chapter 16

Question 1

incomplete records

Answer 1

any method of recording financial transactions that is not based on the double entry model

Question 2

single entry bookkeeping

Answer 2

method of bookkeeping where only one aspect of each financial transaction is recorded

Question 3

statement of affairs

Answer 3

a list of the business assets and liabilities at a point in time, usually the capital of the business at that point in time

Question 4

effect of profit on sole traders capital

Answer 4

profit increases capital while losses reduce capital

Question 5

profit calculation with the capital and liabilities section of the statement of financial position

Answer 5

opening capital
+ capital introduced
+ net profit
- drawings
= closing capital
(the first stage is to identify capital by listing the assets and liabilities in a statement of affairs)

Question 6

purposes of summary bank account(cash book)

Answer 6

forcing the accountant to collate the items involving money coming into the business and money going out of the business so that the totals for each revenue or expense can be identified