Full & Incomplete Records (Cambridge International AS Accounting)

Spec point — the advantages and disadvantages of maintaining full accounting records

Full & incomplete records

What are incomplete records?

• Incomplete records are accounting records kept by businesses that do not keep a full set of records

• This means the accounting principle of duality was not followed in the preparation of accounting transactions

• A business might keep incomplete records for several reasons:

  • The owner lacks the technical skills to prepare the records
  • It is the usual practice of the business to make single entries
  • Some accounting information may have been lost, damaged or stolen

What are the advantages of maintaining a full set of accounting records?

• Full records ensure that financial information will be more reliable and accurate
• It provides more comprehensive information to inform management decision-making
• It facilitates the preparation of financial statements
• Maintaining full records helps locate errors, check arithmetical accuracy, and reduce the chance of fraud
• Information is readily available for banks and lenders

What are the disadvantages of maintaining a full set of accounting records?

• The business may incur the cost of employing a bookkeeper to maintain the records
• There is possible additional expenditure required for office equipment or accounting software
• The increase in administrative costs may result in a decrease in the overall profit for the year

Exam Hint You can spot questions involving incomplete records by looking out for the following phrases:

• "...does not keep full accounting records..."
• "...does not keep a full set of records ..."
• "...does not keep proper books of account ..."