Recording Business Transactions: Steps for Starting a Business, Decision-Makers in Accounting, Journal Entries, Ledger Accounts, and Income Statement

This report covers the steps for starting a business, decision-makers in accounting, recording of journal entries, ledger accounts, and income statement. It also includes an income statement for B More and an explanation of how the profit can be increased or decreased for the year 2022, considering the COVID-19 pandemic.

Business transactions

Contents
INTRODUCTION...........................................................................................................................1
Assessment 1....................................................................................................................................1
PART A...........................................................................................................................................1
Steps for starting the business of a decorator...............................................................................1
A company listed on the London Stock Exchange and define the involvement of decision-
makers in accounting...................................................................................................................2
PART B............................................................................................................................................3
Recording of Journal entries in the books of F Polk....................................................................3
Ledger accounts and Trial balance in the books of Maurice & Brothers....................................4
PART C............................................................................................................................................5
a. Income statement for B More..................................................................................................5
b. Explain what the profit can be increased or decreased for the year 2022, considering the
COVID–19 pandemic..................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business transaction is a financial term related to the event when two or more parties
come together to interchange goods, services or money within the business. Business transactions
of a company are recorded in accounting systems of the organisation and influence financial
position of business. These are sorted into two groups, that are, journals and ledgers. All the
financial records of the company are recorded in the Journal Book. Ledger accounts provide the
opening as well as closing balances for various accounts that are involved in the books of Journal
of the organisation (Abd Majid, Ariff and Mohamad, 2020). Within this present report, a
personnel wants to commence his own business and not knows the steps that are involved in
starting the business. For this, the steps will be explained in this portfolio. Decision-makers of
the organisation also requires financial support, explains Sainsburys. Furthermore, book of
Journal, ledger accounts, trial balance and income statement are taken into consideration for the
given details of the transactions.
Assessment 1
PART A
Steps for starting the business of a decorator
The business that David Green wants to commence is sole proprietorship and the
personnel is desirous to start of business of decoration. In sole proprietorship, the owner is
responsible for all the debts that may arise within the company and is same with David Green
also. Although this person is not aware about the roles as well as responsibilities that are
associated with starting a business. There are some steps that are to be taken into consideration
while starting a new business.
Create a model: First of all, the personnel must make a model to get success within the business
(Abhimantara, 2017). It would help in organising the daily business activities and there must be
clear specifications of the activities or services that are to be offered.
Developing business strategies: Business plan should be made by the personnel for making
progress within the business and it can be completed when mission, vision and objectives are
clearly defined. For doing this, the owner of the business must practice business strategies to gain
the competitive advantages over competitors in the market.
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Working of a business report: This is alike a booklet specifying the goals, abilities and
strategies that are formulated or to be taken by the business. It would likewise have the insights
in relation to the task that are to be accomplished in future in n effective manner. Addition, the
brief of the data is also included in it about the senior executives of the business along with their
abilities, skills and profession.
Listing of the equipments required for the business: Management of the business must assess
the instruments that are to be needed for daily business operations and the ownerhas to make a
list of those items (Anagnostopoulou, 2018). For an instance, the owner must make a list of
lighting, curtains, flowers, balloons and many more for its decoration shop.
Making a technical roadmap: Short-term as well as long-term goals are required to be set. It
helps the business of sole proprietorship in understanding the opportunities and threats that might
occur throughout its business. It also facilitates in formulating a particular amount of time for
completing the task in a specified duration.
Social media presence: With the passage of time, the customers preferred to do shopping
through online mode and hence, it is opportunity for the personnel to expand its business through
creating accounts on social websites or platforms such as Instagram, Facebook, google, you tube,
LinkedIn and many more. The personnel can add-on some pictures and videos concerned with
the business on these platforms that would help the customer-base to learn more about the
business of decorator.
Developing a network: Each venture must get involved in the business activities that positively
impact the well-being of the customers for the purpose of promoting sustainable environment. It
provides assistance in building a community that nurtures the business (Bump and et.al, 2020).
Making more and more business networks is considered as a free advertising technique and helps
in increasing the market-share.
A company listed on the London Stock Exchange and define the involvement of decision-makers
in accounting
The process of recording, evaluating and summarising the financial transactions of the
business is termed as accounting and gives the information or data that helps in making better
business decisions. The motive of the accounting is to provide the financial information of the
business that would help in ascertaining its financial performance. Sainsburys listed on the
London Stock Exchange and different decision-makers are accountable for position of the
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company in the market. Incentives, acquisition and procurement of long-term resources for goods
and services could be taken into consideration. Appropriate information is essential to make sure
that business of the company is profitable.
Decision-makers of Accounting:
Owners: The entrepreneurs of the business chek the investment return rate that are achieved
using the accounting information and comparing the performance with those of related firms
(Cherif, 2017).
Investors: Before making contribution, the owner must record and research the financial
position of the company using accounting information of the business.
Management: The people within the business who are engaged in making the business plans and
preparing the future aspects for achieving organisational goals are considered as management of
the company. Customer-base of financial information use it to plan, control and making the
decisions that helps them in evaluating the presentation and position of the company.
Government: This authority requires accounting data of the company for the purpose of
accumulating several types of taxes like income tax, sales tax and many other direct and indirect
taxes (Liang and Liu, 2018) .
Creditors: This type of decision-makers use financial information for assessing the reliability of
the accountant and ability and capability to recover the debts and obligations.
PART B
Recording of Journal entries in the books of F Polk
Journal entries in the books of F Polk
Date Particulars Debit Credit
01/09/21 Assets A/c Dr.
Fixtures A/c Dr.
Stock A/c Dr.
Debtors A/c(105 + 311) Dr.
Bank A/c Dr.
Cash A/c Dr.
To Creditors A/c(229 + 80)
To Capital A/c
5700
2800
5200
416
1060
85
309
14952
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01/09/21 Bad Debts A/c Dr.
To P Mullen
(Bad Debts written-off)
105
105
05/09/21 Syme Ltd A/c Dr.
To Office Fixtures
(Office fixtures bought through
credit was written-off)
150
150
10/09/21 Bank A/c Dr.
Bad Debts A/c Dr.
To M Abel
(M Abel declared bankruptcy and
received the amount in full
settlement)
180
131
311
18/09/21 Machinery A/c Dr.
To Cash A/c
To Bank A/c
To Brown Ltd
(Purchased a machinery and the
amount paid by cheque, cash and
on credit)
1800
100
500
1200
26/09/21 Brown Ltd Dr.
To Bank A/c
(Half of the amount due paid
through cheque)
600
600
28/09/21 Insurance Expenses A/c Dr.
Drawings A/c Dr.
To Bank A/c
(Insurance expenses paid by bank
but later realised that £70 is of
60
70
130
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personal house)
Ledger accounts and Trial balance in the books of Maurice & Brothers
a. General Ledger Accounts are made in MS-Excel
b. Trial balance for Maurice & Brothers is as follows:
Trial Balance of Maurice & Brothers
Particulars or items Debit Credit
Bank 38880
Cash 6440
Van 46900
Office fixtures 5460
Sharp Office Ltd (creditor) 2400
Loan payable 12400
Capital 70000
TOTAL 91240 91240
PART C
a. Income statement for B More
Income statement for B More
Particulars Amount (£)
Sales 95000
Less: Sales Returns 3500
Less: Carriage Inwards 890
Net Sales (A) 90610
Opening Stock 18000
Purchases 110000
Less: Return Outwards 720
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Less: Closing Stock 13000
Net Purchases (B) 114280
Motor Expenses 1400
Rent 7000
Telephone Charges 830
Wages and Salaries 14000
Insurance 1030
Office Expenses 800
Sundry Expenses 250
Operating Expenses (C) 25310
NET PROFIT (A -B - C) -48980
b. Explain what the profit can be increased or decreased for the year 2022, considering the
COVID–19 pandemic.
For some of the businesses, the year 2020 might be the most tough period involving
difficult circumstances in relation to business. While some of the ventures scored a standard level
of performance in the middle of the year 2020, the pandemic situation of COVID-19 suspended
the progress in most of sectors of universe in middle of the month of March (Pan and et.al,
2020). This resulted in reducing the operations of the businesses and might be the total closure of
some of the organisations.
According to Income Statement, the business experienced a trouble and it states that the
cost have exceeded the income. In any case, the transactions with the association brings some
cash to the business but it didn't cover the total cost. This could be happened because of the
pandemic situation of COVID-19 that lowers the demand of the customer-base and ultimately
diminishes the sales operations of the business (Sarode and et.al, 2021). There could be many
possible outcomes, going from small direct impacts such as changes in business techniques,
closure of the businesses and many more. It becomes critical for the management of the
organisation to understand the effect of company and its financial implications.
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CONCLUSION
From above explanation of the report, it is concluded that developing business strategies
within the organisation helps in gaining the competitive advantage. The books of Journals, ledger
accounts, trial balance and Income statement discovers the financial position of the business. The
Net profit for the organisation is calculated with the help of income statement. This existing
portfolio involves Sainsburys along with the decision-makers of the organisations.
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REFERENCES
Books and Journals
Abd Majid, N., Ariff, A. M. and Mohamad, N. R., 2020. The role of related party transactions on
sukuk financing. Journal of Islamic Accounting and Business Research.
Abhimantara, I. B., 2017, October. THE CONSUMER PROTECTION LAW AGAINST
BREACH OF CONTRACT DUE IN ELECTRONIC TRANSACTIONS.
In International Conference on Law, Governance and Globalization.
Anagnostopoulou, D., 2018. Electronic Contracts and E-Mediation in EU Law: Time for the EU
to Extend E-Mediation for the Benefit of SMEs in B2B Transactions?. European
Business Law Review. 29(6).
Bump and et.al, 2020. Carbon Capture and Storage Potential in Southern Louisiana: A New
Business Opportunity.
Cherif, M., 2017. Related Party Transactions and Expropriation of Minority Shareholders:
Evidence from Tunisia. Journal of Business Studies Quarterly. 9(1). pp.65-80.
Liang, T. P. and Liu, Y. H., 2018. Research landscape of business intelligence and big data
analytics: A bibliometrics study. Expert Systems with Applications. 111. pp.2-10.
Pan and et.al, 2020. Blockchain technology and enterprise operational capabilities: An empirical
test. International Journal of Information Management. 52. p.101946.
Sarode and et.al, 2021. Blockchain for committing peer-to-peer transactions using distributed
ledger technologies. International Journal of Computational Science and Engineering.
24(3). pp.215-227.
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