tailieunhanh - Ebook Principles of financial accounting (3rd edition): Part 2

(BQ) Part 2 book "Principles of financial accounting" has contents: Incomplete records, accounts of clubs, societies and charities, branch accounts, limitations of the conventional accounting model, cash flow statements, analysis of financial statements 1, financial reporting in countries other than the UK,.and other contents. | Part III Special topics in accounting 13 Incomplete records 231 14 Accounts of clubs, societies and charities 248 15 Branch accounts 263 16 Computerised accounting: an introduction 274 17 Auditing: an introduction 280 13 Incomplete records Introduction In this chapter we describe the various degrees of incompleteness in the records of some firms, mostly sole traders. We explain how to build up accounting records from the available information and describe the difficulties likely to be encountered. We then go on to show how to prepare financial statements from such records. Learning objectives At the end of this chapter, after completing the checkpoint questions and exercises, you should be able to: ● explain the procedures needed to construct accounting records from incomplete information; ● explain how to deal with unidentified payments and drawings; ● prepare accounting records from information and explanations provided; ● prepare financial statements from such records. Dealing with incomplete records You may be surprised to learn that not all firms maintain complete accounting records. Many firms’ records lack a lot or a little, and such systems are usually described as incomplete records. This chapter is important because a surprisingly large number of firms rely on incomplete records. We do not have clear evidence, but experience suggests that most sole traders, some partnerships and some small limited companies have records which are more or less incomplete. There are many kinds and degrees of incompleteness. At one extreme there may be very little or virtually nothing, while at the other the firm may have complete cash books and personal ledgers and may lack only a nominal ledger. In practice, a firm of accountants is employed, at the end of each year, to complete the double entry and prepare the accounts. The procedure depends on the circumstances of 231 13 • Incomplete records each case. The following represents a fairly .