ACC1AIS - Accounting and Information System: Anjit Gurung Analysis

This report provides a financial analysis of Anjit Gurung Company for May 2018. It includes journal entries, a trial balance, an income statement, and a balance sheet prepared using an accounting information system. The analysis covers the company's sales, expenses (including cost of goods sold, motor vehicle expenses, depreciation, interest, and rent), and overall profitability. The report reveals a loss for the month, attributed to high operating expenses. Current assets, including inventory, accounts receivable, and prepaid expenses, are also detailed. The document is contributed by a student and available on Desklib.

Running head: ACCOUNTING AND INFORMATION SYSTEM
Accounting and Information System
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ACCOUNTING AND INFORMATION SYSTEM
Table of Contents
Introduction......................................................................................................................................2
Financial Analysis...........................................................................................................................2
Reference.........................................................................................................................................6
Appendix..........................................................................................................................................7

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Introduction
The main purpose of this report is to analyze the performance of the Anjit Gurung
company for the month of May. There are various transactions which the company has engaged
in for the month of May for which Journal entries are passed and income statement and a balance
sheet has been prepared. The company is engaged in the business of buying and selling of socks.
The business has prepared profit and loss account and a balance sheet for the month of May and
also prepared a Trial Balance which are shown in the Appendix which is given below.
Financial Analysis
The transactions which are made during the year are recorded by passing necessary
journal entries for the month of May. The transactions which are passed are the passed through
various ledger accounts. In order to check the mathematical accuracy of the transactions of the
business a trial balance is prepared (Karanina, Bykova and Ilysheva 2014).
As per the trial balance which is prepared by the company, the sales of the business is
shown on the credit side of the trail balance and the same is shown to be $ 9,829. The expenses
of the company comprise mainly of cost of good sold expenses which are directly related to the
production of the products of the business and in addition to this, comprises of Motor Vehicle
expenses which are incurred by the business during the month of May. The cost of good sold of
the business is shown to be $ 5,932 and the motor vehicle expenses of the business is shown to
be $ 531. The trail balance of the business shows that there is general level of accuracy in the
transactions which are recorded by the business as the debit and credit side of the financial
statements of the business matches and the total is shown to be $ 566,660.

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The profit and loss account of the business which is prepared shows the profit which is
generated by the business for the month of May. The profit and loss account of the business is
prepared by considering the all the transactions which has taken place during the month (Reid
and Myddelton 2017). The main objective of the profit and loss statement which is prepared by
the management of the company is to display the profitability of the business for the month of
May. As per the profit and loss account of the business, the main source of income for the
business is the income which is generated from the sales of goods which has been manufactured
by the business (Haas 2014). Another source of income for the business is interest income which
is generated by the business due to the investments which are made by the business for the
purpose of generating secondary income (Elrod, Murray and Bande 2013). The income which is
generated from sales is shown to be $ 9829 for the month of May and the interest income which
is generated by the business for the month of May is shown to be $ 706. The expenses which are
incurred by the business for the month of May is shown in the pie chart which is shown below:
$306.00
$2,042.00
$531.00
$4,545.00
Expenses
Depreciation Interest Expense
Motor Vehicle Expenses Rent
Figure 1: (Pie Chart Showing Expenses of the Company for the Month of May)

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Source: (Created by Author)
As per the above chart which is shown above shows the operating expenses of the
business during the month of May. The major part of the operating expenses of the business for
the month of May is shown to be $ 4545. Rent is considered to be a part of the fixed expenses
which the business has to incur irrespective of the fact that the business undertakes production of
goods. Another major expense of the business is related to the interest which the business has to
[pay which is related to the loan which is undertaken by the business for the month of May. The
same has been shown as $ 2,042. This interest expense of the business is related to the servicing
of the loan which the business has which is shown in the Balance sheet of the company
(Robinson et al. 2015). The other expenses which are shown in the profit and loss account of the
business are Depreciation and Motor Vehicle expenses. The depreciation expenses arise due to
the wear and tear of the assets which are used by the business which results in reduction in the
value of the assets. The depreciation expense of the business is shown to be $ 306. The motor
vehicle expense of the business is shown to be $ 531. The financial statements of the company
show that the business has incurred loss of $ 2,822 during the month. The main reason for such a
loss is because of the increased amount of expenses which the business has incurred during the
month especially the operating expenses of the business.
The main purpose of preparing the Balance sheet of the company is show the financial
position of the business for the month of May. The balance sheet will be portraying all the
liabilities and assets of the business for the month of May (Bobryshev et al. 2014). The current
assets of the business are shown in the graph which is presented below:

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Accounts
Receivable Interest
Receivable Inventory Office
Supplies Prepaid
Advertising Prepaid Rent
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
Current Assets
Figure 2: (Chart Showing Current Assets of the Company for the Month of May)
Source: (Created by Author)
The current assets of the business comprise of Inventory, accounts receivables, interest
receivables, offices supplies, prepaid advertisement and Prepaid Rent (Kapan and Minoiu 2013).
The prepaid rent and prepaid advertisement forms the major part of the current assets of the
business which is both shown as $ 22,727.27. The inventory of the business as shown in the
graph above is shown to be $ 12,468.10 for the month of May which represent the closing stock
of the business. The total of the assets side is shown to be $ 546,344.85. The fixed assets of the
business comprise of Motor Vehicles and Office furniture. The total equity of the business is
shown to be $ 200,000 which represents the owner’s capital less the amount of loss which is
incurred by the business during the month.

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Reference
Bobryshev, A.N., Uryadova, T.N., Lyubenkova, E.P., Yakovenko, V.S. and Alekseeva, O.A.,
2014. Analytical and management approaches to modeling of the accounting balance sheet. Life
Science Journal, 11(8), pp.502-506.
Elrod, C., Murray, S. and Bande, S., 2013. A review of performance metrics for supply chain
management. Engineering Management Journal, 25(3), pp.39-50.
Haas, J.J., 2014. Corporate Finance. West Academic.
Kapan, M.T. and Minoiu, C., 2013. Balance sheet strength and bank lending during the global
financial crisis (No. 13-102). International Monetary Fund.
Karanina, E., Bykova, I. and Ilysheva, N., 2014. Management Accounting System and the
Balanced Scorecard: ReflectingEnterprise Risks. American Journal of Scientific and Educational
Research, (1), p.112.
Reid, W. and Myddelton, D.R., 2017. The meaning of company accounts. Routledge.
Robinson, T.R., Henry, E., Pirie, W.L. and Broihahn, M.A., 2015. International financial
statement analysis. John Wiley & Sons.

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Appendix

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