Recording Business Transactions

Recording Business
Transactions

Table of Contents
INTRODUCTION...........................................................................................................................1
ASSESSMENT 1.............................................................................................................................1
PART 1............................................................................................................................................1
Need of the accounting information for the decision makers......................................................1
Advantages and disadvantages of the business structure for recording the accounting
information...................................................................................................................................2
PART 2............................................................................................................................................3
Journal entries for the David wise for setting up new business ..................................................3
PART 3............................................................................................................................................4
Prepare of the ledger accounts and trial balance for the Pearce & sons......................................4
PART 4............................................................................................................................................6
Income statement for Airman co.:...............................................................................................6
Impact of Covid-19 on the company financial statements...........................................................7
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................8

INTRODUCTION
Recording business transaction is the double entry process in which all the steps are
included from recording to evaluation. It helps the business in in recording the transaction in the
debit and credit side which is done in the journal. In the financial statements there is the
summary of all the transactions which is recorded in the profit and loss. It means the economic
event that is recorded in the accounting system of the organization. All these transaction
measurable in the money (Aragon, 2017) . In this assessment, business transaction is recorded in
the form of journal,ledger and balance sheet which is based on the companies business records to
know about its financial growth and position. In this there is the need of the accounting
information for the decision makers and also the advantage and disadvantage of the business
structure.
ASSESSMENT 1
PART 1
Need of the accounting information for the decision makers
Accounting information play a important role in for the continuous running of the
business because it helps in tracking the income and expenditure, provide important information
to the investor and also financial information to the government. Financial accounting helps in to
keep track of all business transactions in the book of accounts. It involves recording,
summarizing, reporting of all economic activity from the business functioning over a specific
period of time (Kim, Rhee and Lee, 2016). There are many standards and policies are made for
the company in the UK which is follow by the generally accepted accounting principle. Financial
accounting helps the decision maker in making decisions in following ways.
 Through this information investor can easily do the analysis of the company financial
statement and also comparison between the financial health of the trade securities.
 It also help creditors in finding out the liquidity, solvency and and efficiency of the
business ate the particular time period.
 It also helps to the manager in effective use of the resources for taking the business
decisions effectively.
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 It also help the management in recording the financial transaction for the good position of
the company such as Profit and loss, balance sheet and ratio analysis.
 It helps the decision maker in making the planning in regards to the sales, development
and also help in determining the inventory in the stock.
 Accounting information also help in making budget because it is very necessary for
making the estimation of revenue and expenses at the workplace.
 It also help the internal user in making investment credit and other decisions for the
employees, investors and creditors.
 It also help the finance manager in take decisions for controlling the operating activities
and financing activities (Klenk, Onyenokwe and Perez, 2020).
Advantages and disadvantages of the business structure for recording the accounting information
Accounting: It is a process of recording or financing the transaction for the pertinent of
the business. It includes summarize, and reporting the transaction for the accurate decision. Some
examples of the accounting are planning of income tax, financial planning, auditing.
Advantages
 Maintenance of business records: It helps in recording all the transaction related to the
finance in a systematic manner in books. Every transaction related to the finance is not
easy to remember due to the size and complexities of the organisation.
 Preparation of financial accounts: In financial statement all the accounts Balance
Sheet, P&L are prepared in a proper manner. The transaction related to the finance are
also recorded correctly so that the results are accurate enough.
 Comparison of results: It helps in comparing the results of two years so that the accurate
data can be analysed. It helps in recording the transaction according to the policies.
 Decision making: proper recording of the data make it easier for the management to take
the decisions in a proper manner and helps the management to plan its future activities of
the various department and prepare budgets.
Disadvantages:
 Express accounting information in terms of money : transaction that are non-financial
are not recorded and do not have any effect in the books of accounts. Transactions related
to the finance are measurable in a proper manner because they are recorded in monetary
value.
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