Accounting for Management Decisions

ACCOUNTING FOR
MANAGEMENT
DECISIONS

Table of Contents
INTRODUCTION.................................................................................................................................3
Question 1.........................................................................................................................................3
Question 2.........................................................................................................................................3
Question 3.........................................................................................................................................4
Question 4.........................................................................................................................................4
Question 5.........................................................................................................................................5
Question 6........................................................................................................................................13
Question 7........................................................................................................................................17
Question 8........................................................................................................................................19
CONCLUSION...................................................................................................................................20
REFERENCES....................................................................................................................................21

INTRODUCTION
Launching a new business venture is about to launch a new business idea. This report
is based on the case study of launching a new business project. The new business venture call
as custom furniture that will allow its customers to book furniture over internet. This business
idea is very competent in nature as it will favour the business entity to effectively sale all
different furniture product over internet (Secundo and et.al., 2017). This report will project
about the business idea. Also the report will discuss about the journal entries, ledger account
and other such financial record associated with the business entity. The aim of the study is
also to project different ratios that can clearly demonstrate the overall performance of the
business entity. Necessary recommendations will also give to improve the overall
performance of the business entity in future year. Projection of company existing income
statement, balance sheet and cash flow statement will also do.
Question 1
The new business idealised as customised furniture that will allow the customers to
book furniture over internet. This is a business idea named by “Custom Furniture” will allow
the customers to book furniture over internet. Company will provide a service where the
customers can provide all details related to the products they are looking for (Ghezzi, 2019).
The business will run around the United Kingdom. The service will provide on internet only
as company is not aiming to open any of its store at this point in time. This business idea is
about to provide the customer an opportunity to delegate the desired furniture product that
can match up the overall needs and requirements of the customers in the market.
Question 2
The business is a company. The benefit of owning a company is that it can expand
further to listed at the stock change. Also the business operations with support of owning
company are more professional. This looks more authentic for the customers to trust over the
product over by company instead of partnership firm and other form of business (Gray,
Knight and Baer, 2021). Also this creates a scope for the business entity to raise capital by
asking normal people to invest in company business. This will allow and support the business
entity to potentially execute all different plans of the business. Operating business under the
name of company make it more reasonable for the customers to rely over the business entity.
This business idea will further support the organization in getting a brand value with the same
name in future. For a furniture business this is a best suitable way of operating all the
business operations.

Question 3
The business idea of the custom furniture is an online store where customers can place
the order by communicating about the needs and demands of the respective customers related
to the furniture. This is a concept which allow the customers to not to buy the product that is
offered by the company instead this allow the customers to place the order based on the
individual needs and demands of the customers (Hernández-Fernández, Mora and Hernández,
2019). The further impact is such gat customised product contains extra cost that will allow
the business entity to gain extra return over the product selling. Also the customise product
contain more opportunity to gain customer satisfaction that will prominently influence the
overall business sustainability. In order to sustain the business operation this is essential for
the company to gain high customer support. Consumer trust and satisfaction is the lead
towards achieving the high customer sustainability in the business.
Question 4
 Invested capital of $ 1000000 in the business.
 Bought premises worth $400000.
 Machinery and equipment purchased for $150000.
 Paid rent of premises $50000.
 Material purchased of $150000.
 Make sale of product $250000.
 Deposited $100000 into the bank.
 Paid electricity bill of $25000.
 Paid salary of $100000.
 Sale of stock $200000.
 Sale return of $50000.
 Paid insurance expense $20000.
 Material purchase of $250000 on credit.
 Make sale of $150000 to Mr. Thomson on credit.
 Sales made to Mr. Thomson returned worth $50000.
 Deposited $100000 into the bank account.
 Paid $50000 as a license fees.
 Paid $20000 as stationary expense.
 Material returned to creditor worth $12000 due to poor quality.
 Make sale of $150000 to Mr Watson on credit.

Question 5
Journal entry
Date Particular Dr. Cr.
1 April,
2021
Bank a/c 1000000
To capital 1000000
(Invested capital into the business)
2 April Premises a/c $400000
To bank $400000
(Bought premises against the bank )
3 April Machinery and equipment a/c 150000
To bank 150000
(Machinery and equipment are purchased)
5 April Rent a/c 50000
To bank 50000
(Paid rent )
6 April Material a/c 150000
To bank 150000
(Material purchased)
7 April Bank a/c 250000
To sales 250000
(Sold stock for 250000)
9 April Bank a/c 100000
To cash 100000
(Deposited 100000 into the bank a/c)

10 April Electricity bill a/c 25000
To bank 25000
(Paid electricity bill)_
12 April Salary a/c 100000
To bank 100000
(Paid salary from bank)
14 April Bank a/c 200000
To sales 200000
(Sale stock )
15 April Sales return a/c 50000
To bank 50000
(sales are returned)
17 April Insurance a/c 20000
To bank 20000
(Paid insurance expense)
18 April Purchase a/c 250000
To creditor 250000
(Material purchased on credit)
19 April Mr. Thomson a/c 150000
To sales 150000
(Sales on credit)
20 April Sales return a/c 50000
To Mr. Thomson 50000
(Sales made on credit are returned)