Recording Business Transactions: Basics of Accountancy and Financial Information

RECORDING BUSINESS
TRANSACTIONS

Table of Contents
INTRODUCTION...........................................................................................................................3
Part 1................................................................................................................................................3
a. Need of Accounting Information For Decision Makers of Unilever Company .....................3
b. Advantages and Disadvantages of Recording Accounting Information ................................4
Part 2................................................................................................................................................7
a) Journal Entries in David wise business ..................................................................................7
Part 3................................................................................................................................................7
a) General ledger of Pearce and Sons.........................................................................................7
b) Trial balance as at 30th February 2019.................................................................................10
Part 4.........................................................................................................................................10
a) Income Statement of Airman Co. as at 30th September 2020..............................................10
b) Impact of Covid 19 on the company's Income Statement ...................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
This project shall highlight the basics of accountancy, how the transactions are recorded and
furnished to the users of financial information and how are the profitability and the position of
the company calculated. The report shall be divided into four parts each focussing on different
aspects of accounting. The first part shall be explaining the various users of the accounting
information of Unilever company. The investors, management, customers, employees etc. using
the accounting information to facilitate the decision-making process. The second part shall be
disclosing the journal entries of the David Wise who has set up a new business in January 2020
before the outbreak of coronavirus. The third part of the project shall be demonstrating the ledger
accounts and the trial balance of Pearce and Sons for the month of February 2020. Lastly it shall
be reflecting the income statement of Airman Co. for the year ending 30th September 2020 and
showing the impact of covid 19 on the profitability of the company.
Part 1
a. Need of Accounting Information For Decision Makers of Unilever Company
Unilever is Multinational company that deals in consumer products, heath and face care
and listed on stock exchange .there are several decision makers that need accounting information
of the firm (Trigo, Belfo and Estébanez, 2016.). The objective of studying this wide data by
individuals is to identify the current position of company.
Internal Decision makers of information
These users are those who are known about the company's procedure and willing to take
decisions based on calculated accounting information.
Subordinates of Unilever
Employees' are interested in accounting information of the organization as it helps them
to understand growth that firm can actually achieve as it will impact their personal growth such
as jobs security and promotion (Susanto, 2016). Employees working in finance department find
it as their duty to prepare financial statement base on this information. Subordinates of Unilever
group checks these data to measure their performance.
Management
Management includes officers, board of directors and manager of Unilever. They use
these data for several decision-making like planning, organizing, directing and controlling, and

they also access accounting information to know ability of company to generate profits in future.
In financial information the management uses ratios like debt-equity, profitability and liquidity
ratios, income statements and balance sheet so that it can analyse its debt paying capacity of
Unilever company and requirement of funds can be identified by the top-level management so
that cash inflow and outflow can be adjusted.
Owners
They want to know the risk bearing capacity of business with the help of these data so
that they can take decision regarding allocation of their fund with the best strategies so that it can
give them optimum profit. Owners of Unilever company have shown many times though their
share prices that they are properly using data in adequate manner.
External Users of Accounting Information
Investors
Investors' decision of investing in any company is dependent on financial statement of
company. Unilever is company that have been on priority for some investors as its publish its
accurate financial data with full transparency.
Lenders
Lender's decision regarding lending fund to company is based on creditworthiness of
firm. The ability of paying debt is measured through calculating ratios (Olanrewaju and Jugu
2019). The Unilever company have good reputation due its solvency position in market.
Suppliers
Supplier gives input and final products to company on credit basis. It became essential
part to study the financial data of firm. Suppliers of Unilever company read the financial
statements to find out that giving o credit would be beneficial for them or not.
Tax Authorities
Tax Authorities need the financial information to determine that tax evasion can not be
take place by Unilever company. It a legal requirement for company to show its precise reports
to authorities.
b. Advantages and Disadvantages of Recording Accounting Information
There are several advantages and disadvantages of recording business transaction that
company get. Company deals various transaction so remembering each transaction becomes