Incomplete records
Statement of affairs — a summary of the financial position of a business on a certain date.
Disadvantages of not keeping full records
- A trial balance cannot be prepared.
- It is difficult to compare with previous years.
- It is difficult to make decisions.
Useful formulas
Profit = Closing capital − Opening capital + Drawings − Capital introduced
Measuring gross profit as a percentage:
- Mark-up = Gross profit ÷ Cost of sales × 100
- Margin = Gross profit ÷ Sales × 100