Recording Business Transaction
VerifiedAdded on 2023/02/06
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AI Summary
This document provides an overview of recording business transactions, including double entry record posting, accessing a trial balance, evaluating an income statement, preparing a statement of financial position, and analyzing the impact of drawings in small businesses. It also covers the calculation and analysis of profitability ratios. Study material and solved assignments are available on Desklib.
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Recording Business transaction
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Table of Contents
Introduction......................................................................................................................................3
Double Entry Record Posting in T-Accounts and Balancing the Account......................................4
Accessing a Trial Balance.............................................................................................................11
Evaluating an Income Statement...................................................................................................12
Preparing a Statement of Financial Position..................................................................................13
Impact of Drawings in Small Business..........................................................................................15
Calculation and Analysing of Ratios.............................................................................................16
Conclusion.....................................................................................................................................18
2
Introduction......................................................................................................................................3
Double Entry Record Posting in T-Accounts and Balancing the Account......................................4
Accessing a Trial Balance.............................................................................................................11
Evaluating an Income Statement...................................................................................................12
Preparing a Statement of Financial Position..................................................................................13
Impact of Drawings in Small Business..........................................................................................15
Calculation and Analysing of Ratios.............................................................................................16
Conclusion.....................................................................................................................................18
2
Introduction
The many accounting and bookkeeping components of Anne York will be examined in this
paper. Bookkeeping is a step-by-step process that records company activities and occurrences to
keep financial paperwork up to date (Douglas Hillman et al., 2019). This report will use Anne
York's double-entry recording, and the results will be submitted to the T-account when they have
been processed (Ledger). Anne York will also be tested in terms of her trial balance. Following
that, various financial statements for Anne York will be shown. It will then be discussed in detail
throughout the paper how drawings are relevant to small businesses. In the end, several financial
ratios of Anne York will be computed, and her financial ratios will be assessed right away. In
addition, the influence of the Covid -19 epidemic on the average ratios will be discussed in
detail.
3
The many accounting and bookkeeping components of Anne York will be examined in this
paper. Bookkeeping is a step-by-step process that records company activities and occurrences to
keep financial paperwork up to date (Douglas Hillman et al., 2019). This report will use Anne
York's double-entry recording, and the results will be submitted to the T-account when they have
been processed (Ledger). Anne York will also be tested in terms of her trial balance. Following
that, various financial statements for Anne York will be shown. It will then be discussed in detail
throughout the paper how drawings are relevant to small businesses. In the end, several financial
ratios of Anne York will be computed, and her financial ratios will be assessed right away. In
addition, the influence of the Covid -19 epidemic on the average ratios will be discussed in
detail.
3
Double Entry Record Posting in T-Accounts and Balancing the
Account
T-accounts is widely used to produce adjusting entries, and they are a kind of Account. For
example, the matching principle in accrual accounting stipulates that all costs must be equal to or
greater than the revenues earned during the period they occur (Bodie et al., 2018). The T-account
guides accountants on what to record in a ledger to achieve an adjusted balance, ensuring that
revenues match costs. Company owners may also use the utilization of T-accounts to extract
data, such as the type of transaction that happened on a specific day or the amount and activities
of each Account. For example, the T-account of Anne York is following:
DR CASH A\C
CR
Date ££ Date ££
2021
Oct- 1
Oct- 23
Oct- 23
Oct- 31
Nov- 1
CAPTIAL A\C
SALES A\C
SALES A\C
ACCOUNTS
RECEIVABLE A\C
BALANCE B\D
4800
1800
700
150
7450
7340
2021
Oct- 12
Oct- 31
MAINTENANCE AND
REPAIR A\C
BALANCE C\D
110
7340
7450
4
Account
T-accounts is widely used to produce adjusting entries, and they are a kind of Account. For
example, the matching principle in accrual accounting stipulates that all costs must be equal to or
greater than the revenues earned during the period they occur (Bodie et al., 2018). The T-account
guides accountants on what to record in a ledger to achieve an adjusted balance, ensuring that
revenues match costs. Company owners may also use the utilization of T-accounts to extract
data, such as the type of transaction that happened on a specific day or the amount and activities
of each Account. For example, the T-account of Anne York is following:
DR CASH A\C
CR
Date ££ Date ££
2021
Oct- 1
Oct- 23
Oct- 23
Oct- 31
Nov- 1
CAPTIAL A\C
SALES A\C
SALES A\C
ACCOUNTS
RECEIVABLE A\C
BALANCE B\D
4800
1800
700
150
7450
7340
2021
Oct- 12
Oct- 31
MAINTENANCE AND
REPAIR A\C
BALANCE C\D
110
7340
7450
4
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DR BANK A\C CR
Date ££ Date ££
2021
Oct- 1
Oct- 5
Oct- 21
Nov- 01
CAPITAL A\C
SALES A\C
RENT REVENUE A\C
BALANCE B\D
10,000
2800
800
13600
8030
2021
Oct- 04
Oct- 24
Oct- 26
Oct- 30
Oct- 31
Oct- 31
COMPUTER A\C
EQUIPMENT A\C
LAPTOP A\C
SALARIES AND
WAGES EXPENSE A\
C
RENT EXPENSE
OWNER’S
DRAWING A\C
BALANCE C\D
800
200
1700
820
850
1200
8030
13600
DR ACC. RECEIVABLE A\C CR
Date ££ Date ££
2021
Oct- 23
Nov- 01
SALES A\C
BALANCE B\D
300
300
150
2021
Oct- 31
Oct- 31
CASH A\C
BALANCE C\D
150
150
300
5
Date ££ Date ££
2021
Oct- 1
Oct- 5
Oct- 21
Nov- 01
CAPITAL A\C
SALES A\C
RENT REVENUE A\C
BALANCE B\D
10,000
2800
800
13600
8030
2021
Oct- 04
Oct- 24
Oct- 26
Oct- 30
Oct- 31
Oct- 31
COMPUTER A\C
EQUIPMENT A\C
LAPTOP A\C
SALARIES AND
WAGES EXPENSE A\
C
RENT EXPENSE
OWNER’S
DRAWING A\C
BALANCE C\D
800
200
1700
820
850
1200
8030
13600
DR ACC. RECEIVABLE A\C CR
Date ££ Date ££
2021
Oct- 23
Nov- 01
SALES A\C
BALANCE B\D
300
300
150
2021
Oct- 31
Oct- 31
CASH A\C
BALANCE C\D
150
150
300
5
DR FLAT A\C CR
Date ££ Date ££
2021
Oct- 01
Nov- 01
CAPITAL A\C
BALANCE B\D
45000
45000
45000
2021
Oct-31 BALANCE C\D 45000
45000
DR CAR A\C CR
Date ££ Date ££
2021
Oct- 01
Nov- 01
CAPITAL A\C
BALANCE B\D
12000
12000
12000
2021
Oct- 31 BALANCE C\D 12000
12000
DR PURCHASE A\C CR
Date ££ Date ££
2021
Oct- 02
Nov- 01
ACC. PAYABLE A\C
BALANCE B\D
5400
5400
5150
2021
Oct- 18
Oct- 31
ACC. PAYABLE A\C
BALANCE C\D
250
5150
5400
6
Date ££ Date ££
2021
Oct- 01
Nov- 01
CAPITAL A\C
BALANCE B\D
45000
45000
45000
2021
Oct-31 BALANCE C\D 45000
45000
DR CAR A\C CR
Date ££ Date ££
2021
Oct- 01
Nov- 01
CAPITAL A\C
BALANCE B\D
12000
12000
12000
2021
Oct- 31 BALANCE C\D 12000
12000
DR PURCHASE A\C CR
Date ££ Date ££
2021
Oct- 02
Nov- 01
ACC. PAYABLE A\C
BALANCE B\D
5400
5400
5150
2021
Oct- 18
Oct- 31
ACC. PAYABLE A\C
BALANCE C\D
250
5150
5400
6
DR COMPUTER A\C CR
Date ££ Date ££
2021
Oct- 04
Nov- 01
BANK A\C
BALANCE B\D
800
800
800
2021
Oct- 31 BALANCE C\D 800
800
DR EQUIPMENT A\C CR
Date ££ Date ££
2021
Oct- 04
Nov- 01
BANK A\C
BALANCE B\D
200
200
200
2021
Oct- 31 BALANCE C\D 200
200
DR LAPTOP A\C CR
Date ££ Date ££
2021
Oct- 24
Nov- 31
BANK A\C
BALANCE B\D
1700
1700
1700
2021
Oct- 31 BALANCE C\D 1700
1700
7
Date ££ Date ££
2021
Oct- 04
Nov- 01
BANK A\C
BALANCE B\D
800
800
800
2021
Oct- 31 BALANCE C\D 800
800
DR EQUIPMENT A\C CR
Date ££ Date ££
2021
Oct- 04
Nov- 01
BANK A\C
BALANCE B\D
200
200
200
2021
Oct- 31 BALANCE C\D 200
200
DR LAPTOP A\C CR
Date ££ Date ££
2021
Oct- 24
Nov- 31
BANK A\C
BALANCE B\D
1700
1700
1700
2021
Oct- 31 BALANCE C\D 1700
1700
7
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DR SALES A\C CR
Date ££ Date ££
2021
Oct- 31 BALANCE C\D 5600
5600
2021
Oct- 05
Oct- 23
Oct- 23
Nov- 01
BANK A\C
CASH A\C
ACC. RECEIVABLE
CASH A\C
BALANCE B\D
2800
1800
300
700
5600
5600
DR RENT REVENUE A\C CR
Date ££ Date ££
2021
Oct- 31 BALANCE C\D 800
800
2021
Oct- 21
Nov- 01
BANK A\C
BALANCE B\D
800
800
800
DR CAPITAL A\C CR
Date ££ Date ££
2021
Oct- 31 BALANCE C\D 71800
71800
2021
Oct- 01
Nov- 01
CASH A\C
BANK A\C
FLAT A\C
CAR A\C
BALANCE B\D
4800
10000
45000
12000
71800
71800
8
Date ££ Date ££
2021
Oct- 31 BALANCE C\D 5600
5600
2021
Oct- 05
Oct- 23
Oct- 23
Nov- 01
BANK A\C
CASH A\C
ACC. RECEIVABLE
CASH A\C
BALANCE B\D
2800
1800
300
700
5600
5600
DR RENT REVENUE A\C CR
Date ££ Date ££
2021
Oct- 31 BALANCE C\D 800
800
2021
Oct- 21
Nov- 01
BANK A\C
BALANCE B\D
800
800
800
DR CAPITAL A\C CR
Date ££ Date ££
2021
Oct- 31 BALANCE C\D 71800
71800
2021
Oct- 01
Nov- 01
CASH A\C
BANK A\C
FLAT A\C
CAR A\C
BALANCE B\D
4800
10000
45000
12000
71800
71800
8
DR ACC. PAYABLE A\C CR
Date ££ Date ££
2021
Oct- 18
Oct- 31
PURCHASE A\C
BALANCE C\D
250
5150
5400
2021
Oct- 02
Nov- 01
PURCHASE A\C
BALANCE B\D
5400
5400
5150
DR OWNER’S DRAWING A\C CR
Date ££ Date ££
2021
Oct- 31
Nov- 01
BANK A\C
BALANCE B\D
1200
1200
1200
2021
Oct- 31 BALANCE C\D 1200
1200
DR RENT EXPENSE A\C CR
Date ££ Date ££
2021
Oct- 30
Nov- 01
BANK A\C
BALANCE B\D
850
850
850
2021
Oct- 31 BALANCE C\D 850
850
DR MAINTENANCE AND REPAIR EXPENSE A\C CR
9
Date ££ Date ££
2021
Oct- 18
Oct- 31
PURCHASE A\C
BALANCE C\D
250
5150
5400
2021
Oct- 02
Nov- 01
PURCHASE A\C
BALANCE B\D
5400
5400
5150
DR OWNER’S DRAWING A\C CR
Date ££ Date ££
2021
Oct- 31
Nov- 01
BANK A\C
BALANCE B\D
1200
1200
1200
2021
Oct- 31 BALANCE C\D 1200
1200
DR RENT EXPENSE A\C CR
Date ££ Date ££
2021
Oct- 30
Nov- 01
BANK A\C
BALANCE B\D
850
850
850
2021
Oct- 31 BALANCE C\D 850
850
DR MAINTENANCE AND REPAIR EXPENSE A\C CR
9
Date ££ Date ££
2021
Oct- 12
Nov- 01
CASH A\C
BALANCE B\D
110
110
110
2021
Oct- 31 BALANCE C\D 110
110
DR SALARIES AND WAGES EXPENSE A\C CR
Date ££ Date ££
2021
Oct- 26
Nov- 01
BANK A\C
BALANCE B\D
820
820
820
2021
Oct- 31 BALANCE C\D 820
820
10
2021
Oct- 12
Nov- 01
CASH A\C
BALANCE B\D
110
110
110
2021
Oct- 31 BALANCE C\D 110
110
DR SALARIES AND WAGES EXPENSE A\C CR
Date ££ Date ££
2021
Oct- 26
Nov- 01
BANK A\C
BALANCE B\D
820
820
820
2021
Oct- 31 BALANCE C\D 820
820
10
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Accessing a Trial Balance
A trial balance is an accounting document in which the proportions of all ledgers are gathered
into totals in the debit and credit account columns equal in both the worksheet's debit and credit
account columns (Chartered Institute Of Management Accountants, 2014). Producing a trial
balance has the general objective of assuring that the entries in a company's accounting system
are mathematically valid. For example, the trial balance of Anne York is following:
Anne York
Trial Balance
For the month ended October 31, 2021
Sl. No. Ledger Name DR Balance CR Balance
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
CASH A\C
BANK A\C
ACC. RECEIVABLE A\C
FLAT A\C
CAR A\C
PURCHASE A\C
COMPUTER A\C
EQUIPMENT A\C
LAPTOP A\C
SALES A\C
RENT REVENUE A\C
CAPITAL A\C
ACCOUNTS PAYABLE A\C
OWNER’S DRAWING A\C
RENT EXPENSE A\C
MAINTENANCE AND REPAIR A\C
SALARIES AND WAGES EXPENSE A\C
7340
8030
150
45000
12000
5150
800
200
1700
1200
850
110
820
5600
800
71800
5150
11
A trial balance is an accounting document in which the proportions of all ledgers are gathered
into totals in the debit and credit account columns equal in both the worksheet's debit and credit
account columns (Chartered Institute Of Management Accountants, 2014). Producing a trial
balance has the general objective of assuring that the entries in a company's accounting system
are mathematically valid. For example, the trial balance of Anne York is following:
Anne York
Trial Balance
For the month ended October 31, 2021
Sl. No. Ledger Name DR Balance CR Balance
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
CASH A\C
BANK A\C
ACC. RECEIVABLE A\C
FLAT A\C
CAR A\C
PURCHASE A\C
COMPUTER A\C
EQUIPMENT A\C
LAPTOP A\C
SALES A\C
RENT REVENUE A\C
CAPITAL A\C
ACCOUNTS PAYABLE A\C
OWNER’S DRAWING A\C
RENT EXPENSE A\C
MAINTENANCE AND REPAIR A\C
SALARIES AND WAGES EXPENSE A\C
7340
8030
150
45000
12000
5150
800
200
1700
1200
850
110
820
5600
800
71800
5150
11
83,350 83,350
Evaluating an Income Statement
It is one of a company's financial statements that reflect the company's earnings and costs over
an interval of time, known as an income statement (Garrison et al., 2018). When revenues are
converted into net income or profit, this explains how it happens. The income statement of Anne
York is following:
Anne York
Income Statement
For The Month Ended 31st October 2021
Details ££ ££
Sales
Opening inventory
Add: Purchase
Less: Purchase return
Less: Closing inventory
Rent revenue
Gross profit
Less: Operating expense
Rent expense
Salaries and wages expense
Maintenance and repair expense
-
5400
(250)
(320)
850
820
110
5600
(4830)
800
1570
(1780)
Net loss (210)
12
Evaluating an Income Statement
It is one of a company's financial statements that reflect the company's earnings and costs over
an interval of time, known as an income statement (Garrison et al., 2018). When revenues are
converted into net income or profit, this explains how it happens. The income statement of Anne
York is following:
Anne York
Income Statement
For The Month Ended 31st October 2021
Details ££ ££
Sales
Opening inventory
Add: Purchase
Less: Purchase return
Less: Closing inventory
Rent revenue
Gross profit
Less: Operating expense
Rent expense
Salaries and wages expense
Maintenance and repair expense
-
5400
(250)
(320)
850
820
110
5600
(4830)
800
1570
(1780)
Net loss (210)
12
13
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Preparing a Statement of Financial Position
To determine a company's net worth, a statement of financial position must be used. Thus, it
gives an accurate picture of the economic situation than a particular company. It is one of the
financial statements; therefore, it is often shown alongside the income statement and the
Statement of cash flows (Kieso et al., 2018). For example, the Statement of financial position of
Anne York is following:
Anne York
Statement of Financial Position
For The Month Ended 31st October 2021
Details ££ ££ ££
Non-current Assets:
Flat
Car
Computer
Equipment
Laptop
Current Assets:
Inventory
Cash
Cash at Bank
A. Receivable
Less: Current Liabilities
Accounts payable
Financed by:
320
7340
8030
150
45000
12000
800
200
1700
15840
(5150)
59700
10,690
70,390
14
To determine a company's net worth, a statement of financial position must be used. Thus, it
gives an accurate picture of the economic situation than a particular company. It is one of the
financial statements; therefore, it is often shown alongside the income statement and the
Statement of cash flows (Kieso et al., 2018). For example, the Statement of financial position of
Anne York is following:
Anne York
Statement of Financial Position
For The Month Ended 31st October 2021
Details ££ ££ ££
Non-current Assets:
Flat
Car
Computer
Equipment
Laptop
Current Assets:
Inventory
Cash
Cash at Bank
A. Receivable
Less: Current Liabilities
Accounts payable
Financed by:
320
7340
8030
150
45000
12000
800
200
1700
15840
(5150)
59700
10,690
70,390
14
Capital
Less: Net loss
Owners drawings
71800
(210)
(1200)
70,390
15
Less: Net loss
Owners drawings
71800
(210)
(1200)
70,390
15
Impact of Drawings in Small Business
The definition of withdrawal in accounts is a record maintained by a sole proprietor or
accountant that indicates how much cash has been taken by business owners from their
company's accounts. A drawing account is a balance in opposition to the owner's equity. The
negative balance of the drawing Account contrasts with the predicted credit balance of an
owner's equity account since owner withdrawals result in a diminution of the owner's ownership
in the firm (Steffy et al., 2014). For example, as Anne York withdrew 1200 pounds cash, her
owners' equity account was reduced by 1200 pounds. If she withdraws more and more,
consequently, her business will slow down. Furthermore, she might lose her liquidity position
due to drawing a considerable amount from the company.
16
The definition of withdrawal in accounts is a record maintained by a sole proprietor or
accountant that indicates how much cash has been taken by business owners from their
company's accounts. A drawing account is a balance in opposition to the owner's equity. The
negative balance of the drawing Account contrasts with the predicted credit balance of an
owner's equity account since owner withdrawals result in a diminution of the owner's ownership
in the firm (Steffy et al., 2014). For example, as Anne York withdrew 1200 pounds cash, her
owners' equity account was reduced by 1200 pounds. If she withdraws more and more,
consequently, her business will slow down. Furthermore, she might lose her liquidity position
due to drawing a considerable amount from the company.
16
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Calculation and Analysing of Ratios
Calculation of profitability Ratio: The revenue a company earns after reducing all of the
expenses associated with producing and distributing its goods or services is gross profit. A
company's net profit is the cash it makes after reducing operating, interest, and tax expenses for a
certain period (Dc Gardner Group, 2016). Formula
Gross Profit = (Gross Profit / Sales) x 100
Net Profit Ratios = (Net Profit / Sales) x 100
Gross profit ratio of Anne York: (1570/5600) x 100= 28.03 %
Net Profit Ratio of Anne York: (-210/5600) x 100= - 3.75%
Analyses: The competitors' Gross profit is 8% in 2021, whereas the gross profit of Anne York is
28.03%. It is seen that her gross profit ratio is higher than the competitor's, but when it comes to
the net profit ratio, the competitors are far ahead of Anne York.
Calculation of current and acid test ratio: Using current assets, a company's current ratio
measures its ability to meet short-term financial obligations. The acid test ratio determines a
company's ability to pay off its present debts (Bodie et al., 2018). It is appropriate for all sorts of
businesses. Formula:
Current Ratio = Current Assets / Current Liabilities
Acid-Test Ratio = (Current Assets – inventory) / Current Liabilities
Current Ratio of Anne York= (15840 /5150) = 3.0757 times
Acid test Ratio of Anne York= (15840-320) / 5150= 3.0135 times
Analyses: The current ratio of Anne York in 2021 is 3.07 times which indicates that she does
maintain a high liquidity ratio. In comparison, the competitors of Anne does have 2.8 times the
current balance. Therefore, it is seen that Anne has a higher current ratio than her competitor. In
terms of acid ratio, Anne here is also a clear winner. She does maintain a higher acid ratio than
her competitor. But Anne should keep in mind that a higher liquidity ratio is sometimes
insufficient for her business.
Calculation of accounts receivable collection period and Accounts payable payment period:
17
Calculation of profitability Ratio: The revenue a company earns after reducing all of the
expenses associated with producing and distributing its goods or services is gross profit. A
company's net profit is the cash it makes after reducing operating, interest, and tax expenses for a
certain period (Dc Gardner Group, 2016). Formula
Gross Profit = (Gross Profit / Sales) x 100
Net Profit Ratios = (Net Profit / Sales) x 100
Gross profit ratio of Anne York: (1570/5600) x 100= 28.03 %
Net Profit Ratio of Anne York: (-210/5600) x 100= - 3.75%
Analyses: The competitors' Gross profit is 8% in 2021, whereas the gross profit of Anne York is
28.03%. It is seen that her gross profit ratio is higher than the competitor's, but when it comes to
the net profit ratio, the competitors are far ahead of Anne York.
Calculation of current and acid test ratio: Using current assets, a company's current ratio
measures its ability to meet short-term financial obligations. The acid test ratio determines a
company's ability to pay off its present debts (Bodie et al., 2018). It is appropriate for all sorts of
businesses. Formula:
Current Ratio = Current Assets / Current Liabilities
Acid-Test Ratio = (Current Assets – inventory) / Current Liabilities
Current Ratio of Anne York= (15840 /5150) = 3.0757 times
Acid test Ratio of Anne York= (15840-320) / 5150= 3.0135 times
Analyses: The current ratio of Anne York in 2021 is 3.07 times which indicates that she does
maintain a high liquidity ratio. In comparison, the competitors of Anne does have 2.8 times the
current balance. Therefore, it is seen that Anne has a higher current ratio than her competitor. In
terms of acid ratio, Anne here is also a clear winner. She does maintain a higher acid ratio than
her competitor. But Anne should keep in mind that a higher liquidity ratio is sometimes
insufficient for her business.
Calculation of accounts receivable collection period and Accounts payable payment period:
17
Accounts receivable collection period: (Account receivable/net sales) x 365
Accounts payable payment period: (Account payable/net sales) x 365
Accounts receivable collection period of Anne York: (150/5600) x 365= 9.77 days
Accounts payable payment period of Anne York: (5150/5600) x 365= 335.66 days
Analyses: The Account receivable collection period of Anne York is 9.77 days which is lesser
than her competitors. This is good for Anne as she gets her receivables as quickly as possible.
Whereas, Her Accounts payable payment period is higher than her competitor. Her Accounts
payable payment period is 335.66days, whereas her competitor's Accounts payable payment
period is 17 days. Thus Anne should reduce her Account expected payment period.
Impact of Covid on ratio: Almost all the businesses worldwide have been affected by Covid.
Due to Covid, the companies' profit has reduced, which affects the profitability of the business
(Garrison et al., 2018). In addition, Covid has diminished the ability to collect Accounts
receivable and Payment of accounts. The average collection and payment periods have been
hampered through this.
18
Accounts payable payment period: (Account payable/net sales) x 365
Accounts receivable collection period of Anne York: (150/5600) x 365= 9.77 days
Accounts payable payment period of Anne York: (5150/5600) x 365= 335.66 days
Analyses: The Account receivable collection period of Anne York is 9.77 days which is lesser
than her competitors. This is good for Anne as she gets her receivables as quickly as possible.
Whereas, Her Accounts payable payment period is higher than her competitor. Her Accounts
payable payment period is 335.66days, whereas her competitor's Accounts payable payment
period is 17 days. Thus Anne should reduce her Account expected payment period.
Impact of Covid on ratio: Almost all the businesses worldwide have been affected by Covid.
Due to Covid, the companies' profit has reduced, which affects the profitability of the business
(Garrison et al., 2018). In addition, Covid has diminished the ability to collect Accounts
receivable and Payment of accounts. The average collection and payment periods have been
hampered through this.
18
Conclusion
For Anne York, we can conclude that she has an excellent gross margin ratio, but she has a lesser
ratio than her competitor when it comes to the net profit ratio. Therefore, she must focus more on
creating a higher net profit by reducing her cost and selling her product at best. Otherwise, Anne
has a significant financial position.
19
For Anne York, we can conclude that she has an excellent gross margin ratio, but she has a lesser
ratio than her competitor when it comes to the net profit ratio. Therefore, she must focus more on
creating a higher net profit by reducing her cost and selling her product at best. Otherwise, Anne
has a significant financial position.
19
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Reference list
A Douglas Hillman, Kochanek, R.F. and Norgaard, C.T. (2019). Principles of accounting.
United States: Dame Publications.
Bodie, Z. and Merton, R.C. (2018). Finance. Upper Saddle River, Nj: Prentice Hall.
Chartered Institute Of Management Accountants (2014). Financial management. London: Bpp
Learning Media.
Dc Gardner Group (2016). Ratio analysis. Dc Gardner Group Plc.
Garrison, R.H., Noreen, E.W. and Brewer, P.C. (2018). Managerial accounting. New York, Ny:
Mcgraw-Hill Education.
Kieso, D.E., Weygandt, J.J. and Warfield, T.D. (2018). Intermediate accounting. Hoboken, Nj
Wiley.
Steffy, W., Zearley, T. and Strunk, J. (2014). Financial ratio analysis : an effective management
tool. Ann Arbor: Industrial Development Division, Institute Of Science And Technology,
University Of Michigan.
20
A Douglas Hillman, Kochanek, R.F. and Norgaard, C.T. (2019). Principles of accounting.
United States: Dame Publications.
Bodie, Z. and Merton, R.C. (2018). Finance. Upper Saddle River, Nj: Prentice Hall.
Chartered Institute Of Management Accountants (2014). Financial management. London: Bpp
Learning Media.
Dc Gardner Group (2016). Ratio analysis. Dc Gardner Group Plc.
Garrison, R.H., Noreen, E.W. and Brewer, P.C. (2018). Managerial accounting. New York, Ny:
Mcgraw-Hill Education.
Kieso, D.E., Weygandt, J.J. and Warfield, T.D. (2018). Intermediate accounting. Hoboken, Nj
Wiley.
Steffy, W., Zearley, T. and Strunk, J. (2014). Financial ratio analysis : an effective management
tool. Ann Arbor: Industrial Development Division, Institute Of Science And Technology,
University Of Michigan.
20
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