Accounting Project: Analyzing Business Transactions and Statements

This project delves into the realm of accounting, focusing on the meticulous recording of business transactions and the subsequent formulation of financial statements. The assignment commences with an exploration of a large, publicly traded company, Unilever, examining its decision-makers and the necessity of accounting information for various stakeholders, including shareholders, creditors, managers, and investors. It then transitions into a practical application of accounting principles, detailing journal entries, ledger accounts, and trial balance creation for a company named S. Keyes. Furthermore, the project culminates in the preparation of an income statement for S. Keyes, followed by an analysis of the potential impacts of the COVID-19 pandemic on the company's financial performance. The project emphasizes the importance of accurate record-keeping for informed decision-making and financial stability, supported by relevant references.

Project

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
a. Identification of the decision makers and explanation of need for accounting information....1
b. Explanation of advantages and disadvantages for profit business structure............................2
PART 2............................................................................................................................................3
Journal entries to record the transactions.....................................................................................3
PART 3............................................................................................................................................4
a. Recording transactions in ledger of S. Keyes..........................................................................4
b. Formulation of trial balance.....................................................................................................5
PART 4............................................................................................................................................6
a. Formulation of income statement for S. Keyes.......................................................................6
b. Explanation of possible impacts of COVID 19 on the income statement of company...........6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business transactions are the inflow and outflow of cash which is done by the businesses
for the purpose of carrying out operational activities. It is very important for the organisations to
make sure that they are able to formulate effective decisions for business and keep detailed
information of all the transactions that are performed during the accounting year (Abdulajid,
2020). This assignment is focused with recording business transactions of the companies in
books. There are four different parts in this assignment. First part is focused with large company
which is listed on stock exchange. The enterprise which is selected for this part is Unilever
which is operating its business all around the world and mainly established in United Kingdom.
Rest of the three parts are focused with recording of business transactions and formulation of
different accounts.
PART 1
a. Identification of the decision makers and explanation of need for accounting information
Decision makers are the individuals who are responsible for formulating effective
decisions for business so that the entities can carry out all the operations in systematic manner. If
the businesses will not be able to meet their expectations, then it may leave negative impact upon
their engagement level. Unilever is one of the largest entities of United Kingdom which is
operating its business all around the world. There are various decisions makers of the company
and discussion of all of them in context of the enterprise is as follows:
Shareholders: These are the individuals who are having shares within the organisation.
In Unilever all the shareholders need accounting information as it can help them to determine
that the funding which is provided by them to the organisation is utilised by the organisation
properly or not. With the help of accounting information, they can analyse financial stability of
business and formulate effective decisions for future (AL-Saji, 2019).
Creditors: All the external parties which are providing goods to the enterprise on credit
are known as creditors. For all the businesses it is very important to keep them retained with
business as it can help to carry out all the operations in systematic manner. The detailed
accounting information is required by the creditors who are providing goods to the enterprise on
credit. It can benefit them by evaluating credit worthiness of the business and make decision of
offering credit in future.
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Managers: These the individuals who are responsible for formulation of effective
strategies for proper execution of operational activities of business. Accounting information is
needed by them as it can help to determine actual position of business and then formulate
effective decisions according to the same. In Unilever when the managers will get accounting
information then they can determine the causes of bad performance and then find ways to
improve it.
Investors: These external stakeholders analyse efficiency and actual position of business
and then invest funds in business so that higher returns could be generated by them. They need
accounting information to evaluate that the business in which they will be investing their money
will provide them good returns or not. In Unilever investors try to determine the ability of
company to offer them high interest on their funding by evaluating the accounting information
available to them therefore it is needed by them (Bartolini and DeSilvey, 2020).
b. Explanation of advantages and disadvantages for profit business structure
Accounting is the process of recording all the transactions of business in the books so that
the business’s actual position could be determined. It is very important for all the businesses to
make sure that all the accounting related principles, rules and regulations are followed as it can
help to formulate appropriate and accurate books and accounts. There are various advantages and
disadvantages of it for businesses. Discussion of all of them for the enterprises is as follows:
Advantages of accounting: All the major advantages of accounting for a profit business
structure like Unilever are as follows:
 Maintains the records of business: With the help of accounting business entities can
mainta9in the business records and keep detailed information of all the transactions
performed by the company during the year. It will help the managers to get detailed
information of each and every activity which is related to inflow and outflow of cash.
 Facilitate decision making: Accounting can help the decision makers to formulate
effective decisions because it can guide them through out the way of analysis of actual
position of business. By evaluating the accounts stakeholders like managers, creditors,
investors etc. will be able to make future decision for their as well as organisation’s
betterment (Kelly and Banaszewski, 2018).
Disadvantages of accounting: Several disadvantages of accounting are covered in the
following discussed points:
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 Manipulative nature of accounts: The main drawback of accounting is its nature
because all the accounts that are formulated by the professional could be manipulated by
them and it may result in inaccurate details in the books. It may also leave negative
impact upon mind-set of the decision makers.
 Basis of accounting information is estimation: All the details that are recorded in the
accounting books are based upon assumptions therefore sometimes the details could be
wrong. Due to this, the stakeholders like managers can formulate wrong decisions for
business (Nawawi and Salin, 2018).
PART 2
Journal entries to record the transactions
Journal of Pearce & Sons
As on 28th Feb 2020
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PART 3
a. Recording transactions in ledger of S. Keyes
Ledger accounts of S. Keyes as on 29 Feb 2020
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b. Formulation of trial balance
Trial Balance of Pearce & Sons
As on 28th Feb 2020
Particulars Debit Credit
Bank A/c 12230
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cash A/c 1080
Van A/c 35000
Office fixtures A/c 2590
Capital A/c 47300
Loan A/c 2500
Quick office A/c 1100
Nissan co. A/c - -
Total 50900 50900
PART 4
a. Formulation of income statement for S. Keyes
Income statement
of Pearce & Sons
As on 28th Feb 2020
b. Explanation of possible impacts of COVID 19 on the income statement of company
Currently COVID 19 is one of the major issue which is affecting the performance and
position of businesses. Apart from this, it is also leaving negative impact upon functionality of
companies because entities are not able to formulate the final accounts properly. By analysing
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the income statement of the company it has been analysed that there are various possible impacts
of COVID 19 on the income statement’s items (Tillier and Vanthieghem, 2019). All of them
could be analysed with the help of following discussion:
 Because of COVID 19 most of the companies are not able to carry out operational
activities in systematic manner. The enterprise would have asked the landlord to reduce
the rent amount so that the expenses would have decreased and organisation would have
generated higher profits (Sivanathan, Ritchie and Lim, 2017).
 The amount of wages and salaries recorded in income statement is 32000 and because of
the pandemic most of the enterprises have paid less salaries to the staff members to
maintain financial condition of business. This step would also have taken by the
organisation because it would have facilitated the enterprise to improve its profits.
 The amount of telephone charges which are reflected in income statement is 620 but it
would also have ignored by the organisation by disconnecting the telephone during the
lockdown period. It would have also resulted in increased profits for the year (Welfare,
2019).
CONCLUSION
From the above project report, it has been concluded that for all the enterprises it is very
important to keep detailed information of all the business transactions as it can help the decision
makers to evaluate actual position of company and formulate future decisions. For this purpose,
different accounts and statements could be generated. These are journal, ledger, trial balance,
income statement etc.
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REFERENCES
Books and Journals:
Abdulajid, S., 2020. The Power of Electronic Video Recording Proof in Crime Possession of
Sharp Weapons. Jurnal Undang-undang dan Masyarakat. 24. pp.95-103.
AL-Saji, D. A., 2019. The Role of Electronic Payment Methods in Facilitating Money
Transactions in Erbil City. Cihan University-Erbil Journal of Humanities and Social
Sciences. 3(1). pp.7-14.
Bartolini, N. and DeSilvey, C., 2020. Recording Loss: film as method and the spirit of Orford
Ness. International Journal of Heritage Studies. 26(1). pp.19-36.
Kelly, S. and Banaszewski, C., 2018. Using Screen Recording Platforms to Increase Instructor
Presence in an Online Classroom. eLearn. 2018(12).
Nawawi, A. and Salin, A. S. A. P., 2018. Employee fraud and misconduct: empirical evidence
from a telecommunication company. Information & Computer Security.
Sivanathan, A., Ritchie, J. M. and Lim, T., 2017. A novel design engineering review system with
searchable content: knowledge engineering via real-time multimodal recording. Journal
of Engineering Design. 28(10-12). pp.681-708.
Tillier, M. and Vanthieghem, N., 2019. Recording Debts in Sufyānid Fusṭāṭ: A Reexamination of
the Procedures and Calendar in Use in the First/Seventh Century.
Welfare, A., 2019. Commercializing Blockchain: Strategic Applications in the Real World. John
Wiley & Sons.
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