EnglandAccountingSyllabus dot point

How do we prepare financial statements when there is no full double-entry record to start from?

Accounting for organisations with incomplete records and for not-for-profit organisations: the statement of affairs and capital comparison method, the reconstruction of missing figures from control accounts and the cash and bank accounts, and the preparation of receipts and payments and income and expenditure accounts for clubs and societies.

A focused answer to AQA A-Level Accounting 3.14, covering the statement of affairs and capital comparison method of finding profit, the reconstruction of missing sales, purchases and cash figures, and the preparation of receipts and payments and income and expenditure accounts for not-for-profit clubs and societies.

Generated by Claude Opus 4.812 min answerUpdated 2026-06-02

Reviewed by: AI editorial process; not yet individually human-reviewed

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What this dot point is asking
Why records are incomplete
Finding profit by capital comparison
Reconstructing missing sales and purchases
Not-for-profit organisations
Try this

What this dot point is asking

AQA wants you to prepare financial statements when there is no complete set of double-entry records: to find profit by comparing capital, to reconstruct missing sales, purchases and cash figures from control accounts and the cash and bank accounts, and to prepare the receipts and payments and income and expenditure accounts of a not-for-profit club or society. This is unit 3.14, a frequent whole-question task on Paper 1 because it tests whether you truly understand the double-entry model rather than just reproducing it.

Why records are incomplete

Many small businesses and clubs keep only single-entry records: a cash book and a file of invoices, but no ledgers. The task is to rebuild what the double entry would have produced. The key insight is that the accounting equation still holds, so a missing figure can always be found if every other figure around it is known.

Finding profit by capital comparison

The logic is that capital can only change through profit, drawings or new capital introduced. So:

\text{Profit} = (\text{closing capital} - \text{opening capital}) + \text{drawings} - \text{capital introduced}

Drawings are added back because they reduced the closing figure without being a loss; capital introduced is subtracted because it raised the closing figure without being profit.

Reconstructing missing sales and purchases

When a full income statement is needed, the capital-comparison shortcut is not enough and you must rebuild the figures. The control accounts are the tool.

Cash sales and cash purchases are recovered from a reconstructed cash and bank account, where the missing figure (often drawings or cash takings) is the balancing item once every known receipt and payment is entered.

Reconstructing credit sales and finding drawings

The sales ledger control account

A trader's receivables were $8{,}000$ at the start and $9{,}500$ at the end of the year. Receipts from customers were $62{,}000$ and discounts allowed were $1{,}500$ . Credit sales are the balancing figure:

\text{Credit sales} = (\text{closing receivables} + \text{receipts} + \text{discounts}) - \text{opening receivables}

= (9{,}500 + 62{,}000 + 1{,}500) - 8{,}000 = 65{,}000

The purchases ledger control account

Payables were $5{,}000$ at the start and $6{,}200$ at the end; payments to suppliers were $40{,}000$ and discounts received $800$ . Credit purchases:

= (6{,}200 + 40{,}000 + 800) - 5{,}000 = 42{,}000

Finding drawings from the cash account

The owner banked all takings. The bank account shows: opening balance $1{,}000$ , receipts from customers $62{,}000$ , payments to suppliers $40{,}000$ , expenses paid $9{,}000$ , and a closing balance of $3{,}000$ . The drawings are the balancing figure:

\text{Drawings} = 1{,}000 + 62{,}000 - 40{,}000 - 9{,}000 - 3{,}000 = 11{,}000

Why this works

Each control account and the cash account is a complete double-entry account with exactly one unknown, so the unknown is whatever makes the account balance. The figures then feed straight into the income statement and statement of financial position.

Not-for-profit organisations

A club keeps a receipts and payments account - a simple cash summary running from the opening to the closing bank balance. From it you prepare an income and expenditure account, the club's equivalent of an income statement, which applies the accruals concept: subscriptions are the amount earned this year (adjusting for arrears and advances), not the cash received, and expenses are adjusted for accruals and prepayments in the usual way. The result is a surplus (income over expenditure) or deficit, taken to the accumulated fund, which is the members' equivalent of capital.

Try this

Q1. State the formula for profit using capital comparison. [2 marks] Profit $=$ closing capital $-$ opening capital $+$ drawings $-$ capital introduced.

Q2. A club's receipts and payments account shows $9{,}000$ of subscriptions received. Arrears were $200$ at the start and $500$ at the end, with no advances. Calculate subscriptions income. [2 marks] $9{,}000 + 500 - 200 = 9{,}300$ .

Exam-style practice questions

Practice questions written in the style of AQA exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.

AQA 20195 marksA sole trader keeps no full records. Her net assets were

30,000 at the start of the year and

52,000 at the end. During the year she introduced

5,000 of capital and took drawings of

18,000. Calculate her profit for the year.

Show worked answer →

A capital-comparison calculation; marks are awarded for each adjustment to the change in net assets.

Change in net assets: closing capital minus opening capital, that is 52,000 - 30,000 = 22,000 (1 mark).

Adjust for capital introduced and drawings. Profit increases capital, drawings reduce it, and capital introduced is not profit, so profit = change in net assets + drawings - capital introduced = 22,000 + 18,000 - 5,000 = 35,000 (3 marks).

The final mark is for the correct sign on each item: drawings are added back because they reduced the closing figure, and capital introduced is subtracted because it inflated the closing figure without being profit.

AQA 20216 marksA club received

14,200 in subscriptions during the year. Subscriptions in arrears were

600 at the start and

900 at the end; subscriptions in advance were

400 at the start and $250 at the end. Calculate the subscriptions income for the income and expenditure account.

Show worked answer →

A subscriptions adjustment using the accruals concept; the income statement figure is the amount earned this year, not the cash received.

Start from cash received, 14,200. Add closing arrears (earned, not yet received) 900 and subtract opening arrears (earned last year, received this year) 600 (2 marks).

Add opening advance (received last year for this year, now earned) 400 and subtract closing advance (received this year for next year, not yet earned) 250 (2 marks).

Subscriptions income = 14,200 + 900 - 600 + 400 - 250 = 14,650 (2 marks). Markers reward applying the accruals concept consistently: include what was earned this year regardless of when the cash moved.

Related dot points

Sources & how we know this

AQA A-level Accounting (7127) specification — AQA (2017)