Answers to Questions about Accounting Systems and Processes

Answer to Question 1: 3 Answer to Question 2: 3 Answer to Question 3: 4 Answer to Question 4: 5 Answer to Question 5: 6 Answer to Question 6: 7 Answer to Question 7: 8 Answer to Question 8: 9 Answer to Question 9: 10 Answer to Question 10: 10 Answer to Question 11: 11 Answer to Question 12: 11 Answer to Question 13: 11 References: 15 Answer to Question 1: The names are used for substituting mathematical references in the specific spreadsheet cells. A way through which the substitution of cell references is

Running head: ACCOUNTING SYSTEMS AND PROCESSES
Subject Code:
Subject Name: Accounting Systems and Processes
Assignment Task Number: 2
List of Questions Attempted: 13
List of Questions Not Attempted: 0

ACCOUNTING SYSTEMS AND PROCESSES
Acknowledgement:
The work in this assignment is my own work, and has not been plagiarised.
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Table of Contents
Answer to Question 1:.....................................................................................................................3
Answer to Question 2:.....................................................................................................................3
Answer to Question 3:.....................................................................................................................4
Answer to Question 4:.....................................................................................................................5
Answer to Question 5:.....................................................................................................................6
Answer to Question 6:.....................................................................................................................7
Answer to Question 7:.....................................................................................................................8
Answer to Question 8:.....................................................................................................................9
Answer to Question 9:...................................................................................................................10
Answer to Question 10:.................................................................................................................10
Answer to Question 11:.................................................................................................................11
Answer to Question 12:.................................................................................................................11
Answer to Question 13:.................................................................................................................11
References:....................................................................................................................................15
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Answer to Question 1:
The names are used for substituting references in the specific spreadsheet cells. The
reasons mainly constitute of better convenience and linkage with the declarations and
computations depicted in the spreadsheet (Azmat & Lymer, 2016). A way through which the
substitution of cell references is made is represented as follows:
Normal view:
Formula view:
Answer to Question 2:
Brackets could be used for displaying negative numbers in red colour and the following
illustrations are used for validating the statement:
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The debit balances are depicted with positive sign and credit balances are represented
with negative sign in accounting. Few accountants, however, depict debit balances with a
bracket. This sign does not necessarily denote deduction. Based on the type of the account, the
negative sign could imply increase or decrease in account balance. For instance, the negative
sign in sales account balance signifies a rise in that account, while the negative sign for an
expense account balance signifies decline in that account. This is considered as a portion of
accounting language for the accountants.
Answer to Question 3:
In order to simplify the work of the accountants, there is requirement for distinct data
entry areas. The reason is that it helps in depicting the sole view of all the single rows.
Consequently, for report, a distinct area is needed to assist the accountants in forming detailed
reports along with the required data source (Benson, Faff & Smith, 2014). The raw data are
stored in data entry range, while the part of the report is used to transfer the record into useful
information.
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One of the implications is that need for distinct record keeping area is crucial, as it would
enable in recording accurate record of raw data in the excel sheet. Hence, the procedure of
forming a separated area enables in easy storage of raw data, while the unwanted information
could be eliminated. A spreadsheet example is extracted to validate such idea, which is
represented as follows:
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Answer to Question 4:
With the help of IF function, estimated intelligence is provided to the program for
making decisions related to the established criteria as well as deciding the program course. As
commented by Henderson et al., (2015), single value could be derived only with the help of IF
function. The satisfaction of a criterion depicts that the value is true, while the non-fulfilment of
the criteria denotes that the value is incorrect. In order to illustrate the IF function in a better
manner, a spreadsheet example from YouTube has been obtained, which is represented as
follows:
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Answer to Question 5:
According to the Interact resources, in case of perpetual inventory systems, the
transactions are updated at real time, while in case of periodic inventory systems, the transactions
are updated at the end of the accounting year. In addition, two journal entries are passed for
recording sales value in perpetual inventory system, while the number is only one in case of
periodic inventory system.
In this context, it is noteworthy to mention the essential differences between perpetual
and periodic inventory systems and they are described as follows:
Periodic inventory system Perpetual inventory system
Manual record of each account could be kept
for all the inventory units.
It is not possible to maintain the records
physically due to various numbers of
transactions in the accounting year.
Physical count of inventory is not recorded
instantly until their occurrence to compute the
cost of goods sold.
In the general ledger or inventory journal,
continuous updates are made because
inventory-related transactions occur regularly.
The computation of cost of goods sold is made
at lump sum in the financial year end.
Cost of goods sold is updated regularly when a
single unit of sale is conducted.
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Answer to Question 6:
Spreadsheets are designed for extending support to the accounting functions like
budgeting and formulating financial statements. It has basic spreadsheet functionality along with
the ability of carrying out complex mathematical operations. There are various advantages that
spreadsheets could provide to perform accounting functions, which are described briefly as
follows:
Easy tracking of payment:
It is often seen that the small business owners and new users of accounting find
difficulties in keeping track of the payments. In this regard, spreadsheets help in providing
simple solutions. The use of spreadsheets is made for analysing amount incurred and amount
received. As a result, it helps in segregating both amounts received and incurred with the help of
source and timeframe. For instance, it is possible to segregate various kinds of expenditure like
insurance and rent. As a result, track could be kept on the amount to be spent on each of these
items in a month with the help of creation of a table. Thus, incorporating spreadsheets would
help the accountants in carrying out daily tasks.
Linking associated data:
Another advantage of using spreadsheets is to link the worksheets together. This is
beneficial for stuffs such as cash flow, in which the real balance needs to be linked with the bank
at the end of the last month to the opening balance for the month. For achieving this, = in the cell
is to be pressed that needs to be linked and the cursor is to be placed in the cell for linkage. This
is effective for budgets, particularly when a production budget is completed in a single
worksheet and link needs to be made with the master budget. Hence, when any change is made
in the production budget, the master budget is updated automatically (Loughran & McDonald,
2016).
Useful formatting:
When there are huge amount of data, efforts would be made to make the navigation
easier. For instance, Ctrl + B could be used for making the selected text bold, which is beneficial
for helping titles and labels stand out quickly.
However, despite certain advantages, there are numerous drawbacks associated with the
excel spreadsheets in accounting. One of the foremost drawbacks of this type of spreadsheet is
deskilling. The staffs might not need to have skill sets like the experts or specialists and they
might compete with the less costly and unskilled labour. The separate spreadsheets are installed
in majority of the office computers and due to this; it would allow the individuals in hoarding
data for making their own estimations without seeking support from the fellow staffs. Such
phenomenon would lead to data duplication along with the efforts throughout the organisation. In
addition, it is not possible to recover the lost data from the spreadsheets and cumbersome
exercise is needed for doing the same.
It is necessary for the excel spreadsheets to occupy space over the requirements of raw
data. However, the rapid development of the spreadsheets has improved their abilities of
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exchanging information with the other applications and thus, the advantages are enhanced by
eradicating the drawbacks. In addition, the integration of spreadsheet through word processing
and graphic packages enables in increasing the overall report productivity, charts along with
making figures relatively easier to be described in the spreadsheet. Therefore, it could be stated
that the integration of the spreadsheet into the database enables in minimising the drawbacks of
raw data by creating overhead forma for recording the raw information in the excel spreadsheets.
Answer to Question 7:
Average method
FIFO method:
LIFO method:
Cost of goods sold and gross profit:
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Answer to Question 8:
Bank reconciliation statement from the provided data (Normal view):
Bank reconciliation statement from the provided data (Formula view):
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ACCOUNTING SYSTEMS AND PROCESSES
Bank reconciliation statement from the new data (Normal view):
Bank reconciliation statement from the new data (Formula view):
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Answer to Question 9:
Answer to Question 10:
Bad debts could be estimated with the help of two different techniques, which are
enumerated as follows:
Direct write-off method:
Under this method, the amount that is not certain or it could not be collected, is recorded
in the account of bad debt expense. For instance, an organisation with receivables balance of
$5,200 has become uncollectible on 1st April 2018. Hence, the journal entry under this method
would be as follows:
Allowance method:
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Under this method of writing off the bad debt, the expense arising from bad debt is
eliminated from the statement of comprehensive income in the form of operating expenditures
(Scholes, 2015). The bad debt that is written off is debited to the allowance account, instead of
debiting the bad debt expense account.
Answer to Question 11:
In the current era, computers have played a significant role in relation to online retailing.
By considering the instance of E-Bay, which has utilised the computers in the form of tool to
launch its products to the online customers, demand is created amongst the customers. In
addition, it has been observed that the organisation has effective business culture and appropriate
technology for boosting sales, as the computers in the form of promotional tools could
contemplate the retail market (Scott, 2015). Hence, the utilisation of computers is considered as
the crucial tool in order to keep the records for the products and services sold possessing the
prospect to serve the enhanced base of the customers. In addition, E-Bay uses computers, in
which various accounting software are installed. They are used to store accounting-related
information so that accounting reports could be generated like financial statements, budgets and
variances. Accordingly, the management of E-Bay could undertake adequate steps in minimising
any loopholes identified from the accounting reports.
Answer to Question 12:
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Answer to Question 13:
By considering the performance of Wesfarmers Limited, it has recorded greater earning
level by disclosing increased operating cash flows with greater rise in return on equity for the
organisation. This helps in describing the power of the organisation along with placing reliance
on the cash generating ability of the organisation. Considerable amount of profit could be
observed from the annual report of Wesfarmers in 2017. In other words, it could be found out
that the net income of the organisation has increased to $2,873 million by 22.1%. From the
perspective of the investors, the earnings per share of the organisation have increased by 21.6%
and thus, it has stood at $2.55 per share, while the return on equity for the organisation has
increased by 12.4%. In addition, the organisation has proposed final dividend that is fully
franked amounting to $1.20 per share and as result; the dividend for the year has increased to
$2.23 from $1.86 in 2016. Based on the evidences, it could be found out that the management of
the organisation intends to provide long-run returns to the shareholders (Warren & Jones, 2018).
The cash flow management of Wesfarmers Limited has been significantly greater for the
period with cash flows from operation, which has increased from $861 million in 2016 to $4,226
million in 2017. A significant assertion could be cited that the examples of greater cash flows is
primarily due to the earnings growth coupled with improved inventory management with the
help of the retail division for partially offsetting the needs of greater working capital in the
organisation.
By considering the free cash flow of the organisation, it has reported free cash flow
around $4,173 million, which has increased from $2,940 million in 2016. This signifies that
Wesfarmers has greater operating cash flow having minimised net capital expenditure and profit
of $947 million from the divestment of the credit card receivables (Zimmerman & Libby, 2017).
Moreover, the statement of financial position of the organisation is strong for Wesfarmers in the
year 2017. The overall debt of the organisation coupled with swaps in interest rate has been
$4,321 million lower compared to the past year figures.
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According to the approach taken towards sustainability of the organisation, it addresses
the group of issues significantly in its own way and this has created effect on the financial
outcomes. In addition, it has made various carbon disclosures and climate change disclosures for
reviewing the yearly climate risk in its business.
Particulars 2016 2017
Non-Current Assets:
Investments in associates and joint venture 605 703
Deferred tax assets 1042 971
Property 2396 2195
Plant and equipment 7,216 7,245
Goodwill 14448 14360
Intangible assets 4625 4576
Intangible assets 565 246
Other 202 152
Total Non-Current Assets
31,09
9 30,448
0
4000
8000
12000
16000
Items of non-current assets of
Wesfarmers
2016
2017
It could be observed from the above figures that the non-current assets of Wesfarmers
have risen over the years and thus, it would be feasible for the investors to invest in the shares of
Wesfarmers. Along with this, the organisation has strong liquidity position in the Australian
retail sector, which denotes competitive advantage of the organisation in the operating market.
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Investments in associates and
joint venture
2% Deferred tax assets
3%
Property
7%
Plant and
equipment
24%
Goodwill
47%
Intangible assets
15%
Intangible assets
1% Other
0%
Items of non-current assets of Wesfarers
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References:
Azmat, N., & Lymer, A. (2016). Basic Accounting. Teach Yourself.
Benson, K., Faff, R., & Smith, T. (2014). Fifty years of finance research in the Asia Pacific
Basin. Accounting & Finance, 54(2), 335-363.
Henderson, S., Peirson, G., Herbohn, K., & Howieson, B. (2015). Issues in financial accounting.
Pearson Higher Education AU.
Loughran, T., & McDonald, B. (2016). Textual analysis in accounting and finance: A
survey. Journal of Accounting Research, 54(4), 1187-1230.
Scholes, M. S. (2015). Taxes and business strategy. Prentice Hall.
Scott, W. R. (2015). Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.
Warren, C. S., & Jones, J. (2018). Corporate financial accounting. Cengage Learning.
Zimmerman, J., & Libby, D. V. (2017). BASIC BOOKKEEPING AND ACCOUNTING FOR
THE PRIVATE PRACTITIONER. Handbook of Private Practice: Keys to Success for
Mental Health Practitioners.
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