Accounting of Business Transactions (Cai 2019)

Recording Business Transactions

Contents
Introduction.................................................................................................................................................3
Assessment 1...............................................................................................................................................3
Part 1.......................................................................................................................................................3
Part 2.......................................................................................................................................................5
Part 3.......................................................................................................................................................6
Part 4.....................................................................................................................................................10
ASSESSEMENT 2................................................................................................................................12
PART A.................................................................................................................................................12
PART B.................................................................................................................................................20
CONCLUSION.............................................................................................................................................23
References.................................................................................................................................................24

Introduction
Accounting includes monitoring, categorizing, updating and outlining the cash transactions of
the person (Cai, 2019). These documents and the reports derived from them provide the basis for
the analysis of the financial statements and the position of the company. This review concerns
the processing of financial records by the different agencies and the production of trial reports
and income statements. Costs and drawbacks in the taxation of manufacturing firms are
discussed. The impact of Covid-19 on business profits is also addressed.
Assessment 1
Part 1
A. Decision-makers and need for accounting information
Financial accounting includes the summaries and analysis of all numerical facts in such a manner
that it can be reported in the report. These findings are very helpful for smart decision. Effective
judgments from purchase to customer service decide the future of the company (Viriyasitavat
and Hoonsopon, 2019). Both decisions about the induction and dismissal of workers, the
establishment of the profit goal, the planning of news events and budgets, the use of technology
for various manufacturing operations, etc. are taken by the corporation's multiple executives. The
decision-making authority of a company is based on its control processes, governed by the
Executive Committee or the Board members. For example, the Uber Executive board, headed by
its CEO, Dara Khosrowshahi, is responsible for all the strategic vision of the business. Firm
keeps a corporate structure that takes its decisions on behalf of the ideals, mission, beliefs and
goals of the organization. These activities are then delegated to the departmental supervisors,
along with the authority required for implementing them forward.
Financial accounts have the applicable company information in objective terms, making it easy
for management and investors to make rational decisions. Accounting statements shall be drawn
up in line with general systems and policies which are consistent across the industry (Hamilton,
2020). This makes them similar to several other competitors who know their business status
through business metrics. Financial accounts also provide a basis for administrators to take
decisions on investment proposals or whether or not they will be viable and economically
sustainable. Predictions and assumptions also rely on corporate accounting information improved

under current trading environments. Financial data is not only important, since it promotes
comparison in and of itself but also constitutes the foundation for the extraction of useful
information from non-financial details.
B. Advantages and disadvantages of accounting for a business
Accounting monitors and reviews the financial reports of a major company on the grounds of the
essence of the regulation. Benefits and risks related to the handling of financial records are as
shown in:
Advantages:
Decision-making - The executive committee wants statistics and business decision-
making. Account books have a role to play in the company (Zhang, Wang and Zhu,
2019). It includes information on cash reserves in the business as well as other
expenditures and revenues, making it easier to predict financial surpluses or losses in a
timely way. It also serves to establish supervision and accountability, which helps to
prevent and detect fraud.
Evidence in legal matters - Account books function as a corporate background for the
substantial financial operation recorded within. It shall then serve as legal evidence in the
courts if any dispute exists. Entities shall maintain documents in the manner specified in
the Act and submit it to the Registrar after they've been audited by an external
investigator.
Disadvantages:
Records only financial aspects - One of the most significant disadvantages to financial
statements is that it refers only to the accounting of transfers of a financial kind. Various
sub-considerations, like consumer conditions, political environment, legal and regulatory
rules, etc., have significant implications for business practices. They are not recorded in
financial accounts and have an erroneous picture when making smarter business
decisions.

Historical nature - Amounts are listed in individual spending accounts and price shifts
are not taken into consideration. This helps financial documents of historical value in the
books of accounts (Mola, Microsoft Technology Licensing LLC, 2019). These
documents are then regarded as a prerequisite for predicting future outcomes. It loses the
period value of resources and the changes that come with that as well; making projections
dependent on historical costs do not necessarily have the best basis for predicting events
in the future.
Part 2
A. Journal Entries for the month of February 2020
Date Particulars Debit (£) Credit (£)
01/02/20 Asma Ltd. A/c..........................Dr.
To Office fixtures A/c
(Unsuitable office fixtures returned to Asma
Ltd.)
350
350
04/02/20 Bad debt A/c............................Dr.
To S. Keyes
(Debt from S.Keyes written off as bad)
85
85
09/02/20 Machinery A/c.........................Dr.
To Bank A/c
To TS Co. A/c
(Machinery bought from TS Co. on part cash
and part credit)
2300
200
2100
13/02/20 Bank A/c...................................Dr.
Bad debt A/c.............................Dr.
To S. Hill A/c
(Only £220 received out of £270 from
bankrupt debtor S. Hill as full and final
settlement)
220
50
270
20/02/20 Drawings A/c............................Dr.
To Purchases A/c
180
180

(Goods taken for personal use by owner)
26/02/20 Drawings A/c..........................Dr.
To Insurance A/c
(Personal insurance bill debited to business
not stands corrected)
85
85
28/02/20 TS Co. A/c..............................Dr.
To Bank A/c
(Half payment of machine credit paid by
owner to TS Co)
1050
1050
Part 3
A. General ledger
Ledger Accounts
(Amounts in GBP)
Capital Account
Date Particulars Amount Date Particulars Amount
01/02/20 By Bank A/c 21500
01/02/20 By Van A/c 25000
01/02/20 By Office Fixture A/c 800
29/02/20 To Balance c/f 47300
Total 47300 Total 47300
Bank Account
Date Particulars Amount Date Particulars Amount
03/02/20 By Cash A/c 1500 01/02/20 To Capital A/c 21500