Recording Business Transaction: Accounting Information and Its Impact

RECORDING
BUSINESS
TRANSACTION

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
a) Explanation regarding who are decision makers and their need for information related with
accounting...................................................................................................................................3
b) Explanation of advantage & disadvantage of accounting.......................................................3
PART 2............................................................................................................................................4
Journal entries ............................................................................................................................4
PART 3............................................................................................................................................7
a) General ledger of Pearce & Sons...........................................................................................7
b) Trial balance of Pearce & Sons...............................................................................................9
PART 4............................................................................................................................................9
a) Formulation of income statement of Airman Company.........................................................9
b) impact of COVID-19 on Airman Company's Profit & Loss statement...............................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Recording business transaction is part of accounting process. This report has been
formulated in order to define how personal record, summarized business transaction by preparing
journal as well as ledger and trial balance. It also describe impact of COVID – 19 on company's
financial performance by formulating and reviewing income statement.
PART 1
a) Explanation regarding who are decision makers and their need for information related with
accounting.
Decision makers are those individual who have right to take decision and formulate
policies for business organization. In every business entity accounting information is useful for
CEO, finance manager, auditor and cost accountant of organization.
Cadbury is multinational organization which spread its market in more then of 50
countries, thus in order to maintain data cost accountant use to record business transaction. They
on the basis of evaluating statements calculated cost required for run business activities (Alkali,
Zuru and Kegudu 2018).
Finance manager use accounting information in order to evaluate financial performance
of company and measure it by performance of rival business entities. Accounting information
useful in take decision regarding which alternative is more beneficial for raise business profits.
Data collected and measure by using accounting information is also beneficial for CEO
of Cadbury on the basis of that they represent companies financials statement in front of public
as well as took decision regarding future business policies in order to attain their long term goals.
They on the basis of that take decision regarding allocation of capital source of fund
through which they can raise their cash inflow activities.
Management department of Cadbury use accounting information in such way which useful for
maintaining their business records and beneficial for allocation of business resource which help
in attaining further business goals.
b) Explanation of advantage & disadvantage of accounting.
Accounting is consider as essential branch of business. Following are its advantage &
disadvantage :
Advantages

Maintain business record: Field of accounting is developed for the purpose of easily
record business transaction in systematic formate. Manager use these record as evidence of their
business activities. These record are beneficial for the time of auditing process.
Help in forecasting: On the basis of information calculated from accounting statement,
manager able to forecast their further business earnings as well as they estimate expenses
incurred during the time of running business activities (Jasmine, 2019).
Help in decision making: Accounting ingratiation useful in process base for formulation
of managerial accounting reports. Theses reports beneficial for manager to take decision
regarding further business activities. Success of organization depend on the decision taken by
managers thus accounting play vital role in taken decision and it is mandatory for every business
entity .
Useful in calculating tax liabilities: Accounting information is used by manager for
calculate as accurate tax liability. This will be beneficial for the purpose of controlling tax
evasion related activities.
Disadvantages
Require skilled personal: For recording business transaction accurate way manager
needs to hire expertise who have knowledge regarding accounting field. It is not necessary that
information provided from accounting statement is reliable as these information totally based on
the skills of personal who record transaction and formulation financial statements.
Accounts can be manipulated: Accountant in order to make secret profit change
summery of accounts due to this business not able to recognize the accurate profit organization
generate for special period of time. Generally organization for the purpose of tax evasion
manipulated accounts and financial statements (Krismiaji, 2019).
Highly expensive for small business: For small business entities it is hard for them to
maintain accounts as they don't have sufficient capital for hire accountant.
PART 2
Journal entries