Accounting Fundamentals and Expenditure Analysis

The given assignment is a detailed study on accounting fundamentals in different situations. It covers various tasks, including the preparation of journal entries, ledger accounts, profit and loss statements, and balance sheets. The study also provides information about revenue expenditure and capital expenditure, their differences, and how they impact a company's profitability. It includes references to relevant books and journals for further reading.

ACCOUNTING
FUNDAMENTALS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
a) Ledgers accounts for Maxim...................................................................................................1
b) Trial balance at 30 April.........................................................................................................3
c) Financial statements Of Maxim for the month ending 30 April..........................................3
TASK 2............................................................................................................................................4
Ledger for Pendo company.........................................................................................................4
TASK 3............................................................................................................................................8
a) ledgers accounts For Mafuta..................................................................................................8
b) Trial balance at the end of the month for Mafuta................................................................12
c) Financial statements of Mafuta for the month ending 31 January.....................................12
TASK 4..........................................................................................................................................13
Calculation of sole trader..........................................................................................................13
TASK 5..........................................................................................................................................18
Difference between revenue expenditure and capital expenditure with reference to
international accounting standards............................................................................................18
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20

INTRODUCTION
This study is based on accounting fundamentals which are related to the basis of
accounting and covers income statements, balance sheet and closing account balances at the end
of the period. This assignment will include different task in which different transactions will be
contained for which financial statements and ledger accounts will be prepared.
TASK 1
a) Ledgers accounts for Maxim
Date Journal entry Debit (£) Credit(£)
05/Apr Cash A/c Dr 300
To capital A/c 300
07/Apr Purchase A/c Dr 200
To cash A/c 200
08/Apr Cash A/c Dr 250
To loan A/c 250
15/Apr Motor van A/c Dr 150
To cash A/c 150
20/Apr Cash A/c Dr 350
To sales A/c 350
28/Apr Rent A/c Dr 50
To Cash A/c 50
29/Apr Loan A/c Dr 200
To cash A/c 200
30/Apr Drawing A/c Dr 60
To cash A/c 60
Cash A/c
Date Particular Amount (£) Date Particular Amount (£)
05/04/18 To capital 300 07/04/18 By purchase 200
08/04/18 To loan 250 15/04/18 By Motor van 150
1

20/04/18 To sales 350 28/04/18 By rent 50
29/04/18 By loan 200
30/04/18 By Drawing 60
30/04/18 By balance c/d 240
Total 900 Total 900
Purchase A/c
Date Particular Amount (£) Date Particular Amount (£)
07/04/18 To cash 200 30/04/18 By balance c/d 200
Total 200 Total 200
Loan A/c
Date Particular Amount (£) Date Particular Amount (£)
29/04/18 To cash 200 048/Apr By cash 250
30/04/18 To balance c/d 50
Total 250 Total 250
Motor van A/c
Date Particular Amount (£) Date Particular Amount (£)
15/04/18 To cash 150 30/04/18 By balance c/d 150
Total 150 Total 150
Capital A/c
Date Particular Amount (£) Date Particular Amount (£)
2

30/04/18 To balance c/d 300 05/04/18 By cash 300
Total Total
Sales A/c
Date Particular Amount (£) Date Particular Amount (£)
30/04/18 To balance c/d 350 20/04/18 By cash 350
Total 350 Total 350
Drawing A/c
Date Particular Amount (£) Date Particular Amount (£)
30/04/18 To cash 60 30/04/18 By balance c/d 60
Total 60 Total 60
Rent A/c
Date Particular Amount (£) Date Particular Amount (£)
28/04/18 To cash 50 30/04/18 By balance c/d 50
Total 50 Total 50
b) Trial balance at 30 April
Trial balance of Maxim at 30 April
Account Title Debit Credit
Cash A/c 240
Purchase A/c 200
Loan A/c 50
3

Motor van A/c 150
Capital A/c 300
Sales A/c 350
Drawing A/c 60
rent A/c 50
Total 700 700
c) Financial statements Of Maxim for the month ending 30 April
Profit and Loss for the month ended 30 April
Particular Amount (£)
sales 350
Less:COGS 100
Gross profit 250
Less: Rent 50
Less :Drawings 60
Operating profit /net profit 140
Working note
Particulars Amount
opening stock Nil
Add: Purchase 200
Less: closing stock 100
Cost of goods sold 100
Balance sheet for the month ended 30 April
Assets Amount Liabilities Amount
Fixed assets capital 300
4

Motor van 150 Less : Drawings 60
Current assets Add: net profit 140
inventory 100 380
cash 240 loan 250
Less : repaid 200
50
Total 490 Total 430
TASK 2
Ledger for Pendo company
DATE PARTICULARS DEBIT( £) CREDIT (£)
1-Jan Cash A/c 5000
To Capital 5000
2-Jan Motor Van expenses A/c 600
To cash 600
3-Jan Purchase A/c 1300
To Cash 1300
4-Jan Cash A/c 1000
To loan 1000
10-Jan Motor Van expenses A/c 200
To Cash 200
13-Jan Cash A/c 300
To sales 300
20-Jan Cash A/c 500
To sales 500
24-Jan storage expenses A/c 150
To cash 150
27-Jan loan A/c 350
To cash 350
30-Jan Drawing A/c 175
To cash 175
CASH
ACCOUNT
5

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1-Jan To capital 5000 2-Jan By Motor Van 600
4-Jan To Sergei 1000 3-Jan By purchases 1300
13-Jan To Sales 300 10-Jan By Motor Van
expenses 200
20-Jan To sales 500 24-Jan By Storage
expenses 150
27-Jan By loan 350
30-Jan By Drawings 175
By Balance c/d 4025
Total
6800 6800
SALES
ACCOUNT
DATE PARTICULARS AMOUNT DAT
E PARTICULARS
To balance c/d 800 13-
Jan By Cash AMOUN
T
20-
Jan By cash 300
500
Total
800 800
MOTOR
VAN
DATE PARTICULARS AMOUNT DAT
E PARTICULARS AMOUN
T
2-Jan To Cash 600 By balance c/d 600
Total T
600 600
LOAN
ACCOUNT
DATE PARTICULARS AMOUNT DAT
E PARTICULARS AMOUN
T
27-Jan To Cash 350 By cash 1000
6

To balance c/d 650
Total T
1000 1000
PURCHASE
ACCOUNT
DATE PARTICULARS AMOUNT DAT
E PARTICULARS AMOUN
T
3-Jan To Cash 1300 By balance c/d 1300
Total
1300 1300
EXPENSES
ACCOUNT
DATE PARTICULARS AMOUNT DAT
E PARTICULARS AMOUN
T
10-Jan To Cash 200 By balance c/d 350
24-Jan To Cash 150
Total T
350 350
DRAWING
ACCOUNT
DATE PARTICULARS AMOUNT DAT
E PARTICULARS AMOUN
T
30-Jan To Cash 175 By balance c/d 175
Total
175 175
CAPITAL
ACCOUNT
DATE PARTICULARS AMOUNT DAT
E PARTICULARS AMOUN
T
1-Jan To Cash 5000 By balance c/d 5000
7

Total
5000 5000
SERGEI
ACCOUNT
DATE PARTICULARS AMOUNT DAT
E PARTICULARS AMOUN
T
To balance c/d 1000 4-Jan By Cash 1000
Total
1000 1000
Trial
Balance of
Pendo
company for
the month
ended 31
january 2018
Accounting
Heads Debit Credit
1 Cash 4025
2 sales 800
3 motor van 600
4 loan 650
5 purchases 1300
6 expenses 350
7 drawing 175
8 capital 5000
Total 6450 6450
Financial statements for
the month ended 31
January
sales 800
8

less: COGS 500
Gross Profit 300
less:operating expenses
motor van expenses 200
storage expenses 150
350
Operating profit/ Net profit/ loss -50
Working note:
calculation
for COGS
opening stock nil
add: purchases 1300
less: closing
stock 800
Total 500
9

TASK 3
a) ledgers accounts For Mafuta
Date Journal entry Debit (£) Credit(£)
02/01 Harvey A/c Dr 124
To sales A/c 124
05/01 Wages A/c Dr 12
To cash A/c 12
05/01 Purchase A/c Dr 150
To Rich A/c 150
07/01 Cash A/c Dr 18
To Smith A/c 18
09/01 Max A/c Dr 21
To cash A/c 21
11/01 Cash A/c Dr 64
To sales A/c 64
14/01 Wages A/c Dr 14
To cash A/c 14
14/01 Purchase A/c Dr 75
To cash A/c 75
15/01 Rich A/c Dr 162
To cash A/c 162
20/01 office Desk A/c Dr 32
To cash A/c 32
21/01 Wages A/c Dr 17
To cash a/c Dr 17
21/01 Cash A/c Dr 110
To sales A/c 110
23/01 Office expenses A/c Dr 3
To cash A/c 3
23/01 Cash A/c Dr 25
To Harvey A/c 25
10

28/01 Cash A/c Dr 84
To sales A/c 84
28/01 Wages A/c Dr 15
To cash A/c 15
31/01 Cash A/c Dr 30
To sales A/c 30
Sales A/c
Date Particular Amount (£) Date Particular Amount (£)
31/01/18 To balance c/d 412 02/01/18 By Harvey 124
11/01/18 By cash 64
21/01/18 By cash 110
28/01/18 By cash 84
31/01/18 By cash 30
Total 412 Total 412
Cash A/c
Date Particular Amount (£) Date Particular Amount (£)
01/01/18 To balance B/d 343 05/01/18 By wages 12
07/01/18 To smith 18 09/01/18 By Max 21
11/01/18 To sales 64 14/01/18 By wages 14
21/01/18 To sales 110 15/01/18 By Rich 162
23/01/18 To Harvey 25 20/01/18 By office desk 32
28/01/18 To sales 84 21/01/18 By wages 17
31/01/18 To sales 30 23/01/18 By office expense 3
28/01/18 By wages 15
14/01/18 By purchase 75
31/01/18 By balance c/d 323
11

Total 674 Total 674
Wages A/c
Date Particular Amount (£) Date Particular Amount (£)
05/01/18 To cash 12 31/01/18 By balance c/d 58
14/01/18 To cash 14
21/01/18 To cash 17
28/01/18 To cash 15
Total 58 Total 58
office expense A/c
Date Particular Amount (£) Date Particular Amount (£)
23/01/18 To cash A/c 3 31/01/18 By balance c/d 3
Total 3 Total 3
Office desk A/c
Date Particular Amount (£) Date Particular Amount (£)
20/01/18 To cash 32 31/01/18 By balance c/d 32
Total 32 Total 32
Harvey A/c
Date Particular Amount (£) Date Particular Amount (£)
01/01/18 To balance B/d 39 23/01/18 By cash 25
12

02/01/18 To sales 124
31/01/18 By balance c/d 138
Total 163 Total 163
Rich A/c
Date Particular Amount (£) Date Particular Amount (£)
15/01/18 To cash 162 01/01/18 By balance b/d 12
05/01/18 By purchase 150
Total 162 Total 162
Max A/c
Date Particular Amount (£) Date Particular Amount (£)
09/01/18 To cash 21 01/01/18 By balance b/d 21
Total 21 21
Purchase A/c
Date Particular Amount (£) Date Particular Amount (£)
05/01/18 To Rich 150 31/01/18 By balance c/d 225
14/01/18 To cash 75
Total 225 Total 225
inventory A/c
Date Particular Amount (£) Date Particular Amount (£)
13

01/01/18 To balance B/d 458 31/01/18 By COGS 84
31/01/18 By balance c/d 374
Total 458 Total 458
Furniture and fitting A/c
Date Particular Amount (£) Date Particular Amount (£)
01/01/18 To balance b/d 198 31/01/18 By balance c/d 198
Total 198 Total 198
Moon a/c
Date Particular Amount (£) Date Particular Amount (£)
01/01/18 To balance B/d 26 31/01/18 By balance c/d 26
Total 26 Total 26
Smith A/c
Date Particular Amount (£) Date Particular Amount (£)
01/01/18 To balance B/d 18 07/01/18 By cash 18
Total 18 Total 18
b) Trial balance at the end of the month for Mafuta
Trial balance at the month ended 31 January
Account Title Debit credit
Cash A/c 323
14

sales A/c 412
wages a/c 58
Office expense a/c 3
Office desk A/c 32
Harvey A/c 138
Purchase A/c 225
Inventory A/c 374
furniture and fittings 198
Moon A/c 26
capital(Balancing figure) 965
Total 1377 1377
c) Financial statements of Mafuta for the month ending 31 January
Profit and Loss for the month ended 31 January
Particular Amount (£)
sales 412
less: COGS 309
Gross profit 103
Expenses
Office expense 3
wages 58
Operating profit /net profit 42
working note
Particulars Amount
opening stock 458
Add: Purchase 225
Less: closing stock 374
Cost of goods sold 309
15

Balance sheet for the Month Ended 31 January
Assets Amount Liabilities Amount
Fixed assets capital 965
furniture and fittings 198 Add: Net profit 42
Office desk 32 bank O/d 84
current assets
cash 323
Inventory 374
debtors
Harvey 138
Moon 26
Total 1091 Total 1091
TASK 4
Calculation of sole trader
Journal Entries
DATE PARTICULARS DEBIT(£) CREDIT (£)
02/06/18 Claire a/c 425
To sales 425
13/06/18 Purchase a/c 12000
To discount received 840
To Georgine 11160
14/06/18 Hywel a/c 8550
Trade a/c 450
To sales 9000
16

20/06/18 Jane a/c 6000
To cash 6000
21/06/18 Purchase a/c 4500
To discount received 90
To Andrew 4410
22/06/18 Sales return a/c 1000
To Clarie 1000
24/06/18 Mandy a/c 4850
Discount payable a/c 150
To sales 5000
24/06/18 cash a/c 7075
Discount payable a/c 425
To claire 7500
25/06/18 cash a/c 8550
To Hywel a/c 8550
25/06/18 Georgina a/c 11160
To Ricardo 11160
27/06/18 Andrew a/c 4410
To Ricardo 4410
CASH ACCOUNT
DATE
PARTICULAR
S AMOUNT DATE PARTICULARS
AMO
UNT
17

24/06/18 To clarie 8075 20/06/18 By Jane 6000
25/06/18 To Hywel 9000 By balance c/d 11075
Total 17075 Total 17075
CLAIRE ACCOUNT
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
02/06/18 To sales 425 22/06/18 By sales return 1000
To discount
To balance c/d 8075 24/06/18 By cash 7075
24/06/18
Total 8500 Total 8075
SALES ACCOUNT
DATE
PARTICULA
RS AMOUNT DATE
PARTICULAR
S AMOUNT
To balance c/d 14700 02/06/18 By claire 425
14/06/18 By Hywel 8550
14/06/18 By trade 450
24/06/18 By Mandy 4850
24/06/18 By discount 425
Total 14700 Total 14700
18

PURCHASE ACCOUNT
DATE PARTICULARS AMOUNT DATE
PARTICULA
RS AMOUNT
13/06/18 To discount received 840
By balance
c/d 16500
13/06/18 To georgine 11160
21/06/18 To discount received 90
21/06/18 To andrew 4410
Total 16500 Total 16500
GEORGINE ACCOUNT
DATE PARTICULARS AMOUNT DATE PARTICULARS
AMOU
NT
16/06/18 To discount received 840 13/06/18 By purchases 12000
25/06/18 To Ricardo 11160 By cash 9000
Total 12000 Total 12000
HYWEL ACCOUNT
DATE PARTICULARS AMOUNT DATE
PARTICUL
ARS AMOUNT
14/06/18 To sales 9000 14/06/18 By trade 450
By cash 8550
Total 9000 Total 9000
19

JANE ACCOUNT
DATE PARTICULARS AMOUNT DATE PARTICULARS
AMO
UNT
20/06/18 To cash 6000 By balance c/d 6000
Total 6000 Total 6000
ANDREW ACCOUNT
DATE PARTICULARS AMOUNT DATE
PARTICULAR
S AMOUNT
27/06/18 To ricardo 4410 21/06/18 By purchases 4500
21/06/18 To discount received 90
Total 4500 Total 4500
SALES RETURN ACCOUNT
DATE PARTICULARS AMOUNT DATE
PARTICULA
RS AMOUNT
22/06/18 To clarie 1000 By balance c/d 1000
Total 1000 Total 1000
MANDY ACCOUNT
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
24/06/18 To sales 5000 24/06/18 By discount 150
By balance c/d 4850
Total 5000 Total 5000
20

RICARDO ACCOUNT
DATE PARTICULARS AMOUNT DATE
PARTICUL
ARS AMOUNT
To balance c/d 15570 25/06/18 By georgina 11160
27/06/18 By andrew 4410
Total 15570 Total 15570
TRADE ACCOUNT
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
14/06/18 To sales 9000 14/06/18 By Hywel 8550
By balance c/d 450
Total 9000 Total 9000
DISCOUNT RECEIVED ACCOUNT
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
21/06/18 To andrew 4410 21/06/18 By purchases 4500
13/06/18 To georgine 11160 13/06/18 By purchases 12000
To balance c/d 930
Total 16500 Total 16500
DISCOUNT PAYABLE ACCOUNT
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
24/06/18 To clarie 7500 24/06/18 By cash 7075
24/06/18 To sales 5000 24/06/18 By mandy 4850
By balance c/d 575
21

Total 12500 Total 12500
Trial balance of Ricardo for the month ended june
Accounting heads DEBIT(£) CREDIT (£)
cash 11075
sales 14700
purchases 16500
discount allowed 575
trade 450
Ricardo 15570
Mandy 4850
Sales return 1000
Jane 6000
discount received 930
Capital (balancing figure) 40390
Total 56020 56020
TASK 5
Difference between revenue expenditure and capital expenditure with reference to international
accounting standards
With reference to international accounting standards, capital expenditure is considered
for fixed assets of the company by which company will able to achieve long term success of
company. Revenue expenditure is considered a cost which is for specific transactions of
company. Examples of revenue expenditure is cost of goods sold, maintenance expenses etc.
therefore, difference between capital expenditure and revenue expenditure are as follows-
22