Assignment on Ethical Principles of Accounting

Running Head: ACCOUNTING 1
ACCOUNTING

Running Head: ACCOUNTING
Table of Contents
Question 1: Origin of Accounting...............................................................................................................3
Question 2: Ethical Principles.....................................................................................................................5
List and explain each of the ethical principles in the code of ethics........................................................5
Principle of objectivity........................................................................................................................5
Principle of integrity............................................................................................................................5
Principle of confidentiality..................................................................................................................5
Principle of professional behavior.......................................................................................................5
Principles of due care and diligence....................................................................................................6
What should accountants do?..................................................................................................................6
References...................................................................................................................................................8

Running Head: ACCOUNTING
Question 1: Preparation of accounting records
Journal Entries
Pete's handyman Services
Date Particluars Debit Credit
07-01-
2019 Purchases A/c Dr.
$
4,200.00
To loan a/c
$
4,200.00
(for tool trailer purchased via loan
07-02-
2019 Outstanding expenses Dr.
$
300.00
To bank a/c
$
300.00
for expenses paid through bank
07-04-
2019 Accounts Receivables Dr.
$
700.00
To service revenue
$
700.00
for services provided on credit
07-07-
2019 bank a/c Dr.
$
500.00
To accounts receivables
$
500.00
for cash recived in resoect of the services delivered
07-08-
2019 Cash Dr.
$
600.00
To prepaid income
$
600.00
for services delivered now
07-09-
2019 Supplies A/c Dr.
$
350.00
To Bank Account
$
350.00
for supplies purchased
07-10-
2019 Accounts Receivables Dr.
$
1,300.00

Running Head: ACCOUNTING
To service revenue
$
1,300.00
for services provided on credit
07-12-
2019 Drawings A/c Dr.
$
2,500.00
To cash a/c
$
2,500.00
for cash withdrawn for personal use
14/7/19 Bank A/c Dr.
$
1,250.00
to service revenue
$
1,250.00
For services provided and payment receieved
15/7/19 Fuel expenses Dr.
$
80.00
To bank A/c
$
80.00
(for cash paid for the fuel)
16/7/19 Bank A/c Dr.
$
1,300.00
To Accounts Receivables
$
1,300.00
for cash received from Mrs. Budd
22/7/19 Accounts receivables Dr.
$
500.00
To service revenue
$
500.00
for sales made on credit
23/7/19 Service revenue Dr.
$
2,600.00
To unearned revenue
$
2,600.00
for prepaid income received
23/7/19 Advertising A/c Dr.
$
1,200.00
To Bank A/c
$
1,200.00
(for advertising charges paid thorugh bank account)

Running Head: ACCOUNTING
23/7/19 Bank a/c Dr.
$
700.00
To Accounts receivables
$
700.00
cash receieved against the credit sales
26/7/19 Drawings A/c Dr.
$
2,500.00
To cash a/c
$
2,500.00
for cash withdrawn for personal use
26/7/19 Bank A/c Dr.
$
280.00
to service revenue
$
280.00
For services provided and payment receieved
30/7/19 Prepaid insurance Dr
$
320.00
To bank A/c
$
320.00
for insurance paid in advance
31/7/19 Interest expense Dr.
$
400.00
To bank a/c
$
400.00
for interest on loan paid
31/7/19 Repair and Maintenance Dr.
$
320.00
To accounts payable
$
320.00
for repair and maintenance services availed
31/7/19 Telephone Expenses Dr.
$
150.00
To telephone exp payable
$
150.00
for telephone bill outstanding
Total
$
22,050.00
$
22,050.00

Running Head: ACCOUNTING
Ledger Accounts

Running Head: ACCOUNTING
Pete's handyman Services
BANK A/C
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d 3600
07-07-
2019 To accounts receivable 500
07-02-
2019 By outstanding expe 300
07-08-
2019 To prepaid income 600
07-09-
2019 By supplies 350
14/7/19 To service revenue 1250
07-12-
2019 By drawings 2500
16/7/19 To accounts receivable 1300 15/7/19 By motor vehicle 80
23/7/19 To accounts receivable 700 23/7/19 By advertising 1200
26/7/19 To service revenue 280 26/7/19 By drawings 2500
30/7/19 By prepaid expenses 320
31/7/19 By interest 400
31/7/19 By bal c/d 580
8230 8230
Accounts receivable
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d 800
07-07-
2019 By bank a/c 500
07-04-
2019 to service revenue 700 16/7/19 By bank a/c 1300
07-10-
2019 to service revenue 1300 23/7/19 By bank a/c 700
22/7/19 to service revenue 500
31/7/19 By bal c/d 800
3300 3300
Prepaid Expenses
Date Particulars Amount Date Particulars Amount
07-01-
2018 To bal b/d 300
30/7/19 To bank 320 31/7/19 By bal c/d 620

Running Head: ACCOUNTING
620 620
Supplies
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d 400 31/7/19 By bal c/d 750
07-09-
2019 To bank a/c 350
750 750
Equipment
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d 1800 31/7/19 By bal c/d 1800
1800 1800
Accumulated depreciation
Date Particulars Amount Date Particulars Amount
31/7/19 to bal c/d 800
07-01-
2019 By bal b/d 800
800 800
Motor Vehicle
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d 12000 31/7/19 By bal c/d 12000
12000 12000
Accumulated depreciation
Date Particulars Amount Date Particulars Amount

Running Head: ACCOUNTING
31/7/19 to bal c/d 3600
07-01-
2019 By bal b/d 3600
3600 3600
Accounts payable
Date Particulars Amount Date Particulars Amount
31/7/19 to bal c/d 620
07-01-
2019 By bal b/d 300
31/7/19 By rrepairs 320
620 620
Unearned revenue
Date Particulars Amount Date Particulars Amount
31/7/19 to bal c/d 3200
07-01-
2019 By bal b/d 600
23/7/19 By service revenue 2600
0 3200
Capital
Date Particulars Amount Date Particulars Amount
31/7/19 to bal c/d 13600
07-01-
2019 By bal b/d 13600
0 0
Drawing
s
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d 31/7/19 By bal c/d 5000

Running Head: ACCOUNTING
07-12-
2019 To cash 2500
26/7/19 To cash 2500
5000 5000
Service revenue
Date Particulars Amount Date Particulars Amount
23/7/19 To unearned revenue 2600
07-01-
2019 By bal b/d
31/7/19 to bal c/d 1430
07-04-
2019 By accounts receivable 700
07-10-
2019 By accounts receivable 1300
14/7/19 By bank a/c 1250
22/7/19 By accounts receivable 500
26/7/19 By bank a/c 280
4030 4030
Advertisng
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d 31/7/19 By bal c/d 1200
23/7/19 To bank 1200
1200 1200
Interest expense
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d
31/7/19 To bank a/c 400 31/7/19 By bal c/d 400
400 400
Motor vehicle expense
Date Particulars Amount Date Particulars Amount
07-01-
2018 To bal b/d
15/7/19 To bank 80 31/7/19 By bal c/d 80

Running Head: ACCOUNTING
80 80
Repairs
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d
31/7/19 To accounts payable 320 31/7/19 By bal c/d 320
320 320
Telephone expense
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d
31/7/19 To telephone payable 150 31/7/19 By bal c/d 150
150 150
Purchases
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal b/d
07-01-
2019 To loan 4200 31/7/19 By bal c/d 4200
4200 4200
Loan
Date Particulars Amount Date Particulars Amount
07-01-
2019 To bal c/d 4200
07-01-
2019 By purchases 4200
0 0
Outstanding Expense
Date Particulars Amount Date Particulars Amount

Running Head: ACCOUNTING
07-02-
2019 To bank a/c 300 31/7/19 By bal c/d 300
300 300
Prpeid income
Date Particulars Amount Date Particulars Amount
31/7/19 To bal c/d 600
07-08-
2019 By cash A/c 600
600 600
Telephone payable
Date Particulars Amount Date Particulars Amount
31/7/19 To bal c/d 150 31/7/19 By telephone expense 150
150 150
Unadjusted Trial Balance
Pete's Handyman Services
Account Name Debit Credit Adjustments Final Trial
Debit Credit Debit Credit
Bank A/c 580.00 580.00
Accounts Receivable 800.00 800.00
Supplies 750.00 260 490.00
Prepaid Expense 620.00 620.00
Store Equipment 1800.00 1800.00
Acc. Depreciation - Equipment 800.00 80 880.00
Motor Cycle
12000.0
0 12000.00
Acc. Depreciation - Automobile 3600.00 100 3700.00
Accounts Payable 620.00 620.00
Unearned revenue 3200.00 3200.00
Loan Payable 4200.00 4200.00
Telephone Expenses Payable 150.00 150.00
Outstanding Expenses 300.00 300.00
Capital 13600.00 13600.00
Drawings 5000.00 5000.00
Revenue 1430.00 1430.00
Prepaid income 600.00 600.00

Running Head: ACCOUNTING
Advertising Expense 1200.00 1200.00
purchases 4200.00 4200.00
Depreciation Expense - Store
Equipment 80 80.00
Depreciation Expense - Motor Cycle 100 100.00
Repair and maintenance 320.00 320.00
Supplies Expense 260 260.00
Telephone Expenses 150.00 150.00
Fuel Expenses 80.00 80.00
Interest Expense 400.00 400.00
28200.0
0 28200.00 440.00 440.00 28380.00
28380.0
0
Pete's Handyman Services
Adjusting Jounal entires
Date Particluars Debit Credit
31/07/201
9 Depreciation
Dr
.
$
80.00
To accumulated Depreciation
$
80.00
for depreciation charged on equipment
31/07/201
9 Accumulated Depreciation
Dr
.
$
80.00
To equipment
$
80.00
for accumulated depreciation recorded
31/07/201
9 Depreciation
Dr
.
$
100.00
To accumulated Depreciation
$
100.00
for depreciation charged on vehicle
31/07/201
9 Accumulated Depreciation
Dr
.
$
100.00
To vehicle
$
100.00
for accumulated depreciation recorded
31/07/201
9 Supplies Expenses
Dr
.
$
260.00

Running Head: ACCOUNTING
To supplies Account
$
260.00
(for supplies in hand)
$
620.00
$
620.00
Pete's Handyman Servcies
Income statement
(For the month ending 31st July 2019)
Particulars Amount Particulars Amount
Advertising Expense 1200.00 By Revenue 1430.00
purchases 4200.00 By prepaid income 600.00
Depreciation Expense - Store
Equipment 80.00
Depreciation Expense - Motor Cycle 100.00 By net loss 4760.00
Repair and maintenance 320.00
Supplies Expense 260.00
Telephone Expenses 150.00
Fuel Expenses 80.00
Interest Expense 400.00
6790.00 6790.00
Pete's Handyman Servcies
Balance sheet
As at 31st July 2019
Particulars Amount Particulars Amount
Capital
13600.0
0 Current assets
Less: net loss -4760.00 Bank A/c 580.00
Less: Drawings -5000 Accounts Receivable 800.00
Supplies 490.00
Current Liabilities Non Current Assets
Accounts Payable 620.00 Store Equipment 1800.00
Telephone Expenses Payable 150.00
Acc. Depreciation -
Equipment -880.00
Motor Cycle 12000.00
Non-Current Liabilities
Acc. Depreciation -
Automobile -3700.00
Unearned revenue 3200.00
Loan Payable 4200.00 Other Assets
Outstanding Expenses 300
Prepaid Expense 620.00
12010.0
0 12010
0

Running Head: ACCOUNTING
Ratios
Current ratio Current Assets 1870.00 2.43
Current Liabilities 770.00
Debt Ratio Debt 4200.00 0.31
Capital
13600.0
0
Question 2: Origin of Accounting
Accounting has been circulating since the ancient times, the times of the Mesopotamia.
Early financial experts built up the training as an approach to track trades of the agriculture and
to further build up the fiscal system of the earlier stage in the efficient tool to create an altogether
a new history. Accounting has also been given credit in religious books, for example, the Islamic
book of confidence. The enhanced modern day activity of the accounting is surely unmistakably
more complex than its antiquated ancestors, however its establishment and intentions have
continued as before. The sole reason for bookkeeping is to precisely ascertain and track financial
trades. The term accounting has travelled from Egypt and Babylon to India as well. In India,
Chankaya also wrote a manuscript which resembles to the financial management book, in the
Mauryan Empire time period. The book written by him was named as Arthashastra in inclusive
of few aspects of how to follow the accounting and the book keeping for Sovereign State (Ma. et
al 2015).
The accounting records are 7000 years ago and the trading started from the trading of the
temples. The early development of the accounting is closely related with the terms like writing,
money and the counting. Accounting is well known for systemic recording of all the financial
transactions leading to organization. As per the accounting, it is used to analyst, report and
summaries certain transaction when overseeing agencies, tax collection entities and the
regulators. This profession is defined as a system of relatable recording and finally summarizing
the financial transactions to keep the track of commerce. For last thousands, accountants have
been examining data, interpreting the data, keeping certain record, and producing the records for
the operational activities by enabling stakeholders, business owners and other people in order to
make them sound (Chen, et al 2015).
Accounting has developed around time societies, which has started trading with each
other. Accounting was first time visible in early 2000 and 3300 B.C on the basis of Egypt and
clay tablet. Every culture has adopted mathematical calculations for accounting. Luca Pacioli
who was famous for the creation of system of the basic accounting as recorded in simple
textbook. There is a section and description of double entry system accounting as Pacioli is the

Running Head: ACCOUNTING
“father of Accounting” but it does not system of ledgers, receivables, trail balance, and closing
balances and these methods are used. The writer has change the life environment to people with
greater things while planning their book of expertise and expense of its business especially, there
is a need for creative ideas rather partnership (Mereghetti, Pons & Melatos, 2015). With the
advancement of technology, it is seen that it is readily available as companies cannot wait long
time nearly to two weeks after the books have been closed while receiving the reports on the
basis of historical data (Chenhall & Moers, 2015). MNCs and large companies have started
leveraging the advanced technology and using the accounting system rather the actual collected
time with the purpose of qualitative and quantitative analysis. There was extremely complex
situation where scholars said that there is a need for writing and accounting evolved side by side.
The increase in the factors will lead to entities such as governments and the royal families. With
an span of time Lucas has settled a comprehensive cycle for accounting that describes clear
process as included in the accounting to follow. Among all these other things, Lucas has
introduced ledgers on the basis of account payable, account receivable, income accounts, capital,
liabilities, inventories and expenditure. At large level and while flourishing the double entry
system, number of factors has to be considered that private properties, large scaled commerce,
systematic writing, credit, arithmetic, and the capitalization (Nobes, 2015).
After using and maintaining the books of accounting, the technology entered the world of
accounting including automated and other flexible processes where organizations will have to
analyst, present, and manage related financial information as per the industry standards where it
is customized to the needs of the company. Rather than limiting the procedure, the system have
certainly added flexibility rather than requiring customer coding and new software. This helps
the business analysts to have a deeper insight to foresee the relative cost and profitability and
finally change the direction of corrections needed. Further, cloud-based system offers a low
costing and huge productivity. With typical integration, it is easier to create a best solution by
combining with the software solutions while creating the best possible solutions for the business.
With minimum efforts, the system automatically functions where accounts payable, accounts
receivable, financial closings, expense capture, management, and revenue recognition where
modern accounting systems are meant to be designed and formulated as per the requirement of
the business environment. Accounting profession certainly has long history with its starting that
remains a robust as humans have conducted transactions (Marra, 2018).
Certainly, accounting is one of the major functions for every business, which may be
handled by an accountant if it is small sized and it can be group of accountants if it is a larger
organization. The necessary reports generated are cot accounting and other is management
accounting that becomes valuable source of streams and data for decision-making. Qualified
professionals who actually own designation (CPA- Certified Public Accountant) to handle
accounting function. With industrialization, there are more advanced accounting standards and
accounting methods that highlights cost accounting system addressing external funding such as
shareowners and this is need to be calculated and finally predict profits on the basis of profit

Running Head: ACCOUNTING
prediction on their operation on real financial data. Several people correctly or incorrectly
involved in bookkeeping where they use their knowledge in the preparation of financial
statements, interpret them, and record all the day-to-day transaction. This includes assuring that
whether the financial statements have been complying with GAAP (Generally Accepted
accounting principles) that could provide full disclosure of necessary financial information so
that it could remain free from material errors and misconceptions (Dayanandan, Donker, Ivanof,
& Karahan, 2016).

Running Head: ACCOUNTING
Question 3: Ethical Principles
List and explain each of the ethical principles in the code of ethics
There are several ethical principle which are to be followed by the accountants are
deliberately required to keep a check on the ethical principles so that the code of the ethics is
maintained effectively and efficiently (Kamal, 2015).
Principle of objectivity
Example: The professional judgment of the accountant shall not be influenced by any third party
just on the basis of the personal relationships. Accountants shall not decide the recording of the
transactions while violating the concept of the accrual accounting to deliver the bonus to one of
the employees (APESB, 2018).
Principle of integrity
The principle of the integrity expects to be completely forthright, authentic and blunt with
a customer's money related data. Accounting ought to confine themselves from individual
increase or bit of leeway utilizing secret data.
Example: The accountants can be honest if they come across any information that can impact the
decisions of the management as well as stakeholders. The news about the insider trading could
be a good example (Cameron & O'Leary, 2015).
Principle of confidentiality
Accountant is committed to shield this data from unapproved divulgence or open
discharge. Since Accountant follows the secrecy standard, customers don't hesitate to talk
honestly and uncover pertinent actualities in regards to accounting as well as subsidiary issues,
empowering the Accountant to act in the customer's best advantage
Example: The accountants shall keep the data confidential despite the individual or the company
hires the subsequent experts or the accountant. The confidentiality shall be maintained even after
the end of the tenure (Amponsah, Boateng & Onuoha, 2016).
Principle of professional behavior
The principle of professional behavior conduct forces a commitment on every single
proficient accountant to consent to applicable laws and guidelines and stay away from any
activity that the expert accountant knows or should know may dishonor the calling.
Example: The relevant laws and regulations must be followed while dealing with any clients,
irrespective of any personal biasness to avoid any further repercussions (APESB, 2018).

Running Head: ACCOUNTING
Principles of due care and diligence
Example: if the accountant comes across with any kind of the frauds and errors, the due care and
diligence shall be act upon immediately and the same information shall be communicated to the
management (APESB, 2018).
What should accountants do?
Chartered Accountants Australia and New Zealand and Certified Practicing Accountants
Australia, can generally face challenges in while incorporating the accounting principles. In
ethics an ethical dilemma is an issue in the process of taking the strategic decisions between two
potential choices, neither of which is totally adequate from a moral point of view. In spite of the
fact that the organizations face numerous moral and good issues throughout our life, the greater
part of them accompany with the relative solutions. In simpler terms it can be said that the ethical
dilemma is a conflict between the different alternative available, and the ethical principles are
bound to be compromised (CAAN, 2017).
In the field of the accounting the major trust relies on the following of the ethical
practices consistently by the firms and the organizations. In the field of the accounting ethical
responsibility means the firm or the company is recording and translating monetary information
genuinely and objectively without any biasness. The process of the accounting in controlled by
the government and to assist the accountants, different polies as well as procedures are derived to
safeguard the interest against irreconcilable circumstances and any kind of the unprofessional
misconduct, the American Institute of Certified Public Accountants (AICPA) proclaims a
Professional Code of Conduct, just as a synopsis that assists in evaluating various kinds of
threats and also provides the means to safeguard it by complying and adhering to the policies and
the procedures driven by the body (CAAN, (2017).
The typical example of the ethical dilemma is the recording of the transaction in an
incorrect manner. The instructions are provided by a subordinate representative to record an
exchange in a wrong way. For example, an organization with a calendar year of 31st March, signs
contracts with buyers to perform administrative services. The agreements are typically marked
and signed on March 1st and are a yearlong. As per the general principles of accounting, the
revenue shall be recorded only for the month of the March whereas the leftover revenue will be
accounted for in the next financial year. However the management instructs the subordinate to
record the entire amount in the month in which the contract has been established. The major
reason behind opting for this policy is to boost up the revenues for the current financial year. The
board gets a reward for the helped income and the subordinate gets acknowledgment in an
upcoming performance review (Institute of Public Accountants, 2018).
The major ethical dilemma lies here is the recording of the transactions in appropriate
manner just to showcase the business with the higher revenue irrespective of the ethical
accounting. In order to solve these kinds of the situations on the part of the accountants as well

Running Head: ACCOUNTING
as the management, an expert shall be hired to vouch the workings of the subordinates as well as
accountants. Such experts are more commonly known as auditors (CPA Australia, 2018).
The solutions could start with setting up of informant hotlines to urge representatives to
show trustworthiness and uprightness in the working environment and the corporate business
culture. The second step could be to explore whether the issue is controlled by law or approach.
The hotspot for data could be the top level management, any professional association, an
administrative body, for example, the U.S. Protections and Exchange Commission — or the
majority of the above mentioned. The American Institute for Certified Public Accountants
(AICPA) has a Code of Professional Conduct, and Financial Executives International has a Code
of Ethics which can be practiced and followed to avoid any issues relating to ethical dilemma.
Both are fantastic assets in case you're dubious about the morals of a circumstance and also
underpin the fundamental principles for the professional accountants (APESB, 2018).

Running Head: ACCOUNTING
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Running Head: ACCOUNTING
Mereghetti, S., Pons, J. A., & Melatos, A. (2015). Magnetars: properties, origin and
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