Starting a Business and Financial Accounting: Desklib Study Material

This study material from Desklib covers the steps to start a business, the role of financial accounting in decision making, and includes examples of journal entries and income statements. The report also compares the profitability of two companies.

Business Transaction

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
1.Describe the steps in starting a business..................................................................................3
2.Explain the role of financial accounting and whom is responsible for decision making.........3
Part B...............................................................................................................................................4
1. Journal entries for F Polk.............................................................................................................4
2. (a) Post the Journal entries into the General Ledger Accounts...............................................5
2. (b) Make the trail balance on 31st August, 2021....................................................................7
PART C............................................................................................................................................7
(a) Make the income Statement of B Moore for the year ending on 30th September, 2021......7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
A business transaction is an accounting event which is recorded in accounting system of
an organisation. Business transaction includes exchange of goods services for some
consideration (Kaiser, 2018). Every transactions are classified as business transaction then it is
recorded in the journal. Then these transaction are posted to the ledger and after that trail balance
is prepared to check whether the balance of the accounts match or not. Mark and Spencer is
taken as the reference company.
TASK
1.Describe the steps in starting a business.
David is the sole entrepreneur whom wants to start his own business. He is solely
responsible for all the debts and obligations of the company.
 Registration: In the first step the promoter have tor register the firm with the appellate
authority (Mahtani, 2019).
 Business idea: The foremost thing for any business entity is to have idea on which the
whole business will run in future.
 Execution of business plan: The plan needs to be implemented on the business according
to the blue print.
 Technological Strategies: A plan is created for the technological requirements so that the
needs can be found out.
 Community Network: Community is the one of the sources which plays an important role
in the working of the environment.
2.Explain the role of financial accounting and whom is responsible for decision making.
Accounting is comprises of recognising, interpreting, recording, distributing,
communicating and analysing the information to the various users (Lee, 2019). Accounting
system equips information regarding the financial health of an company.
Accounting Information:
 Owners: These information is used by the owners to know the profitability and financial
position of a business organisation and comparing those with the Marks and Spencer.
 Management: There is a huge difference between administration and contributor, they
make the decision according to the mentioned objectives and investment decision.

 Investors: These are the one whom carry research and analyse those results to know the
financial position of the business. Marks and Spencer, the basic requirement for any
investor is the final accounts of any organisation which is used for the purpose of
investing in a concern.
Part B
1. Journal entries for F Polk.
Journal of F Polk for the month September
Date Details Fol Debit Credit
01/09/21 Assets A/c
Fixtures
Stock
Debtors (105 + 311)
Bank
Cash
Creditors (229 + 80)
Capital
5700
2800
5200
416
1060
85
309
14952
01/09/21 Bad Debts
P Mullen
(Bad Debts written-off)
105
105
05/09/21 Payables
Office Fixtures
(Office fixtures bought through credit was written-off)
150
150
10/09/21 Cash
Bad Debts
M Abel
(M Abel declared bankruptcy and received the amount in
full settlement)
180
131
311
18/09/21 Machinery
Cash
1800
100

Bank
Payables
(Purchased a machinery and the amount paid by cheque,
cash and on credit)
500
1200
26/09/21 Payables
Bank
(Half of the amount due paid through cheque)
600
600
28/09/21 Insurance Expenses
Drawings
Bank
(Insurance expenses paid by bank but later realised that
£70 is of personal house)
60
70
130
2. (a) Post the Journal entries into the General Ledger Accounts.
Cash Account
Date Particulars Fol Amount Date Particulars Fol Amount
03/08/21 Bank 2800 15/08/21 Office Fixtures 110
25/08/21 Bank 430
31/08/21 Balance c/d 2260
2800 2800
1/09/21 Balance b/d 2260
Bank Account
Date Particulars Fol Amount Date Particulars Fol Amount
01/08/21 Capital 36800 03/08/21 Cash 2800
25/08/21 Cash 430 04/08/21 Van 6200
02/08/21 Loan Payable 12400 05/08/21 Office Fixtures 1000

19/08/21 Van (Mercedes Plc) 8700
28/08/21 Office Fixtures 750
31/08/21 Balance c/d 30180
49630 49630
1/9/21 Balance b/d 30180
Van Account
Date Particulars Fol Amount Date Particulars Fol Amount
01/08/21 Capital 32000
04/08/21 Bank 6200 31/08/21 Balance c/d 46900
08/08/21 Toyota Co. 8700
46900 46900
1/9/21 Balance b/d 46900
Office Fixtures
Date Particulars Fol Amount Date Particulars Fol Amount
01/08/21 Capital 1200
05/08/21 Cash 1000
05/08/21 Payables 2400 31/08/21 Balance c/d 5460
15/08/21 Cash 110
28/08/21 Bank 750
5460 5460
1/9/21 Balance b/d 5460
Payables Account
Date Particulars Fol Amount Date Particulars Fol Amount

19/08/21 Bank 8700 5/08/21 Office Fixtures 2400
31/08/21 Balance c/d 2400 08/08/21 Van 8700
8700 8700
1/9/21 Balance b/d 2400
Loan Payable Account
Date Particulars Fol Amount Date Particulars Fol Amount
31/08/21 Balance c/d 12400 02/08/21 Bank 12400
12400 12400
1/9/21 Balance b/d 12400
Capital Account
Date Particulars Fol Amount Date Particulars Fol Amount
31/08/21 Bank 70000
31/08/21 Balance c/d 70000
70000 70000
1/09/21 Balance b/d 70000
2. (b) Make the trail balance on 31st August, 2021.
TRIAL BALANCE of Maurice & Brothers as at August, 2021
Details Debit Credit
Bank 30180
Cash 2260

Van 46900
Office Fixtures 5460
Payables 2400
Loan Payable 12400
Capital 70000
TOTAL 84800 84800
PART C
(a) Make the income Statement of B Moore for the year ending on 30th September, 2021
Income Statement of B Moore for the year ending on September 2021
Details Amount (£)
Sales 95000
Less: Sales Returns (3500)
Net Sales 91500
Opening Stock 18000
Purchases 110000
Less: Return Outwards (720)
Add: Carriage Inwards 890
Less: Closing Stock 13000
Cost of Goods Sold 115170
Gross Loss -23670
Less: Motor Expenses 1400
Carriage Outward 500
Rent 7000
Telephone Charges 830

Wages and Salaries 14000
Insurance 1030
Office Expenses 800
Sundry Expenses 250
Operating Expenses 25810
Net Loss -49480
(b) Examine the income statement and ratios. Explain the reason of change in the profit of the
organisation.
Every business organisation affected from the pandemic there were certain organisations
which got benefited from this situation (O’Beirne, 2018). But for organisations which deals in
luxury products have to suffer from this phase. These businesses were not able to earn the profits
equal to the operating expenses. The business have a potential of high growth as compared to the
previous results.
CONCLUSION
From the above report explains the procedure of how to start a business concern and also
explains the process of bookkeeping. Final accounts of F Polk is prepared and B Moore is used
to compare both the firms and their profitability by comparing different ratios.

REFERENCES
Books and Journals
Jia, P., 2018. Book review: David Banks, The Birth of the Academic Article: Le Journal des
Sçavans and the Philosophical Transactions 1665–1700.
Kaiser, C., 2018. Privacy and Identity Issues in Financial Transactions: The proportionality of
the European anti-money laundering legislation (Doctoral dissertation, University of
Groningen).
Lee, I., 2019. The Internet of Things for enterprises: An ecosystem, architecture, and IoT service
business model. Internet of Things. 7. p.100078.
Mahtani, U.S., 2019. Related party transactions in India and their impact on reported
earnings. The Journal of Developing Areas. 53(1).
O’Beirne, C., 2018. Information and communications technology and its use in sport business.
In Managing Sport Business (pp. 502-514). Routledge.