Accounts from Incomplete Records

outstanding expenses, bank balances, etc. are ascertained from the relevant documents and physical count. Statement of Affairs as at –– Liabilities Assets Bills payable ´´´´ Land and Building ´´´´ ´´´´ Machinery ´´´´ Outstanding expenses ´´´´ ´´´´ Capital (balancing figure)* ´´´´ ´´´´ ´´´´ Cash and Bank ´´´´ Prepaid expenses ´´´´ Capital (balancing figure)* ´´´´ xxx x xxxx Note: * where the total of liabilities side is more than total of assets side, capital would be shown in assets side and it represents debit balance of capital . Fig. . : Format of statement of affairs Once the amount of capital, both at the beginning and at the end is computed with the help of statement of affairs, a statement of profit and loss is prepared to ascertain the exact amount of profit or loss made during the year. The difference between the opening and closing capital represents its increase or decrease which is to be adjusted for withdrawals made by the