Accounting System and Process: Comprehensive University Report

This homework assignment delves into several core accounting concepts and practical applications. It begins with an examination of Excel functionalities, including naming cells and using formulas to manage data. The assignment then explores the presentation of negative numbers, segregating data and report areas, and applying IF functions. It differentiates between periodic and perpetual inventory systems, providing examples for calculations. Further, it discusses the role of spreadsheets in financial reporting, highlighting both advantages and disadvantages. The assignment also covers inventory flow assumptions, bank reconciliation processes, journal entries for accounts receivable, and methods for estimating bad debts. Finally, it analyzes the impact of online shopping and includes a case study involving sales transactions and journal entries. The assignment concludes with an analysis of Wesfarmers, including its income statement, balance sheet, and sustainability issues.

Running head: ACCOUNTING SYSTEM AND PROCESS
Accounting system and process
Name of the university
Subject code and name
Student name and student ID number
Assignment task number
Author note

ACCOUNTING SYSTEM AND PROCESS 1
Table of Contents
Answer 1.................................................................................................................................................................2
Answer 3.................................................................................................................................................................4
Answer 4.................................................................................................................................................................5
Answer 5.................................................................................................................................................................6
Answer 6.................................................................................................................................................................7
Answer 7.................................................................................................................................................................7
Answer 8.................................................................................................................................................................8
Answer 9...............................................................................................................................................................10
Answer 10.............................................................................................................................................................11
Answer 11.............................................................................................................................................................11
Answer 12.............................................................................................................................................................11
Question 13...........................................................................................................................................................12
References and Bibliographies..............................................................................................................................16

ACCOUNTING SYSTEM AND PROCESS 2
Answer 1
Naming cells included in the spreadsheet
Through using the names the user can make the formulas easier for maintaining and understanding. The
cells can be named for ranges, constant, functions and table. Excel can be updated easily if the user use names
for the cells.
Example
Normal view –
Formula view –

ACCOUNTING SYSTEM AND PROCESS 3
Answer 2
Negative numbers
Example of showing negative numbers in bracket
Negative numbers are the real numbers those are less than zero. The negative numbers are shown in
brackets to differentiate it from the positive numbers. Putting the negative number is not always visible to the

ACCOUNTING SYSTEM AND PROCESS 4
users as it is too small in size. Therefore, it is put in bracket to make it more clear and visible (Myrelid &
Olhager, 2015).
Answer 3
Segregating the data area and report area
In excel sheet the data area and report area are segregated to present it more clearly and making it more
useful and meaningful to the users. In excel, the data those are not yet processed are presented under the data
area whereas the data those are processed are presented in the report area (Bragg, 2013).
Normal view –

ACCOUNTING SYSTEM AND PROCESS 5
Formula view –
Answer 4
IF functions
Reference of YouTube video that explains IF functions - https://www.youtube.com/watch?v=iKN-QpBLkyM
If statement – IF statement states whether any specific condition is met or not based on which the user can
make his decision. When the conditions are met, the true value is returned by the IF Function. On the contrary,
when the conditions are not met, False value is returned by the IF function. IF function is considered as a
logical function in Excel (Hoggett et al.2015).

ACCOUNTING SYSTEM AND PROCESS 6
Example
Normal view –
Formula view –

ACCOUNTING SYSTEM AND PROCESS 7
Answer 5
Periodic inventory and perpetual inventory
Under the periodic system the physical count are taken occasionally for measuring the inventory level
and COGS. Under this system, all the purchases for recorded in the purchases account. When the physical count
for inventory is done then the purchase account is shifted to inventory account that is eventually adjusted for
matching cost with the closing inventory. On the other hand, under the perpetual system the inventory balances
are are tracked and recorded continuously and the updates are automatically made whenever any product is sold
or received. The foot video shows periodic inventory (Otley & Emmanuel, 2013).
Example of periodic inventory –
COGS = Opening inventory + Purchases – Closing inventory
Let’s assume, Opening balance on 01-01-2016 = $ 1,000
Purchases made = $ 6,000
Closing balance on 31-12-2016 = $ 3,000
Therefore, COGS = $ 1,000 + $ 6,000 - $ 3,000 = $ 4,000
Example of perpetual inventory –

ACCOUNTING SYSTEM AND PROCESS 8
In a grocery shop the inventories are updated only when there is a receipt or sale of inventories.
Answer 6
Financial report and worksheet
Introduction – spreadsheet is used to record large amounts of data within cells those are organized in the
columns and rows. The cell may include the data and various calculations like percentage or sums. It also helps
in processing and manipulating data for filtering and sorting the data (Carraher & Van Auken, 2013).
Discussion – there are various advantages as well as disadvantages of excel spreadsheet that are mentioned
below –
Advantages – spreadsheets assists in copying the format of the paper based sheets that are used by the
bookkeepers and accountants for long times. The advantages of the spreadsheet is that it combines the rigid
layout of needed for maintaining the accounts in clear manner with the inbuilt calculator. Users can further use
various formulas and can state the data based on formulas. Further, it is used to keep the track on various data
very easily and saves lot of time for the employees (Drury, 2013).
Disadvantages – the main disadvantages associated with the spreadsheet it is deskilling. The employees require
special knowledge to maintain and calculate data in the spreadsheet. Further, the spreadsheet installed in
individual computer generally used by the particular employee to make his own calculation and data file. It may
lead to duplication of data that wastes the efforts of the employees. Moreover, the spreadsheet structure requires
raw data which may not be available all the time (Golyagina & Valuckas, 2016).
Conclusion – it can be concluded from the above analysis that the spreadsheet plays important role in managing
and calculating various business data. Though some disadvantages are associated with the spreadsheet, it can be
useful significantly if used properly and proper training is provided to the user.
Answer 7
Application of the inventory flow assumption
Requirement 1

ACCOUNTING SYSTEM AND PROCESS 9
Requirement 2
Gross profit
Answer 8

ACCOUNTING SYSTEM AND PROCESS 10
Bank reconciliation
Normal view
Particulars Amount Amount
Balance as per bank $ 21,453.00
Add:
Deposit in transit $ 2,345.00
EFT rent receipt $ 600.00
Book error cheque 1419 $ 456.00 $ 3,401.00
Less: $ 24,854.00
Outstanding cheques
Cheque no. 1420 $ 1,678.00
Cheque no. 1421 $ 760.00
Cheque no. 1422 $ 340.00
$ 2,778.00
Adjusted balance as per
bank $ 22,076.00
Particulars Amount
balance as per book $ 20,991.00
Bank service charges $ -65.00
rent receipt $ 600.00
note receivable $ 2,650.00
Insurance payment $ 300.00
cheque from customer $ -2,400.00
Adjusted balance as per book $ 22,076.00
Formula view
Particulars Amount Amount
Balance as per bank 21453
Add:
Deposit in transit 2345
EFT rent receipt 600
Book error cheque 1419 456 =SUM(C6:C8)
Less: =SUM(D4:D8)
Outstanding cheques
Cheque no. 1420 1678
Cheque no. 1421 760
Cheque no. 1422 340

ACCOUNTING SYSTEM AND PROCESS 11
=SUM(C11:C14)
Adjusted balance as per bank =D9-D15
Particulars Amount
balance as per book 20991
Bank service charges -65
rent receipt 600
note receivable 2650
Insurance payment 300
cheque from customer -2400
Adjusted balance as per book =SUM(G4:G10)
Condition - if balance as per book = $ 20,991, adjusted balance as per
book = adjusted balance as per bank =IF(F4=G4,
B16=D16,D16=G11)
With changed data –
Normal view –
Particulars Amount Amount
Balance as per bank $ 22,000.00
Add:
Deposit in transit $ 1,543.00
EFT rent receipt $ 800.00
Book error cheque 1419 $ 340.00 $ 2,683.00
Less: $ 24,683.00
Outstanding cheques
Cheque no. 1420 $ 1,532.00
Cheque no. 1421 $ 700.00
Cheque no. 1422 $ 500.00
$ 2,732.00
Adjusted balance as per bank $ 21,951.00
Particulars Amount
balance as per book $ 21,000.00
Bank service charges $ -40.00
rent receipt $ 891.00
note receivable $ 1,500.00
Insurance payment $ 300.00
cheque from customer $ -1,700.00

ACCOUNTING SYSTEM AND PROCESS 12
Adjusted balance as per book $ 21,951.00
Answer 9
Journal entry for accounts receivable
Date Particulars Debit Credit
1st March Mariah’s account $ 10,000
Sales account $ 10,000
1st March Account receivable $ 10,000
Mariah’s account $ 10,000
15th April Cash account $ 8,000
Account receivable $ 8,000
30th April Allowance for doubtful debts $ 2,000
Accounts receivable $ 2,000
Answer 10
Estimation of bad debts
Write-off method – it is one of the 2 methods used for treating the bad debts in the financial statement. Under
this method the company does not expect the expenses for bad debts and write off the amount of bad debt
against the amount of accounts receivable (Hoyle, Schaefer & Doupnik, 2015). While it is established that the
amount is not collectible then the journal entry is passed under which the expenses of bad debts are debited and
the account receivable amount is credited (Chołodowicz & Orłowski, 2015).
Example –
Bad debt expenses $5,000
To accounts receivable $ 5,000
Allowance method – this method is used for calculating the amounts that needs to be reported under the
financial statement of the company as the result of delivering services or selling goods on the credit. Under this
method the company shall record one adjusting entry at end of the each closing period and record the amount of
losses expected by the company (Brief & Peasnell, 2013). As per this method the accounts receivable are
shown in the balance sheet with the reduction known as allowance for the doubtful debts. It estimates the
amounts that established as uncollectible at end of each period
Example –

ACCOUNTING SYSTEM AND PROCESS 13
Expenses of bad debs $5,000
To allowance for the doubtful debts $ 5,00
Answer 11
Online shopping is becoming more popular with the years and and for online shopping computer system
is the major requirement. E-bay has gain popularity over the past few years owing to their availability from any
corner of the world (Brooks, 2015). Online shopping is advantageous as it is convenient and easy for the people
for selecting products they require through the use of internet. Further, it saves time as well as money required
for travelling to the shops and the customers can find the right product very easily from the right catalogues
through using internet as the search engine (Bebbington, Unerman & O'Dwyer, 2014). Therefore, the online
shopping makes the life of shoppers easier and simple and at the same time the online shopping sites like eBay
is carrying on their business profitably and smoothly.
Answer 12
Scenario –
Details Amount (in $)
Credit Sale to Christy 7,500
Partial payment received through cash 2,500
Promise received outstanding to 16/10/2016
Dishonour of past promise due to no payment
Partial payment received through notes 5,000
Journal entries –
Particulars Debit Credit
Account receivable $ 7,500.00
Sales $ 7,500.00
[Being sales made on credit]
Cash $ 2,500.00
Notes receivable $ 5,000.00
Accounts receivable $ 7,500.00
[Being notes received for part payment of credit sales]
Cash $ 5,000.00
Notes receivable $ 5,000.00

ACCOUNTING SYSTEM AND PROCESS 14
[Being cash received for notes]
T- Accounts
Accounts receivable
Sales $ 7,500.00
Cash $ 7,500.00
$ 7,500.00 $ 7,500.00
Sales
Account receivable $ 7,500.00
Cash
Notes receivable $ 7,500.00
Accounts receivable $ 7,500.00
$ 7,500.00 $ 7,500.00
Notes receivable
Cash $ 7,500.00
Question 13
Introduction – Wesfarmers is the leading Australian company that is focussed on the diverse operation and
providing satisfactory returns to the shareholders. The company has it’s headquarter in Western Australia and
the diverse operation of the company includes supermarkets, hotels, liquor, fertilizers, energy, safety products,
industrial products and coal. It is one of the largest private sectors for the employees that has shareholder’s base
of 530,000 approximately.
Discussion –
Sustainability issues – the material issues of the company with regard to its sustainability report is –
 To maintain the relentless focus while providing a safe workplace for the employees
 Providing opportunities for the people for enhancing the job performance and developing their careers
further.
 The company is committed towards respectful and strong relationships with the suppliers
 The company makes a positive contribution to the communities under which it operates.
 The company ensures to reduce the impact of harmful emissions of the business and improve the
resilience of the climatic changes.
 The company maintains robust policies for the corporate governance for all the businesses.

ACCOUNTING SYSTEM AND PROCESS 15
Income statement - the income statement of the company for the year ended 30th June 2017 amounted to $
68,444 million and the operating expenses of the company amounted to $ 64,477 million. The amount of
earnings before interest or income tax expenses amounted to $ 4,402 million. The amount of profit attributable
to the members amounted to $ 2,873 million (Abdelmoneim Mohamed & Jones, 2014).
Balance sheet – looking into the annual report of the company it is identified that the total assets of the
company for the year ended 30th June 2017 amounted to $ 40,115 million, out of which current assets amounted
to $ 9667 million and non-current assets amounted to $ 30,448 million. On the other hand, that the total
liabilities of the company for the year ended 30th June 2017 amounted to $ 16,174 million, out of which current
liabilities amounted to $ 10,417 million and non-current liabilities amounted to $ 5,757 million. Further, total
equity was amounted to $ 23,941 million (Sustainability.wesfarmers.com.au 2018).
Cash flow statement – looking into the cash flow statement of the company it is identified that the cash flow of
the company is segregated into 3 parts – net cash flow from operating activities, net cash flow from investing
activities and net cash flow from financing activities (Armitage & Webb, 2013). Further, the amounts of cash
generated from the operating activities are $ 4,226 million, cash flow used in investing activities amounted to $
53 million and cash flow used in financing activities were amounted to $ 3,771 million. Therefore, cash and
cash equivalents for the year ended 30th June 2017 amounted to $ 1,013 million
(Sustainability.wesfarmers.com.au 2018).
Working capital ratio –
Particulars Unit
Current Assets $9,667
Current Liabilities $10,417
Working Capital Ratio [Current
Assets/Current Liabilities]
0.93
Though the working capital ratio of the company is less than 1, the company can increase is if it can
increase the current assets and reduce the liabilities through paying off the short term obligations.
Earnings per share – the basic EPS of the company for the year ended 30th June 2017 was 254.7 per share
whereas the previous year that is for 2016 the EPS was 36.2 cents per share (Sustainability.wesfarmers.com.au
2018).
Dividend – the company paid dividend of $ 1.20 per share for the year 2017 as against $ 0.95 per share for the
previous year.
Net profit after tax for the last 5 years were as follows –
Year Amount ($ m)
2017 2,873
2016 2,353
2015 2,440
2014 2,689
2013 2,261

ACCOUNTING SYSTEM AND PROCESS 16
Bar graph –
2017 2016 2015 2014 2013
0
500
1000
1500
2000
2500
3000
Amount ($ m)
Amount ($ m)
Pie chart –
2873
2353
2440
2689
2261
Amount ($ m)
2017
2016
2015
2014
2013
Conclusion and recommendation – from the above analysis it is identified that Wesfarmers stock can be chosen
for the purpose of investment as the company has strong and stable profitability position for the last 5 years.
Further, the company is regular in paying dividend to the shareholders and EPS of the company has been
increased from 36.2 cents to 254.7 cents per share over the years from 2016 to 2017. Therefore, it can be
considered as good opportunity for investment.

ACCOUNTING SYSTEM AND PROCESS 17
References
Abdelmoneim Mohamed, A., & Jones, T. (2014). Relationship between strategic management accounting
techniques and profitability–a proposed model. Measuring Business Excellence, 18(3), 1-22.
Armitage, H. M., & Webb, A. (2013). The Use of Management Accounting Techniques by Canadian Small and
Medium Sized Enterprises: A Field Study. In CAAA Annual Conference.
Bebbington, J., Unerman, J., & O'Dwyer, B. (2014). Sustainability accounting and accountability. Routledge.
Bragg, S. M. (2013). Inventory management. AccountingTools.
Brief, R. P., & Peasnell, K. V. (2013). Clean surplus: A link between accounting and finance. Routledge.
Brooks, R. (2015). Financial management: core concepts. Pearson.
Carraher, S., & Van Auken, H. (2013). The use of financial statements for decision making by small
firms. Journal of Small Business & Entrepreneurship, 26(3), 323-336.
Chołodowicz, E., & Orłowski, P. (2015). A periodic inventory control system with adaptive reference stock
level for long supply delay. Measurement Automation Monitoring, 61.
Drury, C. M. (2013). Management and cost accounting. Springer
Golyagina, A., & Valuckas, D. (2016). Representation of knowledge on some management accounting
techniques in textbooks. Accounting Education, 25(5), 479-501.
Hoggett, J., Edwards, L., Medlin, J., Chalmers, K., Hellmann, A., Beattie, C., & Maxfield, J. (2015).
Accounting.
Hoyle, J. B., Schaefer, T., & Doupnik, T. (2015). Advanced accounting. McGraw Hill.
Myrelid, A., & Olhager, J. (2015). Applying modern accounting techniques in complex
manufacturing. Industrial Management & Data Systems, 115(3), 402-418.
Otley, D., & Emmanuel, K. M. C. (2013). Readings in accounting for management control. Springer.
Sustainability.wesfarmers.com.au. (2018). [online] Available at:
https://sustainability.wesfarmers.com.au/media/2222/2017-wesfarmers-sustainability-full-report.pdf
[Accessed 29 Apr. 2018].