Accounting Systems and Processes

Running head: ACCOUNTING SYSTEMS AND PROCESSES
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Subject Name: Accounting Systems and Processes
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ACCOUNTING SYSTEMS AND PROCESSES
Acknowledgement:
The work in this assignment is my own work, and has not been plagiarised.
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1 | P a g e

ACCOUNTING SYSTEMS AND PROCESSES
Table of Contents
Part A: Spreadsheet..........................................................................................................................3
Answer to Question 1:.................................................................................................................3
Answer to Question 2:.................................................................................................................5
Part B: Inventory management........................................................................................................6
Answer to Question 1:.................................................................................................................6
Answer to Question 2:.................................................................................................................7
Answer to Question 3:...............................................................................................................14
Part C: Bank reconciliation............................................................................................................14
Answer to Question 1:...............................................................................................................14
Answer to Question 2:...............................................................................................................14
Part D: Bad debt management and financial decision...................................................................16
Introduction:..............................................................................................................................16
Bad debt method used by the A2 Milk Company:....................................................................16
Methods of estimating bad debt:................................................................................................16
Analysis of the financial information of the organisation:........................................................17
Analysis of the company report on sustainability:....................................................................19
Conclusion:................................................................................................................................19
References:....................................................................................................................................20
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ACCOUNTING SYSTEMS AND PROCESSES
Part A: Spreadsheet
Answer to Question 1:
The three spreadsheet functions learnt include the following and their detailed
explanations are provided as follows:
Future value (FV):
The future value of any investment is determined with the help of the following
spreadsheet formula:
Formula = FV (Rate, Nper, [Pmt], PV, [type])
In the above formula, rate denotes interest rate per annum; NPER stands for number of
periods, [Pmt] equals to payment per period, PV means present value and [type] indicates the
payment at the end of the year, if there is no provided information (Winston, 2016).
For instance, an investor has invested $100 in 2018 with interest rate of 10% per annum
and the payment is made on annual basis. The question here is to determine the future value of
the investment in 2021. By using the spreadsheet function, the future value of the investment is
determined as follows:
Normal view:
Formula view:
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ACCOUNTING SYSTEMS AND PROCESSES
This function is useful, as it assists in finding the future value of a specific investment
having periodic payment and constant rate of interest.
Net present value (NPV):
This function provides the estimated earnings of a project or investment. NPV is
computed with the help of the following formula:
Net Present Value = NPV (rate, value 1, [value 2],...)
The rate denotes the discount rate for a particular period and the values indicate positive
or negative cash flows. The negative values are considered as payments, while positive values
are considered as cash inflows. For instance, an organisation is planning to undertake a project
having an economic life of 5 years with required rate of return of 10%. The cash inflows and
NPV are calculated as follows:
Normal view:
Formula view:
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ACCOUNTING SYSTEMS AND PROCESSES
This method is useful, as it is possible to determine the projected earnings of an
investment made in future (Mayes, 2014).
Effect:
In order to calculate the effective annual rate of interest, effect function is used. This
function is used in Excel containing the following formula:
Effective annual interest rate = Effect (Nominal_Rate, NPERY)
In the above formula, nominal_rate denotes the nominal rate of interest and NPER
indicates the number of compounding per annum. For example, a payment needs to be settled
with a nominal rate of interest of 12% and the number of compounding per annum is 12. The
effective annual rate is computed with the help of the following formula in spreadsheet:
Normal view:
Formula view:
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