Use of Accounting Software for Recording Business Transactions and Generating Reports

This report discusses the use of accounting software for recording business transactions and generating reports. It explores the benefits of using automated accounting software and provides examples of useful financial statements. The report concludes with recommendations for improving business processes based on the generated reports.

Running head: ACCOUNTING INFORMATION SYSTEM
Accounting Information System
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary:
This report aims at discussing and presenting the use of information system for
recording daily business transactions and generating useful reports. In modern business world
numerous transactions cannot be recorded in the books of accounts manually with complete
accuracy, but some automated accounting software can do the same work quickly and with
highest accuracy. In this report, a cloud based accounting software ‘Xero’ have been used to
record the transactions of Gumm Drops company and various useful reports have been
generated as an output. Lastly, the paper concludes with some recommendations based on
such reports for improvement in the business process of Gumm Drops.

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Table of Contents
Introduction:...............................................................................................................................3
Use of Accounting Software:.....................................................................................................3
Profit & Loss:.........................................................................................................................4
Balance Sheet:........................................................................................................................5
Trial Balance:.........................................................................................................................6
Aged Payables Details:..........................................................................................................7
Aged Receivables Details:.....................................................................................................7
Inventory Item Summary:......................................................................................................8
Interpretation of accounting reports:..........................................................................................8
Usefulness of Accounting reports in Management Decision Making:......................................8
Conclusion:................................................................................................................................9
References and Bibliography:..................................................................................................10

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Introduction:
In modern and busy business world, it is quite impossible to record all the business
transactions manually in pen and paper and to generate reports in time as and when needed.
Use of certain automated accounting software can do the same task with highest level of
accuracy and quickly. It can generate various meaningful and useful reports as and when
needed by a single click (Libby, 2017).
Use of Accounting Software:
For understanding the process of setup in such accounting software, the business
information of Grumm Drops has been set in a cloud based accounting software ‘Xero’. To
understand the transactions recording process and report generating process from such
software, transactions for the month of February 2019 has been entered into and some useful
financial statements have been generated as follows (xero.com, 2019).

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Profit & Loss:

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Balance Sheet:

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Trial Balance:

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Aged Payables Details:
Aged Receivables Details:

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Inventory Item Summary:
Interpretation of accounting reports:
All this statements and reports help an organisation to take certain crucial business
decisions, to improve the financial and operational performance of the business. Aged
receivables and aged payables can show how many days the receivables are uncollected and
the payables are unpaid. It can help in changing the terms of credit and credit collection
process. Inventory summary shows the flow of materials starting from procurement to the
ending inventory, and lastly, the final financial reports, Profit & Loss statement, Balance
Sheet can show the overall financial performance and position of the business as on a
particular date.
Usefulness of Accounting reports in Management Decision Making:
Management can take important business strategic decisions based on the information
from the profit and loss statement to increase the profitability of the business. On the other
hand, from the balance sheet information, they can take capital budgeting or any other
investment decisions. From the trial balance they can check the accuracy of the recording

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financial transactions and can take certain corrective measures to eliminate errors and flaws
in the accounting system. From the aged receivables and aged payables statements, the
management can take certain decisions related to credit terms, credit periods and collection
policies (Collier, 2015).
Conclusion:
From the above discussion and analysis, it can be concluded that, use of certain
automated accounting software and information system can reduce the human effort to a
large extent in accounting and reporting. It also ensures accuracy and clarity to a highest
level, and based on reports generated from such systems, various important business
decisions can be taken.

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References and Bibliography:
Collier, P. M. (2015). Accounting for managers: Interpreting accounting information for
decision making. John Wiley & Sons.
Libby, R. (2017). Accounting and human information processing. In The Routledge
Companion to Behavioural Accounting Research (pp. 42-54). Routledge.
Prasetya, R., & Utama, A. G. S. (2019). Accounting Information System for Cattle Feed
Control to Achieve Feed Consumption Efficiency. KnE Social Sciences, 3(13), 1057-
1072.
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues,
concepts and practice. Routledge.
xero.com. (2019). Online Accounting Software – Free Trial, Free Support | Xero. Retrieved
from https://www.xero.com/