Recording Business Transactions: Importance and Impact

RECORDING BUSINESS
TRANSACTION

INTRODUCTION
Recording business transactions is all about recording business activities and
transactions of the business entity. This report will reflect different element associated with
recording the business transaction of the organisation. Henceforth report will emphasis over
decision makers related to the accounting records in the organisation. Different systems
related to recording business transactions will also reflect in this project. Furthermore, journal
entry will also project in this report. Ledger account will also provide in this report. Trail
balance will also be a part of this report. Furthermore, income statement will also be a part of
this report. Impact of the covid over business growth will also demonstrate in this project.
a) Assessment
a. Part 1. A Decision maker of business
All decisions in business are taken based on the financial records of the company.
Different decision makers are a part of the business as they take decisions on the basis of the
position of the company denoted in the financial statement prepared by the business entity.
Following are the stakeholders that are the key decision maker part of te business.
Management: Management of the company are involved in taking all the important decision
in the business. Management analysis the financial position of the company reflect in the
financial book of accounts such as financial statement, trading account, income statement,
balance sheet and cash flow statement (Blue and Grootenboer, 2019). As the financial
records is the financial reflection of the performance of the company in respective market.
Manager assesses the overall performance of the business entity on the basis of the financial
book of accounts and takes all decision in business according to the performance. They all
assess the profitability of the decision making on the basis of the position reflect in the
company’s book of accounts.
Shareholders: Shareholders are also among the prominent stakeholder part of the company.
They are the investors and owners of every business entity. All shareholders make the
decision related to the investment in the business operation based on the financial records of
the entity. They assess the financial records to interpret the overall performance of company
in market and make the best level of decision related to the investment they made (Eberhardt,
de Bruin and Strough, 2017). Shareholders also assess the dividend and profit share allocated
to the existing shareholders of company while making decision related to the investment in

the company. It is essential that shareholders assess the performance denote in the company
book of account while taking the investment decision in the business.
Investors: Investors are also among the most prominent external stakeholders associated
with the business operations. They make the best decision on the basis of the financial
performance denote in the financial records of the business entity (Ziolo and et.al., 2019). It
is significant that financial investor’s analysis the financial books of accounts such as income
statement, balance sheet and cash flow statement so that they can analysis the possibility of
the company in entertaining business operations in the near future. They make investment
decision only when they get to see any effective profit in the business in future. They also
assess the leadership of the company based of the financial performance reflect in the
company’s book of accounts.
The above mentioned are the most prominent stakeholders of company utilises
financial records for making the decision making related to incurring transactions with the
organisation. It is essential that the organization make decision on the basis of the
information reflect in the financial records of the organisation.
b. Part 1. B Profit business structure
Business structure denotes the organisation hierarchy of the company. Following are
the two business structure that denotes the significance of the accounting records in taking the
best level of decision related to the operations in organisation. Business structure is
prominently segregated into formal business structure and informal business structure.
Formal business structure: Accounting book of records allow the management in context to
the formal business structure for making the best level of decision related to the operations in
organisation (Litterscheid and Streich, 2020). The stakeholder’s part of such business entity
allows the company to analysis the financial records for taking any decision in regards to any
affairs with the entity. It is crucial that organisation make all decision based on the
information reflect in accounting books of company.
Advantage:
 It reflects the financial stability of company.
 It improves business decision making of company.
 It expand the profit possibility of the organisation.
Disadvantage: