Recording Business Transactions - Desklib

The report covers the steps required for starting a new business, decision making help of financial accounting, journal entries, and income statement preparation with analysis. It also includes the subject of accounting and finance. The course code, name, and university are not mentioned.

Recording Business
Transactions

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
Enlist the steps required for the beginning of new business.......................................................3
Mention the decision making help of financial accounting and recognise the decision makers
of Tesco.......................................................................................................................................4
PART B............................................................................................................................................5
1. Depict the journal entries of F Polk as on 1 September..........................................................5
2. Record the General Ledger and Trial Balance of the Maurice and brothers...........................6
2. (b) Trial balance on 31st August, 2021...................................................................................8
PART C............................................................................................................................................8
(a) Provide the income Statement of B Moore for the year ending on 30th September, 2021...8
b) Examine the income statement of B Moore along with anticipating any increase or
decrease in the profit or loss for the year 2022...........................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Accounting transactions can be defined as the systematic business activity which
facilitates the inclusion of monetary business entries that directly impact the financial position
and performance of a concerned business institution (Joannides de Lautour, 2018)who are the
users of the Managerial accounting, 2019. It can be in form of cash or credit. The report is
divided into three parts. The first section mentions the procedure of starting a new firm along
with identifying the decision makers of Tesco company. The second and third part relates to the
preparation of complete financial accounts from journal to financial statements along with the
analysis of results.
PART A
Enlist the steps required for the beginning of new business.
David Green is a sole trader who wants to start his own business of decorator. He is
aware about his different responsibilities and duties but does not know the way by which he can
start his own business. To aid him in his decision following some steps are mentioned for
starting its business. These steps are mentioned below:
1. Have a Business Idea – At very first, the person needs to decide the business, it desires
to start. Here, Mr. David is planning to inaugurate its sole proprietorship as a decorator.
Having a business idea will help the business person to understand the possible ways that
they can take up to make the business work.
2. Conduct Market research – Next step is to take a deep look at the market and conduct a
survey for collecting information about the location where the business should be settled
and what is the level of competition in the market.
3. Make a Business Plan – After, conducting the research, there is a need of making a well
proof business plan comprising of the assets to be purchased, goods to be manufactured
and many more (Cosenz and Noto, 2018).
4. Secure Funding – Now, it is the time for MR. David to look out for the amount of
capital it needs to invest in the business. In addition to this, it needs to identify the
sources from where these funds could be raised. Here also, there is need of conducting
research for ascertaining the cheapest source of finance.

5. Decide on the Business Structure – After this, the structure of business is decided.
Here, Mr. David is a sole proprietor, Thus, it will solely be responsible for its operations
and will own the whole business by itself.
6. Register your Business – After making plan, it is required to register the business with
the concerned authorities. It is very important to make the presence of business authentic.
Registering the business is required by law and other law authorities as the business is
required to pay taxes.
7. Register for Tax in your local government – Then, get the business registered with the
taxation authorities so that income tax could be paid in time and there is no problem
related to it in future.
8. Obtain the necessary permits and license – Take required permits and licenses from
the government to work as a decorator. The different permits are required by businesses
that deal in different industries like medicine etc.
9. Study employer responsibilities – At last, the employer is required to conduct a study
on the responsibilities of the employer, if it is facing any kind of problem in performing
as an enterpreneur.
By adopting the above mentioned steps, David can begin its business as decorator.
Mention the decision making help of financial accounting and recognise the decision makers of
Tesco.
Financial accounting refers to the procedure of identifying, recording and interpreting the
monetary records of the company (Nzembayie, 2019). This is very helpful for Tesco in
ascertaining the position and performance of the firm and aids in anticipating its future health.
Various users like shareholders and creditors frame their decisions in accordance with the results
driven under these reports. Tesco can also make use of ratios for interpreting the growth of the
firm and making various decisions. Tesco is a firm listed under London stock exchange so, they
are required to avail their financial information publicly. Here are the users of accounting
information of Tesco (Tesco, 2021) .
Users of accounting information
 Business Management- Tesco being a large business has diversified team of
management which is separate from shareholders. They are interested in generating
information about the position of firm so that they can take further decisions. Financial

statements help in solving this purpose by providing them the information related to the
accounting aspect of the organisation (Who are the users of the Managerial accounting,
2019).
 Competitors- These are the rivalry firms who desires to have information about the
opposite business related to the profits earned by them. On the basis of this data, they
compare the performance of their own business with that of the competing entity.
 Creditors- These parties make use of accounting information for ascertaining the
liquidity of the company so that they could determine that whether the business is in
condition of repaying their debts or not.
By determining the actual performance of entity, the users of financial data frame their
decision that whether they should continue their dealing with business or not. They also take
decision that if there is any requirement of changing the terms at which their dealings are taking
place.
PART B
1. Depict the journal entries of F Polk as on 1 September.
Journal of F Polk for the month September
Date Details Fol Debit Credit
01/09/21 Assets A/c
Fixtures
Stock
Debtors (105 + 311)
Bank
Cash
Creditors (229 + 80)
Capital
(Opening entry)
5700
2800
5200
416
1060
85
309
14952
01/09/21 Bad Debts
P Mullen
(Bad Debts written-off)
105
105

05/09/21 Payable
Office Fixtures
(Office fixtures bought through credit was written-off)
150
150
10/09/21 Cash
Bad Debts
M Abel
(M Abel declared bankruptcy and received the amount in
full settlement)
180
131
311
18/09/21 Machinery
Cash
Bank
Payables
(Purchased a machinery and the amount paid by cheque,
cash and on credit)
1800
100
500
1200
26/09/21 Payables
Bank
(Half of the amount due paid through cheque)
600
600
28/09/21 Insurance Expenses
Drawings
Bank
(Insurance expenses paid by bank but later realised that
£70 is of personal house)
60
70
130
2. Record the General Ledger and Trial Balance of the Maurice and brothers.
Cash Account
Date Details Fol Amount Date Details Fol Amount
03/08/21 Bank 2800 15/08/21 Office Fixtures 110
25/08/21 Bank 430

31/08/21 Balance c/d 2260
2800 2800
1/09/21 Balance b/d 2260
Bank Account
Date Details Fol Amount Date Details Fol Amount
03/08/21 Cash 2800
01/08/21 Capital 36800 04/08/21 Van 6200
25/08/21 Cash 430 05/08/21 Office Fixtures 1000
02/08/21 Loan Payable 12400 19/08/21 Van (Mercedes Plc) 8700
28/08/21 Office Fixtures 750
31/08/21 Balance c/d 30180
49630 49630
1/9/21 Balance b/d 30180
Van Account
Date Details Fol Amount Date Details Fol Amount
01/08/21 Capital 32000
04/08/21 Bank 6200 31/08/21 Balance c/d 46900
08/08/21 Toyota Co. 8700
46900 46900
1/9/21 Balance b/d 46900
Office Fixtures
Date Details Fol Amount Date Details Fol Amount

01/08/21 Capital 1200
05/08/21 Cash 1000
05/08/21 Payables 2400 31/08/21 Balance c/d 5460
15/08/21 Cash 110
28/08/21 Bank 750
5460 5460
1/9/21 Balance b/d 5460
Payables Account
Date Details Fol Amount Date Details Fol Amount
19/08/21 Cash 8700 5/08/21 Office Fixtures 2400
31/08/21 Balance c/d 2400 08/08/21 Van 8700
8700 8700
1/9/21 Balance b/d 2400
Loan Payable Account
Date Details Fol Amount Date Details Fol Amount
31/08/21 Balance c/d 12400 02/08/21 Bank 12400
12400 12400
1/9/21 Balance b/d 12400
Capital Account
Date Details Fol Amount Date Details Fol Amount
31/08/21 Bank 70000

31/08/21 Balance c/d 70000
70000 70000
1/09/21 Balance b/d 70000
2. (b) Trial balance on 31st August, 2021.
TRIAL BALANCE of Maurice & Brothers as at August, 2021
Details Debit Credit
Bank 30180
Cash 2260
Van 46900
Office Fixtures 5460
Payables 2400
Loan Payable 12400
Capital 70000
TOTAL 84800 84800
PART C
(a) Provide the income Statement of B Moore for the year ending on 30th September, 2021
Income Statement of B Moore for the year ending on September 2021
Details Amount (£)
Sales 95000
Less: Sales Returns (3500)
Net Sales 91500
Opening Stock 18000
Purchases 110000

Less: Return Outwards (720)
Add: Carriage Inwards 890
Less: Closing Stock 13000
Cost of Goods Sold 115170
Gross Loss -23670
Less: Motor Expenses 1400
Carriage Outward 500
Rent 7000
Telephone Charges 830
Wages and Salaries 14000
Insurance 1030
Office Expenses 800
Sundry Expenses 250
Operating Expenses 25810
Net Loss -49480
b) Examine the income statement of B Moore along with anticipating any increase or decrease
in the profit or loss for the year 2022.
The outbreak of Pandemic in year 2020 was a big shock for almost all companies. Nearly
all the business of world had to face a big loss in their organisations. As per the profits earned
by B Moore from the last few years, it is very much clear that the business has been following
the upward trend. It has been earning good amount of profit since year 2013. But in year 2020,
the company faced a huge loss amounting to £ 65400. This shows that the firm is in great loss
but can recover itself from this situation as it was earning good amount of profit earlier. The
main reason behind this fall was the outbreak of Covid-19. The company can anticipate the
profits of around £ 25000 in year 2022. Slowly all the restrictions on the operations of the
business are relaxing down. With the current ease of the restrictions on the regulations of the

COVID-19 and the movement of public outdoors, the sales of the company can elevate. Though
it would not increase to the extent, it was having profits in year 2019. But still, the business
would be able to recover itself. Thus, it could be stated that if the company continues its
operations with the same zeal and hard work, it would manage to earn high level of profits in the
near future.
CONCLUSION
From the above analysis, it can be concluded that it is necessary for an entrepreneur to
prepare a business plan before starting any business and should adhere to that framework
properly. Further, the transactions of the business should also be recorded properly and
according to the norms of the accountancy. Through this, the company can generate information
about its financial position which would help them in taking various business decisions.

REFERENCES
Books and Journals
Joannides de Lautour, V., 2018. Strategic Management Accounting, Volume II.
Cosenz, F. and Noto, G., 2018. A dynamic business modelling approach to design and
experiment new business venture strategies. Long Range Planning, 51(1), pp.127-140.
Nzembayie, K.F., 2019. Mechanisms Driving Digital New Venture Creation & Performance: An
Insider Action Research Study of Pure Digital Entrepreneurship in EdTech.
Tesco, 2021 Available Through [Online] <https://www.londonstockexchange.com/search?
searchtype=all&q=Tesco>
who are the users of the Managerial accounting, 2019 Available Through [Online]
<https://bizfluent.com/info-8393559-users-managerial-accounting.html>