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