Business Accounting Report: Anne York's Financial Statements Analysis

This report provides a comprehensive analysis of Anne York's accounting and bookkeeping practices. It begins with an examination of double-entry recording, utilizing T-accounts to illustrate transaction postings and balance calculations. The report then progresses to a trial balance, followed by evaluations of the income statement and the statement of financial position. A key section delves into the impact of drawings on small businesses, followed by a detailed calculation and analysis of various financial ratios, including profitability, current, and acid-test ratios, as well as accounts receivable collection and accounts payable payment periods. The report also addresses the impact of the COVID-19 pandemic on these ratios. Overall, the report offers insights into Anne York's financial performance, liquidity, and efficiency, providing a basis for recommendations to improve financial outcomes.

Recording Business transaction
Student Name:
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1

Table of Contents
Introduction......................................................................................................................................3
Double Entry Record Posting in T-Accounts and Balancing the Account......................................4
Accessing a Trial Balance.............................................................................................................11
Evaluating an Income Statement...................................................................................................12
Preparing a Statement of Financial Position..................................................................................13
Impact of Drawings in Small Business..........................................................................................15
Calculation and Analysing of Ratios.............................................................................................16
Conclusion.....................................................................................................................................18
2

Introduction
The many accounting and bookkeeping components of Anne York will be examined in this
paper. Bookkeeping is a step-by-step process that records company activities and occurrences to
keep financial paperwork up to date (Douglas Hillman et al., 2019). This report will use Anne
York's double-entry recording, and the results will be submitted to the T-account when they have
been processed (Ledger). Anne York will also be tested in terms of her trial balance. Following
that, various financial statements for Anne York will be shown. It will then be discussed in detail
throughout the paper how drawings are relevant to small businesses. In the end, several financial
ratios of Anne York will be computed, and her financial ratios will be assessed right away. In
addition, the influence of the Covid -19 epidemic on the average ratios will be discussed in
detail.
3

Double Entry Record Posting in T-Accounts and Balancing the
Account
T-accounts is widely used to produce adjusting entries, and they are a kind of Account. For
example, the matching principle in accrual accounting stipulates that all costs must be equal to or
greater than the revenues earned during the period they occur (Bodie et al., 2018). The T-account
guides accountants on what to record in a ledger to achieve an adjusted balance, ensuring that
revenues match costs. Company owners may also use the utilization of T-accounts to extract
data, such as the type of transaction that happened on a specific day or the amount and activities
of each Account. For example, the T-account of Anne York is following:
DR CASH A\C
CR
Date ££ Date ££
2021
Oct- 1
Oct- 23
Oct- 23
Oct- 31
Nov- 1
CAPTIAL A\C
SALES A\C
SALES A\C
ACCOUNTS
RECEIVABLE A\C
BALANCE B\D
4800
1800
700
150
7450
7340
2021
Oct- 12
Oct- 31
MAINTENANCE AND
REPAIR A\C
BALANCE C\D
110
7340
7450
4

DR BANK A\C CR
Date ££ Date ££
2021
Oct- 1
Oct- 5
Oct- 21
Nov- 01
CAPITAL A\C
SALES A\C
RENT REVENUE A\C
BALANCE B\D
10,000
2800
800
13600
8030
2021
Oct- 04
Oct- 24
Oct- 26
Oct- 30
Oct- 31
Oct- 31
COMPUTER A\C
EQUIPMENT A\C
LAPTOP A\C
SALARIES AND
WAGES EXPENSE A\
C
RENT EXPENSE
OWNER’S
DRAWING A\C
BALANCE C\D
800
200
1700
820
850
1200
8030
13600
DR ACC. RECEIVABLE A\C CR
Date ££ Date ££
2021
Oct- 23
Nov- 01
SALES A\C
BALANCE B\D
300
300
150
2021
Oct- 31
Oct- 31
CASH A\C
BALANCE C\D
150
150
300
5

DR FLAT A\C CR
Date ££ Date ££
2021
Oct- 01
Nov- 01
CAPITAL A\C
BALANCE B\D
45000
45000
45000
2021
Oct-31 BALANCE C\D 45000
45000
DR CAR A\C CR
Date ££ Date ££
2021
Oct- 01
Nov- 01
CAPITAL A\C
BALANCE B\D
12000
12000
12000
2021
Oct- 31 BALANCE C\D 12000
12000
DR PURCHASE A\C CR
Date ££ Date ££
2021
Oct- 02
Nov- 01
ACC. PAYABLE A\C
BALANCE B\D
5400
5400
5150
2021
Oct- 18
Oct- 31
ACC. PAYABLE A\C
BALANCE C\D
250
5150
5400
6

DR COMPUTER A\C CR
Date ££ Date ££
2021
Oct- 04
Nov- 01
BANK A\C
BALANCE B\D
800
800
800
2021
Oct- 31 BALANCE C\D 800
800
DR EQUIPMENT A\C CR
Date ££ Date ££
2021
Oct- 04
Nov- 01
BANK A\C
BALANCE B\D
200
200
200
2021
Oct- 31 BALANCE C\D 200
200
DR LAPTOP A\C CR
Date ££ Date ££
2021
Oct- 24
Nov- 31
BANK A\C
BALANCE B\D
1700
1700
1700
2021
Oct- 31 BALANCE C\D 1700
1700
7

DR SALES A\C CR
Date ££ Date ££
2021
Oct- 31 BALANCE C\D 5600
5600
2021
Oct- 05
Oct- 23
Oct- 23
Nov- 01
BANK A\C
CASH A\C
ACC. RECEIVABLE
CASH A\C
BALANCE B\D
2800
1800
300
700
5600
5600
DR RENT REVENUE A\C CR
Date ££ Date ££
2021
Oct- 31 BALANCE C\D 800
800
2021
Oct- 21
Nov- 01
BANK A\C
BALANCE B\D
800
800
800
DR CAPITAL A\C CR
Date ££ Date ££
2021
Oct- 31 BALANCE C\D 71800
71800
2021
Oct- 01
Nov- 01
CASH A\C
BANK A\C
FLAT A\C
CAR A\C
BALANCE B\D
4800
10000
45000
12000
71800
71800
8

DR ACC. PAYABLE A\C CR
Date ££ Date ££
2021
Oct- 18
Oct- 31
PURCHASE A\C
BALANCE C\D
250
5150
5400
2021
Oct- 02
Nov- 01
PURCHASE A\C
BALANCE B\D
5400
5400
5150
DR OWNER’S DRAWING A\C CR
Date ££ Date ££
2021
Oct- 31
Nov- 01
BANK A\C
BALANCE B\D
1200
1200
1200
2021
Oct- 31 BALANCE C\D 1200
1200
DR RENT EXPENSE A\C CR
Date ££ Date ££
2021
Oct- 30
Nov- 01
BANK A\C
BALANCE B\D
850
850
850
2021
Oct- 31 BALANCE C\D 850
850
DR MAINTENANCE AND REPAIR EXPENSE A\C CR
9

Date ££ Date ££
2021
Oct- 12
Nov- 01
CASH A\C
BALANCE B\D
110
110
110
2021
Oct- 31 BALANCE C\D 110
110
DR SALARIES AND WAGES EXPENSE A\C CR
Date ££ Date ££
2021
Oct- 26
Nov- 01
BANK A\C
BALANCE B\D
820
820
820
2021
Oct- 31 BALANCE C\D 820
820
10

Accessing a Trial Balance
A trial balance is an accounting document in which the proportions of all ledgers are gathered
into totals in the debit and credit account columns equal in both the worksheet's debit and credit
account columns (Chartered Institute Of Management Accountants, 2014). Producing a trial
balance has the general objective of assuring that the entries in a company's accounting system
are mathematically valid. For example, the trial balance of Anne York is following:
Anne York
Trial Balance
For the month ended October 31, 2021
Sl. No. Ledger Name DR Balance CR Balance
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
CASH A\C
BANK A\C
ACC. RECEIVABLE A\C
FLAT A\C
CAR A\C
PURCHASE A\C
COMPUTER A\C
EQUIPMENT A\C
LAPTOP A\C
SALES A\C
RENT REVENUE A\C
CAPITAL A\C
ACCOUNTS PAYABLE A\C
OWNER’S DRAWING A\C
RENT EXPENSE A\C
MAINTENANCE AND REPAIR A\C
SALARIES AND WAGES EXPENSE A\C
7340
8030
150
45000
12000
5150
800
200
1700
1200
850
110
820
5600
800
71800
5150
11

83,350 83,350
Evaluating an Income Statement
It is one of a company's financial statements that reflect the company's earnings and costs over
an interval of time, known as an income statement (Garrison et al., 2018). When revenues are
converted into net income or profit, this explains how it happens. The income statement of Anne
York is following:
Anne York
Income Statement
For The Month Ended 31st October 2021
Details ££ ££
Sales
Opening inventory
Add: Purchase
Less: Purchase return
Less: Closing inventory
Rent revenue
Gross profit
Less: Operating expense
Rent expense
Salaries and wages expense
Maintenance and repair expense
-
5400
(250)
(320)
850
820
110
5600
(4830)
800
1570
(1780)
Net loss (210)
12