Incomplete records occur when a business does not keep a full double-entry system.
Estimating profit from capital
Profit = Closing capital − Opening capital + Drawings − Additional capital
Missing figures are found using the accounting equation, control accounts and mark-up/margin. For example, if capital rose from RM50,000 to RM80,000 and drawings were RM12,000 (no new capital), profit was RM42,000.
Remember
- Profit = Closing capital − Opening capital + Drawings − Additional capital.
- Use mark-up and margin to find missing sales or cost of sales.