Accounting Systems and Processes (pdf)

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

ACCOUNTING SYSTEM AND PROCESS 1
Table of Contents
Answer 1.................................................................................................................................................................2
Answer 3.................................................................................................................................................................4
Answer 4.................................................................................................................................................................5
Answer 5.................................................................................................................................................................6
Answer 6.................................................................................................................................................................7
Answer 7.................................................................................................................................................................7
Answer 8.................................................................................................................................................................8
Answer 9...............................................................................................................................................................10
Answer 10.............................................................................................................................................................11
Answer 11.............................................................................................................................................................11
Answer 12.............................................................................................................................................................11
Question 13...........................................................................................................................................................12
References and Bibliographies..............................................................................................................................16

ACCOUNTING SYSTEM AND PROCESS 2
Answer 1
Naming the cells of spreadsheet
If the user uses the names for spreadsheet cell it will enable him to use the sheet in easier way and input
the formulas easily. It will also allow editing and updating the cells easily and can be used for putting various
ranges, functions, table and analysis (Hoyle, Schaefer & Doupnik, 2015).
Example
Normal view –
Formula view –

ACCOUNTING SYSTEM AND PROCESS 3
Answer 2
Negative numbers
Negative numbers are shown in bracket rather than putting minus sign in front of the number to make it
more visible and showing it distinctly from the positive numbers. It will help the users to identify the negative
numbers more easily (Drury, 2013).
Example of showing negative numbers in bracket

ACCOUNTING SYSTEM AND PROCESS 4
Answer 3
Data area and report area
The data area and the report in the excel spreadsheet must be segregated to present it more clearly and
useful manner for the users. All the raw data are put into the data area and all the processed data are put into the
report area. This enables the user to make difference between the processed data and unprocessed data
(Armitage & Webb, 2013).
Normal view –

ACCOUNTING SYSTEM AND PROCESS 5
Formula view –

ACCOUNTING SYSTEM AND PROCESS 6
Answer 4
IF functions
YouTube video reference explaining IF functions - https://www.youtube.com/watch?v=iKN-QpBLkyM
IF function – it signifies whether the particular function is fulfilled or not. When the condition satisfied it
returns TRUE value and when the condition is not satisfied it returns FALSE value (Carraher & Van Auken,
2013).
Example
Normal view –

ACCOUNTING SYSTEM AND PROCESS 7
Particulars Amount Result
Sales revenue 100000
Less: Expenses
Salary and wages 35000
Interest expenses 15000
Depreciation 10000
Total expenses 60000
Net profit before tax 40000
Less: Tax expenses 12000
Net profit after tax 28000 Profit
Formula view –
Particulars Amount Result
Sales revenue 100000
Less: Expenses
Salary and wages 35000
Interest expenses 15000
Depreciation 10000
Total expenses =SUM(C7:C9)
Net profit before tax =C5-C10
Less: Tax expenses =C11*30%
Net profit after tax =C11-C12 =IF(B13>0,"Profit","Loss")
Answer 5
Periodic versus perpetual inventory
Periodic system of inventory takes the count of inventory and measures the COGS occasionally rather
than tracking and measuring the inventory on continuous basis like perpetual system of inventory (Bebbington,
Unerman & O'Dwyer, 2014). The stock under the perpetual system is updated automatically as the inventories
are measured on continuous basis. Food video used the periodic system of inventory (Chołodowicz &
Orłowski, 2015).
Example of the periodic inventory –
COGS = Opening inventory + Purchases – Closing inventory
If, Opening balance on 01-01-2017 = $ 1,000
Purchases made = $ 5,000
Closing balance on 31-12-2017 = $ 4,000
Then, COGS = $ 1,000 + $ 5,000 - $ 4,000 = $ 2,000

ACCOUNTING SYSTEM AND PROCESS 8
Example of perpetual inventory –
In a school library stock of books are updated whenever there is issue of any book purchase of any new book.
Answer 6
Financial report and the worksheet
Introduction – spreadsheet is the electronic document under which the data is input and arranged in columns
and rows of the grid that can be updated, edited, manipulated or used for the purpose of calculations.
Discussions – the spreadsheet has various disadvantages and disadvantages to the users as follows –
Advantages – users of the spreadsheet can easily maintain and keep a track of large number of data through
spreadsheet. It also helps the users to make calculations using formulas very easily and the user further can
easily edit, update, delete and add data in the spreadsheet as per his requirements. Moreover the cells of the
spreadsheet can be copied to the doc file, if required. Further, the templates included in the spreadsheet contain
formulas that can be used for repetitive type of task which in turn enhance the productivity.
Disadvantages – the main disadvantage of spreadsheet is that generally one sheet is used by individual person
and if more than one person is working on same assignment then every person will make their individual report
that may lead to data duplication. It will waste the time and effort of the people. Further, using the spreadsheet
efficiently needs special training and knowledge (Golyagina & Valuckas, 2016).
Conclusion – from the above analysis it is concluded that the spreadsheet can be used as a important tool for
carrying out daily business operation. Irrespective of some disadvantages the spreadsheet can be a useful tool
for maintaining business data if used by a person with appropriate knowledge.
Answer 7
Application of inventory flow assumption
Requirement 1
Calculation of ending inventory and cost of goods sold (Bragg, 2013).
Requirement 2
Calculation of Gross profit

ACCOUNTING SYSTEM AND PROCESS 9
Answer 8
Bank reconciliation
Normal view
Formula view

ACCOUNTING SYSTEM AND PROCESS 10

ACCOUNTING SYSTEM AND PROCESS 11
With changed data –
Normal view –

ACCOUNTING SYSTEM AND PROCESS 12
Answer 9
Journal entry for accounts receivable

ACCOUNTING SYSTEM AND PROCESS 13
Answer 10
Estimating the bad debts
Write-off approach – this is the simple approach of accounting that charges off the bad debts immediately. As
per this approach, the particular account receivable is subtracted from the sales revenue under the period in
which the amounted is expected to be uncollectible (Myrelid & Olhager, 2015).
Example –
Bad debt expenses $50,000
To accounts receivable $ 50,000
Allowance method – this term refers to the process of uncollectible accounts receivable that records the bad
debt estimation expenses under the period of sale. This approach is used for adjusting the accounts receivable
that is shown in the balance sheet.
Example –
Bad debts expenses $50,000
To allowance for doubtful debts $ 50,000
Answer 11
Accounts receivable and computers
As the e-commerce industry is growing fast since last few years, the big businesses like eBay is trying
to enhance their income through the online retailing that is possible with the assistance of computers only. To
carry out the online shopping business smoothly it needs computer devices and internet connection. eBay is the
well known online shopping site from where the users can purchase the goods as per his choice without
physically visiting the store. People prefer online shopping as it is convenient and easy to select the product as
per their requirement (Hoggett et al., 2015). Further it saves the money and time as the products can be
purchased from any corner of the world with just one click. However, all these activities can be done with the
use of computers only. Therefore, computer plays major role in online retailing.
Answer 12
Scenario –
Details Amount (in $)
Credit Sale made to Harry 10,000
Partial payment received by cash 7,500
Promise received outstanding to 15/12/2017
Dishonour of past promise due to non payment

ACCOUNTING SYSTEM AND PROCESS 14
Partial payment received by notes 2,500
Journal entries –
Question 13
Introduction – Wesfarmers is the largest conglomerate in Australia that deals in various products and services
like hotel, energy, fertilizers, supermarkets, coal, safety products, home products and industrial products. It has
head quarter in Western Australia. The company’s main focus is on its diverse operation and it is committed to
provide satisfactory returns to the shareholders. The employee base of the company is more than 530,000
(Sustainability.wesfarmers.com.au, 2018).
Discussion –
Sustainability issues – various materially issues incorporated in its sustainability report are as follows –
 Establishing strong and respectful relations with its employees
 Providing a healthy and safe workplace to its employees
 Trying to reduce the harmful impact of its production to the community in which it operates
 Offering opportunities to the people working with them to develop their career
 Maintaining robust policies with regard to the corporate governance requirements
(Sustainability.wesfarmers.com.au, 2018).
Nat profit after tax – the income statement of the Wesfarmers for the year closed on 30th June 2017 revealed the
revenue of $ 68,444 million. After deducting operating expenses, interest expenses and tax expenses the net
profit of the company amounted to $ 2,873 million.
Working capital ratio –
Particulars Unit

ACCOUNTING SYSTEM AND PROCESS 15
Current Assets $9,667
Current Liabilities $10,417
Working Capital Ratio [Current
Assets/Current Liabilities]
0.93
It can be observed from the above table that the company’s working capital ratio for the year closed on
30th June 2017 was 0.93. Though the working capital ratio of 1 is considered as efficient for any company, it
can be suggested that the company can pay off its liabilities to increase the working capital ratio.
Earnings per share – the EPS of the company have been increased to 254.7 cents per share for the year ended
30th June 2017 as compared to 36.2 cents per share for the previous year (Sustainability.wesfarmers.com.au,
2018).
Net profit after tax for the last 5 years were as follows –
Year Amount ($ m)
2017 2,873
2016 2,353
2015 2,440
2014 2,689
2013 2,261
Bar graph –
2017 2016 2015 2014 2013
0
500
1000
1500
2000
2500
3000
Amount ($ m)
Amount ($ m)
Pie chart –

ACCOUNTING SYSTEM AND PROCESS 16
2873
2353
2440
2689
2261
Amount ($ m)
2017
2016
2015
2014
2013
Conclusion and recommendation – it can be concluded from the above discussions that the profitability position
and cash flow position of Wesfarmers is satisfactory and the company is regular in paying return to the
shareholders through dividends. Moreover, the EPS of the company states that the company is regular is
generating wealth for its shareholders. Therefore, the investor can invest in Wesfarmers Ltd.

ACCOUNTING SYSTEM AND PROCESS 17
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.
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.
Myrelid, A., & Olhager, J. (2015). Applying modern accounting techniques in complex
manufacturing. Industrial Management & Data Systems, 115(3), 402-418.
Sustainability.wesfarmers.com.au. (2018). [online] Available at:
https://sustainability.wesfarmers.com.au/media/2222/2017-wesfarmers-sustainability-full-report.pdf
[Accessed 5 May. 2018].