As stated earlier, the conversion method usually implies the preparation of final accounts without actual conversion of single entry records into double entry records. But the kind of information which is needed for preparing the final accounts is not directly available from records maintained on single entry system. Hence, we have to prepare certain additional accounts for finding out the necessary information. Before we learn how such information can be extracted from incomplete records, we should identify the kind of information which is usually missing. In practice, the most common items are:

1. Opening Capital
2. Credit Sales
3. Credit Purchases
4. Cash and Bank Balances

Opening Capital

We know that capital is always equal to the total of assets minus the total of external liabilities. Hence, by preparing a statement of all assets and all external liabilities we can easily find out the opening capital.

Credit Sales

To prepare Trading Account and find out the Gross Profit we will certainly need the figure of sales. The sales include cash as well as credit sales of goods, Hence we will need both of these amounts, The amount of cash sales can be easily found out from the summary of cash transactions called the 'Receipts and Payments Account', But for credit sales we should prepare an additional account called 'Total Debtors Account’. We learnt about the preparation of Total Debtors Account in Unit 14 under Sectional Balancing, it shows opening debtors and credit sales on the debit side, and cash received from debtors, sales returns, discount allowed, bad debts, and closing debtors on the credit side. If the figures of all other items (opening and closing balances of debtors, cash received from debtors, discount allowed, bad debts, etc.) are given, the credit sales can be easily ascertained by working out the difference between the totals of debit and credit sides of the Total Debtors Account.

The credit sales are worked out with the help of the Total Debtors Account are the net of total credit sales and sales returns. In fact with the help of Total Debtors Account we can find out any missing item like cash received from debtors, opening debtors or closing debtors provided the Figures of all other items including credit sales are given.

Credit Purchases

The amount of purchases is another item which is important for the preparation of Trading Account. Like sales, purchases also include cash purchases and credit purchases of goods. The amount of cash purchases call be taken from the Receipts and Payments Account. For credit purchases we have to prepare Total Creditors Account. We know Total Creditors Account shows the opening creditors and the credit purchases on the credit side, and the cash paid to creditors, purchases returns, discount received and closing creditors, on the debit side.

If the amounts of all other items (opening and closing creditors, cash paid to creditors, discount received, etc.) are given, the credit purchases can be ascertained simply by working out the difference between the totals of the debit and credit sides of the Total Creditors Account.

Credit purchases as worked out with the help of Total Creditors Account are the net of total credit purchases and purchases returns. In fact, with the help of Total Creditors Account we can find out any missing item like cash paid to, creditors opening or closing creditors provided the figures of all other items including credit purchases are given.

Cash and Bank Balances

Cash and Bank balances as at the beginning are usually given. But the balances at the end may have to be worked out. This can be easily done by preparing the Receipts and Payments Account which is debited with all receipts of cash and cheques and credited with all payments by cash and cheques. The closing balance in Receipts and Payments Account represents both the cash and bank balances at the end. Cash in hand is generally known and so the remaining amount may be treated as cash at bank at the end.