Accounting and Information System

This article covers various topics related to accounting and information system such as naming spreadsheet cells, negative numbers, separation of report area and data area, IF functions, periodic inventory and perpetual inventory, financial report and worksheet, application of inventory flow, bank reconciliation, journalising entries for accounts receivable, estimation of bad debts, computers and account receivable, dishonour of account receivable, and work integrated assessment. It also includes references for further reading.

Running head: ACCOUNTING SYSTEM AND PROCESS
Accounting and information system
Name of the university
Subject code and name
Student name and student ID number
Assignment task number
Author note

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Table of Contents
1. Naming spreadsheet cells.................................................................................................................................2
2. Negative numbers............................................................................................................................................3
3. Separation of report area and data area............................................................................................................4
4. IF functions......................................................................................................................................................6
5. Periodic inventory and perpetual inventory.....................................................................................................8
6. Financial report and worksheet........................................................................................................................9
7. Application of inventory flow..........................................................................................................................9
8. Bank reconciliation........................................................................................................................................10
9. Journalising entries for accounts receivable..................................................................................................13
10. Estimation of bad debts..................................................................................................................................13
11. Computers and account receivable................................................................................................................13
12. Dishonour of account receivable...................................................................................................................13
13. Work integrated assessment...........................................................................................................................15
References.............................................................................................................................................................17

ACCOUNTING AND INFORMATION SYSTEM 2
1. Naming spreadsheet cells
Naming the spreadsheet cells helps in moving the data quickly as through naming it makes easier for the
user to insert formulas, editing data, deleting data and inserting functions. Further, naming the cells will make it
easier for the user to remember the cells and its significance.
Example
Normal view –
Formula view –

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2. Negative numbers
Negative numbers can be shown in bracket through selecting the range of the cells that can be formatted
with the style of negative number. Then the bracket can be put simply through clicking the currency or number
option from category box (Armitage & Webb, 2013). Negative numbers are shown is bracket to differentiate it
from the positive numbers. Putting the negative number may not always be visible. Therefore, the negative
numbers in bracket and with red colour will definitely make it more visible to the users.
Example for negative number in bracket

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3. Separation of report area and data area
In the excel spreadsheet the data area and the report area must be differentiated to present it more clearly
and transparently. Generally the data area includes the raw data and report area includes the processed data.
Therefore, the user can make the differentiation among the processed data and unprocessed data. Further the
segregation of data is and report area makes the presentation and analysis easier for the user.
Normal view –

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Formula view –

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4. IF functions
YouTube video reference for IF functions - https://www.youtube.com/watch?v=iKN-QpBLkyM
IF function or statement – IF function is 1 of the most used and popular functions of Excel that allows to
compares the value with the expectation. It is formulated as – IF (something is TRUE, then do particular thing,
otherwise display FALSE). Therefore, the IF statement has 2 results. The 1st one is displayed if the result is true
and the 2nd one is displayed if the result is false.
Example
Normal view –

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Formula view –

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5. Periodic inventory and perpetual inventory
The foot video used the periodic system of inventory.
Perpetual method and periodic method both are used for tracking the inventories. The perpetual system
requires regular updation and keeps continuous track of the inventories whereas the periodic system requires
occasional updation and determines the ending inventories and COGS (Bragg, 2013). The major differences
among the 2 system of inventories are as follows –
 Accounts – as per the perpetual system continuous updates are made to the inventory journal or general
ledger as the transactions takes place for inventories. On the contrary, the periodic system it does not
record the COGS and it is recorded only when the physical inventory is taken place (Hoyle, Schaefer &
Doupnik, 2015).
 Purchases – as per the perpetual system there are continuous updates in the merchandise account or
inventory account for raw material. On the other hand, as per the periodic inventory system all the
transactions related to purchases no individual entry is recorded.
 Transaction investigations – as per the periodic inventory method it is almost impossible tracking the
account records for determining the error associated with the inventory records as the in records are
updated on periodic basis. On the other hand, as per the perpetual method the transactions can be
investigated can be tracked and investigated easily (Chołodowicz & Orłowski, 2015).
Example of periodic inventory –
COGS = Beginning inventory + Purchases – Ending inventory

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Let’s assume, Beginning balance of inventory on 01-01-2016 = $ 1,000
Purchases made = $ 6,000
Ending balance for inventory on 31-12-2016 = $ 3,000
Therefore, COGS = $ 1,000 + $ 6,000 - $ 3,000 = $ 4,000
Example for the perpetual inventory –
ABC Corporation records the inventory at the end of every month and does not record the transactions taken
place within the months.
6. Financial report and worksheet
Introduction – the spreadsheet is the software application that helps the user to sort, manage and sorting the data
in arranged manner for columns and rows. It stores various data in tabular form as the electronic document. It
similar to the accounting worksheet and based on the same (Brief & Peasnell, 2013)
Discussion – various disadvantages and advantages of the worksheet are as follows –
Advantages –
 Efficiency – for calculating the results the user only needs to enter the values, formulas and variables. If
any error is mistake is found the same can be updates through editing the particular entry only and the
associated entries are automatically updated. This saves the time of the user as he is not required to
make alterations for all the entries (Brooks, 2015).
 Integrity – Spreadsheet reduces the human error occurs while entering the business data. Further, one
simple format can be used for a range of cells that can be used for the entire sheet.
 Graph and chart – excel helps in preparing the graphs and charts very easily and selecting the data charts
and graphs can be automatically prepared.
 Security – sensitive data can be secured from unauthorised access by protecting it through password and
code. Further, the specific cell can be hided and locked to hide it from unwanted users (Hoggett et al.,
2015)
Disadvantages –
 Fraud – spreadsheets are vulnerable to fraudulent data manipulation. The reason is that the inherent
control risk that makes it easier to alter the data, formula, dependencies and values without detection
 Susceptible to human error – the spreadsheets are also susceptible to human errors and if by mistake
one data input is incorrect, for example if minus is missed the entire result will be changed (Carraher &
Van Auken, 2013).
Conclusion – from the above analysis it is found that spreadsheets plays important role in maintaining business
related data. It saves lot of efforts and timings of the users. Through it has various advantages and
disadvantages it can be of great use if used by appropriately and proper training is provided to the user.
7. Application of inventory flow
Requirement 1

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Requirement 2
Gross profit
8. Bank reconciliation
Normal view

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Formula view

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With changed data –
Normal view –

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9. Journalising entries for accounts receivable
10. Estimation of bad debts
Write-off approach – as per the write-off approach the entity the company does not expect to recover the
amount of debt and therefore it is written-off against the account receivable account. Once it is established that
amount of the debt will not be collected it passes the journal entry under which the bad debt expenses are
debited and the account receivable account gets credited (Drury, 2013).
Example –
Allowance approach – this approach refers to the process of recording the uncollectible amount of accpunt
receivable for the estimation of bad debts expenses on account of sale. This approach is used for adjusting the
account receivable that is recorded in the balance sheet.
Example –
11. Computers and account receivable
Due to various facilities the craze for online shopping is increasing over the last few years. in the same
way e-Bay is also becoming popular with the online shoppers day by day. Various advantages associated with
the online shopping are that it saves the time and money of the shoppers as the person can shop from any corner
of the world that also saves the transportation cost required for visiting the shops. Further, availability of wide
range of products makes the shoppers more attracted towards online shopping (Golyagina & Valuckas 2016).
However, to shop through online the user needs the computer and internet connection as the product can be

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searched from the shopping sites like e-Bay through using the internet only. Therefore, computers and internet
plays major role for making the online shopping sites like e-Bay popular to the online shoppers.
12. Dishonour of account receivable
Scenario –
Journal entries –
T- Accounts

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13. Work integrated assessment
Introduction – the leading Australian supermarket, Wesfarmers is focussed on delivering adequate return to
investors through its diverse business operations. The company mainly operates its operation from Western
Australia and its diverse operation include liquor business, energy and fertilizers, safety products, home décor
products, hotels and supermarkets. The company has the shareholder’s base for more than 530,000
(Sustainability.wesfarmers.com.au, 2018).
Discussion –
Sustainability issues – materiality sustainable issues of the company are as follows –
 Maintaining persistent focus on providing safe and healthy workplace to the employees
 Commitment to build strong and respectful relations with the employees and suppliers
 Making positive contributions to the people under the community in which the company operates its
business (Bebbington, Unerman & O'Dwyer, 2014).
 It assures minimum impact of the harmful emissions generated from the regular operation of the
business
Financial statement – looking into the income statement of the company it can be found that the net revenue of
the company was $ 68,444 million and the net profit amounted to $ 2,873 million. Therefore, the net profit
margin of the company was (2873/68777*100) = 4.18%. Further, the current asset of the company was $ 9,677
million as against the current liabilities of $ 10,417 million (Sustainability.wesfarmers.com.au, 2018).
Therefore, the current ratio or working capital ratio is 0.93 and it is calculated as follows –
Working capital ratio –
Further, the net profit after tax of the company for last 5 years were as follows –

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Bar graph –
2017 2016 2015 2014 2013
0
500
1000
1500
2000
2500
3000
Amount ($ m)
Year
Net profit
Pie chart –
2873
2353
2440
2689
2261
Net profit
2017 2016
2015 2014
2013
Further, the EPS of the company for the year ended 2016 was 36.2 cents per share and it significantly
increased to 254.70 cents per share for the year ended 2017.

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Conclusion and recommendation – from the above analysis it can be concluded that the company is stable in
generating profit from revenues and return to the shareholders that is earning per share is stable and strong.
Further, the current ratio of less than can be increased through paying off the current liabilities. Therefore, it is
recommended that the stock of Wesfarmers can be considered for investment.

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References
Armitage, H. M., & Webb, A. (2013). The Use of Management Accounting Techniques by Canadian Small and
Medium Sized Enterprises: A Field Study. In CAAA Annual Conference.
Bebbington, J., Unerman, J., & O'Dwyer, B. (2014). Sustainability accounting and accountability. Routledge.
Bragg, S. M. (2013). Inventory management. AccountingTools.
Brief, R. P., & Peasnell, K. V. (2013). Clean surplus: A link between accounting and finance. Routledge.
Brooks, R. (2015). Financial management: core concepts. Pearson.
Carraher, S., & Van Auken, H. (2013). The use of financial statements for decision making by small
firms. Journal of Small Business & Entrepreneurship, 26(3), 323-336.
Chołodowicz, E., & Orłowski, P. (2015). A periodic inventory control system with adaptive reference stock
level for long supply delay. Measurement Automation Monitoring, 61.
Drury, C. M. (2013). Management and cost accounting. Springer
Golyagina, A., & Valuckas, D. (2016). Representation of knowledge on some management accounting
techniques in textbooks. Accounting Education, 25(5), 479-501.
Hoggett, J., Edwards, L., Medlin, J., Chalmers, K., Hellmann, A., Beattie, C., & Maxfield, J. (2015).
Accounting.
Hoyle, J. B., Schaefer, T., & Doupnik, T. (2015). Advanced accounting. McGraw Hill.
Sustainability.wesfarmers.com.au. (2018). [online] Available at:
https://sustainability.wesfarmers.com.au/media/2222/2017-wesfarmers-sustainability-full-report.pdf
[Accessed 25 May. 2018].