Recording Business Transactions

This document discusses the importance of recording business transactions in accounting and its impact on decision making. It also explores the advantages and disadvantages of for-profit business structures. Examples of journal entries and trial balance are provided. Additionally, the document discusses the possible impact of Covid-19 on income statements.

Recording Business Transactions

Contents
Introduction.................................................................................................................................................3
MAIN BODY.................................................................................................................................................3
ASSESSMENT 1....................................................................................................................................3
PART 1....................................................................................................................................................3
Part 2.......................................................................................................................................................5
Part 3.......................................................................................................................................................6
Part 4.....................................................................................................................................................11
REFERENCES..............................................................................................................................................13

Introduction
Accounting includes an entity's control, categorization, revision and presentation of money
transactions. These statements and the findings gathered from each other simply provide the
foundation for the review of the firm's earnings reporting and role (Raczkowski and Schneider,
2013). This appraisal has an effect on the independent organizations’ preparation of tax returns
and the production of trial details and income reports. In the taxation of industries, advantages
and restrictions are defined. The influence on Covid-19's company earnings is also discussed.
MAIN BODY
ASSESSMENT 1
PART 1
(a) Who are the decision makers referred to in the above definition and explain their need for
accounting information.
Management team is often asked to take action to resolve disagreements. Judgment and
issue involve continuous procedures that evaluate issues or problems, discuss solutions,
take recommendations and take appropriate steps (Kovalev, Kovalev Alexey
Yevgenyevich, 2012). The judgment process is often very short and the conceptual
examination is almost immediate. The treatment will take weeks or months in some
situations. The entire method of decision relies on the best evidence available at the right
time to the appropriate person. In the context of the Tesco Company, management takes
important decisions relating to several kinds of factors. They rely on key accounting
information related to financial and non financial aspects which play a key role for better
decision making.
Role of information-Management Accounting Analysis is intended to assist the managers
of the business, while aggregation analysis is targeted at supplying financial data to non-
organizational groups. As in above Tesco plc, accounting information contribute in an
effective manner to assess financial performance as well as taking key decision for
investment.

Owner- The manager of the organization also plays a key role in taking corrective
measures. Typically, main organizations direct the process of decision, work directly with
external holders, statistics gathered, assign responsibilities to other participants or
managers (if necessary), complete the task, provide the ultimate authorization (if / where
used) and are typically responsible for the performance of the multiple elements. The
owner of Tesco plc plays an important role in judgment. They evaluate key data for
accounting.
Manager- Accounting provides administrators and other shareholders with important
accounting reporting related to judgment. Evaluation of the employee's role of
maintaining and controlling the profits of the organization. Decide if business cash is
borrowed or saved. Similarly, in the context of Tesco plc their managers consider main
accounting information to make futuristic plans and strategies to beat their competitors in
an effective manner.
(b) Identify and explain the advantages and disadvantages of any two for profit business
structures which an accountant may encounter.
Accounting- Analysis is the practice for reporting company-related cash operations. The
monitoring protocol includes the summary, supervision and reporting of these activities
to the governing body, agencies and tax collectors. In the context of above Tesco plc,
they record key financial information as per the accounting rules and regulations in an
effective way. The profit company explains certain advantages and weaknesses below:
Full and Systematic Record- Accounting depends on norms widely agreed and on the
analytical means through which business events are interpreted by records. Both
corporate practices, for instance, are routinely and carefully documented (Sukumar and
Ferrell, 2013). The individual shortcomings which can be taken into account in all sales
are resolved by recording, as any purchase can be documented and measured by the same
process. Such as in above Tesco plc, they identify and record all kinds of financial
information which is related to their operations. Basically, accounting gives an overview
or idea about which transactions need to be considered.

Helps to raise loans- For further growth, company must have ample resources.
Occasionally, because of its lack of funding, the company could not do very well. In such
cases it is possible to raise more funds by borrowing money from other banks and other
financial institutions. Such banks that offer loans on the grounds of the viability and
legality of a corporate enterprise. Efficiency and reliability can be assessed by the Trade
and Benefit & Loss Statements and cash flows, the ultimate review of financial records.
As in the aspect of Tesco plc, accounting records and accounts play a key role in the
aspect of taking loans. It becomes possible because by help of prepared financial records,
it becomes easier for them to show their financial data to bank to take financial
assistance.
Accounting depends on commonly recognized conventions and the analytical means by
which business operations are portrayed by books. All company processes, for example
in the aspect of Tesco all financial data are documented annually and extensively. The
individual shortcomings that cannot be properly considered in all sales are resolved by
reporting, as any purchase can be recorded and assessed by the same method.
Drawbacks:
Until implementation, the Reporting Process creates and assigns several actions to
resolve a problem. From the several choices that are open, the director can pick any
preference and even remove them all. Accounting also should, have information only and
no intervention is recommended.
Preference to rational decision making- With the aid of accounting techniques, objective
decisions may be made. However, accountancy firms and senior executives also prefer
previous judgment experience and perspective (Kaplan, International Business Machines
Corp, 2012). This is because it is genuinely straightforward and quick to draw an intuitive
judgment. As in the aspect of above Tesco plc, they use accounting information but due
to inconsistency of data set and ineffective interpretation company face different kinds of
issues for decision making.

One of the most critical drawbacks of accounting standards is that it refers only to
governance at the organizational level. Several alternatives, including market situations,
political environment, legal and sustainability laws, etc., have important consequences for
the practice of the industry. When taking solid business choices, they are not listed in
financial data and have a misleading credibility. In addition to this, under Tesco plc they
face different kinds of issues due to a range of accounting standards which makes
recording of data more complex and ineffective.
Part 2
A. Journal Entries for the month of February 2020
Date Details Debit (£) Credit (£)
01/02/20 Asma Ltd. A/c..........................Dr.
To Office fixtures A/c
(Unsuitable office fixtures returned to Asma
Ltd.)
350
350
04/02/20 Bad debt A/c............................Dr.
To S. Keyes
(Debt from S.Keyes written off as bad)
85
85
09/02/20 Machinery A/c.........................Dr.
To Bank A/c
To TS Co. A/c
(Machinery bought from TS Co. on part cash
and part credit)
2300
200
2100
13/02/20 Bank A/c...................................Dr.
Bad debt A/c.............................Dr.
To S. Hill A/c
(Only £220 received out of £270 from
bankrupt debtor S. Hill as full and final
settlement)
220
50
270

20/02/20 Drawings A/c............................Dr.
To Purchases A/c
(Goods taken for personal use by owner)
180
180
26/02/20 Drawings A/c..........................Dr.
To Insurance A/c
(Personal insurance bill debited to business
not stands corrected)
85
85
28/02/20 TS Co. A/c..............................Dr.
To Bank A/c
(Half payment of machine credit paid by
owner to TS Co)
1050
1050
Part 3
A. General ledger
Ledger Accounts of Pearce & Sons for Feb 2020
Capital Account
Date Details Fol Amount Date Details Fol Amount
29/02/2
0 To Balance c/f 47300 01/02/20 By Bank A/c 21500
01/02/20 By Van A/c 25000
01/02/20 By Office Fixture A/c 800

Total 47300 Total 47300
Bank Account
Date Details Fol Amount Date Details Fol Amount
01/02/2
0 To Capital A/c 21500 03/02/20 By Cash A/c 1500
02/02/2
0 To Loan A/c 2500 04/02/20 By Van A/c 4800
25/02/2
0 To Cash A/c 350 19/02/20 By Nissan Co. A/c 5200
28/02/20 By Office Fixture A/c 620
29/02/20 By Balance c/f 12230
Total 24350 Total 24350
Van Account
Date Details Fol Amount Date Details Fol Amount

01/02/2
0 To Capital A/c 25000 29/02/20 By Balance c/f 35000
04/02/2
0 To Bank A/c 4800
08/02/2
0 To Nissan Co. A/c 5200
Total 35000 Total 35000
Quick Office Ltd Account
Date Details Fol Amount Date Details Fol Amount
29/02/2
0 To Balance c/f 1100 05/02/20 By Office Fixture A/c 1100
Total 1100 Total 1100
Cash Account
Date Details Fol Amount Date Details Fol Amount
03/02/2
0 To Bank A/c 1500 15/02/20 By Office Fixture A/c 70

25/02/20 By Bank A/c 350
29/02/20 By Balance c/f 1080
Total 1500 Total 1500
Nissan Co. Account
Date Details Fol Amount Date Details Fol Amount
19/02/2
0 To Bank A/c 5200 08/02/20 By Van A/c 5200
Total 5200 Total 5200
Office Fixture Account
Date Details Fol Amount Date Details Fol Amount
01/02/2
0 To Capital A/c 800 29/02/20 By Balance c/f 2590
05/02/2
0 To Quick Office Ltd A/c 1100
15/02/2
0 To Cash A/c 70

28/02/2
0 To Bank A/c 620
Total 2590 Total 2590
Loan Account
Date Details Fol Amount Date Details Fol Amount
29/02/2
0 To Balance c/f 2500 02/02/20 By Bank A/c 2500
Total 2500 Total 2500
B. Trial Balance as at 28th Feb 2019
Trial Balance
(at the month ending 29/02/2020)
Details Debit Credit
Capital Account 47300
Bank Account 12230

Cash Account 1080
Van Account 35000
Quick Office Ltd. Account 1100
Office Fixture Account 2590
Loan Account 2500
Total 50900 50900
Part 4
A. Income Statement for the year ending 30th Sept 2019
Income statement of Airman Co. for the year ending 30th September 2019
Details
Sales 80000
Less: Returns Inwards 2000
Net sales 78000
Less: Cost of sales 65400
Opening Stock 36000
Purchases(150000-600) 14940
0
Closing Stock 12000
0

Gross profit 12600
Less: Other expenses 41670
Carriage Outwards 400
Motor Expenses 1200
Rent 5000
Telephone Charges 620
Wages and Salaries 32000
Insurance 830
Office Expenses 600
Sundry Expenses 300
Carriage Inwards 720
Net loss -29070
B. Possible impact of Covid-19 on Income statements
The world influence on individuals, communities, companies and regimes of CoVIDE-19
(Corona virus), that simply appears to have such a profoundly adverse effect on individuals,
households, companies and governments, that everyone wants to know how their scientific
research is all about (Pacini, 2012). The effect of Covid-19 on all sectors of culture that may
involve societal, economic or national problems and that may require time and expense to
operate perfectly in any particular state. The epidemic is growing as we speak, and we are in an
environment in which we do not understand how far it is going to go. Some COVID-influenced
artefacts are described below:

Lack of income can be found in the prior argument that, compared to expenses, there is less
market value. That's also due to the negative effects of COVID 19 on company sales.
Higher refunds- There are greater percentages of goods rejected by customers due to a lack of
consistency. This explains the direct effects of COVID.
Higher pay-Wages are 32,000 pounds that implies that the firm deducted this amount from its
income, leading to lower output.

REFERENCES
Raczkowski, K. and Schneider, F. eds., 2013. The Economic Security of Business Transactions:
Management in Business. Chartridge Books Oxford.
Kovalev, A.Y., Kovalev Alexey Yevgenyevich, 2012. Method for multi-dimensional accounting
of business transactions and system therefor. U.S. Patent Application 13/365,530.
Sukumar, S.R. and Ferrell, R.K., 2013. ‘Big Data’collaboration: Exploring, recording and
sharing enterprise knowledge. Information Services & Use, 33(3-4), pp.257-270.
Kaplan, I., International Business Machines Corp, 2012. Computer-implemented method and
system for handling business transactions within an inhomogeneous legal environment.
U.S. Patent 8,140,346.
Pacini, C., 2012. Foreign Corrupt Practices Act: Taking a Bite out of Bribery in International
Business Transactions. Fordham J. Corp. & Fin. L., 17, p.545.