1. Introduction to the Single Entry System (Incomplete Records)

The standard system of financial accounting universally taught, practiced by modern corporations, and mandated by regulatory statutes across the world is the Double Entry System. Founded on the dual aspect concept, the double entry framework mandates that every financial transaction must be recorded with equal and offsetting debit and credit entries. However, in the vast realm of small-scale commerce—such as sole proprietorships, local grocery stores, freelance practices, and street-level traders—maintaining a comprehensive double entry ledger infrastructure is often deemed too expensive, overly complex, and practically unfeasible.

Consequently, small business owners frequently maintain informal, incomplete, or unscientific records of their transactions. In accounting terminology, any system of bookkeeping that fails to strictly adhere to the dual aspect rule and does not record both the debit and credit aspects of every single transaction is traditionally termed the Single Entry System, or more accurately in modern professional literature, Accounts from Incomplete Records.

1.1 Definition and Conceptual Nature

Strictly speaking, there is no standardized, scientifically designed "system" known as single entry. As the eminent accounting scholar R.N. Carter famously stated: "The Single Entry System is really not a system at all, but rather a defect of the Double Entry System."

In practice, it is an arbitrary, unsystematic method of keeping financial accounts where:

For some transactions, both aspects (debit and credit) are entered (e.g., cash received from a debtor is entered in the Cash Book and credited to the debtor's personal ledger account).
For some transactions, only one aspect is recorded (e.g., payment of cash for business rent is recorded in the Cash Book, but no Rent Account is maintained in any ledger).
For certain transactions, no entry whatsoever is made in the formal books (e.g., depreciation on fixed machinery, accrued interest on investments, or bad debts written off).

1.2 Objectives of the Single Entry System

Small business proprietors who operate under single entry do not aim to generate audited financial statements for stock exchanges. Instead, their bookkeeping objectives are intensely practical and focused on minimal operational survival:

Tracking Credit Customer Balances: To maintain an accurate record of how much money individual customers (Sundry Debtors) owe the business, ensuring invoices can be collected on time.
Tracking Supplier Liabilities: To maintain a clear record of how much money the business owes to its suppliers and wholesalers (Sundry Creditors) to prevent default or supply interruption.
Monitoring Physical Cash Flows: To keep a daily track of cash in hand and bank balance through a primary Cash Book to prevent internal theft and manage liquidity.
Minimizing Bookkeeping Overhead: To avoid the high administrative cost of hiring full-time professional chartered accountants or purchasing enterprise accounting software suites.

1.3 Distinct Features of Incomplete Records

An examination of single entry records reveals several consistent operational characteristics:

Maintenance of Personal Accounts Only: Proprietors predominantly maintain personal accounts of debtors and creditors. Real accounts (such as Plant, Machinery, Land, Furniture) and Nominal accounts (such as Salaries, Rent, Advertising, Discount, Depreciation) are largely ignored.
Centrality of the Cash Book: The Cash Book is the primary—and often the only—formal book of original entry. It frequently mixes business cash inflows and outflows with the owner's private, domestic household expenditures.
Heavy Reliance on Original Source Documents: Because nominal and real ledgers do not exist, the business relies heavily on physical filing cabinets containing raw vouchers, purchase invoices, delivery challans, and counterfoils to reconstruct financial history when needed.
Lack of Uniformity: Every small trader invents their own idiosyncratic method of recording transactions. There is zero standardization across different businesses.

1.4 Advantages and Limitations of Single Entry

Understanding the single entry system requires an objective assessment of why it persists among millions of small businesses, contrasted against its fatal structural flaws.

Advantages of Single Entry

Extreme Simplicity: Requires no specialized training in double entry rules, journalizing, or ledger balancing. Any literate business owner can maintain it.
Low Administrative Cost: Drastically cuts down administrative expenses. No need for complex ERP licenses, certified bookkeepers, or internal auditors.
Time-Saving: Transaction recording is swift, allowing the sole trader to focus 100% of their daily energy on sales, customer service, and procurement.
Flexibility for Micro-Enterprises: Highly suitable for small retail kiosks, repair shops, and local service providers where daily transaction volume is small.

Limitations & Structural Flaws

No Arithmetic Verification: Because dual aspect is omitted, a Trial Balance cannot be prepared. Arithmetic errors in additions and postings go completely undetected.
Inability to Ascertain True Profit/Loss: Without nominal accounts (Sales, Purchases, Overheads), a proper Trading and P&L Account cannot be directly prepared.
No True Financial Position: Because real asset accounts are not tracked, a standard Balance Sheet cannot be drawn up.
High Vulnerability to Fraud & Theft: Internal check mechanisms are non-existent. Cash embezzlement and unrecorded inventory shrinkage are rampant.
Unacceptable to Banks & Tax Authorities: Tax departments (Income Tax, GST) and commercial lending institutions legally reject single entry records.

2. Double Entry vs. Single Entry & Types of Single Entry

To master the accounting treatment of incomplete records, a student must understand the structural differences between scientific double entry accounting and single entry record-keeping, as well as the various degrees to which single entry is implemented in the field.

2.1 Rigorous Distinction: Double Entry vs. Single Entry System

The table below summarizes the fundamental differences across all major accounting parameters:

Basis of Distinction	Double Entry System	Single Entry System (Incomplete Records)
1. Principle / Rule	Strictly follows Dual Aspect: Every debit must have an equal and corresponding credit.	Does not follow dual aspect; transactions are recorded with two, one, or zero entries arbitrarily.
2. Ledgers Maintained	Maintains Personal, Real, and Nominal accounts comprehensively.	Maintains only Personal accounts and a Cash Book. Real and Nominal accounts are omitted.
3. Arithmetic Verification	Arithmetic accuracy is systematically verified by extracting a Trial Balance.	A Trial Balance cannot be extracted; arithmetic accuracy cannot be proved.
4. Ascertainment of Profit	Calculated scientifically by preparing a Trading and Profit & Loss Account.	Estimated indirectly using the Statement of Affairs or Conversion method.
5. Financial Position	Reflected accurately via a scientifically prepared Balance Sheet.	Estimated through a Statement of Affairs based on estimated asset values.
6. Internal Control & Audit	Strong internal controls; records can be systematically audited by chartered accountants.	Internal control is absent; books cannot be formally audited by statutory auditors.
7. Legal Acceptance	Universally accepted by Income Tax authorities, GST departments, Banks, and Courts.	Legally rejected by tax authorities and commercial lending institutions.

2.2 Types of Single Entry Systems

In actual commercial practice, "single entry" does not exist in a single monolithic form. Based on the degree of completeness and the variety of subsidiary records maintained, scholars categorize single entry into three distinct operational types:

1. Pure Single Entry System

The most extreme and incomplete form. Under pure single entry, the proprietor maintains only personal accounts of debtors and creditors. No Cash Book is maintained, no real accounts exist, and no record of expenses or incomes is kept. Information regarding cash in hand or cash at bank is completely unrecorded. This type is extremely rare and borders on total accounting illiteracy.

2. Simple Single Entry System

Under this type, the proprietor maintains Personal accounts of debtors/creditors and a Cash Book. Entries in the Cash Book are made regularly, but postings to nominal accounts (e.g., Rent, Salaries, Electricity) are completely omitted. When cash is received from a customer or paid to a supplier, double entry is completed between Cash and the Personal account, but all other transactions remain single-sided.

3. Quasi (Semi) Single Entry System

The most common practical form encountered in small businesses. In addition to personal accounts and a Cash Book, the trader maintains several supplementary subsidiary records, such as a Purchases Day Book, Sales Day Book, Bills Receivable Book, and Bills Payable Book. Furthermore, informal notes or slips are maintained for recording discounts, returns, and bad debts. While it approaches double entry in volume, it lacks nominal ledgers and dual-entry balancing, remaining technically incomplete.

3. Determination of Profit or Loss under Single Entry

Even though a small business does not maintain full double entry ledgers, the proprietor still needs to know whether the enterprise generated a profit or suffered a loss over the financial year. Because nominal accounts (Sales, Purchases, Expenses) are missing, the accountant cannot simply prepare a standard Trading and Profit & Loss Account directly from a trial balance.

To overcome this limitation, financial accounting provides two primary methodologies for determining profit or loss from incomplete records:

The Statement of Affairs Method (also known as the Capital Comparison Method or Net Worth Method).
The Conversion Method (converting incomplete records into full double entry).

3.1 The Statement of Affairs (Capital Comparison) Method

The fundamental economic premise of the Capital Comparison method is rooted in the accounting equation: Capital = Assets − Liabilities. Under this concept, if the net worth (capital) of a business increases between the beginning of the year and the end of the year, that increase represents profit, provided adjustments are made for any capital introduced or withdrawn by the owner.

Core Accounting Logic & Mathematical Derivation

If a sole proprietor starts the year with $50, 000 in c a p i t a l, an d b y t h ee n d o f t h ey e a r t h e i r n e t c a p i t a l ha se x p an d e d t o$ 80,000, the apparent gain of $30,000 must have been generated by profitable operations. However, this comparison must be adjusted for two major owner-related transactions:

Drawings (Cash or Goods withdrawn for personal use): Drawings artificially reduce closing capital. Therefore, to ascertain the true profit earned by the business before money was taken out for personal living expenses, Drawings must be ADDED BACK to the closing capital.
Additional / Fresh Capital Introduced: If the owner injected $10,000 of fresh personal savings during the year, that injection artificially inflated the closing capital. Therefore, to isolate purely business operating profits, Additional Capital must be DEDUCTED from the closing capital.

Mathematical Formula: Single Entry Profit Determination Capital Comparison Method

Adjusted Closing Capital = Closing Capital (C₁) + Drawings (D) − Additional Capital (I)

Net Profit / (Loss) = Adjusted Closing Capital − Opening Capital (C₀)

Where:

C₁ (Closing Capital): Net worth at the end of the financial period (Closing Assets − Closing Liabilities).
D (Drawings): Total cash, goods, or business assets withdrawn by the owner for personal/household use during the year.
I (Additional Capital Introduced): Fresh funds or personal assets injected into the business during the year.
C₀ (Opening Capital): Net worth at the commencement of the financial period (Opening Assets − Opening Liabilities).

3.2 Step-by-Step Procedure to Calculate Profit

To execute the Statement of Affairs method systematically, the accountant follows a four-step sequential protocol:

Step 1: Ascertain Opening Capital (C₀)

Draft an Opening Statement of Affairs as of the first day of the accounting year (e.g., April 1st). List all opening assets (Cash, Bank, Debtors, Stock, Furniture, Machinery) on the right side, and all opening liabilities (Creditors, Bank Overdraft, Loans) on the left side. The balancing figure between Total Assets and Total Liabilities is the Opening Capital.

Step 2: Ascertain Closing Capital (C₁)

Draft a Closing Statement of Affairs as of the last day of the accounting year (e.g., March 31st). List all closing assets and liabilities at their unadjusted book values. The balancing figure between Total Assets and Total Liabilities is the Closing Capital (Unadjusted).

Step 3: Calculate Adjusted Profit / Loss

Draft the Statement of Profit or Loss. Take the Closing Capital, Add Drawings, Deduct Additional Capital introduced during the year, and Deduct the Opening Capital. The resulting figure is the Gross Operating Profit / Loss before Year-End Adjustments.

Step 4: Incorporate Year-End Adjustments

Apply all standard accrual adjustments: Deduct Depreciation on Fixed Assets, Deduct Provision for Doubtful Debts (PDD), Deduct Outstanding Expenses, Deduct Interest on Capital, and Add Prepaid Expenses / Accrued Incomes / Interest on Drawings. The final resulting figure is the True Net Profit or Net Loss.

3.3 Standard Format of Statement of Profit or Loss

Below is the universal structural format used by accountants to present the calculation of profit or loss under the Net Worth method:

Statement of Profit or Loss For the Year Ended 31st March, 20XX

Particulars	Amount ($)	Amount ($)
Capital at the end of the year (Closing Capital from Statement of Affairs)		XX,XXX
Add: Drawings made during the year (Cash + Goods for personal use)		X,XXX
Subtotal		XX,XXX
Less: Additional Capital introduced during the year		(X,XXX)
Adjusted Capital at the end of the year		XX,XXX
Less: Capital at the beginning of the year (Opening Capital)		(XX,XXX)
Profit / (Loss) before Adjustments		XX,XXX
Add: Adjustments (Incomes & Gains):
• Interest on Drawings	XXX
• Prepaid / Unexpired Expenses	XXX
• Accrued Income / Income Earned but not received	XXX	X,XXX
Less: Adjustments (Expenses, Losses & Provisions):
• Depreciation on Fixed Assets	XXX
• Provision for Doubtful Debts (PDD) on Debtors	XXX
• Outstanding / Unpaid Expenses (Wages, Rent, etc.)	XXX
• Interest on Capital	XXX	(X,XXX)
Net Profit / (Loss) for the Year		XX,XXX

3.4 Comprehensive Worked Numerical Illustration

To solidify the mechanics of the Capital Comparison method, let us examine a detailed practical problem involving opening capital computation, closing capital computation, drawings, fresh capital, and multiple standard year-end adjustments.

∑ Worked Illustration: Statement of Affairs & Profit Determination
Case Data: Mr. Rajesh keeps his books under Single Entry. His financial position is as follows:

On 01-04-2023 (Opening): Cash in Hand =

4, 000∣ C a s ha tB ank =

16,000 | Stock in Trade =

30, 000∣ S u n d r y D e b t or s =

40,000 | Plant & Machinery =

60, 000∣ S u n d r y C r e d i t or s =

25,000 | Bank Loan = $15,000.

On 31-03-2024 (Closing): Cash in Hand = $6, 000∣ C a s ha tB ank =$ 12,000 | Stock in Trade = $45, 000∣ S u n d r y D e b t or s =$ 52,000 | Plant & Machinery = $60, 000∣ S u n d r y C r e d i t or s =$ 28,000 | Bank Loan = $10,000.

Additional Information during the year 2023-24:

• Rajesh withdrew $2, 000 p er m o n t hin c a s h f or p er so na l h o u se h o l d e x p e n ses ($ 24,000 total).

• He also took goods worth $4, 000 f r o m t h es h o p f or d o m es t i c u se . (T o t a l D r a w in g s =$ 28,000).

• On 01-10-2023, he sold his private gold jewelry for $15,000 and invested the entire proceeds into the business as fresh capital.

• Adjustments: (1) Depreciate Plant & Machinery @ 10% p.a. (2) Create a Provision for Doubtful Debts @ 5% on Sundry Debtors. (3) Outstanding Salaries = $3, 000. (4) P r e p ai d I n s u r an ce =$ 1,000. (5) Provide Interest on Opening Capital @ 5% p.a.

STEP 1: OPENING STATEMENT OF AFFAIRS (As on 01-04-2023)

Total Opening Assets = Cash ( $4, 000) + B ank ($ 16,000) + Stock ( $30, 000) + D e b t or s ($ 40,000) + Machinery ( $60, 000) =$ 150,000.

Total Opening Liabilities = Creditors ( $25, 000) + B ank L o an ($ 15,000) = $40,000.

Opening Capital (C₀) = Total Assets (150,000) − Total Liabilities (40,000) = $110,000.

STEP 2: CLOSING STATEMENT OF AFFAIRS (As on 31-03-2024 - Before Adjustments)

Total Closing Assets = Cash ( $6, 000) + B ank ($ 12,000) + Stock ( $45, 000) + D e b t or s ($ 52,000) + Machinery ( $60, 000) =$ 175,000.

Total Closing Liabilities = Creditors ( $28, 000) + B ank L o an ($ 10,000) = $38,000.

Closing Capital (C₁) = Total Assets (175,000) − Total Liabilities (38,000) = $137,000.

STEP 3: STATEMENT OF PROFIT OR LOSS (For the year ended 31-03-2024)

Closing Capital (C₁): $137,000

ADD: Total Drawings ( $24, 000 C a s h +$ 4,000 Goods): +28,000 → Subtotal =165,000

LESS: Additional Capital Introduced: −15,000 → Adjusted Closing Capital =150,000

LESS: Opening Capital (C₀): −110,000 → Operating Profit before Adjustments =40,000

STEP 4: APPLYING ADJUSTMENTS

ADD: Prepaid Insurance = +1,000 → Total =41,000

LESS Adjustments:

• Depreciation on Machinery (10% of $60, 000) =$ 6,000

• Provision for Doubtful Debts (5% of $52, 000 D e b t or s) =$ 2,600

• Outstanding Salaries = $3,000

• Interest on Opening Capital (5% of $110, 000) =$ 5,500

Total Deductions = $6, 000 +$ 2,600 + $3, 000 +$ 5,500 = $17,100

FINAL RESULT: True Net Profit for the year = 41,000 −17,100 = $23,900.

4. Comparative Analysis: Statements vs. Accounts

In academic examinations and professional accounting practice, students must clearly understand why a Statement of Affairs is not a Balance Sheet, and why a Statement of Profit or Loss is fundamentally different from a regular Profit & Loss Account.

4.1 Balance Sheet vs. Statement of Affairs

While both documents present liabilities on the left and assets on the right, their underlying source data, legal validity, and reliability are worlds apart.

Basis of Distinction	Balance Sheet	Statement of Affairs
1. Source of Information	Prepared strictly from the ledger balances of a fully balanced Double Entry Trial Balance.	Prepared from incomplete records, raw invoices, rough memory, and physical asset counts.
2. Primary Objective	To depict the true, audited financial position of the enterprise as on a specific date.	To estimate the capital (net worth) of the proprietor as on a specific date.
3. Balancing Figure	There is no balancing figure. Both sides must agree automatically due to dual aspect.	The difference between Total Assets and Total Liabilities is the Capital (Balancing Figure).
4. Omission of Items	Omission of assets or liabilities is virtually impossible without unbalancing the Trial Balance.	Assets and liabilities can easily be omitted or forgotten without any mathematical warning.
5. Valuation Basis	Assets are shown at strict historical cost less systematic depreciation per accounting standards.	Asset values are frequently based on rough proprietor estimates, guesses, or current market rumors.
6. Legal Reliability	Accepted by courts of law, tax departments, banks, and auditors as authoritative evidence.	Treated as a mere informal estimate; rejected by courts, tax authorities, and institutional lenders.

4.2 Profit & Loss Account vs. Statement of Profit or Loss

Basis of Distinction	Profit & Loss Account	Statement of Profit or Loss
1. Method of Ascertainment	Determines profit by matching total revenues against total indirect expenses (Nominal Accounts).	Determines profit by comparing closing capital with opening capital (Net Worth Comparison).
2. Operational Breakdown	Provides a granular breakdown of every individual expense (Rent, Salaries, Advertising, Interest).	Provides no itemized details of operating expenses; only shows net capital movements.
3. Trading Account Linkage	Commences with Gross Profit brought down from a scientifically prepared Trading Account.	Has no Trading Account; Gross Profit on sales is completely unknown.
4. Double Entry Status	It is a formal nominal account in the ledger following the rules of debit and credit.	It is a memorandum statement; not an account, with no debit or credit sides.

5. The Conversion Method (Theory & Mechanics)

While the Statement of Affairs method is simple and swift, it suffers from a massive defect: it tells the owner how much profit was earned, but tells them absolutely nothing about how it was earned. It does not reveal Total Sales, Gross Margin, Cost of Goods Sold, or individual expense overheads. To overcome this limitation and provide comprehensive, auditable financial statements, the accountant deploys the Conversion Method.

5.1 Concept and Rationale of Conversion

The Conversion Method is the systematic accounting technique of transforming incomplete, single entry records into a full, verified Double Entry System. By reconstructing missing ledger accounts from available source vouchers, cash books, and personal ledgers, the accountant calculates all missing figures (such as Credit Sales, Credit Purchases, Total Debtors, Total Creditors, and Nominal Expenses) and subsequently prepares a standard Trading Account, Profit & Loss Account, and Balance Sheet.

5.2 Step-by-Step Protocol for Conversion

The reconstruction process follows a rigorous logical sequence:

Step 1: Preparation of Opening Statement of Affairs:
Prepared as on the first day of the year to ascertain the missing Opening Capital.
Step 2: Analysis of the Cash Book (Cash / Bank Summary):
The accountant reconstructs a comprehensive Cash Book. If the Cash Book does not balance, the missing balancing figure is identified as either: (a) Cash Sales, (b) Cash Purchases, (c) Cash Drawings by the proprietor, or (d) Cash stolen / unaccounted for.
Step 3: Preparation of Total Debtors Account:
A memorandum control account reconstructed to determine missing figures relating to credit customers. Depending on what data is already given, the balancing figure will reveal either Credit Sales, Cash Received from Debtors, or Closing Debtors.
Step 4: Preparation of Total Creditors Account:
A memorandum control account reconstructed to determine missing figures relating to suppliers. The balancing figure will reveal either Credit Purchases, Cash Paid to Creditors, or Closing Creditors.
Step 5: Preparation of Bills Receivable & Bills Payable Accounts:
If the business accepts or issues promissory notes and bills of exchange, these control accounts are drafted to find the total bills received from debtors or bills accepted in favor of creditors.
Step 6: Ascertaining Missing Nominal Expenses and Incomes:
Extracted directly from the payment and receipt sides of the reconstructed Cash Book, adjusted for opening and closing outstanding/prepaid accruals.
Step 7: Final Financial Statement Preparation:
Once all missing figures (Opening Stock, Net Purchases, Direct Wages, Net Sales, Closing Stock, Overheads) are mathematically locked down, standard Trading Account, Profit & Loss Account, and Balance Sheet are drafted under regular double entry rules.

5.3 Format and Logic of Key Reconstruction Ledger Accounts

Below are the structural formats of the primary control accounts used during the conversion process:

Reconstruction Control Accounts Conversion Technique

< t ab l ec l a ss = " t ab l e - c u s t o m " s t y l e = " ma r g in : 0; " >< t r >< t h co l s p an = "2" > T O T A L D E B T O R S A C C O U N T (D r . S i d e) < / t h >< t h co l s p an = "2" > T O T A L D E B T O R S A C C O U N T (C r . S i d e) < / t h >< / t r >< t r >< t d > T o B a l an ce b / d (O p e nin g D e b t or s) < / t d >< t d > X X, X X X < / t d >< t d > B y C a s h R ece i v e df r o m D e b t or s < / t d >< t d > X X, X X X < / t d >< / t r >< t r >< t d > T o B ank (C h e q u es d i s h o n o u r e d) < / t d >< t d > X, X X X < / t d >< t d > B y B ank (C h e q u esr ece i v e d) < / t d >< t d > X X, X X X < / t d >< / t r >< t r >< t d > T o B i l l s R ece i v ab l e (D i s h o n o u r e d) < / t d >< t d > X, X X X < / t d >< t d > B y D i sco u n t A l l o w e d < / t d >< t d > X, X X X < / t d >< / t r >< t r >< t d >< b > T o C r e d i tS a l es (B a l an c in g F i g u r e) < / b >< / t d >< t d >< b > X X, X X X < / b >< / t d >< t d > B y R e t u r n s I n w a r d s (S a l es R e t u r n s) < / t d >< t d > X, X X X < / t d >< / t r >< t r >< t d >< / t d >< t d >< / t d >< t d > B y B a d D e b t s w r i tt e n o f f < / t d >< t d > X, X X X < / t d >< / t r >< t r >< t d >< / t d >< t d >< / t d >< t d > B y B i l l s R ece i v ab l e (B i l l s d r a w n) < / t d >< t d > X, X X X < / t d >< / t r >< t r >< t d >< / t d >< t d >< / t d >< t d >< b > B y B a l an cec / d (C l os in g D e b t or s) < / b >< / t d >< t d >< b > X X, X X X < / b >< / t d >< / t r >< / t ab l e >

TOTAL CREDITORS ACCOUNT (Dr. Side)	TOTAL CREDITORS ACCOUNT (Cr. Side)
To Cash Paid to Creditors	XX,XXX	By Balance b/d (Opening Creditors)	XX,XXX
To Bank (Cheques paid)	XX,XXX	By Bills Payable (Dishonoured)	X,XXX
To Discount Received	X,XXX	By Credit Purchases (Balancing Figure)	XX,XXX
To Returns Outward (Purchase Returns)	X,XXX
To Bills Payable (Bills accepted)	X,XXX
To Balance c/d (Closing Creditors)	XX,XXX

∑ Analytical Diagnostic: Calculating Total Sales & Purchases
In Conversion Method problems, Total Sales and Total Purchases are synthesized as follows:

Formula: Total Sales = Cash Sales (from Cash Book) + Credit Sales (from Debtors A/c) − Sales Returns

Formula: Total Purchases = Cash Purchases (from Cash Book) + Credit Purchases (from Creditors A/c) − Purchase Returns

If the proprietor took goods for personal consumption: Deduct Goods Drawings from Purchases before charging to the Trading Account.

If Cash Sales are missing, but Gross Profit ratio is given: Cost of Goods Sold = Opening Stock + Net Purchases + Direct Expenses − Closing Stock. Then, Total Sales = COGS + Gross Profit. Finally, Cash Sales = Total Sales − Credit Sales.