14.2 Techniques for reconstructing accounts

Cards (77)

  • Incomplete records make it easy to prepare full financial statements.
    False
  • What are the four main types of missing information in incomplete records?
    Revenue, cost, balance sheet, bank
  • Revenue data examples include sales figures and service income
  • Order the main sources of data used to reconstruct incomplete accounting records:
    1️⃣ Bank Statements
    2️⃣ Supplier Invoices
    3️⃣ Customer Invoices
    4️⃣ Inventory Records
    5️⃣ Fixed Asset Records
  • Bank statements provide details on cash receipts and payments.

    True
  • Supplier invoices contain information on purchases and expenses
  • What do inventory records provide data on?
    Stock levels
  • What do supplier invoices document?
    Purchases from suppliers
  • Bank statements provide a transaction log for credit card payments.
    False
  • Identifying missing information is crucial for choosing the correct techniques to estimate values.

    True
  • Match the source of data with its description:
    Bank Statements ↔️ Cash receipts and payments
    Supplier Invoices ↔️ Purchases and expenses
    Customer Invoices ↔️ Sales and revenue
    Inventory Records ↔️ Opening and closing stock
  • Data from multiple sources is needed to reconstruct missing elements in incomplete records.

    True
  • Customer invoices contain detailed records of sales transactions, including dates, amounts, and products/services sold
  • What are incomplete records in accounting?
    Missing or incomplete records
  • The accounting equation used to deduce missing values is Assets = Liabilities + Equity
  • What does the gross profit method estimate using the gross profit percentage?
    Missing sales or cost
  • Cash book reconstruction involves using bank statements and cash records.

    True
  • Match the type of missing information with an example:
    Revenue Data ↔️ Sales figures
    Cost Data ↔️ Expense receipts
    Balance Sheet Items ↔️ Asset values
    Bank Statement Details ↔️ Cash withdrawals
  • Match the source of sales information with its description:
    Customer Invoices ↔️ Detailed records of sales transactions
    Sales Receipts ↔️ Proof of payment for sales
    Bank Statements ↔️ Show cash inflows from sales
    Credit Card Transactions ↔️ Detail credit card sales
  • Customer invoices contain detailed records of sales transactions.

    True
  • Bank statements are used to reconcile payments to suppliers and other expenses
  • Missing information refers to the specific pieces of financial data that are absent
  • Order the main sources of data used to reconstruct incomplete accounting records:
    1️⃣ Bank Statements
    2️⃣ Supplier Invoices
    3️⃣ Customer Invoices
    4️⃣ Inventory Records
    5️⃣ Fixed Asset Records
  • Bank statements provide details on cash receipts and payments
  • What are the key sources for gathering sales information?
    Customer Invoices, Bank Statements
  • Closing stock is the value of goods remaining unsold at the end of an accounting
  • What method is used to estimate closing stock?
    Gross Profit Method
  • How is gross profit calculated?
    Sales Revenue - COGS
  • Reconciling the cash book and bank statement involves comparing balances and identifying discrepancies.

    True
  • The accounting equation is used to deduce missing values
  • What is the role of bank statements in reconstructing incomplete records?
    Provide cash transaction details
  • Missing revenue data includes examples such as sales figures and service income
  • What are the primary sources for tracking purchases and expenses?
    Supplier Invoices, Bank Statements
  • Match the source of data with its purpose in tracking expenses:
    Supplier Invoices ↔️ Document purchases
    Expense Receipts ↔️ Capture smaller expenses
    Bank Statements ↔️ Reconcile payments
    Credit Card Transactions ↔️ Detail credit card payments
  • The Gross Profit Method calculates closing stock by deducting gross profit from sales revenue.

    True
  • The cash book is maintained by the business, while the bank statement is issued by the bank
  • What are some common techniques for reconstructing accounts from incomplete records?
    Gross Profit Method, Cash Book Reconstruction
  • Identifying missing information helps determine the appropriate reconstruction techniques.

    True
  • What are the four main types of missing information in incomplete accounting records?
    Revenue, cost, balance sheet, bank statement
  • Why is identifying the specific types of missing information crucial in reconstructing accounts from incomplete records?
    Determines estimation techniques