IT Financial Accounting Report: Sage 50 and Financial Analysis

This report provides a comprehensive financial analysis of HSC Trading Group Ltd, focusing on the application of Sage 50 software. It begins with an introduction to the company and the purpose of the assignment, which is to generate financial reports. The report details the process of setting up a new company in Sage 50, including entering customer, vendor, inventory, and payroll details. It then presents a financial statement analysis, covering the trial balance, profit and loss statement, and balance sheet, highlighting key figures and their implications for the company's financial health. The analysis includes a discussion of fixed and current assets, liabilities, and equity. Furthermore, the report explores the risks associated with electronic accounting systems, such as data entry errors and unauthorized access. The conclusion summarizes the company's strong working capital and operational structure. The report references relevant accounting principles and standards and includes appendices with visual aids.

Running head: IT FINANCIAL ACCOUNTING
IT Financial Accounting
Name of the Student:
Name of the University:
Author’s Note

1
IT FINANCIAL ACCOUNTING
Table of Contents
Introduction......................................................................................................................................2
Discussions......................................................................................................................................3
Setting up a New Company in Sage 50.......................................................................................3
Entering the Details of the Customer...........................................................................................3
Entering the Vendor Details........................................................................................................4
Entering Inventory Details...........................................................................................................4
Entering Payroll Details...............................................................................................................4
Postings of Credit Sales...............................................................................................................5
Posting of Credit Purchases.........................................................................................................5
Financial Statement Analysis..........................................................................................................6
Risks of using Electronic Accounting System.................................................................................8
Conclusion.......................................................................................................................................8
Reference.......................................................................................................................................10
Appendix........................................................................................................................................11

2
IT FINANCIAL ACCOUNTING
Introduction
The main purpose of this report is to analyze the financial statement of HSC trading
Group ltd which operates in UK. The financial statements will be including periodic trial
balance, statement of profit and loss account and Balance sheet of the company. A periodic trial
balance is prepared to check whether the total of debit and credit side of the trial balance matches
or not. It is prepared for general mathematical accuracy of the same. The statement of profit and
loss contains all the expenses and losses which the business incurs during the year and also
contains all income and gains from that particular year. Balance sheet of the company shows the
financial position of the company at the end of financial year. it contains all the assets and
liabilities of the business.
HSC Trading Group Ltd is engaged as a hire supply tool company which provide hire
tools to other business. At present it is one of the largest hire supply tool company which is
operating in UK. The purpose of the assignment is to record the name of the company in
Software application Sage 50 which will then be used to generate reports on financial statements
of the company (Schneider & Bussmann, 2013).

3
IT FINANCIAL ACCOUNTING
Discussions
Setting up a New Company in Sage 50
Entering the Details of the Customer

4
IT FINANCIAL ACCOUNTING
Entering the Vendor Details
Entering Inventory Details
Entering Payroll Details

5
IT FINANCIAL ACCOUNTING
Postings of Credit Sales
Posting of Credit Purchases

6
IT FINANCIAL ACCOUNTING
Financial Statement Analysis
The financial statement analysis is conducted on the software application Sage 50 and the
reports are generated using such a software. As per the trial balance of the company, the
company has shown a number of fixed assets such as land, property and warehouse, trucks,
motor vehicles (Hofmann & Lampe, 2013). The trial balance also reveals that there is
accumulated depreciation for assets such as property and warehouse, truck and motor vehicles
which are shown at amount of 65,550, 52,860 and 12,080 respectively. The total of the trial
balance is shown at £ 6,095,909.64 which matches both the sides. If the debit and credit side of

7
IT FINANCIAL ACCOUNTING
the trial balance does not match, then there is a possibility of error which might have occurred in
the trial balance. If any item of the trial balance is misstated than the trial will not match due to a
single misstatement.
The profit and loss statement of a company reveals the profit or loss a business earns
during that particular period. As per the profit and loss statement of HSC trading group ltd, the
items which are revenue for the business are sales of the product. The gross profit which comes
for the period is £ 372,216.20 which comes after purchase expenses are deducted from the sales
revenue of the business. The items of overheads for the company comprises of gross wages,
depreciation and general expenses. After deducting the overheads from the gross profit, the net
profit figure of the company is obtained which is £ 62,442.24. The major accounts which are
shown in the profit and loss account of the business is are overhead expenses, sales and purchase
account (Lidstone & MacLennan, 2017).
Balance sheet of a company displays the financial position of a company during a
particular year. As per the Balance Sheet of the company the fixed assets total comes to around £
4,313,910.00. The current assets of the company comprise of stock, debtors and bank account
balances. The total of the current assets of the company is shown at £ 1,124,102.24. The current
liabilities of the company comprise of creditors and VAT liability as shown in the balance sheet
of the company. The current asset is much more than the current liabilities of the business which
signifies that the company has strong working capital base. This also implies that the business is
not having any problems while meeting the liquidity requirements and the operational activities
of the business is running smoothly. The non-current liabilities of the company only consist of
creditor which are of long term nature. The figure of net assets which is obtained by deducting
the total liabilities of the company from the total asset figure comes to £ 4,460,086.24. The

8
IT FINANCIAL ACCOUNTING
equity section of the balance sheet comprises of share capital, reserves and profit and loss
account balance. The share capital of the business is shown at £ 4,000,000.00 which refers to the
amount of capital which the company has taken from the public. The reserves represent a part of
the profit which the company has kept aside for the purpose of using the same during times of
emergency or any other purpose. The balance sheet of the company matches which signifies the
mathematical accuracy and double entry system of accountancy is being followed. Therefore, in
the case of HSC Trading Group ltd the financial statement is prepared as per relevant accounting
standards and principles.
Risks of using Electronic Accounting System
The risks of using electronic accounting system is most due to the human factors, however in
certain rare case natural factors might also be there to cause the risk. The various risks are
discussed below:
1. There is a risk of wrong entry of data which can either be intentionally or by mistake.
None the less, it will affect the financial statement and thereby the report which are
generated and thus making the process risky (Kim & Zhang, 2016).
2. Moreover, if proper password is not provided to the financial data anyone in the work
force may access such information who are not authorized even.
3. There is a chance of loss of data due to breakdown of the system or software problems in
the Sage 50 applications.
Conclusion
Thus, from the above discussions, it is clear that HSC Trading Group ltd has a strong
working capital which signifies that the current assets of the company is more than the current

9
IT FINANCIAL ACCOUNTING
liabilities of the business. This is a positive indicator which shows that the business has a good
liquidity situation. Moreover, the sales of the company is also decent which shows that the
company operational structure is good. The company is able to generate net profits and also keep
the costs as low as possible. The financial statements also facilitates comparison between two
periods and is effectively presented.

10
IT FINANCIAL ACCOUNTING
Reference
Hofmann, E., & Lampe, K. (2013). Financial statement analysis of logistics service providers:
ways of enhancing performance. International Journal of Physical Distribution & Logistics
Management, 43(4), 321-342.
Kim, J. B., & Zhang, L. (2016). Accounting conservatism and stock price crash risk: Firm‐level
evidence. Contemporary Accounting Research, 33(1), 412-441.
Lidstone, J., & MacLennan, J. (2017). Marketing planning for the pharmaceutical industry.
Routledge.
Schneider, G., & Bussmann, M. (2013). Accounting for the dynamics of one-sided violence:
Introducing KOSVED. Journal of Peace Research, 50(5), 635-644.

11
IT FINANCIAL ACCOUNTING
Appendix
Purchase Transactions
Suppliers
2017 - 2018 ALPHA SIGMA BETA
Units CPU NET Units CPU NET Units CPU NET
Opening Stock 1,800 5,000 6,000
Additions in year
April 1,000 2.80 2,800 1,800 4.15 7,470 1,200 3.12 3,744
May 1,400 2.80 3,920 560 4.15 2,324 1,400 3.12 4,368
June 1,000 2.80 2,800 1,600 4.15 6,640 1,350 3.12 4,212
July 1,200 2.80 3,360 1,500 4.15 6,225 1,000 3.12 3,120
August 1,000 2.80 2,800 300 4.15 1,245 1,150 3.12 3,588
September 900 2.80 2,520 2,000 4.15 8,300 1,305 3.12 4,072
October 1,850 2.80 5,180 1,650 4.15 6,848 1,200 3.12 3,744
November 1,105 2.80 3,094 560 4.15 2,324 1,600 3.12 4,992
December 950 2.80 2,660 1,680 4.15 6,972 1,650 3.12 5,148
January 1,200 2.80 3,360 1,560 4.15 6,474 1,500 3.12 4,680
February 1,400 2.80 3,920 2,000 4.15 8,300 1,560 3.12 4,867
March 1,950 2.80 5,460 600 4.15 2,490 1,200 3.12 3,744
Total Available for sales 16,755 20,810 22,115
Less Sold ( From Sales Schedule) (14,511) (21,125) (20,619)
Closing Stock Units 2,244 (315) 1,496
Closing Stock Value 6,283 (1,307) 4,668
Journal entry will be:
Balance Sheet Inventory Debit Debit Debit
Profit & Loss - Cost of Sales Credit Credit Credit
Yunshi Duncan