Financial Reporting · Preparation of single entity financial statements

How to Solve Incomplete Records Questions in ACCA FR

Updated 11 October 2026 · Fact-checked

Incomplete records questions ask you to build financial statements when the books are missing. You find each missing figure from a balancing ledger account, a cash and bank summary, or a margin or mark-up. Then you assemble the statement of profit or loss and the statement of financial position from those figures.

Understand Incomplete Records

In a full set of books, every transaction is recorded in double entry and a trial balance gives you the figures. In an incomplete records question, some of that information is missing. A small business may have kept only a bank statement, some invoices and a few notes. You must rebuild the figures from what you are given.

The key idea is that every account balances. If you know three of the four items in a ledger account, the fourth is the balancing figure. Receivables, payables, inventory, cash and bank all work this way. Opening balance plus increases minus decreases equals closing balance.

When there is no ledger information, you can use relationships. Margin is gross profit as a percentage of sales. Mark-up is gross profit as a percentage of cost of sales. If you know one of them and either sales or cost of sales, you can find the other figures. This is also how you estimate a figure that you cannot count.

You can also use the accounting equation. If you know opening and closing net assets, you can find profit. Profit equals closing capital minus opening capital plus drawings minus any capital introduced. This is the last resort when you have no income and expense detail.

Finally, you present the answer. Use the standard layout of a statement of profit or loss and a statement of financial position. Show your workings clearly, because the Section C marker gives credit for correct method even if one figure is wrong.

Key rules to remember

Gross margin: Gross margin = gross profit ÷ sales × 100%; Based on sales. Cost of sales is (100% − margin) of sales.
Mark-up: Mark-up = gross profit ÷ cost of sales × 100%; Based on cost. Sales are (100% + mark-up) of cost of sales.
Sales from cost of sales: Sales = cost of sales ÷ (1 − margin) or Sales = cost of sales × (1 + mark-up); Choose the one that matches the percentage you are given.
Converting between margin and mark-up: Margin = mark-up ÷ (1 + mark-up); Mark-up = margin ÷ (1 − margin); A 25% margin equals a 33⅓% mark-up. Check by assuming sales of 100.
Cost of sales: Cost of sales = opening inventory + purchases − closing inventory; Include carriage inwards in purchases. Rearrange to find the missing item.
Receivables account: Credit sales = closing receivables + cash received + discounts allowed + irrecoverable debts written off − opening receivables; Use the same logic for payables to find purchases or payments.
Payables account: Credit purchases = closing payables + payments + discounts received − opening payables; Returns reduce purchases and are treated like payments in the account.
Expense accrual or prepayment: Expense for the year = cash paid + closing accrual − opening accrual (or − closing prepayment + opening prepayment); Build a T-account for each expense with a balance.
Profit from net assets: Profit = closing net assets − opening net assets + drawings − capital introduced; For a sole trader. For a company, use the movement in equity plus dividends.

How to solve Incomplete Records questions

This method works for any incomplete records question. Work in order so that each figure you find feeds the next.

1Read the requirement first. Note which statements you must produce and what the question tells you about margin, mark-up, inventory and cash.
2Write down the opening statement of financial position, if the question does not give one. Opening capital is the balancing figure of opening assets minus opening liabilities.
3Prepare a cash and bank summary. Enter all receipts and payments known and find the missing figure, such as drawings or cash takings. Keep the cash in hand and bank accounts separate if the question gives both.
4Prepare receivables and payables accounts. Find credit sales and credit purchases as balancing figures. Add cash sales to get total sales.
5If sales or purchases still cannot be found, use the margin or mark-up on the figures you do have. Set up a small cost of sales working to find the missing item.
6Prepare accrual and prepayment accounts for each expense, then apply adjustments such as depreciation, irrecoverable debts, allowance for receivables and closing inventory.
7Draw up the statement of profit or loss, then the statement of financial position. Capital equals opening capital plus profit minus drawings.
8Check that the statement of financial position balances. If it does not, look for a missed cash item or a wrong sign in a ledger account.

Quickest way: Balancing-figure shortcut for time pressure

When to use it: Use this when the question gives many small facts and you have limited time. It stops you wasting minutes on details that do not change the answer.

Scan the question and tick each figure as you place it in a working, so that none is missed or used twice.
Draw all T-accounts first: cash, receivables, payables, inventory (as cost of sales), and each expense with an accrual or prepayment.
Start with the account where you know the most. Complete it and move the result into the next account.
For margin or mark-up questions, put cost of sales on one line and sales on the next. Work from whichever you know and use the percentage to get the other.
Where capital is unknown, use net assets to find opening capital. Do not search for it elsewhere.
Leave the final statements until all workings are done. Then copy figures across with working references.

Common mistakes in Incomplete Records

Mixing up margin and mark-up
Both are percentages of gross profit and the words sound alike, so students apply the percentage to the wrong base.
Fix: Margin is always on sales. Mark-up is always on cost. Write 100 against the base and the other figure beside it, for example cost 100, mark-up 40, sales 140.
Treating all receipts as credit sales
Students put cash from customers straight into sales and forget opening and closing receivables.
Fix: Use a receivables account. Cash received is not sales. Sales equal cash received plus the movement in receivables, adjusted for discounts and irrecoverable debts.
Forgetting cash paid from the till
Owners often pay expenses or take drawings straight from takings, and this is mentioned only briefly in the question.
Fix: In the cash summary, include every payment from the till before you find cash takings. Check the notes for small cash items.
Using cash paid as the expense for the year
Students forget opening and closing accruals and prepayments.
Fix: Build a T-account for each expense that has a balance. The charge to profit or loss is the balancing figure after adding the accrual or removing the prepayment.
Putting the wrong sign on movements in payables or receivables
Students are unsure which way the balancing figure goes in a ledger account.
Fix: Remember the T-account. Opening balance and amounts added go on one side. Cash and write-offs go on the other. The closing balance sits on the side with the smaller total, and the missing figure makes both sides equal.
Forgetting that a statement of financial position must balance
Time pressure leads students to skip the final check.
Fix: Assets minus liabilities must equal opening capital plus profit minus drawings. If it does not, the difference points to a missed cash item or a mistake in a working.

Worked examples

Example 1

A trader sells goods at a mark-up of 40% on cost. Sales for the year were $168,000. Opening inventory was $10,000 and closing inventory was $14,000. Opening trade payables were $15,000 and closing trade payables were $18,000. There were no discounts or returns. Calculate purchases for the year and the cash paid to suppliers.

Show the solution

Cost of sales = sales ÷ 1.40 = $168,000 ÷ 1.40 = $120,000.
Gross profit = $168,000 − $120,000 = $48,000. Check: $48,000 ÷ $120,000 = 40%.
Cost of sales = opening inventory + purchases − closing inventory, so purchases = $120,000 + $14,000 − $10,000 = $124,000.
Payables account: opening $15,000 + purchases $124,000 = $139,000 on the credit side in total. Closing balance is $18,000.
Payments to suppliers = $139,000 − $18,000 = $121,000.

Answer: Purchases were $124,000 and cash paid to suppliers was $121,000.

Example 2

A shop owner keeps few records. Opening trade receivables were $24,000 and closing trade receivables were $31,000. During the year, $205,000 was received from credit customers, discounts allowed were $3,000 and irrecoverable debts of $2,000 were written off. Cash takings from cash sales were used as follows: $52,000 was banked, $6,000 paid for expenses and $4,000 taken as drawings. Cash in the till was $500 at the start and $700 at the end. Calculate total sales for the year.

Show the solution

Credit sales = closing receivables + cash received + discounts + irrecoverable debts − opening receivables.
Credit sales = $31,000 + $205,000 + $3,000 + $2,000 − $24,000 = $217,000.
Cash sales = cash banked + expenses paid + drawings + closing till cash − opening till cash.
Cash sales = $52,000 + $6,000 + $4,000 + $700 − $500 = $62,200.
Total sales = $217,000 + $62,200 = $279,200.

Answer: Total sales for the year were $279,200.

Exam tips

Look at where the marks are. In Section C, marks are given for each working, so label every working and show the T-account even when you can do the arithmetic in your head.
In Section A and B objective questions, one missing figure is usually asked for. Identify which account contains it and solve only that account. Remember that a wrong answer scores zero and a correct one scores the full two marks.
Read every note in the question. Small items such as goods taken for personal use, cash paid from takings or an expense paid in advance often change the result.
Always check whether a percentage is a margin or a mark-up. Underline the word in the question before you start the calculation.
Do the cash and bank summary early. Many other figures, such as drawings and cash sales, depend on it, and the examiner usually gives the link in the question.

Practice questions from Preparation of single entity financial statements

Incomplete Records in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Incomplete Records: frequently asked questions

What is the difference between margin and mark-up in incomplete records?

Margin is gross profit as a percentage of sales. Mark-up is gross profit as a percentage of cost of sales. A 25% margin is the same as a 33⅓% mark-up, so the base you use makes a large difference to the answer.

How do I find missing purchases or sales in an incomplete records question?

Use a ledger account if you have opening and closing balances and the cash figures. Otherwise use the cost of sales formula with the margin or mark-up. Start from the figure you know and work towards the missing one.

Do I need to prepare a full set of financial statements?

It depends on the requirement. Some Section C questions ask for a statement of profit or loss and a statement of financial position. Objective test questions usually ask for one figure, such as sales, purchases or closing capital.

How do I find opening capital if it is not given?

Opening capital is the net assets at the start of the year. Add up all opening assets and subtract all opening liabilities. This works for a sole trader, where capital is the owner's interest in the business.

Can I use the accounting equation instead of ledger accounts?

Yes, when you have no income and expense records. Profit equals closing net assets minus opening net assets plus drawings minus capital introduced. It gives profit only, so you cannot produce a detailed statement of profit or loss from it.