Recording Business Transactions: Steps for Establishing a New Business of Decorator

Recording Business
Transactions
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Table of content
Table of Contents
Introduction......................................................................................................................................3
Part A...............................................................................................................................................3
Explain the steps for establishing a new business of Decorator.............................................3
Accounting involves recording, analysing and summarising the transactions of each business
organisation in order to provide information for decision making. Consider a large
organisation that is listed on a London Stock Exchange and identify the decision makers that
are referred in the above decisions.........................................................................................4
Part B...............................................................................................................................................5
Journal Entry..........................................................................................................................5
General Ledger of ABC enterprise, Maurice and Brothers ...................................................7
Part 3..............................................................................................................................................10
Income statement..................................................................................................................10
Prediction of Profit and Loss of B Moore for the year 2022................................................12
Conclusion.....................................................................................................................................13
REFERENCES..............................................................................................................................14
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Introduction
The process of recording business transactions is an important aspect of the business.
Business is basically referred as the economic activity that is performed with the intention of
earning profits in order to earn a living and maximise the wealth. The recording of transaction
comprises of financial statement and it is a key responsibility of every accounting department. In
order to record a specific transaction, it is very important to understand a transaction while
understanding the importance of each transaction. It is important to record the essential business
transaction as it can have a significant impact over the business and financial statements of the
business. The concept of income statement will also be covered in aspect of the business.
(Adamyk, 2017).
Part A
Explain the steps for establishing a new business of Decorator.
David Green is planning to set up a sole proprietorship business as a decorator. Sole
proprietor business is a business wherein the owner is a sole person who is responsible for all the
operations and the business activities. In order to start a business various steps are required to be
performed.
 Conduct market research- David green will require to conduct a market research in
order to analyse the number of competitors in the industry. The market research will help
the business to analyse the business environment as well as the analysis of market in
terms of demand and supply (Prihanto and et.al., 2019).
 Business plan- The next step after conducting a market research is to design a business
plan and according to this the business will be initiated. The business plan comprises of
various mission, vision and objectives that will be required to get accomplished by the
organisation.
 Fund business- The next step in order to establish a decorator business, the owner will
have to look upon various sources of funds. It is very important for the business to source
funds in order to survive and expand its business. There are various sources of funds that
can be opted by David Green in order to fund the business. The several sources of funds
have been suggested below (Thabit and Abbas, 2017).
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◦ Bank Loans- The banks loan is also considered as a source of funds wherein the bank
grants loan. The loan is repaid by paying interest upon the principal amount.
◦ Retained earnings- Retained earnings can be termed as personal investment that is
brought in by the entrepreneur in order to bring finances for the business. The
retained earnings are basically the savings of an individual (Aritonang and Janrosi,
2020).
◦ Government grants and subsidies- The government agencies tend to provide finances
in terms of grants and subsidies that is available for various businesses. They are
provided at the federal and provincial level.
 Pick business location- The business will require to pick a location that can prove
appropriate for the business. An ideal location is the one that is easily accessible for the
people.
 Choose a business structure- The owner will be required to choose a business structure
that David Green has already chosen as a sole proprietor.
 Choose your business name- An attractive business name needs to chosen that defines
the business (Rahwani, 2017).
 Register the business- Once the name of the business is decided, the business is required
to get registered.
 Get federal and state Tax IDs- The business of decorator needs to get federal and state
tax Ids in the name of business.
 Apply for licences and permits- The business will be required to apply for various
licences and permits to operate its business.
 Opening business bank account- Also, there must be a current bank account in the
name of the organisation through which the transactions will take place (Rechtman,
2017).
Accounting involves recording, analysing and summarising the transactions of each business
organisation in order to provide information for decision making. Consider a large
organisation that is listed on a London Stock Exchange and identify the decision makers
that are referred in the above decisions.
The organisation that has been considered for this section is Tesco. Tesco is a multi national
organisation that is listed upon London Stock Exchange. The decision makers of Tesco are
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