Detailed Accounting System and Process Assignment Solution - Finance

This assignment solution covers various aspects of accounting systems and processes. It begins by explaining how cell references can be replaced with names in spreadsheets for user convenience, and then discusses how to make negative numbers more visible using brackets. The solution then differentiates processed and unprocessed data in spreadsheets using data and report areas. It further explains the use of the IF function. The assignment also addresses periodic inventory systems, and provides a ten-column adjusted worksheet. It demonstrates the uses of spreadsheets as accounting tools, including charts, graphs, and formula calculations. Bank reconciliation and journal entries for accounts receivables are also covered. The solution explores the determination of bad debts and financial status analysis through receivable ratios. Finally, the assignment analyzes the Wesfarmers group, including its business operations, revenue statement, financial statement items (dividends, return on equity, earnings per share), risk and its alleviation, corporate governance, and sustainability. The solution concludes with advice for investment and analysis of the company's financial statements.

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

1ACCOUNTING SYSTEM AND PROCESS
Table of Contents
Answer no. 1.............................................................................................................................................2
Answer no. 2.............................................................................................................................................2
Answer no. 3.............................................................................................................................................3
Answer no. 4.............................................................................................................................................3
Answer no. 5.............................................................................................................................................4
Answer no. 6.............................................................................................................................................5
Answer no. 7.............................................................................................................................................9
Answer no. 8...........................................................................................................................................10
Answer no. 9...........................................................................................................................................12
Answer no. 10.........................................................................................................................................12
Answer no. 11.........................................................................................................................................13
Answer no. 12.........................................................................................................................................13
Answer no. 13.........................................................................................................................................14
Reference................................................................................................................................................17

2ACCOUNTING SYSTEM AND PROCESS
Answer no. 1
Replacing the cell references with the names assists the user to use the spreadsheet as per his
requirement (Bebbington, Unerman & O'Dwyer, 2014). For instance, the user can format the sheet,
use formula in the sheet only after naming the cell. Example of a spreadsheet that presents the owner’s
equity + Liabilities = Asset is shown below –
Answer no. 2
To make the negative numbers more visible and clear to the users of the sheet, the negative
numbers may be shown within bracket instead representing it with the minus sign (Drury, 2013). The
example that shows the negative numbers within bracket is shown below –

3ACCOUNTING SYSTEM AND PROCESS
Answer no. 3
The spreadsheet includes the processed data as well as the unprocessed data. Therefore, to
differentiate the processed and unprocessed data the spreadsheet shall be segregated into data area and
report area. It will further, assist the user extract different data as per his requirement and process the
data for required purposes. Spreadsheet representing separate report area and data are is below –
Answer no. 4
If function is regarded as the logical function under the spreadsheet; It performs logical test
that is used to analyse whether the particular condition is satisfied or not. If the condition is satisfied,
the IF function returns TRUE value and if not then it returns the FALSE value.

4ACCOUNTING SYSTEM AND PROCESS
Example of IF function under normal view –
Under formula view –
Answer no. 5
Periodic systems of inventory
As per the periodic system, the transaction of sales and purchases are not updated for each
transaction rather the records are updated after the closing of each period say 3 months, 6 months or
year. The purchases are added to the opening stock of inventory (Hoggett et al, 2015). Thereafter, the
closing stock is reduced from that to arrive at the figure for cost of goods sold.
Example -

5ACCOUNTING SYSTEM AND PROCESS
Answer no. 6
Fancy Footwear – ten column adjusted worksheet under normal view
Fancy Footwear – ten column adjusted worksheet under formula view

6ACCOUNTING SYSTEM AND PROCESS
Income statement as normal view

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Income statement as formula view
Balance sheet as normal view

8ACCOUNTING SYSTEM AND PROCESS
Balance sheet as formula view

9ACCOUNTING SYSTEM AND PROCESS
Uses of spreadsheet as accounting tool –
 Charts and graphs can be used as per the requirement and to make the analysis and
comparisons (Myrelid & Olhager, 2015).
 The calculation becomes easier through the formula that can b e used through spreadsheet
 The data can be formatted as required size, font, numbers and and text
 The cells can be hidden if the particular cell is not required
Answer no. 7
Inventory as normal view
Gross profit calculation as normal view

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Inventory as formula view
Gross profit calculation as formula view
After changing the data
Inventory
Gross profit
Answer no. 8
Bank reconciliation as normal view

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Formula view
With changed data
Normal view

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Answer no. 9
Journal entries for account receivables
Answer no. 10
Determination of bad debt
Write-off method – where the amount of debt is established as uncollectible, are charged against the
account receivable account
For example, the allowance for $ 1000, the journal entry will be as follows –

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Allowance method – as per this method, the amount that is uncollectible from the receivables are
measured at each closing period
Journal entry as per allowance method will be
Answer no. 11
Analysis of the financial status through the receivable status
The receivable ratio analyses the solvency of a firm and through calculation of receivables the
firm’s efficiency in collecting its receivables are measured (Song & Joo, 2015). If the company is
efficient in collecting its debt then the bed-debt risk will be lower. On the contrary, the bad debt risk
put the company in solvency risk.
Answer no. 12
Scenario
Journal entries

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Answer no. 13
1. Business of the Wesfarmers group
Various businesses are carried out by the company, some of them are –
 Products related to home improvement
 Various products under retail store
 Products for the improvements of office
 Various energy products and products related to fertilizers and chemicals
 Liquor and food
 Industries and products related to safety
2. Comprehensive revenue statement
The comprehensive statement for revenue of the company reveals that profit which is
attributable to the parent company. The comprehensive loss for the year ended 2016 under the
company computed as $ 78 million. The statement further reveals the foreign currency reserve for
transaction and the involved amount was for $ 15 million.
3. Various items from financial statement
Dividend – after dividend right is established, the amount is considered as dividend. Further, the
company is regular in payment of dividend and paid $ 2,600 as dividend for 30th June 2016
Return on equity – it reveals the company’s efficacy regarding generation of return on the equity. it is
calculated through dividing the net income by the shareholder’s equity. from the annual report of
Wesfarmers, their return on equity is found as $ 407/$22,949 = 0.018, which is significantly poor.
Earnings per share – Basic EPS as well as diluted EPS both are valued at 36.2 cents as on 30th June
2016. The company calculates its basic EPS by dividing the contributed profits to the parent
organization by weighted average number of shares.

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Risk and its alleviation – the risk is associated with the company is that it does not provide any
guarantee for the accurateness, reliability, completeness and suitability. To alleviate these risks the
company do not specify any particular person for the financial statement and complies with the AASB
framework while preparing their financial statement (Wesfarmers.com.au, 2017).
Corporate governance – Wesfarmers follows the recommendations released on 27th March 2014 and
the third edition of ASX corporate Governance council’s principle for corporate governance.
Sustainability – looking at the annual report of the company and its performance over past years, it is
identified that they are able to generate consistent income and gained competitive advantages over the
competitors. Therefore, the company is sustainable in the industry.
Income statement - the expenses are deducted from revenue to arrive at the figures of EBIT and
thereafter the interest expenses and tax expenses are deducted to get net profit
Balance sheet – it is divided as follows –
 Assets – it is divided in current assets and non-current assets.
 Liabilities - it is divided in current liabilities and non-current liabilities
 Shareholder’s equity
4. Working capital ratio
5. After tax profit

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Advice to Vikram
Viskram is suggested to invest in Wesfarmers as they are generating consistent profi over the
past years.

17ACCOUNTING SYSTEM AND PROCESS
Reference
Bebbington, J., Unerman, J., & O'Dwyer, B. (2014). Sustainability accounting and accountability.
Routledge.
Drury, C. M. (2013). Management and cost accounting. Springer
Hoggett, J., Edwards, L., Medlin, J., Chalmers, K., Hellmann, A., Beattie, C., & Maxfield, J. (2015).
Accounting.
Myrelid, A., & Olhager, J. (2015). Applying modern accounting techniques in complex
manufacturing. Industrial Management & Data Systems, 115(3), 402-418.
Song, H. N., & Joo, C. A. (2015). A Study on Elementary School Teachers' Awareness about School
Accounting Budget System Operation. Journal of Fisheries and Marine Sciences
Education, 27(1), 83-97.
Wesfarmers.com.au. (2017). Retrieved 16 September 2017, from
https://www.wesfarmers.com.au/infodetail/about/investors/2015AnnualReport.pdf