IGCSE Accounting 0452 - 5.6 Incomplete Records

Objective: Prepare Opening and Closing Statements of Affairs

Incomplete records are a common occurrence in real-world accounting. This section focuses on how to prepare opening and closing statements of affairs when a full set of financial records is not available. These statements provide a snapshot of a business's financial position at a specific point in time.

1. Opening Statement of Affairs

An opening statement of affairs is prepared when a business starts trading and has no previous financial records. It essentially outlines the initial assets, liabilities, and capital of the business.

The format of an opening statement of affairs is as follows:

1. Assets: List all the assets the business possesses.
2. Liabilities: List all the debts the business owes to others.
3. Capital: This represents the owner's contribution to the business.

The statement is presented in a table format:

Item	Amount (£)
Assets
Cash in Bank
Inventory
Fixtures
Liabilities
Overdraft
Accounts Payable
Capital
Owner's Contribution

Example:

Item	Amount (£)
Assets
Cash in Bank	2,500
Inventory	1,800
Fixtures	500
Liabilities
Overdraft	1,000
Accounts Payable	700
Capital
Owner's Contribution	3,000

2. Closing Statement of Affairs

A closing statement of affairs is prepared at the end of a business's trading period when a full set of financial records is not available. It provides a summary of the business's assets, liabilities, and capital at that point.

The format is similar to the opening statement of affairs:

1. Assets: List all the assets the business possesses.
2. Liabilities: List all the debts the business owes to others.
3. Capital: This represents the owner's contribution to the business.

The statement is presented in a table format:

Item	Amount (£)
Assets
Cash in Bank
Inventory
Fixtures
Debtors
Liabilities
Overdraft
Accounts Payable
Capital
Owner's Capital

Example:

Item	Amount (£)
Assets
Cash in Bank	3,200
Inventory	1,500
Fixtures	500
Debtors	800
Liabilities
Overdraft	1,200
Accounts Payable	900
Capital
Owner's Capital	4,500

Important Note: When preparing these statements, it's crucial to be as accurate as possible based on the available information. Any estimations should be clearly noted.