Accounting System and Process - Doc

Running head: ACCOUNTING SYSTEM AND PROCESS
Accounting System and Process
Name of the Student
Name of the University
Authors Note
Course ID

1ACCOUNTING SYSTEM AND PROCESS
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................2
Answer to question 3:.................................................................................................................2
Answer to question 4:.................................................................................................................3
Answer to question 5:.................................................................................................................4
Answer to question 6:.................................................................................................................4
Answer to question 7:.................................................................................................................5
Answer to requirement 1:...........................................................................................................5
Answer to requirement 2:...........................................................................................................6
Answer to question 8:.................................................................................................................6
Answer to question 9:.................................................................................................................8
Answer to question 10:...............................................................................................................8
Answer to question 11:...............................................................................................................9
Answer to question 12:...............................................................................................................9
Answer to question 13:...............................................................................................................9
Reference List:.........................................................................................................................12

2ACCOUNTING SYSTEM AND PROCESS
Answer to question 1:
The purpose of substituting the spreadsheet cell with the names to enable an informal
understanding of the accessibility and relation with the calculations performed with
declaration of each spreadsheet. Below stated is the example of spreadsheet with the names;
Normal View:
Particulars Amount (in $)
Sales 3,20,000
Less: Cost of Goods Sold 1,70,000
Gross profit 1,50,000
Formula View:
Particulars Amount (in $)
Revenue ='Q-1 (NV)'!C4
Cost of revenue ='Q-1 (NV)'!C5
Gross profit =C4-C5
Answer to question 2:
The negative numbers are presented as brackets in red colour. Accountants makes the
use of the spreadsheet to show the negative numbers in bracket is because it helps in
emphasising that the figure constitute a loss or expenses rather than a gain (Zeff, 2016).
Answer to question 3:
As stated by Edmonds et al., (2016) necessary for the accountants to have the distinct
system of accounting. The primary objective of creating a separate accounting data is to
enable a single view of each row and column. For an accountant to have a separate
accounting area helps in forming a detailed report which covers the necessary source of
information.

3ACCOUNTING SYSTEM AND PROCESS
A separate record keeping provides correct recording of data in the spreadsheet
(Vasarhelyi et al., 2018). The process involved recording spreadsheet is the development of
separate data entry to enable simple data recording and removing the undesired records. An
example of spreadsheet is stated below;
Answer to question 4:
As defined by Tricker & Tricker, (2015) “IF” is a type of function that return one
value if the criteria are True or alternatively provides value if the criteria is False. The “IF”
function is regarded as the build-in function that is held as logical function. The below stated
figure provides an example of “IF” function.

4ACCOUNTING SYSTEM AND PROCESS
Answer to question 5:
Denoting from the evidences obtained from the video it is understood that the
perpetual method inventory is followed. The main purpose of considering such assumption is
that there is a continuous update made to the general ledger regarding each unit recorded
(Henderson et al.,2015). The differences between the periodic and the perpetual method of
inventory system is stated below;
Basis of Distinction Perpetual Inventory System Periodic System
Purchase In the perpetual inventory
system the inventory that are
purchased is recorded in
either raw materials
inventory account or
merchandise account based
on the nature of purchase.
Under the periodic inventory
system all the purchase of
inventory is recorded in the
purchase asset account
(Scott, 2015).
Computer systems It is not possible to keep the
tract of transactions due to
large number of units
(Schaltegger & Burritt,
2017).
The periodic inventory
system is easy to maintain as
it facilitates manual record
keeping for small business.
Answer to question 6:
Spreadsheet can be defined as the document where data is arranged in the form of row
and columns in the grid and the same can be manipulated with the use of calculations

5ACCOUNTING SYSTEM AND PROCESS
(Williams, 2014). Over the years it is noticed that accountants have been using the
spreadsheet for recording data. For a business it is vital to separate the issues associated with
the spreadsheet so that control can be implemented. The complexities vary from one business
to another business. The advantages of using the spreadsheet are many as spreadsheet
provides the business with the combination of rigid layout that helps in keeping track of
accounting transactions.
Business that uses the spreadsheet can keep a track and assess the tool of flow of work
which assist in supporting the operational process (Warren & Jones, 2018). This comprises of
the unpaid invoices, open claims and other necessary information which was earlier recorded
in paper of manual folders. Spreadsheets provides assistance in applying control by reviewing
and controlling the accounting transactions that is captured in the spreadsheet correctly. The
spreadsheet helps in providing analytical view to the management for making decisions.
Spreadsheet imparts the functions of analytical management information to help the
management in undertaking decisions. Spreadsheet is useful in determining the sensibleness
of the financial tools. Spreadsheet are usually used by the management in recording the
general ledger balances from the financial statements.
The advantages spreadsheet includes facilitating easy calculation. Implementing the
spreadsheet helps in easy understanding of the calculations since calculations are visible at
every stage of development (Macve, 2015). Spreadsheet helps in writing notes for
transactions and facilitates an explanation of each line of item. The grid of spreadsheet cells
is made visible or it is hidden while making a print out as the reports can be formatted as per
the required display.
The templates of spreadsheet consist of the formula that regularly helps in eliminating
the need for expertise knowledge (Macve, 2015). Spreadsheet forms is used as the source of
interacting with the database in order to fill the necessary fields with automated creation.
Apart from the numerous advantage spreadsheet suffers from following disadvantages
as well. From the many disadvantages of spreadsheet include that it is deskilling (Quattrone,
2016). Workers that are performing on the spreadsheet would not be required to have
necessary skills of expertise and might compete with cheap unskilled labour. Spreadsheet are
usually installed in most of the computers and the data can be easily horded by the person for
their own projection without the need of colleague’s co-operation. This leads to data
duplication along with the efforts all through the organization.
The spreadsheet structure forces a rise in the storage requirements over the
requirement of raw data. Nevertheless, with the improvement made in the spreadsheet it is
improved the abilities to exchange the necessary information with other forms of application
that eventually improves the advantages of spreadsheet and cuts down the disadvantages
(Otley, 2016). The spreadsheet can be integrated with word processing and graphics that
ultimately assists in improving the productivity of reports and enables the figures to be easily
identified.
Answer to question 7:
Answer to requirement 1:
Average Method

6ACCOUNTING SYSTEM AND PROCESS
Unit Cost per Unit (in $) Total Amount (in $) Unit Cost per Unit (in $) Total Amount (in $) Unit Cost per Unit (in $) Total Amount (in $)
01-10-2018 60 57 3,420
03-01-2017 10 65 650
70 58 4,070
12-10-2018 30 70 2,100 100 62 6,170
18-10-2018 70 72 5,040 170 66 11,210
31-01-2017 55 66 3,627 115 66 7,583
Average Method
Date
Purchase Issued Balance Inventory
FIFO Method:
Unit Cost per Unit (in $) Total Amount (in $) Unit Cost per Unit (in $) Total Amount (in $) Unit Cost per Unit (in $) Total Amount (in $)
01-10-2018 60 57 3,420
03-10-2018 10 65 650 10 65 650
12-10-2018 30 70 2,100 60 65 3,900
10 65 650
30 70 2,100
18-10-2018 70 72 5,040 60 65 3,900
10 65 650
30 70 2,100
70 72 5,040
31-10-2016 55 65 3,575 5 65 325
10 65 650
30 70 2,100
70 72 5,040
31-10-2016 55 3,575 115 8,115
FIFO Method
Date
Purchase Cost of Goods Sold Balance Inventory
LIFO Method:
Unit Cost per Unit (in $) Total Amount (in $) Unit Cost per Unit (in $) Total Amount (in $) Unit Cost per Unit (in $) Total Amount (in $)
01-10-2018 60 57 3,420
03-01-2017 10 65 650 10 65 650
12-10-2018 30 70 2,100 60 57 3,420
10 65 650
30 70 2,100
10-10-2018 70 72 5,040 60 57 3,420
10 65 650
30 70 2,100
70 72 5,040
31-01-2017 55 72 3,960 60 57 3,420
10 65 650
30 70 2,100
15 72 1,080
55 72 3,960 115 7,250
Date
Purchase Cost of Goods Sold Balance Inventory
LIFO Method
Answer to requirement 2:
Answer to question 8:
Answer to requirement A:

7ACCOUNTING SYSTEM AND PROCESS
Answer to Requirement B:

8ACCOUNTING SYSTEM AND PROCESS
Answer to question 9:
Answer to question 10:
To estimate the bad debt there are two methods namely the direct write off method
and the allowance methods;
Direct Write-Off Process:
Under the direct write off method debts are written off directly for the specific amount
when it becomes evident that the debt becomes uncertain and cannot be collectable for the
amount that is owed (Chenhall & Moers, 2015). The bad debt is allocated to the bad debt
expense account. For example, a business that has debtor balance of $10,000 turns out be
non-collectable as on 31th December 2017, the journal entries are as follows;
Allowance Method:
Another method of writing the bad debt off is the allowance method. In this method
the expenses of bad debt are written off in the profit and loss account as the operating
expenditure (Lanen, 2016). The written off bad debt is debited to “Allowance A/c” instead of
debiting the same to the bad debt expenditure account.

9ACCOUNTING SYSTEM AND PROCESS
Answer to question 11:
In the current age of technology driven computers have transformed the way business
is conducted. In the current age of the rising technology an important element of the business
is the online retailing. Considering the situation of E-Bay, it has used the computers as an
instrument of launching promotional products for the online customers so that a demand for
goods and service among the customers is created (Lavia López & Hiebl, 2014). Arguably,
E-bay has appropriate organizational culture and technology to increase the sales for the
company. For E-Bay computers as the tool of promotional tool can help in contemplating the
retail market. E-Bay uses computer as the tool of keeping the track of goods and services
sold.
Answer to question 12:
Answer to question 13:
Wesfarmers during the last financial year has posted a strong financial performance as
the company has reported a higher increase in the cash flow with improved return on equity.
Wesfarmers places large amount of focus on the generation of cash. Wesfarmers has
substantially increased the net profit in the fiscal year of 2017. Following the exclusion of the
significant items, Wesfarmers reported an underlying net profit after tax of 22.1% as the net
profit stood $2,873.
With respect to the investors point of view the earnings per share of Wesfarmers stood
21.6 per cent as the earnings per share stood at a record of $2.55 each share and the return on
equity of Wesfarmers rose by 9.6% to a record of 12.4%. Wesfarmers declared the entirely
franked final dividend of $1.20 every share. This eventually raised the overall year dividend
to $2.23 per share from the previous year figure of $1.86 of 2016. Denoting from the
evidences of Wesfarmers financial performance the directors have undertook the direction of
giving a value return to its shareholders.

10ACCOUNTING SYSTEM AND PROCESS
The company has better strategy in place to manage its cash flow as there has been a
considerable amount of increase in the cash flow of the Wesfarmers. The figures increased to
$861 million during the year 2017 to stand at $4,226 million. A significant factor responsible
for the rise in the cash flow is largely due to the increase in the earnings with improved
inventory management in the retail division to eliminate the requirement of higher cost in the
working capital of the Wesfarmers.
The free cash flow for the Wesfarmers has improved to stand at $4,173 million that
earlier stood $2,940 million during the year 2016. This helps in demonstrating that
Wesfarmers has provided a higher operating cash flow with lower capital expenses and
profits of $947 million following the divestment of Coles credit receivables. The interest rate
swap of assets stood $4,321 million while $2,321 lessor from the earlier figures.
Particulars 2016 2017
Current Assets:
Cash and Cash Equivalent 611 1013
Receivebles: Trade and Other 1628 1633
Receivables: Finance advance and loans 835 -
Inventories 6,260 6,530
Derivatives 54 247
Other 296 244
Total Non-Current Assets 9,684 9,667
611; 3%1628; 8%
835; 4%
6260; 32%
54; 0%296; 2%
9684; 50%
Items of Current assets of Wesfarmers
in 2017
Cash and Cash Equivalent
Receivebles: Trade and Other
Receivables: Finance advance and
loans
Inventories
Derivatives
Other
Total Non-Current Assets
Figure 1: Figure Depicting Current Assets of Wesfarmers
(Source: As Created by Author)

11ACCOUNTING SYSTEM AND PROCESS
Cash and Cash Equivalent
Receivebles: Trade and Other
Receivables: Finance advance and loans
Inventories
Derivatives
Other
Total Non-Current Assets
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
611
1628
835
6260
54
296
9684
1013
1633
0
6530
247
244
9667
Items of Current assets of Wesfarmers
2016 2017
Figure 2: Figure Depicting Current Assets of Wesfarmers
(Source: As Created by Author)
Taking into the consideration the above stated figures current assets of the company
has increased over the year. To recommend with the shareholders and the investors investing
in the shares of the Wesfarmers is held as beneficial. The company over the last two financial
years has increased the dividend pay-out to its shareholders with better liquidity position.
Wesfarmers has declared a final dividend of 120 cents per share which eventually takes the
dividends to 223 cents per share. Wesfarmers has presented some strong future earnings
forecast to further strengthen the cash flow and balance sheet. Therefore, making an
investment in the shares of the Wesfarmers is held as the reasonable decision. Investors by
making an investment in the shares of shareholders would help in maximizing the returns for
the shareholders from the shares with prospects of higher dividends from shares.

12ACCOUNTING SYSTEM AND PROCESS
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practices. Oxford University Press, USA.
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of trends. Routledge.