Accounting System and Process

This document provides information on various topics related to accounting, including spreadsheet functions, inventory management, bank reconciliation, and bad debt management. It covers useful Excel functions such as IF, AND, OR, and LEFT/RIGHT/MID, as well as the VLOOKUP function. It also discusses perpetual and periodic inventory procedures, cost of goods sold using LIFO, FIFO, and average cost methods, bank reconciliation requirements, and bad debt management methods. The document includes examples and explanations for better understanding.

Accounting System and Process
Name of the Student
Name of the University

Table of Contents
Part A: Spreadsheet...............................................................................................................................3
[A1] Three Useful excel functions:.....................................................................................................3
[a] Excel IF Function:......................................................................................................................3
[b] Excel AND / OR Function:.........................................................................................................5
[c] LEFT/RIGHT/MID function:.......................................................................................................6
[A2] VLOOKUP Function:...................................................................................................................7
Purpose of VLOOKUP:....................................................................................................................7
Demonstration:..............................................................................................................................8
Part B: Inventory Management.............................................................................................................8
[B1] Perpetual inventory procedure Vs Periodic inventory procedure:.............................................8
Perpetual inventory procedure.....................................................................................................8
Periodic inventory procedure:.......................................................................................................9
Journal entries:..............................................................................................................................9
[B2] Cost of Goods sold using LIFO, FIFO and Average Cost method:..............................................11
LIFO Method:...............................................................................................................................12
FIFO Method:...............................................................................................................................13
Average cost method:..................................................................................................................13
[B3] Which method is appropriate?.................................................................................................14
Part C: Bank Reconciliation..................................................................................................................14
[C1] Requirement 1:........................................................................................................................14
[C2] Requirement 2:........................................................................................................................14
Part D: Bad debt management and financial decision.........................................................................14
Bibliography.........................................................................................................................................17

Part A: Spreadsheet
[A1] Three Useful excel functions:
There are several excel functions that are useful in various ways. Among them, below are three such
functions that are important in many ways:
[a] Excel IF Function:
The excel IF function or commonly referred as IF statement is used to validate a condition and
provide solutions when the condition is true and when the condition is false. In other words the
function is used to come to a solution basis certain condition.
The syntax of IF function is:
=IF(logic_test, value_if true, value_if_false)
The excel IF function can be used in several ways. One such example if SUMIF function. Here, the
function is a combination of excel SUM function and IF function.
The syntax of SUMIF function is:
=SUMIF( range, criteria, [sum_range] )
Another useful example is NESTED IF function. The NESTED IF function is used to check multiple
conditions and return the value when condition is true or false.
The syntax for nested IF function is:
=IF( condition1, value_if_true1, IF( condition2, value_if_true2, value_if_false2 ))
Example of IF function:
Raw data:

Conditions:
Calculations:

With formula view:
[b] Excel AND / OR Function:
The excel AND function is a logical function which return TRUE if two or more given conditions hold
true. On the other hand, the excel OR function is also another logical function which return TRUE if
any one of the two or more given conditions hold true.
The syntax for AND function is:
=AND (logical1, [logical2], ...)
The syntax for OR function is:
=OR (logical1, [logical2], ...)
Example:

With formula view:
[c] LEFT/RIGHT/MID function:
The excel LEFT, RIGHT or MID function is a specific text function which helps in identifying specific
text content.
The syntax for LEFT, RIGHT, MID functions are as follows:
=LEFT(text_string, char_numbers)
=RIGHT(text_string, char_numbers)
=MID(text_string, start_number, char_numbers)
Example:

With formula view:
[A2] VLOOKUP Function:
Purpose of VLOOKUP:
The VLOOKUP function performs a vertical lookup by searching for a value in the first column of a
table and returning the value in the same row in the index_number position. The VLOOKUP function
is a built-in function in Excel that is categorized as a Lookup/Reference Function. It can be used as a
worksheet function in Excel. As a worksheet function, the VLOOKUP function can be entered as part
of a formula in a cell of a worksheet.
The syntax for the VLOOKUP function is:
= VLOOKUP( value, table, index_number, [approximate_match] )

Demonstration:
With formula view:
Part B: Inventory Management
[B1] Perpetual inventory procedure Vs Periodic inventory
procedure:
Perpetual inventory procedure
Organizations utilize perpetual inventory procedure in an assortment of business settings. Generally,
organizations that sold stock with a high individual unit esteem, for example, autos, furniture, and
machines, utilized perpetual inventory procedure. Today, modernized money registers, scanners,
and bookkeeping programming programs consequently monitor inflows and surges of each stock
thing. Computerization makes it prudent for some, retail locations to utilize never-ending stock
method notwithstanding for merchandise of low unit esteem, for example, groceries.
Under perpetual inventory procedure, the Merchandise Inventory account gives close control by
demonstrating the expense of the products that should be available at a specific time. Organizations
charge the Merchandise Inventory represent each buy and credit it for every deal with the goal that
the present parity is appeared in the record consistently. As a rule, firms additionally keep up
itemized unit records demonstrating the amounts of each kind of merchandise that ought to be
available. Organization work force likewise take a physical stock by really tallying the units of stock

available. At that point they contrast this physical tally and the records demonstrating the units that
ought to be close by.
Periodic inventory procedure:
Promoting organizations moving low unit esteem stock, (for example, stray pieces, nails, Christmas
cards, or pencils) that have not electronic their stock frameworks frequently find that the additional
expenses of record-holding under perpetual inventory procedure more than exceed the advantages.
These marketing organizations regularly utilize periodic inventory procedure.
Under periodic inventory procedure, organizations don't utilize the Merchandise Inventory record to
record each buy and clearance of stock. Rather, an organization revises the parity in the
Merchandise Inventory account as the consequence of a physical stock tally toward the finish of the
bookkeeping time frame. Additionally, the organization as a rule does not keep up different records
appearing precise number of units that ought to be close by. Albeit intermittent stock technique
decreases record-keeping, it likewise lessens command over stock things. Firms accept any things
excluded in the physical check of stock toward the finish of the period have been sold. In this way,
they erroneously expect things that have been stolen have been sold and incorporate their expense
in expense of merchandise sold.
Journal entries:
Given data:
 Dec. 01: Beginning inventory; 200 units @ $10 each.
 Dec. 02: Sold 160 units @ $16 each.
 Dec. 12: Purchased 300 units @ $12 each.
 Dec. 18: Sold 240 units @ $17.50 each.
 Dec. 22: Purchased 320 units @ $14 each.
 Dec. 29: Sold 200 units @ $18 each.
Perpetual Method:

Periodic method:

For the given Bike World Business Periodic method will be more appropriate.
[B2] Cost of Goods sold using LIFO, FIFO and Average Cost
method:
Given data:

LIFO Method:
Formula view:

FIFO Method:
Formula view:
Average cost method:
Formula view:

[B3] Which method is appropriate?
The periodic inventory method is most helpful for ther organizations that keep up negligible
measures of stock. For them, a physical stock tally is anything but difficult to finish, and they can
gauge cost of products sold figures for between time periods. Be that as it may, there are a few
issues with the framework:
 Negligible data. It doesn't yield any data about the expense of products sold or finishing
stock adjusts amid interval periods when there has been no physical stock check.
 Estimation blunders. You should assess the expense of products sold amid break periods,
which will probably result in a huge change in accordance with the genuine expense of
merchandise at whatever point you in the long run total a physical stock check.
 Extensive alterations. There is no real way to alter for out of date stock or scrap misfortunes
amid interval periods, so there will in general be a critical (and costly) modification for these
issues when a physical stock tally is in the end finished.
 Not versatile. It's anything but a sufficient framework for bigger organizations with vast stock
ventures, given its abnormal state of error at some random point in time (other than the day
when the framework is refreshed with the most recent physical stock check).
Part C: Bank Reconciliation
[C1] Requirement 1:
New item that can increase bank balance is "Collections deposited in bank but amount recorded by
bank short".
New item that can increase cash balance is "Matured bonds collected by bank but firm has not yet
recorded the same".
[C2] Requirement 2:
Part D: Bad debt management and financial
decision
[a] The company used perceived credit quality method for calculating bad debt. In 2016, the bad
debt amount was $112,000.
[b] Apart from perceived credit quality, there is another method that can be used is delay
recognition method.
[c] Ratio:

2016 2015
1.9
1.95
2
2.05
2.1
2.15
2.2
2.25
2.3
2.35
2.4
Current Ratio
Current Ratio
2016 2015
1.55
1.6
1.65
1.7
1.75
1.8
1.85
1.9
1.95
Quick Ratio
Quick Ratio

Bibliography
Lowe, H., 2017. The practice manager guide to accounts. Part 1: Income. Practice Management,
27(7), pp.36-37.
Officer, A.C.F., 2016. Accounts Receivable Management. Policy.
Einkamerer, T.F. and Maqbool, J., 2017. Accounts Payable: Improving a System for Better Efficiency.
AMR, p.39.