Chapter 18
Incomplete Records 2 - net worth/ balance sheet method
Net worth
The value of the assets owned by an organization less the liabilities it owes
Advantages & Disadvantages of the net worth method
Advantages Disadvantages
● Profit statements may be completed
● Profit may be found
● Full set of final statements can’t be prepared -
essential info -> sales revenue & expenses -
not available
● Owner of bus. doesn’t have enough info for
analysis
● Info is unreliable & makes preparation of final
accounts difficult - particularly when required
for legal purposes
Eg - comply with tax regulations
