Accounting and Spreadsheets: Analysis and Evaluation

The provided assignment involves analyzing a company's financial data using accounting concepts such as net profit ratio, debt equity ratio, and current ratio. It also explores the benefits and limitations of spreadsheet usage in businesses, particularly in managing inventory and making decisions. The performance evaluation of Quanta's company is presented, highlighting areas for improvement and suggesting restructuring of capital structure to make it more balanced. This assignment demonstrates a comprehensive understanding of accounting principles and spreadsheet applications in business decision-making.

ACCOUNTING

TABLE OF CONTENTS
Q.1 Facilitating the names of cells in spreadsheet...........................................................................3
Q.2 Identifying why accountant use brackets to display the negative numbers..............................3
Q.3 Identifying the reason behind using the separate data entry are and separate report area by
accountant........................................................................................................................................4
Q.4 Explaining the IF Functions......................................................................................................4
Q.5 Determining the differences between perceptual and periodic inventory system....................5
Q.6 Analysing the functioning of spreadsheet and its various merits and demerits........................6
(7)LIFO and FIFO calculation.........................................................................................................6
8 IF statement...................................................................................................................................8
9 Accounting entries .......................................................................................................................8
10. Estimating bed debts..................................................................................................................9
11. Computers and account receivables...........................................................................................9
12 Dishonour of notes receivable....................................................................................................9
13 Analysis of Quanta’s.................................................................................................................10
REFERENCES..............................................................................................................................11

Q.1 Facilitating the names of cells in spreadsheet
In order to analyse the net profit there has been entry of the data which were relevant
with the Sales and Expense. Therefore, the measurement will be such as referencing the cells
with formulas:
Here the analysis of net profit will be based on putting formula such as “=”, then
selecting the sales cell “B4” than pressing “-”, than selling the Expenses cell “B5” and finally
pressed enter to have the adequate answer.
Particulars Amount
Sales 40000
less: Expenses 15000
Net profit 25000
Q.2 Identifying why accountant use brackets to display the negative numbers
In consideration with using the brackets in a cell is to determining that particular number
as the negative. Accountant use this technique as it make easy to analyse the proper outcome on
a prompt basis such as:
In terms of using such method such as putting the numbers into a bracket will help in
automatically make the “-” symbol among such numbers. This will be beneficial as to analyse

the net profit just by putting the formula such as “=Sum()” and between such bracket referencing
the cells of sales and expenses such as “(B9:B10)” and then press Enter.
Q.3 Identifying the reason behind using the separate data entry are and
separate report area by accountant
In terms of using the separate data entry and separate report area which will be fruitful or
accountants as to promptly analyse the end results. However, it can be understand as per the
below listed example such as:
Formula view:
Normal View:
years CF Discounting factor 10% PV
1 1000 0.91 909.09
2 1200 0.83 991.74
3 1400 0.75 1051.84
4 1150 0.68 785.47
5 1250 0.62 776.15
6 1500 0.56 846.71
7 1580 0.51 810.79
8 1600 0.47 746.41
Total 6918.20

Initial investment 2000
NPV 4918.20
Q.4 Explaining the IF Functions
In accordance with analysing the true outcomes there has been use of such technique
which will be performed over logical test and return on one data set.
Therefore, it can be said that here, the marks scored by Individuals below 75 will be
denoted as fail while more than 75 will be denoted as the pass individuals. Thus, it will be
fruitful for accountant in terms of identifying all the results with the single selection after putting
the formula instead of selecting particulate cell (Excel Basics #22: IF function formula made
easy!, 2008). However, here the formula can bed used as “=IF()” than selecting the cells such as
“B35>75;1;2”. Here, the 1 will be denoted as pass while 2 will be denoted as fail.
Individuals Score Result
A 86 1
B 79 1
C 68 2
D 74 2
E 95 1

1 pass
2 fail
Q.5 Determining the differences between perceptual and periodic inventory
system
These are the two inventory systems which keeps record of the inflows and outflows of
the inventories. In accordance with Perceptual inventory systems the sales and cost of goods sold
are measured at each level of transactions. However, there will be requirements of recording all
the transactions such as purchase of goods and other operating expenses (The difference between
the periodic and perpetual inventory systems, 2017). On the other side, the periodical system
consist of record of such transaction on the continues basis but with considerations of all the
operational transactions such as purchase and operating expense.
Q.6 Analysing the functioning of spreadsheet and its various merits and
demerits
To: Board of Directors
From: Operational manager
Subject: Excel sheet can be used as the accounting tool.
Sir,
The use of spreadsheet is mainly relevant with keeping the records of all the transaction
held within the period as well as analysing the appropriate outcomes. It will be helpful in terms
of making the adequate measurement of all the transaction and the measurements will be made
on the basis of using various formulas (The Benefits of Using Spreadsheets in Accounting,
2016). This will help as an accounting tool in terms of keeping the records of big calculations as
well as referring the cells to be used in the formulas. However, it will be very beneficial tool in
terms of making the easy tracking of payments, referring the relevant data as well as formatting
such transactions.
Disadvantages of spreadsheet:
There has been various disadvantages of such tool is that to analyse and estimate the
outcomes of the record transactions there will be need of skilled and talented individual. On the

other side, there will be threat of losing the confidential data which will be problematic for an
organisation (The Advantages & Disadvantages of Spreadsheets, 2017). There will be
requirement of the proper technical development as well as educational level of the individual
who are using it.
(7)LIFO and FIFO calculation
Earliest cost
Units 600
Price 5
Sales value 3000
Next earliest cost
Units 600
Price 6
Sales value 3600
Total cost of 1200
inventory 6600
COGS-LIFO
Cost of units 3000
Additional cost 16100
Total cost 19100
Less cost of ending
inventory 6600
COGS 12500
Gross profit LIFO
Sales 25400
COGS 12500
GP 12900

Date of Purchase
Number of
Units Purchased
Cost
per
Unit
Total
Cost
Beginning
Inventory 42 $2.42 $101.64
July 7, 2003 16 $2.65 $42.40
July 21, 2003 10 $2.75 $27.50
August 4, 2003 18 $2.50 $45.00
August 18, 2003 12 $2.45 $29.40
August 30, 2003 6 $2.80 $16.80
Total
cost of
units 262.74
Method of Inventory
Valuation
Cost of
Ending
Inventory
Cost of
Goods Sold
First In First Out
(FIFO) $161.70 $101.64

8 IF statement
Bank balance 22345
Cash 1664
EFT Rent receipt 700
EFT Insurance payment 400
NSF Cheque from customer 2300
Note receivable 2345
Book error cheque 1419 12
Bank service charge 78
Deposit in transit 4567
Outstanding cheques
Cheque no 1420 1789
Cheque no 1421 650
Cheque no 1422 320
Cash account balance 24009
IF statement 1664
Revised cash balance 22345
9 Accounting entries
Debtor 50000

To sale 50000
Account receivable
To sales
60000
60000
Depreciation
To account receivable
5000
5000
Cash
To debtor name
70000
70000
10. Estimating bed debts
From assessment, it has identified that there are mainly two methods that can be
undertaken for calculating bad-debts such as:
Income statement: Company can calculate the level of debt on the basis of net credit sales. For
example: Bad debt will be 3% of net credit sales amounted to $100000. In this, figure of bad debt
will be calculated in the following way:
Particulars Amount
Net credit sales $100000
Bad debt 3% of credit sales
Bad debt (in $) $100000 * 3% = $3000
`Balance sheet method: On the basis of amount receivable or trade debtors one can easily
calculate the figure of bad debt. For example:
Trade debtors $200000
Bad debt 5% of receivables
Bad debt (in $) $200000 * 5% = $10000

11. Computers and account receivables
By doing research of e-bay, it has assessed that in the case of online retailing images play
a vital role in attracting and giving information to the customers. Along with this, computers also
help online firms like e-bay in maintaining the record of trade debtors.
12 Dishonour of notes receivable
For instance: Sales were made ABC to XYZ Ltd and issued a note to creditor. In
response to the same, XYZ Ltd accepted the note and agreed to pay amount within the period of
four months. On expiry, XYZ ltd found that in the bank account of XYZ Ltd there was no money
and meanwhile note dishonored.
10400 10000
400
13 Analysis of Quanta’s
To: Shareholders of Quanta’s
From: Investment advisor
Subject: Performance evaluation of Quanta’s
Sir,
For shareholders of Quanta’s performance evaluation is done and same is given below.
Net profit 853
Sales 16200
Net profit ratio 0.052654
Debt 6586
Equity 3540
Debt equity ratio 1.860452
Current assets 3119
Current liability 7095

Current ratio 0.439605
Net profit ratio: Net profit ratio is reflecting that only 5% of profit is earned by the firm in its
business after excluding all sort of expenses incurred in business from cash flow amount. It can
be seen from table that value of net profit is 853 and sales is valued at 16200. Thus, it can be said
that relatively very less amount of profit is earned by the firm in its business.
Debt equity ratio: Debt equity ratio value is 1.86 which reflect that debt is just double of equity
and firm need to restructure its capital structure so that it can be made more balanced in nature.
Current ratio: Current ratio value is 0.43 which means that for every single unit of current
liability there is only 0.43 unit of current asset. Hence, it can be said that firm is not able to pay
its current liability on time by using current assets.
On basis of these facts it can be said that firm is not able to generate better return for
investors in respect of risk they are taking by making investment in the firm.

REFERENCES
Online
The Advantages & Disadvantages of Spreadsheets. 2017. [Online]. Available through
:<http://smallbusiness.chron.com/advantages-disadvantages-spreadsheets-26551.html>.
The difference between the periodic and perpetual inventory systems. 2017. [Online]. Available
through :<https://www.accountingtools.com/articles/what-is-the-difference-between-the-
periodic-and-perpetual-in.html>.
The Benefits of Using Spreadsheets in Accounting. 2016. [Online]. Available through
:<https://babington.co.uk/blog/accounting/benefits-using-spreadsheets/>.
Excel Basics #22: IF function formula made easy!. 2008. [Online]. Available
through :<https://www.youtube.com/watch?v=OMu7LTGHMVc>.