Starting a Business and Accounting Involvement in Decision-Making

This report discusses the steps to start a business and how accounting plays a role in decision-making. It includes journal entries, ledger accounts, and income statements. The report also mentions the impact of COVID-19 on businesses. Subject: Accounting

Accounting

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Part-A ....................................................................................................................................3
Part – B...................................................................................................................................4
PART- C.................................................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business refers to an enterprise that have come into existence to sell goods and services
for the main purpose of profit earning. There are different types of business enterprises
(Humphries, Neilson and Ulyssea, 2020). These businesses are involved in transactions with
many internal and external factors of the business. These business transactions refers to the
dealings between two or more parties involving the exchange of goods and services. These are
recorded in the books of accounts for the purpose of profit calculations. This report highlights
how a business is started and how these books of accounts are maintained.
TASK
Part-A
What are the steps taken up by entrepreneurs to start a new venture of decorator.
David Green is a sole proprietor and wants to set up a new business of decorating.
Following are the steps that he needs to take up for opening the business:
 Formulate a model: The first step to start a business is to ascertain its model and what the
business will deal in. Here, the business will deal in decoration and decorating items.
 Building a strategy: In this step the main focus of the entrepreneur is to be clear of the
visions and missions of the business and how the business will have competitive
advantage in the market (Kepczynski, and et. al., 2018).
 Formulating a business portfolio: In this step the entrepreneur has to build up the
techniques, goals and initiatives that the business will take.
 Finding out equipment that will be needed in business operations.
 Settings of long-term objectives and determining hurdles that might come in its path.
 Engaging in activities related to welfare of the society and building a network with
suppliers and customers.
 The businesses now-a-days have to have their online presence to gain visibility in a
potential marketplace which would aid business in its settlement in the marketplace.
How accounting have an involvement in decision-making of a company.
Accounting helps many users of the accounting information in number of ways.
Accounting helps the users by providing them information about financial performance of the
business (Lessambo, 2018). The company taken up for this purpose is Tesco, which is registered

in London stock exchange. The accounting information helps the decision-makers in the
following way:
 Owners: They check the rate at which the company is able to earn profits and its
performance in the industry
 Creditors: They use the accounting information to ascertain the capacity of the business
to pay back its obligations.
 Government: They need the information to ascertain the tax liability of the business and
if they are meeting the same (Mukanov, and et. al. 2018).
 Management: these use the accounting information to make arrangements for the future
and predict the future position of the business.
 Investors: These have to examine the profitability of the business and ascertain how
much short term obligations the firm has which may affects their own return on
investment.
Part – B
1. Journal Entries for the month September, 2021
Date Particulars Debit
Amount
Credit Amount
01/09/2021 Bad Debts A/C Dr.
To P Mullen A/C Cr
(Being debts written off)
105
105
05/09/21 Syme Ltd A/C Dr.
To Office Fixtures A/C Cr.
(being office fixtures returned)
150
150
10/09/21 Cash or bank A/C Dr.
Bad Debts A/C Dr.
To M Abel A/C
(being amount recovered in the full settlement)
180
131
311
18/09/21 Machinery A/C Dr.
To cash A/C cr.
To bank A/C Cr.
1800
100
500

To Brown Ltd A/C Cr.
(Being machinery purchased by cash, bank and on
credit)
1200
26/09/21 Brown Ltd A/C Dr.
To Bank A/C Cr.
(being half amount paid to Brown Ltd)
600
600
28/09/21 Insurance A/C Dr.
Drawings A/C Dr.
To Bank A/C Cr.
(Being insurance paid)
60
70
130
2.
a) Prepare Ledger Accounts for August, 2021.
Cash A/C
Particulars Amount
(Debit)
Particulars Amount (Debit)
To bank A/C
To bank A/C
2800
430
By office fixtures A/C
By balance c/d
110
3120
TOTAL 3230 TOTAL 3230
Bank A/C
Particulars Amount (Debit) Particulars Amount (Debit)
To Satandar A/C
To sharp office A/C
To balance c/d
12400
2400
7050
By cash in hand A/C
By secomd hand van A/C
By office fixtures A/C
By Toyota A/C
By office fixtures A/C
2800
6200
3400
8700
750
TOTAL 21850 TOTAL 21850
Satandar A/C

Particulars Amount
(Debit)
Particulars Amount (Debit)
To balance c/d 12400 By bank A/C 12400
TOTAL 12400 TOTAL 12400
Second hand van A/C
Particulars Amount
(Debit)
Particulars Amount (Debit)
To balance c/d 6200 By bank A/C 6200
TOTAL 6200 TOTAL 6200
Office Fixtures A/C
Particulars Amount
(Debit)
Particulars Amount (Debit)
To bank A/C
To Sharp Office Ltd A/C
To Cash A/C
To Bank A/C
1000
2400
110
750
By balance c/d 4260
TOTAL 4260 TOTAL 4260
Sharp Office A/C
Particulars Amount
(Debit)
Particulars Amount (Debit)
To bank A/C
To balance c/d
1000
2300
By office fixtures A/C 3400
TOTAL 3400 TOTAL 3400
Van A/C
Particulars Amount Particulars Amount (Debit)

(Debit)
To Toyota A/C 8700 To balance c/d 8700
TOTAL 8700 TOTAL 8700
Toyota A/C
Particulars Amount
(Debit)
Particulars Amount (Debit)
To bank A/C 8700 By van A/C 8700
TOTAL 8700 TOTAL 8700
B) Trial Balance
Particulars Amount
(Debit)
Amount
(Credit)
Cash A/C 3120
Bank A/C 7050
Satandar A/C 12400
Second hand van A/C 6200
Office fixtures A/C 4260
Sharp office Ltd A/C 2300
Van A/C 8700
Toyota A/C - -
Suspense A/C 11870
TOTAL 27950 27950
PART- C
a) Income Statement of P Moore ending 31st September, 2021.
Trading A/C as on 31ST SEPTEMBER, 2021
Particulars Amount (DR.) Particulars Amount (CR.)

To opening stock
To Purchases(110000)
Less: purchase returns(720)
To carriage inwards
To wages & salaries
To motor expenses
18000
109280
890
14000
1400
By Sales(9500)
Less: sales return(3500)
By Closing Stock
By carriage outwards
By gross loss
6000
13000
500
107870
TOTAL 123730 TOTAL 123730
Profit & Loss A/C as on 31ST SEPTEMBER, 2021
Particulars Amount (DR.) Particulars Amount (CR.)
To Gross loss
To rent
To telephone charges
To insurance
To office expenses
To sundry expenses
107870
7000
830
1030
800
250
To net loss 117780
TOTAL 117780 TOTAL 117780
b) Based on the income statements of previous year predict that whether the company will
attain profits or losses in the year 2022 taking into account the Covid-19 pandemic.
The year 2020 was like a nightmare for many businesses. It has been considered as the
most challenging situations for the businesses in recent times (Rapina, and et. al., 2020). While
many business have shown a regular growth in the start of 2020, the Covid-19 pandemic have
made many businesses discontinue their operations due to negligible profits. The income
statement of the company have noticed that the company made loss in the year 2020, the main
reason for this have been the pandemic that made customers purchase less due to safety
precautions and this made less revenue for the business (Wei, Chen, and Wirth, 2020). The
previous years profits show that the company was doing well pre covid-19 era. The trend shows
that the company was all set to take up their profits to 142000 pounds in the year 2020 but

suffered loss of 65000. If the company recovers this amount in 2021, the company will surely
make a certain amount of profit in 2022.
CONCLUSION
From the above report, it can be concluded that formulating a business strategy is critical when
starting a business. The entry of transactions in the journal entry, general ledger and profit and
loss account reflects the company's financial position. The net profit is shown in the profit and
loss account. In this report, Tesco have been taken up and the decision-makers of the
organisation is explained.

REFERENCES
Books and Journals
Humphries, J.E., Neilson, C. and Ulyssea, G., 2020. The evolving impacts of COVID-19 on
small businesses since the CARES Act.
Kepczynski, R., and et. al., 2018. Integrated Business Planning. Management for Professionals.
Lessambo, F.I., 2018. Financial Statements. Analysis and Reporting.
Mukanov, A., and et. al., 2018. Composing of scenarios development in strategic
planning. Journal of Environmental Management & Tourism. 9(3 (27)). pp.491-500.
Rapina, R., and et. al., 2020, September. The Impact of A Collection of Tasks And Activities On
Accounting Information Quality: Survey in Indonesia. In Proceedings of the 2020 3rd
International Conference on Big Data Technologies (pp. 233-236).
Wei, Y., Chen, J. and Wirth, C., 2020. Tunneling, Fraudulent Financial Statements and
Regulation Effects: Chinese Evidence. Emerging Markets Finance and Trade, pp.1-11