NECO Accounting 2024 Theory — Question 2

Model answer

1. A trial balance cannot be prepared to check the arithmetical accuracy of the accounts, since there is no double entry to cross-check debit and credit entries; errors and discrepancies can therefore go unnoticed. 2. Incomplete records fail to give an accurate picture of financial results (revenues, expenses, assets, liabilities and equity), making it difficult to assess the true financial position and performance of the business, which can discourage lenders and investors. 3. In the event of loss by fire or theft, incomplete records make it difficult to establish the value of the assets lost, causing problems with insurance claims.