CHAPTER 19 159

INCOMPLETE RECORDS
AND SINGLE ENTRY

If accounting records are incomplete it makes good book-keeping difficult.

Double entry, the complete system, cannot be used to advantage.
Final accounts made up from single·entry records often require a fair
degree of approximation.
The single-entry system, or rather lack of system, used to be prevalent
among many small traders, whose main business was 'cash over the counter'.
The records also kept by small clubs and local societies were often incom-
plete, based largely on a rough form of cash book and perhaps a bank
account. The Receipts and Payments Account described in the next chapter
is an incomplete record; further information, analysis of payments and
distinction between capital and revenue expenditure is necessary before
presenting to members a more informative statement.
On the commercial side, neglecting to keep proper books could lead to
tax evasion, although this may not be deliberate. The retailer used to rely
a good deal on his memory, and it was only when the tax inspector began
to over-assess him for income tax that he realised it was in his own interest
to start keeping permanent and authentic records.

19.1 WHERE CASH RECORDS ARE AVAILABLE

Generally , some sort of cash book is kept, and also a bank account now by
the majority of small traders. Some rough record will also be kept of
credit customers, and statements from suppliers, when paid, will either be
stuck on a hook or thrust away in a drawer. Often though, in very small
businesses, there are no re cords of the present value of business assets, no
cumulative record of purchases and sales, and no nominal or expense
recorded totals at all.
When an accountant is called in to sort things out and perhaps put the
trader on a more business-like basis, he will generally follow this procedure,
with a fair amount of approximation where figures are missing and answers
to his questions extremely vague.
J. R. Stott, Mastering Principles of Accounts
© J. Randall Stott 1982
160

(a) First he will reconcile the bank colurnns of the cash book with the
bank statement, and then analyse all cash book items, preparing a
Cash Summary for the year.
(b) The various nominal accounts can be opened and posted up from the
cash book summary, completing that part ofthe double entry.
(c) Total accounts for debtors and creditors will be made up where
credit is in operation. These total accounts have already been ex-
plained in Chapter 15. From these total accounts the credit purehases
and credit sales for the trading period will be obtained and posted up
to their respective accounts in the nominaliedger.
(d) An opening balance sheet (sometimes called a Statement of Affairs)
is made out, probably with much approximation in so far as asset
values are concerned. The commencing capital (say of one year back)
is obtained in this way, being simply the difference between total
estimated assets and total estimated liabilities at that particular date.
Many discreet questions must be asked of the proprietor, such as:

'Where did you get the money for your new car?'
'How did you manage to find f:5000 deposit on your new house?'

The answers to some of these questions may explain a huge cash dis-
crepancy which will in due course be debited to drawings.

(e) When the double entry has been completed, a trial balance is taken
out, year-end adjustments are made, and the first full set of accounts
made up in the ordinary way.

Single-entry illustration
John Brown's accountant summarised his client's cash book for the year
ended December 31 thus:

f f
Balance b/f 1,300 Payments to suppliers 3,300
Wages 4,200
Cash takings for year 8,500 DraVii ngs of J. BroVin 1,900
Cash purchases 270
Money received from NeVi counter 150
credit customers 940 Insurance 30
Rates 280
General expenses 48
Balance cld 562

10,740 10,740

Balance r)ld
--
562
--