Recording Business Transactions: Importance and Impact of COVID-19

This document discusses the importance of recording business transactions and the impact of COVID-19 on company income statements. It explores decision makers' need for accounting information and the advantages and disadvantages of recording accounting information. The document also provides insights into journal entries, ledger and trial balance, and an income statement for Airman Co.

Recording
Business
Transactions
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Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
ASSESSMENT 1.............................................................................................................................1
PART 1............................................................................................................................................1
Decision makers and their need for accounting information:......................................................1
Advantage and Disadvantage of recording accounting information:..........................................2
PART 2............................................................................................................................................2
Journal entries with narration for the David wises:.....................................................................2
PART 3............................................................................................................................................3
Ledger and trail balance of Pearce & sons:.................................................................................3
PART 4............................................................................................................................................6
Income statement for Airman co.:...............................................................................................6
Impact of COVID 19 on company income statement items:.......................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The business transactions for the evens which includes transactions for goods, money, services
for the various parties for businesses. Business transactions are events which should measurable
for the money which are recorded for accounting system. Business transactions which are useful
for company’s for managing their activities which helps its for higher profitability for the
businesses. The company which has better performance for its activities which helps its for
higher profitability for the businesses. For example, the company purchases machinery for the
cash. It is the transaction for the company which it use for its activities which helps for higher
profitability for the businesses. These transactions company’s records for their financial
statements which includes liabilities, assets, income, expenses, profits etc. This report is based on
various company’s business records. This covers topics such as journal, ledger and trial balance.
Apart from this it also covers cash account and ratio analysis in comparison to competitors for
the businesses (Ando and et. al., 2016).
ASSESSMENT 1
PART 1
Decision makers and their need for accounting information:
Decision makers for the company's are who makes planning for running its activities for
its strategies which they are makes from financial statements for the business. Those who has
power for for make strategic decisions for acquisition, expansion, investments etc.
Tesco is the British multinational retail base company, it was found in 1919, headquarter
situated in UK. It provides its goods supermarkets, hypermarkets, retailers etc.
The company Tesco, which deals for retail sector has various decision makers for making
strategic decisions. The company has various decision makers which includes operational,
tactical, strategic etc. these use accounting statements for making decisions which are related for
company's activities. These are suing accounting statements for better performance for expenses,
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income, profits for the company which helps company for higher profitability for the businesses.
Decision makers for the company are Managers, CEO, CFO etc.
Financial Managers: They are the decision makers for the company, who are using
accounting information for its better performance for making better decisions which are
related for its expenses, income, profits etc. managers using accounting information for their
pricing strategy, salary for employees, profit margins etc. it helps in analysing costs for
various sources of funds which is helpful in procurement process. These statements which
company’s makes for external parties for shareholders which helps them for investing for the
company which helps its for more business activities which helps for higher profitability for the
businesses.
CEO: They are the people who has rights for making strategic decisions for the business.
They using accounting information for analysing viability for their investments. Accounting
information enables them for assessing the ability for business for paying dividends. It helps the
owner of the company to meet the obligation of the business. It also helps to make effective
decisions for the company.
CFO: The CFO is responsible people for the company's financial position, they views the
capital structure for the business. They using accounting information for taking financial
actions for its activities, analysing financial planning for company's strengths, expenses,
profitability. Accounting helps the business in tracking its financial operations and activity.
Financial accounting is about accounting for business transactions for the company which
helps managers for company’s better decision making. These transactions includes for income
statement, balance sheet etc. this helps company’s for know its position which are related for its
activities which helps its for higher profitability. These statements are necessary for the
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company’s which helps it for its higher profitability for the businesses (De Kruijff and Weigand,
2017). Business transactions are helps for knowing company’s position for its expenses, income.
Company’s records their transactions for GAAP concepts for accounting which helps for better
performance which helps for higher profitability for the businesses (Campbell, Padayachee and
Masombuka, 2015).
Advantage and Disadvantage of recording accounting information:
Business structure: The business structure is about how activities for tasks allocation,
coordination, overviews for accomplish its objectives. It affects the company's action which
provides procedure for accomplish works for the businesses.
Partnership business: It is about partnership business which has more than two owners
for the company. The Tesco has partnership business structure for its goods, services which
adopts accounting statements for its activities which helps company for its profitability.
Advantage of recording accounting information for Tesco:
Accounting recording make the management activity more effective as through
accounting transaction business can monitor each activity and can control them effectively. In
accounting the the financial transactions are recorded systematically in the books of accounts. It
helps the owner for payment of loan and other credit on time and save further penalty expenses.
Disadvantage of recording accounting information for Tesco:
The company's accounting information is affected by personal influence of the
accountant. Inventory valuation, treatment of revenue and expenses, depreciation etc. have
different method which can affect the accounting. So sometimes it increases the chance of error
because of the lack of objectivity.
Current replacement cost and original cost can not be same. There is always a difference between
them which cannot be shown in balance sheet. And thus balance sheet is fail to show the actual
financial position of the company.
Corporations Business: The corporation are the business structure which gives the
entity for the legal entity for its owners. It needs for owners for tax requirements. The Sainsbury
has corporation business for which owners are responsible for taxes for the businesses.
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Advantage of recording accounting information for Sainsbury:
Advantage of recording accounting information for Sainsbury are it provides accounting
information of company to the owner so that he can measure the business performance and can
solve problem of business. Recording is beneficial as it helps to assess the demand of the product
from the accounting. It also helps owner to carry out business in a effective manner as it provide
a proof of all accounting information.
Disadvantage of recording accounting information for Sainsbury:
In accounting non-financial activity cannot be recorded in the books. It only record the
financial transaction which can be expressed in terms of money. Some accounting information is
based on estimates which increase the chance of mistakes.
Business Accounting: Systematic recording, analysing, reporting and presentation of
financial transaction is called accounting.. It also helps owner in decision making by analysing
financial activity of the business. These financial information of the business is represent in the
reports and that show the financial position the the company. It is a key function in the business
and handled by one person like accountant in small firm and by accounting department in a large
organisation.
PART 2
Journal entries with narration for the David wises:
Journal Entries
S. NO Date Particulars L.F £ £
1 01/02/20 purchase return A/C Dr. 350
To Purchase A/c 350
( Being purchase return with full
settlement)
2 04/02/20 Bad debts A/c Dr. 85
To S. keys A/c 85
(being debt debt written off by S.
keys)
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3 09/02/20 Machinery A/c DR. 2300
To Bank 200
To TS CO. 2100
( Being machinery purchase with
cash Rs. 200 and 2100 on credit)
4 13/02/20 Cash account 220
Bad debts A/c 50
To S. hill Ltd. 270
( money owed by S. hill 270 and
paid only 220, Rs. 50 declare as
bad debts)
5 20/02/20 Drawing A/s Dr. 180
To Stock 180
6 26/02/20 Insurance A/c Dr. 85
To Cash A/c 85
( Business paid money for
private house insurance)
7 28/02/20
Machinery A/c
DR. 1050
To bank A/c 1050
(amount paid by TS CO. for half
amount credit on machinery)
Total 4320 4320
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PART 3
Ledger and trail balance of Pearce & sons:
A. General ledger
Ledger Accounts
(Amounts in GBP)
Capital Account
Date Particulars Amt. Date Particulars Amt.
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
29/02/20 To Balance c/f 47300
Total 47300 Total 47300
Bank Account
Date Particulars Amt. Date Particulars Amt.
03/02/20 By Cash A/c 1500 01/02/20 To Capital A/c 21500
04/02/20 By Van A/c 4800 02/02/20 To Loan A/c 2500
19/02/20 By Nissan Co. A/c 5200 25/02/20 To Cash A/c 350
28/02/20 By Office Fixture A/c 620
29/02/20 By Balance c/f 12230
Total 24350 Total 24350
Van Account
Date Particulars Amt. Date ParticularsAmt. Amt.
01/02/20 To Capital A/c 25000
04/02/20 To Bank A/c 4800
08/02/20 To Nissan Co. A/c 5200
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29/02/20 By Balance c/f 35000
Total 35000 Total 35000
Quick Office Ltd Account
Date Particulars Amt. Date Particulars Amt.
05/02/20 By Office Fixture A/c 1100
29/02/20 To Balance c/f 1100
Total 1100 Total 1100
Cash Account
Date Particulars Amt. Date Particulars Amt.
15/02/20 By Office Fixture A/c 70 03/02/20 To Bank A/c 1500
25/02/20 By Bank A/c 350
29/02/20 By Balance c/f 1080
Total 1500 Total 1500
Nissan Co. Account
Date Particulars Amt. Amt. Date Particulars Amt.
08/02/20 By Van A/c 5200 19/02/20 To Bank A/c 5200
Total 5200 Total 5200
Office Fixture Account
Date Particulars Amt. Date Particulars Amt.
01/02/20 To Capital A/c 800
05/02/20 To Quick Office Ltd A/c 1100
15/02/20 To Cash A/c 70
28/02/20 To Bank A/c 620
29/02/20 By Balance c/f 2590
Total 2590 Total 2590
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Loan Account
Date Particulars Amt. Date Particulars Amt.
02/02/20 By Bank A/c 2500
29/02/20 By Balance c/f 2500
Total 2500 Total 2500
Trial Balance
(in the month ending 29/02/2020)
(Amounts in GBP)
Particulars 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
Income statement for Airman co.:
Income statement in the year end 30th Sept. 2020
Profit & Loss Account
(In the year ending 30th Sept 20)
Particulars Amount Particulars Amount
Opening Stock 36000 Sales 80000
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Purchases 150000 Less: Returns Inwards -2000 78000
Less: Returns Outwards -600 149400 Closing Stock 120000
Carriage Inwards 720
Gross Profit c/f 11880
Total 198000 Total 198000
Carriage Outwards 400 Gross Profit c/d 11880
Motor Expenses 1200
Rent 5000
Telephone Charges 620
Wages and Salaries 32000
Insurance 830
Office Expenses 600
Sundry Expenses 300
Net profit / (loss) -29070
Total 11880 Total 11880
Impact of COVID 19 on company income statement items:
There are various factors which affects businesses for their activities. These factors includes
political, economic, social, technological, environmental, legal etc. The company’s are running
for the customers which helps it for earning profits for the business. These factors affects
businesses for their activities as for COVID 19 era, company’s were not able to runs their
activities properly. It affects Airman co. for not running company for COVID lock down for it
has less sale for the period. The company which are run their activities for online was makes
expenses for them which affects its profitability. This affects the profitability for the company
which affects the financial statements for the businesses.
CONCLUSION
From the above report it has been concluded that business transactions are about
recording transactions for the company’s activities for their better decision making. These
transactions helps managers for better performance which helps for higher profitability for the
businesses. Company’s which records their transactions which helps them for preparing making
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financial statements for the business. These statements which helps managers for better decision
making which helps for higher profitability for the businesses.
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REFERENCES
Books and journals:
Ando, H., and et. al., 2016. Wireless multichannel neural recording with a 128-Mbps UWB
transmitter for an implantable brain-machine interfaces. IEEE transactions on
biomedical circuits and systems. 10(6). pp.1068-1078.
Campbell, R.M., Padayachee, K. and Masombuka, T., 2015, December. A survey of honeypot
research: Trends and opportunities. In 2015 10th international conference for internet
technology and secured transactions (ICITST) (pp. 208-212). IEEE.
De Kruijff, J. and Weigand, H., 2017, June. Understanding the blockchain using enterprise
ontology. In International Conference on Advanced Information Systems Engineering
(pp. 29-43). Springer, Cham.
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REFERENCES
Books and journals:
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