14.2 Techniques for reconstructing accounts

• 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