Computation of Profit/(Loss) From Incomplete Records (Part 2)

August 20th, 2006 Comments off
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In this final part, the second method used to ascertain profit/(loss) from incomplete records are :

The Analysis Method

 

· This is a frequently asked question in examination

 

·      Many examination questions require the preparation of the Trading, Profit and loss account and Balance sheet from incomplete record. Most of the time, certain information is given and the student is expected to find the missing figure in order to construct the final accounts.

 

To Find the Missing figure of SALES

 

From the DEBTOR account:

DEBIT SIDE:

Balance B/f

Sales ( balance)

 

CREDIT SIDE:

Return Inwards

Discount Allowed

Cash received

Balance C/d

 

By reconstructing the debtor account like the above, we can find the missing figure whether it is for sales or collections from debtors and others.

 

To find the Missing figure of  PAYMENTS TO CREDITORS

From the CREDITOR Account:

DEBIT SIDE:

Returns Outwards

Discount received

Cash Paid (balance)

Balance c/d

 

CREDIT SIDE:

Balance b/f

Purchase

 

By reconstructing the creditor account like the above, we can find the missing figure whether it is for purchases or payment to creditors and others.

 

To find the Missing Figure of EXPENSES Incurred For The Year

 

From the EXPENSE ACCOUNT:

 

DEBIT SIDE:

Cash

Balance c/f

 

CREDIT SIDE:

Balance b/f

Profit & loss (Balance)

 

 

By reconstructing the expenses account like the above, we can find the missing figure whether it is for expenses incurred for the whole year.

To find the Missing Figure of CASH DRAWING BY PROPRIETOR

 

From the CASH ACCOUNT:

 

DEBIT SIDE:

Receipts:

Balance b/f

Debtors

Sales by cash

 

 

CREDIT SIDE:

Payments:

Creditors

Purchases by cash

Bank

Drawings ( balance)

Balance c/d

 

 

By reconstructing the CASH account like the above, we can find the missing figure for the drawings for the year.

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Financial Accounting

 
 

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