Recording Business Transactions

Recording Business Transactions

Table of Contents
INTRODUCTION...........................................................................................................................3
ASSESSMENT 1.............................................................................................................................3
PART 1............................................................................................................................................3
a) Brief explanation of who are the decision makers and their relevance for accounting
information..................................................................................................................................3
b) Advantage & disadvantages of accounting ............................................................................4
PART 2............................................................................................................................................5
Journal entries.............................................................................................................................5
PART 3............................................................................................................................................7
Journal entries and ledger of Pearce & Sons...............................................................................7
Trial balance of Pearce & Sons...................................................................................................9
PART 4............................................................................................................................................9
Income statement of Airman Company......................................................................................9
Impact of COVID – 19 on income statement of Airman Company........................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Accounting is field of study which define how data collect measure and interpret in
systematic manner. In order to understand relevance of accounting, this report has been
formulated. It includes how manager use data in order to record, measure and analysis business
transaction by formulating journal, ledger trial balance and income statement. This report also
define how COVID – 19 impacted on the financial performance of Airman Company by
analysing their income statement.
ASSESSMENT 1
PART 1
a) Brief explanation of who are the decision makers and their relevance for accounting
information.
Accounting is used for the purpose of recording and analysing business transactions. It is
essential and vital application of management which will help in effectively operate business.
Accounting information is useful in decision making purpose. In context with Tesco, cost
accountant, CEO, finance manager and auditor all theses are use accounting information for the
purpose of decision making. Cost accountant supervise all the transaction, record in systematic
and effective manner.
They on the basis of that recognize volume of profits and recognize those activities which
may become the reason of charging extra cost. On the basis of that they took decision regarding
apply those tools through which they can able to cut those activities which are the main cause of
incurring additional cost (Choudhary, Virmani and Juneja, 2020).
Finance manager use basic accounting information as these provides base for formulation
of financial statements. They use accounting information for present theses data in effective
manner to attract their internal as well as external stockholder.
Finance manage take decision on the basis of summarising and supervising their
accounting and financial statements and take decision for future business strategies which help
in attaining long term business goals. As well as these accounting information help in finding out
which alternative is beneficial for run further business activities.
CEO of Tesco use accounting information for measuring their reviews performance of
business and auditors also use information and data collected from accounting procedure. They

use these data for the purpose of reviewing and finding any error arises during the time of
recording business transactions and formulating financial statement.
They use accounting data for cross check and auditing adjustment and entries in order to
control illegal business activities. Auditors take decision by supervising accounting data related
with whether organization formulate their statement on the basis of using norms of accounting
standard or not. They use accounting information in order to prevent from any illegal activities
and useful as legal evidence for company.
b) Advantage & disadvantages of accounting
Accounting help in operate business in systematic manner. Following are the benefits and
drawbacks of accounting.
Benefits
 Maintain business record: Accounting information is useful in order to maintain record
of each and every small activity detail. Theses detail a act as legal evidence during the
time of auditing procedure. Maintaining systematic record help in save time and cost rat
the time of disputes.
 Help in forecasting: Business organizations use accounting information in order to
determine their financial performance. On the basis of recording data manager able to
formulate their budget. They use accounting information for the purpose of forecasting .
Manager use accounting information as it provides base for formulate financial report as
well as help in analysis and forecasting future business performance.
 Prevent business fraud: Manager use theses application in their organization in order to
control issue related with fraud or corruption as with the changing of time scenario rate
of cyber crime and insider money lending has been increase thus in order to control all
these issue manager use accounting application for recording and maintaining their
business transactions (Mirza Naqvi Rahat and Rizvi, 2020).
 Useful in calculating tax liabilities: Manager use accounting application in order to
calculate the real value of their tax liability and on the basis of that they pay tax. This will
help in reduce case related with evasion of taxes. Manager on the basis of using proper
accounting statement able to take advantage which government provide and offer to those
tax payer who fulfil their tax liability with the given time period.