When books of accounts are incomplete, information regarding revenues, expenses, assets and liabilities is not known fully. Hence it becomes difficult to prepare trading and profit and loss account and balance sheet.
Steps to be followed to prepare final accounts:
1. Opening statement of affairs is to be prepared to ascertain the opening capital.
2. Missing figures must be found out with available date. This can be done by preparing memorandum accounts or by making necessary adjustments to the existing figure.
• It may become necessary to prepare a cash book find out missing items such as cash purchase and sales.
• By preparing total debtors and total creditors A/c credit sales and credit purchases can be ascertained.
• Bills Receivable, Bills Payable A/cs are to be prepared to find out the balance of Bills Receivable. Bills Payable accepted.
3. The final step is to prepare trading and profit and loss A/c and balance sheet.
