Accounting System & Process - Assignment

Running Head: Accounting system and process
1
Project report: Accounting system and process

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Worksheet and financial reports:
Executive summary:
The paper explains about the importance, advantages and disadvantages of
spreadsheet. Spreadsheet is crucial application for an organization to measure and manage all
the financial records of the company. However, few errors are there in excel file.
Introduction:
Spreadsheet is an electronic document which arranges the data of an organization in
rows and column of a grid. Spreadsheet could be used to manipulate the data and calculate
the data of the company. Spreadsheet contains various pros and cons which has been
discussed and studied in the report (Weygandt, Kimmel & Kieso, 2015).
Spreadsheet:
The most common use of spreadsheet in a business is to make the budgets, produce
the charts and graphs and for sorting and storing data. In an organization, spreadsheet is used
by the managers of the company to predict the future performance, compute the tax, complete
basic payroll, calculate the revenue of the company etc. Spreadsheet was one of the oldest
applications for PC and Macs to encourage the businesses to make an investment into the
computer network (Wordpress, 2018). All the spreadsheet application is same. It includes raw
and columns which could be indentified on the basis of numbers and the letters. Spreadsheet
contains various pros and cons which are as follows:
Advantages of spreadsheet:
Spreadsheet is an interactive application which is quite crucial for each business as it
make the operations and the activities of the company quite simple. It is one of the best ways
to collect record and sort all the relevant information of an organization. The main
advantages of the spreadsheet are as follows:
 What if analysis could be used by the organizations without rebuilding the
entire model
 Spreadsheet could be shared through e-mail (Chron, 2018)

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 Models and the spreadsheet files could be saved and stored to prevent the data
loess
 graphs could be produced easily to identify the trend in the industry
 It is quite safe and easy to use
 It is cheap and fast to use (Snyder & Davenport, 2013)
 No additional software are required to run this application
 It could be sped up as well as slowed down according to the requirements.
It explains that there are various uses of spreadsheet for an organization. It is one of the
most used applications in every organization as it is quite easier to use as well as it contains
various formulas and the analysis methods which reduces the level of mathematical errors as
well as it also boost the position of the company through reducing the extra man power and
the cost of the comapny.
Disadvantages of spreadsheet:
However, spreadsheet contains many cons as well which affects the business activities
and the decision making process of the organization. Spreadsheet must be used by the
companies after evaluating all the relevant factors. Following are few disadvantages of the
spreadsheet:
 Spreadsheet might not offer an exact representation of actual things and data
 spreadsheet models take a lot of time to evaluates and test
 some of spreadsheet models are complex and extra software are required to use that
models
 Changes into one cell makes the entire result affected (Hillier, Grinblatt and Titman,
2011)
 There are various variables in the spreadsheet which affects the data storing and
sorting process of the company.
It explains that various cons of the spreadsheet are as well. An organization must be
prepared enough to use the spreadsheet. The users must have enough knowledge of the
software so that it could be used in best manner.

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Conclusion:
To conclude, Spreadsheet is crucial application for an organization to measure and
manage all the financial records of the company. The users must have enough knowledge of
the software so that it could be used in best manner.

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Dishonor of note receivable:
Dishonoured note is a promissory note which is given by the debtor to the company
against the amount and which has not been paid in reasonable time. With the help of note
receivable, debtor promises to the company to pay the amount in short term. If the debtor
fails to pay the amount in short term period, than the note receivable get dishonour (Davies &
Crawford, 2011).
The case could be brief with the help of an example. For instance, a company has sold
worth of $ 5000 amount to one of its debtor on credit. And the creditor has promised to pay
the amount in next 3 months. Debtor has given a note receivable against it. After the 3
months, when the company went for redemption of note receivable, customer fails to pay the
amount and thus the note receivable worth of $ 5000 get dishonour. The journal entry of note
receivable and dishonour is as follows:
Note receivable account
Debit Credit
Debtors $ 5000 Bank $ 5000
dishonour $ 5000
Balance
c/d $ 5000
$ 10000 $ 10000
It explains that the debtor has not paid the amount to the company and now either the
debtor of the company can pay the amount in cash and again offer a note receivable to the
company. It depends on both the parties.

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Work integrated assessment case study:
Executive summary:
The report explains about the investment position of an Australian company,
Wesfarmers limited. For indentifying the performance of the company and the investment
position of the company, financial data of the company has been evaluated. the report
evaluates that the company is one of the best choice for the investors to invest and generated
extra returns.
Introduction:
Investors and the financial analyst are required to identify and evaluates the financial
position of an organization in a better way so that a better decision could be made. The report
focuses on the Wesfarmers limited. In the report, activities, changes into the capital structure,
performance indicators and the ratios of the company have been evaluated.
Performance indicators:
Performance indicators briefs about the revenue and the gross profit of the company.
Below table explains that the Total sales of the company have been enhanced from last 2
years in 2017. And with the increment in the sales, gross profit of the company has also been
enhanced. It briefs that the current gross margin rate of the company is 31.84% which is quite
competitive and briefs about the better performance of the company.
Figure 1: Performance indicators

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(Annual report, 2017)
Capital structure of the company:
Capital structure evaluates the financial position of the company. It evaluates the total
long term debts of the company and the total stockholders’ equity of the company to measure
the weight of both the funds in the comapny. On the basis of evaluation on capital structure of
the company, it has been found that the debt level of the company is higher due to less cost of
debt.
Figure 2: Gearing ratios
Ratio analysis:
Ratio analysis is a financial analysis method which evaluates the financial statement
of an organization and evaluates the performance of the company on the basis of liquidity
position, profitability position, efficiency position, capital structure position etc.
According to the profitability ratios, it has been found that the profitability position of
the company has been better from last 2 years. Currently, the profitability level of the
company is quite competitive and briefs about the better investment position of the company.
2017 2016 2015
Profitability
Return on
shareholder funds
NPAT/ Total
equity 12.00% 1.77% 9.85%

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Operating profit
margin
Operating net
profit / Sales 5.42% 0.98% 4.97%
Gross Profit Margin
Gross Profit /
Sales 31.84% 30.51% 30.53%
According to the Liquidity ratios, it has been found that the liquid position of the
company is quite similar in last 3 years. However, the acid test position of the company has
been lower (Garrison et al, 2010). It briefs that the liquidity level of the company is quite
risky and briefs about the risk level of the company at the time of liquidation.
Liquidity 2017 2016 2015
Current ratio
Current
assets/current
liabilities 0.93 0.93 0.93
Acid test ratios
Current assets-
Inventory/current
liabilities 0.30 0.33 0.37
According to the asset management efficiency ratios, it has been found that the cash
conversion cycle of the company has been better from last 2 years. Currently, the efficiency
level of the company is quite competitive and briefs about the better investment position of
the company.
Asset
management
Efficiency 2017 2016 2015
Receivables
collection period
Receivables/
Total sales*365 8.76 9.07 8.60
Payables
collection period
Payables/ Cost
of sales*365 52.08 52.04 48.74
Inventory days
Inventory/ cost
of goods sold
*365 51.41 50.19 46.50
Lastly, the market ratios of the company have been evaluated. On the basis of that, it
has been found that the market position of the company has been better from last 2 years.

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Currently, the market position of the company is quite competitive and briefs about the better
investment position of the company (Hansen, Mowen & Guan, 2007).
Financial ratios 2017 2016 2015
Earings per share
NPAT/
Number of
ordinary
shares 2.55 0.36 2.16
Price earing ratio
Market price
per share /
earnings per
share 16.32
Market to book
ratio
Market price
per share /
Book value
per share 1.6624
Conclusion:
On the basis of the above evaluation on Wesfarmers limited, it has been evaluated that
the performance of the company is quite better and the investment into the company would
offer huge return to the investors.

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References:
Annual report. (2017). Wesfarmers Limited. (online). Retrived on 6th April 2018 from
https://www.wesfarmers.com.au/docs/default-source/default-document-library/2017-
annual-report.pdf?sfvrsn=0.
Chron. (2018). Advantages and disadvantages of spreadsheet. (online). Retrieved on 6th April
2018 from: http://smallbusiness.chron.com/advantages-disadvantages-spreadsheets-
26551.html.
Davies, T. & Crawford, I., (2011). Business accounting and finance. Pearson.
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial
accounting. Issues in Accounting Education, 25(4), 792-793.
Hansen, D., Mowen, M. & Guan, L., (2007). Cost management: accounting and control.
Cengage Learning.
Hillier, D., Grinblatt, M. & Titman, S., (2011). Financial markets and corporate strategy.
McGraw Hill.
Snyder, H. & Davenport, E., (2013). What does it really cost? Allocating indirect costs. Asian
Libraries.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting.
John Wiley & Sons.
Wordpress. (2018). Spreadsheet concepts. (online). Retrieved on 6th April 2018 from
https://spreadsheetconcepts.wordpress.com/advantages-and-disadvantages/.

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Appendix:
Financial Data
Description WESFARMERS LTD
2017 2015 2014
Revenue 68,015 65,512 62,102
Cost of goods
sold 46,359 45,525 43,145
Gross profit 21,656 19,987 18,957
Operating profit 3,685 642 3,084
Net profit 2,873 407 2,440
Inventory 6,530 6,260 5,497
Current assets 9,667 9,684 9,093
Receivables 1,633 1,628 1,463
Current
liabilities 10,417 10,424 9,726
Payales 6,615 6,491 5,761
Equity 23,941 22,949 24,781
Total liabilities 16,174 17,834 15,621
Total assets 40,115 40,783 40,402
Description Formula WESFARMERS LTD
2017 2016 2015
Profitability
Return on
shareholder
funds
NPAT/ Total
equity 12.00% 1.77% 9.85%
Operating profit
margin
Operating net
profit / Sales 5.42% 0.98% 4.97%
Gross Profit
Margin
Gross Profit /
Sales 31.84% 30.51% 30.53%

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Liquidity 2017 2016 2015
Current ratio
Current
assets/current
liabilities 0.93 0.93 0.93
Acid test ratios
Current assets-
Inventory/current
liabilities 0.30 0.33 0.37
Asset
management
Efficiency 2017 2016 2015
Receivables
collection
period
Receivables/
Total sales*365 8.76 9.07 8.60
Payables
collection
period
Payables/ Cost of
sales*365 52.08 52.04 48.74
Inventory days
Inventory/ cost
of goods sold
*365 51.41 50.19 46.50
Capital
structure ratio 2017 2016 2015
Geraing
Non current
interets bearing
debt / non
current interet
bearoing debt +
equity 0.15 0.20 0.16

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Debt rqtio
Total Liabilities /
total assets 0.40 0.44 0.39
Financial
ratios 2017 2016 2015
Earings per
share
NPAT/ Number
of ordinary
shares 2.55 0.36 2.16
Price earing
ratio
Market price per
share / earnings
per share 16.32
Market to book
ratio
Market price per
share / Book
value per share 1.6624