Recording Business Transactions

Running head: RECORDING BUSINESS TRANSACTIONS
Recording business transactions
Name of the student
Name of the university
Student ID
Author note

1RECORDING BUSINESS TRANSACTIONS
Table of Contents
Assessment 1..............................................................................................................................2
Part 1..........................................................................................................................................2
(a) Advantages and disadvantages for the profit business structure.................................2
(b) Main users of accounting information and the purpose of users.................................4
Part 2..........................................................................................................................................8
Part 3..........................................................................................................................................9
(a) Transactions in the general ledger of S. Young..........................................................9
(b) Trial balance as at 30th June 2018..............................................................................11
Part 4........................................................................................................................................12
(a) Income statement for F. Jones for the year ended 30th September 2018...................12
(b) Statement of Financial Position for F. Jones as at 30th September 2018..................13
Reference..................................................................................................................................14

2RECORDING BUSINESS TRANSACTIONS
Assessment 1
Part 1
(a) Advantages and disadvantages for the profit business structure
For-profit business structure’s main objective is to generate earnings for the owners
and its employees. Profits generated through sales of the products or providing the services
measures success of the for-profit entities and the generated profits can be shared with the
employees, shareholders and owners. For-profit businesses can be traded publicly or
privately. However, the publicly traded entities are required to comply with special rules and
regulation for protecting the shareholders. Setting-up of for-profit business has several clear
advantages like self employment and financial success that is proportional to the success.
Though, the advantages are associated with disadvantages like obligation and financial
liability to the creditors and investors (Petrovsky, James and Boyne 2015). Other advantages
of for-profit business structure are as follows –
 Money – most noticeable advantage associated with for-profit business structure is
possibility of generating money. Revenue generated more than the expenses belong to
the owner and the owner can spend it as per his preference including personal as well
as business expenses. More the company becomes successful greater is the financial
reward. However, the money goes to the owner but it is not necessary to the founder if
the owners are the investors or loan providers (Harper 2015).
 Regulation – for-profit organisations are required to go through less numbers of rules
and regulation unlike the non-profit organisations those have to go through the
internal earning service’s microscope to assure that they work for the purposes for

3RECORDING BUSINESS TRANSACTIONS
which they have been started up. For-profit organisations as a whole are allowed to
carry on their businesses as they consider fit, so they comply with the rules.
 Liquidity of the assets – if the business faces liquidity issues, the final advantage is
the assets of for-profit businesses are highly liquid. Even after the business goes into
liquidation the still can sell the assets of the company including office equipment,
buildings or equipments for settlements of debts (Harper 2015).
Various disadvantages of for – profit business structures are as follows –
 Taxes – for-profit businesses are subjected to corporate income tax imposed by the
local, state or federal government. They are further subjected to various other taxes
like property taxes and sales taxes and often charged under various other mandates.
This impact the bottom line of income significantly which in turn, impact stock value
of the company and overall prosperity (Rahim 2017).
 Missed special discounts or rates – generally the non – profit organizations are
entitled to special rates, discounts and get preferential treatment in different contexts.
Government and various other organizations like media house offers various
discounts to non-profit businesses and some of the non-profits are allowed to run the
public service announcements for free. However, no such offers are available to for-
profit businesses.
 Maintenance of records – as the for-profit organisations are subjected to various taxes
and the performance of these organisations are analysed for the purpose of making
investments, they are require to maintain and publish the financial data through
financial statements to the users for financial statement including creditors,
shareholders, investors, supplier and government. Further, the financial statements of
these companies are required to be audited on periodical basis (Rahim 2017).