Which statement is commonly prepared to find the capital under incomplete records?
Correct answer: B. Statement of affairs
- A. Bank reconciliation statement
- B. Statement of affairs
- C. Manufacturing account
- D. Funds flow statement
Explanation
A statement of affairs lists assets and liabilities, and the difference is treated as capital. It resembles a balance sheet, but its figures may be based on incomplete or estimated records.
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About Incomplete Records
Incomplete records require profit and financial position to be reconstructed when a complete double-entry system is unavailable. Methods include statements of affairs, capital comparisons, control accounts, cash summaries and margin calculations to find missing sales, purchases, expenses, assets, liabilities and drawings, while distinguishing business profit from changes in capital.
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More Incomplete Records questions
Which feature best describes an incomplete records system?
A business has assets of Rs. 850,000 and liabilities of Rs. 275,000. What is its capital according to the statement of affairs?
Under the capital comparison method, which formula determines profit when drawings and additional capital are known?
A trader’s opening capital is Rs. 400,000, closing capital is Rs. 470,000, drawings are Rs. 60,000, and additional capital introduced is Rs. 20,000. What is the profit?
Opening debtors are Rs. 20,000, cash received from debtors is Rs. 70,000, returns inward are Rs. 3,000, bad debts are Rs. 2,000, and closing debtors are Rs. 25,000. What are the credit sales?