Accounting and Decision Making: A Study on Financial Performance and Business Structures

This study explores the role of decision makers in accounting, advantages and disadvantages of business structures, journal entries, transactions in general ledger, income statement, and the impacts of COVID-19 outbreak on financial position. It emphasizes the importance of financial statements in decision making and highlights the challenges faced by businesses during the pandemic.

assessment
Table of Contents

INTRODUCTION.................................................................................................................................3
Part 1.....................................................................................................................................................3
Decision makers................................................................................................................................3
Advantage and disadvantage of any two business structure...............................................................4
Part 2.....................................................................................................................................................4
Journal entries....................................................................................................................................4
Part 3.....................................................................................................................................................5
Transactions in general ledger...........................................................................................................5
Task 4..................................................................................................................................................10
Income statement.............................................................................................................................10
Impacts of COVID 19 Outbreak......................................................................................................11
REFERENCES....................................................................................................................................13
INTRODUCTION
Accounting is denoted as representing the financial position of the organisation in the
accounting books of accounts. This project would emphasis over the key decision makers in

respect to the accounting books of accounts of an organisation. This project would highlight
advantages and disadvantages of any two of profit making business organisation. This project
would also guide about the journal entries of the certain transactions. Furthermore, in this
project reporting will be done in regards to the transaction in general ledger of S Keyes.
Income statement will be draft of S Keyes. Possible impacts of COVID 19 outbreak will also
shown over the income and financial position of the organisation.
Part 1
Decision makers
Accounting is about to record, analyse and summarises the transactions of accounting
books so that crucial decisions can make in respect to the business operations of company.
All decisions different stakeholders make are based on information stated in the company’s
books of accounts. As it is stated that financial performance of company is identified based
on the accounting books of accounts. Especially in a big company like Marks and Spencer
where allot of risk also get involved in the business operations as the organisation contain
heavy investment of company’s financial resources. Different stakeholders such as investors,
shareholders, suppliers, government and all different stakeholders assess these financial
statements to make the best possible decision in favour of their individual interest. Financial
statements are the true state of affairs in respect to the business organisation and project the
exact financial position of the company (Ariana, Bagiada and Sukayasa, 2018). Decision
makers such as shareholders take decision in respect to sustaining the shareholding in the
organisation and other stakeholders like investors that take decision in respect to investing in
company’s affairs and other stakeholders like management that take all decisions related to
the operations of company based on the projection of company’s books of accounts.
Accounting books of account and financial statements such as income statement and balance
sheet of company highlight that how effective the organisation could perform in the
respective financial year (Zeff, 2018). Further these statement show statistics in respect to the
profitability of company. Shareholders get the complete assurance about the company’s
operations and affairs as it denote how effective the company could perform against the
business operations undertaken by organisation. Investors get the complete aim about the
financial stability of the organisation as they need the complete assurance in respect to the
financial stability and strength of company before making any type of decision in respect to
investing in company’s operations.

Advantage and disadvantage of any two business structure
Financial records are the true projection related to company’s financial performance
in market. Profitable business structures allow the stakeholders to make positive decision in
favour of the organisation. The readers of company’s financial statements become more
capable to take the best level of decisions in respecting to doing some kind of affairs with the
respective organisation. Accounting books of account and financial transactions give a clear
insight about the company’s financial stability. Companies like Marks and Spencer and Tesco
are in profitable position based on the information depict in the company’s books of
accounts. It allows the company in talking advantages by attracting all different stakeholders
to entertain business operations with the organisation (İdil and Akbulut, 2018). Financial
statements also get benefited to the organization in case they hold profitable business
operations to approach other stakeholders associated with company’s business to enhance the
growth and profitability of company.
Accounting books of accounts are further associated with the certain disadvantages.
Many times company do not project the exact financial transactions in case if certain
transaction contain fractional amount that company record the transaction by rounding off the
overall amount of the transaction. In order to record much transaction this practice
implements which resist the organisation to record the exact financial position of the
organisation (Nigrini, 2016). It is also possible that companies use different approaches to
record the same transaction which also reflect the inappropriate results by comparing the
financial position of both these companies.
Part 2
Journal entries
Date Particular Debit Credit
Feb 1 Cash a/c
To office fixtures a/c
350
350
Feb 4 Bad debt a/c
S. keyes a/c
85
85
Feb 9 Machinery a/c 2300

To Bank a/c
To TS. Co a/c
200
2100
Feb. 13 Cash a/c
Bed debt a/c
To S. Hill
220
50
270
Feb 20 Drawing a/c
To stock
180
180
Feb. 26 Drawing a/c
To cash
85
85
Feb 28 TS co a/c
To bank
1050
1050
Part 3
Transactions in general ledger
Date Particular Debit Credit
Feb 1 Bank a/c
Van a/c
Office fixtures a/c
To capital
21500
25000
800
47300
Feb 2 Cash a/c
To loan a/c
2500
2500
Feb 3 Cash in hand a/c 1500

To Bank a/c 1500
Feb 4 Van a/c
To Bank a/c
4800
4800
Feb 5 Office fixture a/c
To Quick office ltd
1100
1100
Feb 8 Van a/c
To Nissan co.
5200
5200
Feb 15 Office fixture a/c
To Cash a/c
70
70
Feb 19 Nissan co.
To Bank a/c
5200
5200
Feb 25 Bank a/c
To Cash a/c
350
350
Feb 28 Office fixture a/c
To Bank a/c
620
620
Ledger accounts
Bank a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 1 To capital 21500 Feb 3 By cash in hand 1500
Feb 25 To cash a/c 350 Feb 4 By van a/c 4800
Feb
19
By Nissan 5200

Feb
28
By office furniture 620
By bal c/f 9730
Total 21850 Total 21850
Van a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 1 To capital 25000
Feb 4 To bank 4800
Feb 8 To Nissan co. 5200 By bal. c/f 35000
Total 35000 Total 35000
Office fixtures a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 1 To capital a/c 800
Feb 5 To quick office ltd 1100
Feb 15 To cash 70
Feb 28 To bank 620 By bal. c/f 2590
Total 2590 Total 2590
Capital a/c

Date Particulars JF Amount Date Particular JF Amount
Feb 1 By bank 21500
By van 25000
To bal c/f 47300 By office fixture 200
Total 47300 Total 47300
Cash a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 2 To loan from bank 2500 Feb
15
By offices fixtures 70
Feb 3 To bank 1500 Feb
25
By bank 350
By bal c/f 3580
Total 4000 Total 4000
Loan from bank
Date Particulars JF Amount Date Particular JF Amount
By bal. c/f 2500 Feb 2 By cash 2500
Total 2500 Total 2500

Quick office ltd
Date Particulars JF Amount Date Particular JF Amount
By bal c/f 1100 Feb 5 By office fixtures 1100
Total 1100 Total 1100
Nissan co
Date Particulars JF Amount Date Particular JF Amount
Feb 19 To bank a/c 5200 Feb 8 By van 5200
Total 5200 Total 5200
Trial balance
Particulars Debit Credit
Bank a/c 9730
van 35000
Office fixtures 2590
Capital 47300
Cash 3580
Loan 2500
Quick office Ltd 1100

Total 50900 50900
Task 4
Income statement
Particulars Amount
Sales 80000
Less: sales return 2000
Net sales 78000
Less: cost of goods sold 66120
opening stock 36000
Add: purchases (150000-600) 149400
Add: carriage inward 720
Less: closing stock 120000
Gross profit 11880
Expenses:
Motor expenses 1200
Carriage outward 400
Rent 5000
Telephone charges 620

Wages and salaries 32000
Insurance 830
Office expenses 600
Sundry expenses 300
Total expenses 40950
Net profit/loss -29070
Impacts of COVID 19 Outbreak
COVID 19 pandemic has proved as a crisis for the business organisation. This entire
pandemic could oppose the complete lockdown over organisations. Business operations were
completely shut by the organisation due to the lockdown guidelines issues by the
government. Airman Company has been profitable in its business cycle but due to the
COVID 19 outbreak company needed to face huge losses like other companies operating
business operations. The outbreak could completely stop the supply of company’s products
which resulted into that company could not deliver the needs and requirements of the target
customers in market (Jarrett, 2017). This entire situation of COVID 19 has seemed like a
huge failure in the growth of company’s business. Company also required sending employees
on home due to the lockdown situation. The entire situation of COVID could harm businesses
in many ways. The liquidity situation of the organisation completely impacted, profitability
get down, no transactions entertained in those period which offer losses to business
organisation. Many experts have predicted that COVID 19 outbreak could affect the
businesses all across the globe like never before. Many economies are facing recession and
related issues. Purchasing power of the customers completely destroyed in these entire
circumstances of COVID.

REFERENCES
Books and Journals
Ariana, I. M., Bagiada, I. M. and Sukayasa, I. K., 2018, October. User satisfaction on
technical and operational performance of spreadsheet-based financial accounting
application. In 1st International Conference on Social Sciences (ICSS 2018).
Atlantis Press.

İdil, K. A. Y. A. and Akbulut, D. H., 2018. Big data analytics in financial reporting and
accounting. PressAcademia Procedia. 7(1). pp.256-259.
Jarrett, J. E., 2017. Intellectual property and the role of estimation in financial accounting and
mergers and acquisitions. SF J Intel P, 1.
Nigrini, M. J., 2016. The implications of the similarity between fraud numbers and the
numbers in financial accounting textbooks and test banks. Journal of Forensic
Accounting Research. 1(1). pp.A1-A26.
Zeff, S. A., 2018. Instilling historical perspective and a critical faculty in the first
undergraduate course in financial accounting. Issues in Accounting Education. 33(3).
pp.95-100.
Zeff, S. A., 2018. The early years of the Financial Accounting Foundation and the Financial
Accounting Standards Board, 1972 to 1980: The “special relationship” with the
AICPA. Journal of Financial Reporting. 3(1). pp.117-126.