Accounting For Single Entry And Incomplete Records

Question 1

Importance of record keeping

Answer 1

1. Performance assessment
2. Planning and control of operations
3. Tax purposes
4. Determination of profit / loss
5. Requirement for sourcing for funds
6. Business valuations
7. Extraction of trial balance
8. Identification of errors
9. Misappropriation.

Question 2

Incomplete records

Answer 2

Accounting records which have not been maintained according to strict double entry principles.

Question 3

Why full records are not kept

Answer 3

1. Proprietor doesn’t keep a full record of accounts
2. When business accounts are accidentally destroyed or lost
3. No legal requirement
4. Cost of a bookkeeper is not justified
5. Information for preparation of financial statements can be obtained from other sources.

Question 4

Determination of profit

Answer 4

1. Net assets (capital) approach.

2. Cash book (income) approach.

Question 5

Net assets (capital) approach

Answer 5

Profit or loss is determined based on the assumption that capital grows by making profit and reduces by making loss.