Incomplete accounting records means at present it is not maintained on the basis of double entry system or records are lost due to fire, theft etc.
Although all records are lost but bank statement, cross ledger from creditors And debtors will be available.
Statement of affairs (balance sheet before adjustment)
1 Ascertain closing capital by preparing a statement of affairs at the end of accounting period.
2 Add the amount of drawing to the closing capital
3 Deduct additional capital introduced from closing capital
4 Ascertain opening capital by preparing a statement of affairs at the beginning of the accounting period
5 Ascertain profit or losses by deducting opening capital from adjusted closing capital
Adjusted closing capital
Closing capital + Drawings – additional capital
6 make adjustment for items not yet adjusted
While calculating closing capital.
From opening and closing balance sheet find opening capital and closing capital afterwards prepare capital account .
Balancing figure net profit for the year.
Difference between statement of affairs and balance sheet.
Statement of affairs Balance sheet
Based on estimated ledger – on actual ledger
Balance of capital account – balance of capital
Will be calculated already available
Asset and liabilities – omission can be found
Omitted cannot be found
It is known as estimated – it is actual financial
Financial statement statement.