Recording Business Transactions.

Recording Business
Transactions

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
Decision makers and their need for accounting information: .....................................................3
Advantage and Disadvantage of recording accounting information:..........................................4
PART 2............................................................................................................................................4
Journal entries with narration for the David wises:.....................................................................4
PART 3............................................................................................................................................5
Ledger and trail balance of Pearce & sons:.................................................................................5
PART 4............................................................................................................................................7
Income statement for Airman co.:...............................................................................................7
Impact of COVID 19 on company income statement items:.......................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business transactions refers to process of events involving an interchange of goods,
money and services between two and more parties. Transactions can be done by sales and
purchase of goods and services. For example, business purchase machinery in cash basis. There
are two accounts impacted cash and purchase. Business transactions are the activities of business
that affects business financial position and expenses and income (Ibrahim, Ali and Besar,
2020). Business transactions helps in making financial statements such as p&l account and
liabilities and assets statement that shows firms financial position. Business transaction refers to
an activity which is measured in monetary terms and affects the financial position of business.
The report is based on recording of business transactions through journal, ledger, trial balance
that helps it to make cash flow, profit and loss account and balance sheet. This report covers
topics such as decision makers, disadvantages and advantages of recording business transactions,
journal, ledger, impact of COVID on income statements, profit and loss account and balance
sheet.
PART 1
Decision makers and their need for accounting information:
Decision makers are the employees and managers that helps in taking decisions regarding
organisational activities, merger and acquisition, business expansion, structure, investments etc.
decision makers plays vital role in business because they provides guidance for business
expansion and profitability. Financial accounting refers to the recording, summarising and
analysing transactions within the organisation. These statements makes for external parties such
as investors for taking decisions regarding investments (Karayianes, 2017). Firms uses general
accepted accounting principles and accounting laws for strategic decision making and preparing
financial statements. It helps firms to know about firms financial position and making future
decisions. Financial decisions helps in day to day activities and provides map what for future
activities. Financial accounts shows all related information of the company in monetary terms
which helps management and shareholders in order to making strategic decisions. It is a
specialized function of accounting that helps in tracking firms financial transactions. Financial
accounting provides source for financial decision makers for decisions such as funds
arrangement, investments, expansion etc.

Advantage and Disadvantage of recording accounting information:
Advantages: Recording accounting information plays vital role in financial accounting
and organisations. It has various advantages such as it helps firms in maintenance of comparison
of results, business records, preparing financial statements, provide evidence for legal and law
matters, , decision-making provides information to related parties, provide helps in tax matters,
valuation of business, investment decisions etc. it helps employees and managers for strategic
decision making that helps to business control its expenses and increase in profitability (Lea,
2016) . Recording business transactions helps in making financial statements that shows firms
financial position.
Disadvantages: It has various disadvantages such as it provides information in terms of
money, information is based on estimations, accounting information can be change, it records
fixed assets at original costs, manipulation of accounts, money is the tool in measurement units
changes values.
PART 2
Journal entries with narration for the David wises:
Journal Entries
S. NO Date Particulars L.F £ £
1 01/02/20 purchase return A/C Dr. 350
To Purchase A/c 350
( Being purchase return with full
settlement)
2 04/02/20 Bad debts A/c Dr. 85
To S. keys A/c 85
(being debt debt written off by S.
keys)
3 09/02/20 Machinery A/c DR. 2,300
To Bank 200

To TS CO. 2,100
( Being machinery purchase with
cash Rs. 200 and 2100 on credit)
4 13/02/20 Cash account 220
Bad debts A/c 50
To S. hill Ltd. 270
( money owed by S. hill 270 and
paid only 220, Rs. 50 declare as
bad debts)
5 20/02/20 Drawing A/s Dr. 180
To Stock 180
6 26/02/20 Insurance A/c Dr. 85
To Cash A/c 85
( Business paid money for
private house insurance)
7 28/02/20
Machinery A/c
DR. 1,050
To bank A/c 1,050
(amount paid by TS CO. for half
amount credit on machinery)
Total 4,320 4,320

PART 3
Ledger and trail balance of Pearce & sons:
29/02/20 By Balance c/f 12230
Total 24350 Total 24350

PART 4
Income statement for Airman co.:
Impact of COVID 19 on company income statement items:
The firm Airman co. running well in 10 years its profitability is increase by approx. 15%
every year but due to COVID it impact on firms profitability. Firm generates higher sales in
every year but in this year due to COVID it was decreases its sales (Mazouz, Mokhati and Badri,
2017). As there are various factors that affects any business performance factors including
political, economic, social, technological, environmental and legal. These factors attach with
any business related to its customers and investors that can affects business (Roe, 2017). In
lockdown firms sales are goes down because various persons losses their job and not getting
salary as well as people was restricted to goes outside the house. Customers income level affects

their purchasing power and that leads to decrease in demand. As in the firm Airman co. its
decreases its sales and purchases more inventory (Smith, 2020). As it has to pay its fixed
expenses as always and it has no income that leads to profit in the year. Fixed expenses includes
carriage outwards, motor expenses, telephone charges, rent, wages and salaries, insurance, office
expenses, sundry expenses etc.
CONCLUSION
From the above report it has been concluded that business transactions refers to the
process of sales and purchase in any business that shows in monetary terms. Recording business
transactions are important in organisations because it helps in making financial statements such
as profit and loss account and balance sheet. Business transactions includes journal, ledger, trial
balance. Decision makers are employees within the company who have power to taking strategic
decisions such as merger and acquisition, expansion and investments. Income statement shows
all expenses and income of organisation that helps to define net profit for the company and
balance sheet involves all liabilities and assets of the company.

REFERENCES
Books and journals:
Ibrahim, F., Ali, D. N. H. and Besar, N. S. A., 2020. Accounting Information Systems (AIS) in
SMEs: Towards an Integrated Framework. International Journal of Asian Business and
Information Management (IJABIM).11(2). pp.51-67.
Karayianes, F., 2017. Aircraft Maintenance Engineering: Factors Impacting Airlines E-
Maintenance Technologies, Authoring and Illustrations (Doctoral dissertation,
Northcentral University).
Lea, T., 2016. Down The Rabbit Hole:(Discover The Power of the Blockchain) (Vol. 1). Tim
Lea.
Mazouz, M., Mokhati, F. and Badri, M., 2017. Formal development of multi-agent systems with
FPASSI: towards formalizing PASSI methodology using rewriting logic.
Informatica.41(2).
Roe, M. ed., 2017. The Journal and Letters of Captain Charles Bishop on the North-west Coast
of America, in the Pacific, and in New South Wales, 1794-1799. Taylor & Francis.
Smith, M. S., 2020. Closing the gap between information and payment flows in a digital
transformation (Doctoral dissertation, Massachusetts Institute of Technology).