ACC1AIS Financial Analysis: Accounting & Information System

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Added on 2023/06/04

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This assignment provides a comprehensive financial analysis of ABS Company, focusing on its accounting information system. It includes journal entries, ledger accounts, and the preparation of financial statements such as the profit and loss account, balance sheet, and trial balance for the month of May. The analysis covers key financial metrics like sales, cost of goods sold, and operating expenses, illustrated through charts and diagrams. The document also presents an overview of the company's current assets and their composition. The aim is to evaluate the company's financial performance and position during the specified period.

Running head: ACCOUNTING AND INFORMATION SYSTEM
Accounting and Information System
Name of the Student:
Name of the University:
Author’s Note

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ACCOUNTING AND INFORMATION SYSTEM
Table of Contents
Introduction......................................................................................................................................2
Financial Analysis...........................................................................................................................2
Reference.........................................................................................................................................5
Appendix..........................................................................................................................................6

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ACCOUNTING AND INFORMATION SYSTEM
Introduction
The main purpose of this assessment is to analyze the performance of the Abs company
for the month. The assessment shows the various journal entries and ledger accounts which is
prepared by the management during the period (Khan 2015). The business has prepared profit
and loss account, balance sheet and a trial balance as well which is shown in the appendix
section of the assessment.
Financial Analysis
The transaction which the business has been involved in are recorded initially in the form
of journal entries and then the same is processed through various ledger accounts. In addition to
this a trail balance is prepared for the purpose of ensuring that the accuracy of the transactions
which are posted in the ledger accounts.
The trail balance shows the sales of the business on credit side and the figure is shown to
be $ 9,275.76. The main expenses which can be identified for the business is cost of good sold
for the business. The figure for cost of goods sold is shown to be $ 5,833.40 for the month of
May. The main use of trial balance is to effective check the mathematical accuracy of the trial
balance based on debit and credit side balances (Warren, Reeve and Duchac 2013).
The profit and loss account are prepared by the business for the purpose of evaluating the
profits of the business during the period (Hatfield 2014). The profit and loss statement show the
expenses and revenues which is generated by the business during the period (Needles, Powers
and Crosson 2013). The main income which is generated by the business is through sales of
goods which are produced by the business during the period. There is another source of income
which is secondary source which comprise of interest income and other similar revenues of the

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ACCOUNTING AND INFORMATION SYSTEM
business. The presentation of the expenses of the business is shown in format of graph which is
shown below:
$5,681.82
$266.66$1,458.33
$531.31
$4,545.45
Operati ng Expenses
Advertising Depreciation Interest Expense
Motor Vehicle Expenses Rent
The above pie chart shows the operating expenses of the business for month which
includes advertisement, depreciation, interest expenses, motor vehicle expenses and rent (Weil,
Schipper and Francis 2013). The above diagram makes it clear that major expense which the
business has undertaken during the month is related to rent and advertisement.
The balance sheet of the business is prepared in order to determine the financial position
of the business during the period and also identify the assets and liabilities which is owned by the
business during the period (Robinson et al. 2015). The presentation of the current assets of the
business is shown in the figure below:

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ACCOUNTING AND INFORMATION SYSTEM
Accounts
Receivable
Interest
Receivable
Inventory Office Supplies Prepayments
$-
$5,000.00
$10,000.00
$15,000.00
$20,000.00
$25,000.00
$30,000.00
$35,000.00
$40,000.00
$45,000.00
Current Assets
The current assets of the business which is shown in above figure comprise of inventory,
accounts receivable, interest receivables, prepayments and office supplies which are shown in the
diagram portrayed above. The prepayments which are shown by the business are maximum in
comparison to other current assets of the business.

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ACCOUNTING AND INFORMATION SYSTEM
Reference
Hatfield, H.R., 2014. Accounting: Its Principles and Some ofits Problems. In The Development
of Accounting Theory (RLE Accounting) (pp. 21-29). Routledge.
Khan, M., 2015. Accounting: Financial. In Encyclopedia of Public Administration and Public
Policy, Third Edition-5 Volume Set (pp. 1-6). Routledge.
Needles, B.E., Powers, M. and Crosson, S.V., 2013. Principles of accounting. Cengage
Learning.
Robinson, T.R., Henry, E., Pirie, W.L., Broihahn, M.A. and Cope, A.T., 2015. International
Financial Statement Analysis, (CFA Institute Investment Series). John Wiley & Sons.
Warren, C., Reeve, J.M. and Duchac, J., 2013. Financial & managerial accounting. Cengage
Learning.
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.