Recording Business Transaction: Steps, Accounting, and Analysis

This report highlights the importance of recording business transactions and its impact on decision making for the success of a business. It includes steps for starting a business, accounting aspects, journal entries, ledger accounts, income statement, and trend analysis.

RECORDING BUSINESS TRANSACTION
ASSESSMENT 1

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1...................................................................................................................................................1
2...................................................................................................................................................2
PART B............................................................................................................................................2
1...................................................................................................................................................2
2...................................................................................................................................................3
PART C............................................................................................................................................6
a)..................................................................................................................................................6
b).................................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Recording business transaction is associated with process of multi-step which aids in
examining affected accounts so that proper formulation of decision on the basis of obtained
information can become possible. In the current era, the complexity of transaction has increased
in which requires firm to record this in order to gain sufficient information for making accurate
& reliable report. The current report will include steps for starting business as decorator and
identification of decision makers for listed company on London stock exchange. It will include
calculation of journal entries, ledger trail balance and income statement. This will emphasize on
predicting profit or loss of upcoming year so that evaluation of company's performance can be
done.
PART 1
1.
There are few critical actions which are required to be taken into consideration while
operating a new business. To become successful and having ability to eliminate legal course of
action in turn better processing can be achieved (Tiwari and Khan, 2020).
The initial step that is required to be included in order to start business is checking the
legal requirements so that appropriate knowledge can be obtained. The other step is considered
with paying attention on having business plan so that significant structure can be derived to
continue in effective manner (Schumann2019). Opening bank account so that appropriate
practice such as financial, accounting and legal obligations can be conducted appropriately.
Creating brand awareness through developing brand strategy so that essential business sorting
setting up internet, etc. can become possible (Bebbington, Russell and Thomson, 2017)
. The particular step can be done by deciding the name with maintaining branding so registering
with HR revenue & customer related laws in turn higher effectiveness to accomplish the goals
can become possible. It can allow creating system that business can keep records in turn gaining
sustainability & profitability. (Nowotny, 2018.) From the evaluation it can be specified that
these are crucial steps that can be taken into consideration for having ability to start business as
decorator.
David Green as being part of decorating industry require to follow the mentioned steps
so that irrelevant legal obligation arising while dealing with customers can be provided. These
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steps can provide assistance in having ability to spread awareness regarding brand in turn higher
profitability can be obtained (Rosenthal, 2018). On the basis of this, it can be said that these are
crucial steps which are required to be taken into consideration for having proper stability in
specific industry.
Pestle analysis
Political factors
 Being a business entity as a decorator
firm needs to comply with all the tax
and other laws & legislation associated
with it.
Economic factors
 Currently, due to COVID-19 economic
condition is affected to a great extent.
Meanwhile, purchasing power is
affected significantly which in turn has
direct impact on business operations.
Social factors
 Trends and customer’s preferences are
changing quickly with regards to
interior designing. Hence, sole trader
needs to keep in mind customer’s
choices while offering designing
services.
Technological factors
 With the rise in technological
advancements now customers do more
research about designs before placing
any order. Further, online website need
to be developed for attracting more
customers.
Legal factors
 There are several laws with which firm
needs to comply with for ensuring
smooth functioning such as Customer
protection, Intellectual property,
Equality Act etc.
Environmental factors
 As per the standards, for enhancing
brand image and attract customers’
firm needs to perform activities in an
eco-friendly manner.
SWOT analysis
Strengths
 Innovative offerings
Weaknesses
 Lack of research and development
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 Skilled and efficient staff
 Effective social media presence
 No economies of scale
Opportunity
 Company has opportunity to capture
market share and increase customer
base by offering products and services
at overseas level.
Threat
 Presence of leading brands such as
Ikea, Walmart etc impose threat in
front of the firm.
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Accounting is concerned with paying attention on recording, analysing and summarizing
information in turn relevant, reliable and accurate information for having significant decision in
turn accomplishing business objectives can become possible (Savga, Krykliy and Kyrychenko,
2018). Accounting experts positions refers to those who has significant ability to identify,
recognise and analyse the information. The experts include financial analyst, accountant,
assistant managers, etc. play significant role in fulfilling the objective. TESCO is one the
multinational company that has been listed on London stock exchange which require firm to take
strategic decision so that better outcome to stakeholders can be provided (Christ and Burritt,
2018). There are several stakeholders that are required to be taken into consideration by
company in turn effective decision formulation can become possible (Maheshwari, Maheshwari
and Maheshwari, 2021). There are number of stakeholders such as internal and external that get
affected from the processing of company. The internal stakeholders include management,
employees, etc (Internal vs external stakeholders, 2021). on the other side, external stake
holders comprise suppliers, customers, investors, government agencies, etc. accounting play
significant role in influencing business action as decision are basically based on financial
statements prepared by companies (Brown and et.al., 2019).
From the given statement regarding accounting it can be specified that the stakeholders
that decision on basis of provided information includes both internal & external parties
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(Derakhshan, Turner and Mancini, 2019.). Management of TESCO uses these information for
analysing its capabilities to generate revenue from selling products and utilizing resources. It
leads in making effective decision (Ashari and Anggoro, Y., 2020). Investors, suppliers,
lenders, etc. parties of TESCO highly concentrate on analysing that achieving objective of
higher profitability can become possible for the company or not (Putra, 2019). On the basis of
this, it can be identified that these all stakeholder take decision on the basis of provided
information.
PART B
1.
Journal entries for the transactions of September 2021 are enumerated below
Date Particular Debit (in
£)
Credit
(in £)
1 Bad Debt A/C
To P Mullen
(Being bad debt recorded owed by P Mullen)
105
105
5 Syme Ltd A/C
To purchase return A/C
(being goods returned by Syme)
150
150
10 Cash a/c
Bad debt a/c
To M. Abel
(Being M. Abl declared bankrupt)
180
131
311
18 Machinery a/c
To cash
To bank
To Brown ltd
(being machinery purchased through cash, cheque and
credit)
1800
100
500
1200
26 Brown ltd a/c 600
4

To Bank a/c
(being half of debt paid by cheque)
600
28 Insurance A/C
Drawing a/c
To bank a/c
(being amount paid for insurance both business and
private)
60
70
130
2
Journal entries for the transactions of August 2021 in the books of ABC enterprises are as
follows:
Date Particular Debit Credit
1 Bank a/c
To bank loan a/c
(being bank loan taken)
12400
12400
2 Cash a/c
To Bank a/c
(being amount transferred in cash)
2800
2800
3 Van a/c
To Bank a/c
(being van purchased and paid by cheque)
6200
6200
4 Office fixtures
To bank
To Sharp Office ltd
(being office fixtures purchased on cash & credit
basis)
3400
1000
2400
8 Van a/c
To Toyota Co
(Being van purchased on credit)
8700
8700
15 Office fixtures 110
5

To cash
(being office fixtures purchased on cash)
110
19 Toyota co
To bank
(being amount paid to Toyota by cheque)
8700
8700
25 Bank a/c
To cash
(being cash deposited in bank)
430
430
28 Office fixtures
To bank a/c
(being office fixtures purchased by cheque)
750
750
Ledgers
Bank a/c
Date Particulars Amount (in £) Date Particular Amount (in £)
1-Aug Bank loan 12400 2-Aug By cash 2800
25-Aug To cash 430 3-Aug By van 6200
31-Aug To bal c/d 6620 4-Aug By office fixtures 1000
19-Aug By Toyota Co. 8700
28-Aug By office fixtures 750
Total 19450 19450
Bank loan a/c
Date Particulars Amount (in £) Date Particular Amount (in £)
31-Aug To bal c/d 12400 1-Aug By Bank 12400
12400 12400
Cash a/c
Date Particulars Amount (in £) Date Particular Amount (in £)
2-Aug to bank 2800 8-Aug by office fixtures 110
25-Aug by bank 430
31-Aug by bl c/d 2260
Total 2800 2800
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Van a/c
Date Particulars Amount (in £) Date Particular Amount (in £)
3-Aug to bank 6200 31-Aug by bal c/d 14900
8-Aug to Toyota 8700
Total 14900 14900
Office fixtures a/c
Date Particulars Amount (in £) Date Particular Amount (in £)
4-Aug to bank 1000
4-Aug to sharp office 2400 31-Aug by bal c/d 4260
15-Aug to cash 110
28-Aug to bank 750
Total 4260 4260
Sharp office Ltd
Date Particulars Amount (in £) Date Particular Amount (in £)
4-Aug by office fixtures 2400
31-Aug To bal c/d 2400
Total 2400 2400
Toyota
Date Particulars Amount (in £) Date Particular Amount (in £)
19-Aug to bank 8700 8-Aug by van 8700
8700 8700
Trial balance of ABC Enterprise
Particulars
Debit side
Figures (in £)
Credit side
Figures (in £)
Bank 6620
Bank loan 12400
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Cash 2260
Van 14900
Office fixtures 4260
Sharp office 2400
Total 21420 21420
PART C
a)
Income statement of sole trader B Moore. as at 30 September 2021
Particulars
Figures
( in £)
Figures
( in £)
Sales 95,000
Return inwards (Sales Returns) 3,500
91,500
COGS 114,280
Carriage inwards 890
Gross Loss -23,670
Carriage outwards 500
Motor expenses 1,400
Rent 7,000
Telephone charges 830
Wages and salaries 14,000
Insurance 1030
Office expenses 800
Sundry expenses 250 25810
Net loss 49,480
Particulars
Figures ( in
£)
Inventory (Stock): 30 September 2020 18,000
Purchases 110,000
less: Returns outwards (Purchase
Returns) 720 109,280
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Closing stock 13,000
COGS 114,280
b)
From the presented information regarding profit and loss of B More since 2013 to 2020, it
can be specified that there is fluctuating trend in overall functioning of the company. In the 2013
the company has obtained 55800 which has inclined to 77100 and then to 85500 for the
respective years such as 2014 & 2015. From the evaluation of these three years it can be said
that company is having inclining trend of growth. From the year 2016 to 2018 there is
fluctuating pattern is seen as in initial o it has decrease and then increase. This is the
performance of prior COVID which is indicating that company has good financial health.
Y= 1326x+121793
= 1326(9)+12793
= 11934 +12793
= 24727
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From the evaluation of above presented chart it can be said that the profitability for the year
2022 is 24727. On the basis of this it can be articulated that there is positive outcome which is
reflecting upward movement of the company's growth & development. In addition to this, it can
be said that after the pandemic company was facing losses which can has been covered by
company through making larger efforts. From the presented trend line it can be said that in year
2022 firm will derive profitability.
CONCLUSION
From the above report it can be concluded that recording business transaction is essential in
having depth insights about company's processing so that relevant decision can be taken. The
current report has given emphasis on describing steps crucial for operating new business which
comprises checking legality, formulating structure, etc. the current study has focused on
explaining internal & external stakeholders like managers, employees, competitors, investors,
etc. that formulated decision. In order to forecast profit or loss trend line possessing graph has
been developed which indicates that in the year 2022 there will be profitability. It is indicating
good financial performance of the company.
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REFERENCES
Books and Journals
Ashari, M. H. and Anggoro, Y., 2020. Implementation of Green Accounting in Business
Sustainability at Public Hospitals in Malang Raya. International Journal of Multicultural
and Multireligious Understanding, 7(10), pp.391-403.
Bebbington, J., Russell, S. and Thomson, I., 2017. Accounting and sustainable development:
Reflections and propositions. Critical Perspectives on Accounting. 48. pp.21-34.
Brown, C. and et.al., 2019. Accounting for business adaptations in economic disruption
models. Journal of Infrastructure Systems. 25(1). p.04019001.
Christ, K. L. and Burritt, R. L., 2018. The role for transdisciplinarity in water accounting by
business: reflections and opportunities. Australasian Journal of Environmental Management.
25(3). pp.302-320.
Derakhshan, R., Turner, R. and Mancini, M., 2019. Project governance and stakeholders: a
literature review. International Journal of Project Management. 37(1). pp.98-116.
Maheshwari, S. N., Maheshwari, S. K. and Maheshwari, M. S. K., 2021. Principles of
Management Accounting. Sultan Chand & Sons.
Nowotny, T., 2018. Judt Business (pp. 158-163). Routledge.
Putra, Y. M., 2019. Analysis of Factors Affecting the Interests of SMEs Using Accounting
Applications. Journal of Economics and Business. 2(3).
Rosenthal, C., 2018. Accounting for slavery. Harvard University Press.
Savga, L., Krykliy, O. and Kyrychenko, K., 2018. The role of internal and external stakeholders
in higher education system in ukraine. Business ethics and leadership. 2(1). pp.32-43.
Schumann, H.O., 2019. The use of student-copresented virtual guest speakers in entrepreneurial
education. Journal of Education for Business. 94(6). pp.418-422.
Tiwari, K. and Khan, M. S., 2020. Sustainability accounting and reporting in the industry
4.0. Journal of cleaner production. 258. p.120783.
Online
Internal vs external stakeholders. 2021. [Online]. Available through:
<https://boycewire.com/stakeholder-definition/>
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