IGCSE Accounting: Incomplete records (Cambridge 0452) – Revision Notes

Syllabus edition note. This resource follows the Cambridge IGCSE Accounting 0452 syllabus (and Cambridge O Level Accounting 7707, which has the same subject content for the same series) for exams in 2027, 2028 and 2029 (version 1), first examined in the March 2027 series in India and the June 2027 series elsewhere. If you sit 0452 in November 2026, you sit the 2026 syllabus (version 2), which differs: Paper 1 has 35 multiple-choice marks in 1 hour 15 minutes, not 40 marks in 1 hour 30 minutes; Topic 7 is “Accounting principles and policies”, without 7.2 Ethical considerations or 7.3 Technology and sustainability; 4.4 is “Irrecoverable debts and provision for doubtful debts”; income statements are named instead of statements of profit or loss; three-column running balance accounts are not required; Clubs and societies is 5.4 and Manufacturing accounts 5.5; and 6.3 is “Inter-firm comparison”. For this topic, the 2026 syllabus covers only trading and service businesses in 5.1 and limits drawings adjustments to goods taken by the owner for own use; for limited companies it excludes cumulative and non-cumulative preference shares, rights issues, share premium and capital redemption reserve but requires the difference between redeemable and non-redeemable preference shares (the 2027-2029 syllabus lists none of these); and for incomplete records it does not ask why businesses keep them or what their advantages are. If you sit in November 2026, work from the 2026 syllabus on the Cambridge International website.

Quick recall for syllabus section 5.6 Incomplete records, Cambridge IGCSE Accounting 0452, syllabus for exams in 2027, 2028 and 2029 (version 1). For full explanations and the Haverford Cycles worked example, use the study guide. Then test yourself with the practice questions. Course links: hub, printable checklist and free 10-minute diagnostics.

The syllabus restricts incomplete records questions to sole trader businesses. Service and manufacturing businesses are not asked.

Records, reasons and trade-offs

Different types of records. Instead of full double entry (every transaction in ledger accounts, checked by a trial balance), a small trader may keep only bank statements or a cash book, filed invoices and a list of receivables and payables.

Reasons: no bookkeeping knowledge; cost of a bookkeeper or software; small scale, so the owner sees most transactions; the owner mainly wants to know the bank balance.

Advantage	Disadvantage
Cheaper	No trial balance, so errors go unnoticed
Quicker and simpler	Theft and fraud harder to detect
Needs little skill	Profit has to be rebuilt, less reliable
	Poor control of trade receivables and trade payables
	Lenders and tax authorities may not accept the figures

Formulas to know

Item	Formula
Capital	Assets - liabilities (statement of affairs)
Profit or loss	Closing capital - opening capital + drawings - capital introduced
Credit sales	Receipts from credit customers + closing trade receivables + irrecoverable debts written off - opening trade receivables
Credit purchases	Payments to credit suppliers + closing trade payables - opening trade payables
Revenue	Credit sales + cash sales
Cost of sales	Opening inventory + purchases - closing inventory
Gross profit	Revenue - cost of sales
Mark-up (%)	Gross profit / Cost of sales x 100
Gross profit margin (%)	Gross profit / Revenue x 100
Rate of inventory turnover (times)	Cost of sales / Average inventory
Inventory turnover (days)	Average inventory / Cost of sales x 365 days
Average inventory	(Opening inventory + closing inventory) / 2

The syllabus says only its listed ratio formulas are accepted in candidate responses, so write them in this form.

Method in steps

1. Opening statement of affairs. List every asset and liability at the start. Net the allowance against trade receivables. Capital is the balancing figure.
2. Closing statement of affairs. Same again at the end. If the question gives no closing balance for depreciation or the allowance, work them out first.
3. Quick profit. Use the capital formula. Drawings include cash, goods and private expenses.
4. Rebuild credit sales, purchases and each expense, one working at a time.
5. Statement of profit or loss from those figures, with every 5.1 adjustment.
6. Statement of financial position. It is the closing statement of affairs reorganised, with the capital section in full.
7. Check. Profit from step 5 should equal step 3. If not, an adjustment is missing.

Adjustments from 5.1 in one place

Item	Expense or income for the year
Expense paid	Paid - opening accrual + opening prepayment + closing accrual - closing prepayment
Income received	Received - opening accrued income + opening income in advance + closing accrued income - closing income in advance
Straight line	Cost x rate
Reducing balance	Rate x carrying amount at the start of the year
Revaluation	Opening value + additions - closing valuation
Irrecoverable debt	Expense; reduces trade receivables
Allowance	Expense is the increase; a decrease is added to income
Goods taken by owner	Deduct from purchases (or cost of sales); add to drawings
Private expense paid by business	Remove from expenses; add to drawings

Worked reminders (Tolliver Tiles)

Loss from capital. Opening capital 14,200; closing capital 9,500; drawings 5,400; equipment worth 3,000 introduced.

9,500 - 14,200 + 5,400 - 3,000 = -2,300   a loss of 2,300

Missing receipts. Opening trade receivables 4,100; credit sales 52,300; irrecoverable debt written off 250; closing trade receivables 5,050. Cash from customers is the balancing figure.

4,100 + 52,300 - 250 - 5,050 = 51,100

Missing purchases. Paid to suppliers 36,400; trade payables 2,800 opening and 3,150 closing.

Purchases = 36,400 + 3,150 - 2,800 = 36,750

Ratios. Cost of sales 36,000; inventory 3,800 opening, 5,200 closing. Average inventory is 4,500, so rate of inventory turnover = 36,000 / 4,500 = 8 times, and inventory turnover is 4,500 / 36,000 x 365 = 45.6 days. If the margin is 30%, mark-up = 30/70 = 42.9%.

Must-know distinctions

• Mark-up vs margin. Mark-up uses cost of sales as the base; margin uses revenue. For the same sale, the mark-up percentage is always the larger.
• Converting. Margin m% gives mark-up m/(100 - m). Mark-up k% gives margin k/(100 + k).
• Statement of affairs vs statement of financial position. Same layout, but a statement of affairs is built from listed balances because there are no full ledgers.
• Drawings vs expenses. Anything the owner takes for private use is drawings, whether cash, goods or a private bill paid by the business.
• Irrecoverable debts vs the allowance. A debt written off is certain; the allowance is an estimate of the closing receivables that may not be paid.
• Capital introduced vs profit. Both increase capital, but only profit appears in the statement of profit or loss.
• Opening vs closing statement. Opening capital is the start of the year; profit cannot be found without both.

Quick self-test

1. A trader has assets of 18,400 and liabilities of 6,100. What is capital?
2. Closing capital 15,800; opening capital 12,300; drawings 7,200; capital introduced 2,000. Find the profit.
3. Receipts from credit customers 40,000; trade receivables 4,700 opening and 5,200 closing; no irrecoverable debts. Find credit sales.
4. Payments to suppliers 28,900; trade payables 3,100 opening and 3,600 closing. Find purchases.
5. A business earns a margin of 20%. What is its mark-up?
6. Cost of sales is 24,000 and the mark-up is 50%. Find revenue and gross profit.
7. Average inventory is 3,500 and the rate of inventory turnover is 6 times. Find cost of sales.
8. Rent paid 5,400; prepaid 450 at the start and 500 at the end. Find the rent expense.
9. Equipment cost 10,000, accumulated depreciation 3,000, depreciated at 20% on the reducing balance. Find the charge.
10. Loose tools valued at 2,200 at the start; 600 bought; valued at 2,000 at the end. Find the depreciation by revaluation.
11. Trade receivables at the year end are 6,250 and the allowance is to be 4%. The allowance at the start was 190. Find the expense.

Answers

1. 18,400 - 6,100 = 12,300.
2. 15,800 - 12,300 + 7,200 - 2,000 = 8,700 profit.
3. 40,000 + 5,200 - 4,700 = 40,500.
4. 28,900 + 3,600 - 3,100 = 29,400.
5. 20 / 80 x 100 = 25%.
6. Gross profit 50% x 24,000 = 12,000; revenue = 36,000.
7. 6 x 3,500 = 21,000.
8. 450 + 5,400 - 500 = 5,350.
9. 20% x (10,000 - 3,000) = 1,400.
10. 2,200 + 600 - 2,000 = 800.
11. Allowance = 4% x 6,250 = 250; increase 250 - 190 = 60 expense.

Where marks are usually lost

• Leaving out drawings of goods or private expenses when finding profit from capital.
• Forgetting to add back a debt written off when rebuilding credit sales.
• Using the wrong base: gross profit over revenue for mark-up, or over cost of sales for margin.
• Using closing inventory instead of average inventory for turnover.
• Not netting the allowance against trade receivables in a statement of affairs.
• Treating a decrease in the allowance as an expense.
• Showing capital introduced as income in the statement of profit or loss.
• Not checking that the two profit figures agree.
• Unlabelled workings, so one slip hides every correct method step.

Frequently asked questions

What is the formula for profit from changes in capital? Profit equals closing capital minus opening capital, plus drawings, minus capital introduced. A negative answer is a loss.

How should the allowance for irrecoverable debts appear in a statement of affairs? Net the allowance against trade receivables on the assets side, so the receivables figure shows what the business expects to collect.

Is capital introduced shown as income? No. Capital introduced by the owner increases capital, not income, so it is not shown in the statement of profit or loss and is deducted when finding profit from changes in capital.

How can you check an incomplete records answer? Compare the profit from the statement of profit or loss with the profit found from changes in capital; the two should agree. Labelled workings make any slip easier to find.

Official syllabus

Cambridge IGCSE Accounting 0452 syllabus for 2027, 2028 and 2029 (version 1), Cambridge University Press & Assessment, section 5.6 and the Accounting ratios list.