Cloud-Based Accounting System

This document provides information about cloud-based accounting systems, specifically focusing on the concept and advantages of such systems. It also discusses the suitability of Xero cloud-based accounting system for a company named Spotty Ltd. Additionally, it highlights the importance of internal control and employee fraud prevention. The document also includes examples of rectification entries and a bank ledger. Finally, it provides insights on how to implement Xero in a business.

Running head: CLOUD-BASED ACCOUNTING SYSTEM
CLOUD-BASED ACCOUNTING SYSTEM
Name of the Student:
Name of the University:
Author Note

1CLOUD-BASED ACCOUNTING SYSTEM
Table of Contents
Answer to Question 1:-..............................................................................................................2
Answer to Question 2:-..............................................................................................................3
Answer to Question 3:-..............................................................................................................6
Answer to Question 4:-..............................................................................................................7
Answer to Question 5:-............................................................................................................10
References and Bibliography...................................................................................................12

2CLOUD-BASED ACCOUNTING SYSTEM
Answer to Question 1:-
MEMO
To: - Mr and Mrs Spot
From: - [Your Name]
Subject: - Inventory Management System
Date: - 14th May 2019
This memo is prepared to explain the different concept and method of the inventory
management. This memo explains the periodic method and the perpetual method and Fist in
first out and the weighted average cost.
Periodic method is the method of the inventory management is which the only one
purchase entry is passed at the time of purchasing inventory. Further, in the end of the period
the combined entry passed in respect of cost of goods sold.
Perpetual method is another method of controlling the inventory of the firm. In this,
the cost of goods sold is passed along with the purchase entry at the time of purchasing
inventory.
The first in first out is the one of the system of recording the transaction of the
inventory in the firm. In this the transaction related to the inventory is recorded in the first in
first out basis means the earlier purchased goods will be sold first.
The Weighted average method is the another system of recording the inventory in the
books of account. In this, the transaction of the inventory is recorded by using the weighted
average method.

3CLOUD-BASED ACCOUNTING SYSTEM
The paper concludes that there is various method and system available for recording
the transactions related to the inventories. The company can use any of them as per there
requirements.
Answer to Question 2:-
Introduction
The report titled “CLOUD-BASED ACCOUNTING SYSTEM” is prepared to
explain the concept of the cloud based accounting systems to the Mr and Mrs Spot for their
company named Spotty Ltd. As the business of the Spotty Ltd is growing faster and the
company already increases its inventory line to twenty, hence the company is in the need of
the proper inventory system to manage and control the inventory of the firm properly. In this
regards, this report explains the concept of the cloud based accounting system as well as the
suitability of the Xero cloud based accounting system. Further, this report explains the
advantages and features of the Xero that can be beneficiary for the company.
Discussion
Cloud- based accounting system
The cloud based accounting systems are the accounting system that works based on
the online cloud server. These are totally based of the internet and the technology of the new
generation. By using, the latest technology this system provides ease of doing the accounting
entries and provide result that is more accurate based of the entry (Binde, 2017). This type of
the system provides the ease in preparing the accounting report in less time and with more
accuracy. The main advantages of this type of accounting system is that this system records
all the transaction in the online cloud, which is more secure and easily accessible from
anywhere and anytime. This system also provides the flexibility in the as the business
requirement as well as more security in the storing the data.

4CLOUD-BASED ACCOUNTING SYSTEM
Xero cloud based accounting information system
Xero is a cloud based accounting information system that assist the accountant to
prepare the various accounting report in much easier and accurate way. This is the online
server based accounting system and provides the flexibility to access the cloud from
anywhere and anytime (Brandas, Megan & Didraga, 2015). To enrol and use the system, the
company need to get the subscription of the Xero system and get enrol with it. To access the
system, it requires only the internet connectivity and the user id and password given after
purchasing the subscription of it. Once the company complete its registration with the Xero
then it can be accessible from anywhere and anytime. This is a fully automated accounting
system hence this itself creates all the relevant account in the initial stage in the basis of the
information provided by the company. The accountant only need to put the opening balance
of all the relevant account (Cleary & Quinn, 2016). After that, the accountant only need to
pass the entry of the transaction in daily basis and the system automatically performs all the
changes and effect of the transaction in the other accounts and gerent the various report in
just one click. This calculates the various report of accounts in less time and more accurately.
Features of Xero
The followings are the some important feature of the Xero that can be beneficial for
the Spotty Ltd. The first one is its inventory management solution. As the company is
growing and the inventory stocks of the company is also increasing hence the company needs
a proper accounting system for the inventory. The inventory management of the company can
be increase as the Xero provides the proper and efficient complete accounting to the Spotty
Ltd. The second one is the easiness and flexibility of the system (Flaherty, 2017). As the
Spotty Ltd is not a very big company and mainly handled by Mr and Mrs Spot. Hence, this
feature helps the directors of the company to understand the inventory management of the

5CLOUD-BASED ACCOUNTING SYSTEM
company easily. As the company is not so big, hence the expenses must be a concern for the
company. In this regards, Xero come up with the various packages as per the requirements of
the company. So, the company can opted for the small package in the initial stage and then
grow the package in the basis of growth of the firm and the requirement.
Advantages of Xero
The Xero the cloud based accounting system have the various advantages that can be
beneficial for the company. The Xero is a fully cloud based accounting system, which give
the access from the anywhere of the world in anytime to the accounting information of the
firm. This is fully automatic and easily calculates the various required accounting report in
just one click (Marshall & Lambert, 2018). This provides the ease in preparing or generating
the accounting report for the company. Easily accessible from anywhere in world though the
internet. This provides the detailed information of the each event and transaction as well as
the summarized information of the various transaction and event. The price of the
subscription and the easy process of registration is also beneficial for the firm.
Implication Process of Xero
The implication of the Xero in the business involves the very simple and few steps.
Firstly, the firm need to purchase the subscription of the Xero and then it get the login Id and
password to access the system. Then the company need to provide the opening balances of
the all accounts and it is completed. Additional, the company need a set up of the computer
and the internet connectivity.
Conclusion
As per the above discussion, this report concludes that the cloud based accounting
system are more developed and beneficial for the companies compared to the tradition
accounting system. The Xero cloud based accounting system has the various advantages and

6CLOUD-BASED ACCOUNTING SYSTEM
the features that can be beneficial for the company. Hence, this report recommends the Spotty
Ltd to adopt the Xero for performing there accounting activities.
Answer to Question 3:-
To,
The Directors
Spotty Ltd,
Australia
Date: - 14/05/2019
Sub: - Importance of internal control and employee fraud
Dear Sir,
This letter is to inform you about the importance of the internal control and the
employee fraud. As now a day, the employee fraud is increased and Australia witnesses the
various employee fraud. Hence, this letter prepared to aware you about the employee frauds
and the importance of the internal control in the business.
As the recent case observed that a Perth office worker who stolen the $ 1.2 million
from two small businesses in between the November 2009 and 2017. This type of cases are
increasing the Australian news. The employee fraud refers to such functions of the
employees, which economically effect the company like stealing the cash from the business
or the getting the reimbursements by presenting the manipulating bills (Newton, 2015). This
is suggested to the Spotty Ltd to observe and employees’ performance wisely to avoid such
frauds as this can be very harmful for the business.
The importance of the internal control increases the in the context of the employees
frauds. The internal control analyse the business performance internally and can save the
company from the employee’s fraud (Leitch, 2016). As the internal control of the business

7CLOUD-BASED ACCOUNTING SYSTEM
analyse the each and every aspect of the business and highlights the suspicious activity in the
business that help the company to solve such activities. This also notifies the management
before any mishaps and give time to the management to fix it out.
Hence, this letter recommends the Spotty limited to properly perform the internal
control function of the management to avoid any type of employees’ fraud.
Thanking you.
With Regards,
[Name]
[Address]
[Contact details]
Answer to Question 4:-
Requirement i:-

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9CLOUD-BASED ACCOUNTING SYSTEM
Requirement 2:-
Date Particulars Debit Credit
31-Aug-18 Bank 550.00$
Accounts Receivable 550.00$
(To record deposits by the customers, dated
19.08.2018)
31-Aug-18 Bank 3,200.00$
Accounts Receivable 3,200.00$
(To record deposits by the customers, dated
25.08.2018)
31-Aug-18 Bank 14.68$
Interest Income 14.68$
(To record interest received on bank deposits,
dated 31.08.2018)
31-Aug-18 Accounts Payable 200.00$
Bank 200.00$
(To record payment to suppliers, Cheque no.
140, dated 29.08.2018)
31-Aug-18 Bank Charges 25.00$
Bank 25.00$
(To record bank charges deducted by the
bank)
31-Aug-18 Accounts Payable 90.00$
Bank (430-340) 90.00$
(To rectify cheque transaction, cheque no 133,
dated 02.08.2018)
31-Aug-18 Bank (5000-500) 4,500.00$
Accounts Payable 4,500.00$
(To record cheque transaction, cheque no 137,
dated 10.08.2018)
31-Aug-18 Bank (1332-1322) 10.00$
Accounts Receivable 10.00$
(To rectify the receipt transaction dated
11.08.2018)
31-Aug-18 Bank (1065-1056) 9.00$
Accounts Receivable 9.00$
(To rectify the receipt transaction dated
27.08.2018)
31-Aug-18 Accounts Receivable 80.00$
Bank (5880-5800) 80.00$
(Rectify receipt transaction dated 08.08.2018)
Rectification Entry
Party Supplies Ltd.

10CLOUD-BASED ACCOUNTING SYSTEM
Requirement 3:-
Debit Credit
Date Particulars Amount Date Particulars Amount
01-Aug-18 Balance b/f 17,245.00$ 01-Aug-18 Accounts Payable 195.00$
01-Aug-18 Accounts Receivable 300.00$ 02-Aug-18 Accounts Payable 340.00$
02-Aug-18 Accounts Receivable 2,180.00$ 02-Aug-18 Accounts Payable 3,800.00$
08-Aug-18 Accounts Receivable 5,880.00$ 04-Aug-18 Accounts Payable 511.00$
11-Aug-18 Accounts Receivable 1,322.00$ 08-Aug-18 Accounts Payable 660.00$
13-Aug-18 Accounts Receivable 2,136.00$ 10-Aug-18 Accounts Payable 5,000.00$
24-Aug-18 Accounts Receivable 3,200.00$ 17-Aug-18 Accounts Payable 870.50$
27-Aug-18 Accounts Receivable 1,056.00$ 22-Aug-18 Accounts Payable 3,140.00$
29-Aug-18 Accounts Receivable 1,200.00$ 24-Aug-18 Accounts Payable 1,266.00$
31-Aug-18 Accounts Receivable 1,600.00$ 31-Aug-18 Accounts Payable 972.00$
31-Aug-18 Accounts Receivable (Rect) 550.00$ 31-Aug-18 Accounts Payable (Rect) 200.00$
31-Aug-18 Accounts Receivable (Rect) 3,200.00$ 31-Aug-18 Bank Charges 25.00$
31-Aug-18 Interest Income 14.68$ 31-Aug-18 Accounts Payable (Rect) 90.00$
31-Aug-18 Accounts Payable (Rect) 4,500.00$ 31-Aug-18 Accounts Receivable (Rect) 80.00$
31-Aug-18 Accounts Payable (Rect) 10.00$
31-Aug-18 Accounts Payable (Rect) 9.00$ 31-Aug-18 Balance c/f 27,253.18$
44,402.68$ 44,402.68$Total Total
Bank Ledger
Answer to Question 5:-

11CLOUD-BASED ACCOUNTING SYSTEM
Date Particular Amount
01-07-2016 Equipment purchased 800000
30-06-2017 Less:- Depriciation 152000
[800000-40000]/5
30-06-2017 Closing Balance 648000
30-06-2018 Less:- Depriciation 152000
[800000-40000]/5
30-06-2018 Closing Balance 496000
30-06-2019 Less:- Depriciation
[800000-500000]/6 50000
30-06-2018 Closing Balance 446000
31-12-2019 Less:- Depriciation
[50000*6/12] 25000
31-12-2019 Balance 421000
31-12-2019 Bank A/c 500000
31-12-2019 Profit on sale 79000
Depriciation schadule

12CLOUD-BASED ACCOUNTING SYSTEM
References and Bibliography
Binde, P. (2017). Gambling-related employee embezzlement: A study of Swedish newspaper
reports. Journal of Gambling Issues, (34).
Brandas, C., Megan, O., & Didraga, O. (2015). Global perspectives on accounting
information systems: mobile and cloud approach. Procedia Economics and
Finance, 20, 88-93.
Cleary, P., & Quinn, M. (2016). Intellectual capital and business performance: An
exploratory study of the impact of cloud-based accounting and finance
infrastructure. Journal of Intellectual Capital, 17(2), 255-278.
Flaherty, S. (2017). Bookkeeping in the Cloud: Advancements in Accounting
Software (Doctoral dissertation, Appalachian State University).
Leitch, M. (2016). Intelligent internal control and risk management: designing high-
performance risk control systems. Routledge.
Marshall, T. E., & Lambert, S. L. (2018). Cloud-based intelligent accounting applications:
accounting task automation using IBM watson cognitive computing. Journal of
Emerging Technologies in Accounting, 15(1), 199-215.
Newton, N. J., Persellin, J. S., Wang, D., & Wilkins, M. S. (2015). Internal control opinion
shopping and audit market competition. The Accounting Review, 91(2), 603-623.
Cheng, Q., Goh, B. W., & Kim, J. B. (2018). Internal control and operational
efficiency. Contemporary Accounting Research, 35(2), 1102-1139.
Smith, H. (2019). Xero for dummies. For Dummies.
Zuberi, O., & Mzenzi, S. I. (2019). Analysis of employee and management fraud in
Tanzania. Journal of Financial Crime, (just-accepted), 00-00.