Recording Business Transaction

Recording Business
Transaction
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Contents
Introduction......................................................................................................................................3
Main body........................................................................................................................................3
A. What is the importance of Accounting Information in a Business Organisation?..................3
B. Differences between Gross Profit vs Net Profit......................................................................4
C. Difference between non-current assets and current assets and non-current liabilities and
current liabilities..........................................................................................................................5
D. The meaning of the double entry bookkeeping system..........................................................6
E. Who invented this system originally?.....................................................................................6
F. What is meant by debit and credit?.........................................................................................7
Accounting entries...........................................................................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8
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Introduction
Business transactions are considered as the group activity or the events that ae measured
in form of monetary form and this helps in determining the financial position of the company.
This has been seen that all the business transaction in a company affects the accounting elements
which are considered as the Assets, Liabilities, capital, income and the expenses. Also all the
transactions may be classified into exchange transactions or non-exchange transactions (Buffum
and et. al., 2018). This report contains the advice that is given to Mr. Till who is director of small
business. They are engaged in the business of kilts and the company is named as Kool kit Ltd.
also the questions that would be answered in this report are importance of accounting
information in business organisation, difference between the gross profit and net profit. Also the
difference between non-current and current assets and liabilities would be discusses here in.
After this the report will move to meaning of double entry book keeping system. At last the
discussion would move to the meaning of what is meant by debit and credit.
Main body
A. What is the importance of Accounting Information in a Business Organisation?
This is important for the business organisation to record the accounting data which is
available to them so that it is easy for the stakeholders to know about the financial position of the
company (Collis, Holt and Hussey, 2017). The term accounting is considered as very common
term which helps the company to record the business information in the monetary form so that
the decisions can be made for increasing the profits of the company. To run the business
organisation it is important to record the data, analyse it and sustain it. Hence the accounting
information is very important for the company’s management so as to take decisions for the
better implementation of the strategies to expand the business and earn maximum revenue. This
is very important for the company as without the accounting information the company is not able
to form the strategies for the future business. There are various importance of accounting which
includes the following:
 Helps to monitor the cash flows: The requirement of working capital and the liquid assets
can be predicted through the financial information of the company.
 Income statement: this helps management in knowing the profits or loss the company is
gaining over its operating activities.
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