Accounting Fundamentals: Analyzing Transactions and Statements

This accounting assignment comprehensively covers fundamental accounting principles through practical application. It begins with the creation of ledger accounts for Maxim, followed by the preparation of a trial balance and financial statements, including a profit and loss statement and balance sheet. The assignment then analyzes Pendo Company's ledger accounts and proceeds to Mafuta's ledger, trial balance, and financial statements. Further, it explores the calculation of a sole trader's financial position, and concludes with a discussion differentiating between revenue and capital expenditure, all within the context of International Accounting Standards. The assignment demonstrates the recording of various transactions, their impact on financial statements, and the analysis of financial performance and position.

ACCOUNTING
FUNDAMENTAL

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
a. Maxim's ledger accounts.........................................................................................................1
b) Trial balance as of 30 April....................................................................................................3
c) Maxim' financial statement for the month ending 30 April....................................................3
TASK 2............................................................................................................................................4
Pendo company's ledger..............................................................................................................4
TASK 3............................................................................................................................................8
a) Mafuta's ledger account..........................................................................................................8
b) Mafuta's trial balance at the end of the month .....................................................................11
c) Mafuta's financial statement for the month ending 31 January............................................11
TASK 4..........................................................................................................................................12
Calculation of sole trader..........................................................................................................12
TASK 5..........................................................................................................................................17
Difference among revenue expenditure and capital expenditure .............................................17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Accounting is referred as comprehensive and systematic recording of business's financial
transactions. It is also known as process to analyse, reporting and summarizing transactions for
over-sighting agencies, tax collection organization and regulators. The financial statements help
in summarizing operations of large organization, cash flows and financial position over specific
duration as concise summary of numerous transactions might have entered over period. The
present report will give brief discussion by explaining nature, behaviour and objective of cost
accounting and its application along with techniques and methods of business transaction. In the
same series, it will be reviewing basic principles of accounting such as application of proper
software. Furthermore, there will be preparation of financial statements dealing with routing and
non routine transactions and analysing in appropriate manner. Lastly, there is demonstration of
variation among capital or revenue expenditure with context to International Accounting
Standards.
TASK 1
a. Maxim's ledger accounts
Date Journal entry Debit (£) Credit(£)
05/Apr Cash account debit 300
To capital account 300
07/Apr Purchase account debit 200
To cash account 200
08/Apr Cash account debit 250
To loan account 250
15/Apr Motor van account debit 150
To cash account 150
20/Apr Cash account debit 350
To Sales revenue account 350
28/Apr Rent account debit 50
To Cash account 50
29/Apr Loan account debit 200
To cash account 200
1

30/Apr Drawing account debit 60
To cash account 60
Cash account
Date Particular Figure (£) Date Particular Figure (£)
05/04/18 To capital 300 07/04/18 By purchase 200
08/04/18 To loan 250 15/04/18 By Motor van 150
20/04/18 To Sales revenue 350 28/04/18 By rent 50
29/04/18 By loan 200
30/04/18 By Drawing 60
30/04/18 By balance cd 240
Total 900 Total 900
Purchase account
Date Particular Figure (£) Date Particular Figure (£)
07/04/18 To cash 200 30/04/18 By balance cd 200
Total 200 Total 200
Loan account
Date Particular Figure (£) Date Particular Figure (£)
29/04/18 To cash 200 048/Apr By cash 250
30/04/18 To balance cd 50
Total 250 Total 250
Motor van account
Date Particular Figure (£) Date Particular Figure (£)
2

15/04/18 To cash 150 30/04/18 By balance cd 150
Total 150 Total 150
Capital account
Date Particular Figure (£) Date Particular Figure (£)
30/04/18 To balance cd 300 05/04/18 By cash 300
Total Total
Sales revenue account
Date Particular Figure (£) Date Particular Figure (£)
30/04/18 To balance cd 350 20/04/18 By cash 350
Total 350 Total 350
Drawing account
Date Particular Figure (£) Date Particular Figure (£)
30/04/18 To cash 60 30/04/18 By balance cd 60
Total 60 Total 60
Rent account
Date Particular Figure (£) Date Particular Figure (£)
28/04/18 To cash 50 30/04/18 By balance cd 50
Total 50 Total 50
b) Trial balance as of 30 April
Trial balance of Maxim at 30 April
Account Title Debit Credit
3

Cash account 240
Purchase account 200
Loan account 50
Motor van account 150
Capital account 300
Sales revenue account 350
Drawing account 60
rent account 50
Total 700 700
c) Maxim' financial statement for the month ending 30 April
Profit and Loss for the month ended 30 April
Particular Figure (£)
Sales revenue 350
Less: COGS 100
Gross profit 250
Less: Rent 50
Less :Drawings 60
Operating profit /net profit 140
Working note
Particulars Figure
opening Inventory Nil
Add: Purchase 200
Less: closing Inventory 100
Cost of goods sold 100
Balance sheet for the month ended 30 April
4

Assets Figure Liabilities Figure
Fixed assets capital 300
Motor van 150 Less : Drawings 60
Current assets Add: net profit 140
inventory 100 380
cash 240 loan 250
Less : repaid 200
50
Total 490 Total 430
TASK 2
Pendo company's ledger
DATE PARTICULARS DEBIT( £) CREDIT (£)
1-Jan Cash account 5000
To Capital 5000
2-Jan Motor Van expenses account 600
To cash 600
3-Jan Purchase account 1300
To Cash 1300
4-Jan Cash account 1000
To loan 1000
10-Jan Motor Van expenses account 200
To Cash 200
13-Jan Cash account 300
To Sales revenue 300
20-Jan Cash account 500
To Sales revenue 500
24-Jan storage expenses account 150
To cash 150
27-Jan loan account 350
To cash 350
30-Jan Drawing account 175
To cash 175
5

CASH ACCOUNT
DATE PARTICUL
ARS Figure DATE PARTICUL
ARS Figure
1-Jan To capital 5000 2-Jan By Motor
Van 600
4-Jan To Sergei 1000 3-Jan By purchases 1300
13-Jan To Sales
revenue 300 10-Jan By Motor
Van expenses 200
20-Jan To Sales
revenue 500 24-Jan By Storage
expenses 150
27-Jan By loan 350
30-Jan By Drawings 175
By Balance
cd 4025
Total 6800 Total 6800
Sales revenue ACCOUNT
DATE PARTICUL
ARS
Figure DATE PARTICUL
ARS
Figure
To balance cd 800 13-Jan By Cash 300
20-Jan By cash 500
Total 800 Total 800
MOTOR VAN
DATE PARTICULAR
S
Figure DATE PARTICULAR
S
Figure
2-Jan To Cash 600 By balance cd 600
Total 600 Total 600
LOAN ACCOUNT
DATE PARTICULAR
S
Figure DATE PARTICULAR
S
Figure
27-Jan To Cash 350 By cash 1000
To balance cd 650
Total 1000 Total 1000
PURCHASE ACCOUNT
6

DATE PARTICULAR
S
Figure DATE PARTICULAR
S
Figure
3-Jan To Cash 1300 By balance cd 1300
Total 1300 Total 1300
EXPENSES ACCOUNT
DATE PARTICULAR
S
Figure DATE PARTICULAR
S
Figure
10-Jan To Cash 200 By balance cd 350
24-Jan To Cash 150
Total 350 Total 350
DRAWING ACCOUNT
DATE PARTICULAR
S
Figure DATE PARTICULAR
S
Figure
30-Jan To Cash 175 By balance cd 175
Total 175 Total 175
CAPITAL ACCOUNT
DATE PARTICULAR
S
Figure DATE PARTICULAR
S
Figure
1-Jan To Cash 5000 By balance cd 5000
Total 5000 Total 5000
SERGEI ACCOUNT
DATE PARTICULAR
S
Figure DATE PARTICULAR
S
Figure
To balance cd 1000 4-Jan By Cash 1000
Total 1000 Total 1000
Trial Balance of Pendo company for the month ended 31 january 2018
Accounting Heads Debit Credit
7

1 Cash 4025
2 Sales revenue 800
3 motor van 600
4 loan 650
5 purchases 1300
6 expenses 350
7 drawing 175
8 capital 5000
Total 6450 6450
Financial statements for the month ended 31 January
Particulars Details Figu
res
Sales revenue 800
less: COGS 500
Gross Profit 300
less:operating expenses
motor van expenses 200
storage expenses 150
350
Operating profit/ Net profit/ loss -50
Working note:
calculation for COGS Figures
opening Inventory nil
add: purchases 1300
less: closing Inventory 800
Total 500
8

TASK 3
a) Mafuta's ledger account
Date Journal entry Debit (£) Credit(£)
02/01 Harvey account debit 124
To Sales revenue account 124
05/01 Wages account debit 12
To cash account 12
05/01 Purchase account debit 150
To Rich account 150
07/01 Cash account debit 18
To Smith account 18
09/01 Max account debit 21
To cash account 21
11/01 Cash account debit 64
To Sales revenue account 64
14/01 Wages account debit 14
To cash account 14
14/01 Purchase account debit 75
To cash account 75
15/01 Rich account debit 162
To cash account 162
20/01 office Desk account debit 32
To cash account 32
21/01 Wages account debit 17
To cash account debit 17
21/01 Cash account debit 110
To Sales revenue account 110
23/01
Office expenses account
debit 3
To cash account 3
23/01 Cash account debit 25
9

To Harvey account 25
28/01 Cash account debit 84
To Sales revenue account 84
28/01 Wages account debit 15
To cash account 15
31/01 Cash account debit 30
To Sales revenue account 30
Sales revenue account
Date Particular Figure (£) Date Particular Figure (£)
31/01/18 To balance cd 412 02/01/18 By Harvey 124
11/01/18 By cash 64
21/01/18 By cash 110
28/01/18 By cash 84
31/01/18 By cash 30
Total 412 Total 412
Cash account
Date Particular Figure (£) Date Particular Figure (£)
01/01/18 To balance bd 343 05/01/18 By wages 12
07/01/18 To smith 18 09/01/18 By Max 21
11/01/18 To Sales revenue 64 14/01/18 By wages 14
21/01/18 To Sales revenue 110 15/01/18 By Rich 162
23/01/18 To Harvey 25 20/01/18 By office desk 32
28/01/18 To Sales revenue 84 21/01/18 By wages 17
31/01/18 To Sales revenue 30 23/01/18 By office cost 3
28/01/18 By wages 15
14/01/18 By purchase 75
31/01/18 By balance cd 323
Total 674 Total 674
10

Wages account
Date Particular Figure (£) Date Particular Figure (£)
05/01/18 To cash 12 31/01/18 By balance cd 58
14/01/18 To cash 14
21/01/18 To cash 17
28/01/18 To cash 15
Total 58 Total 58
Office expense account
Date Particular Figure (£) Date Particular Figure (£)
23/01/18 To cash account 3 31/01/18 By balance cd 3
Total 3 Total 3
Office desk account
Date Particular Figure (£) Date Particular Figure (£)
20/01/18 To cash 32 31/01/18 By balance cd 32
Total 32 Total 32
Harvey account
Date Particular Figure (£) Date Particular Figure (£)
01/01/18 To balance bd 39 23/01/18 By cash 25
02/01/18 To Sales revenue 124
31/01/18 By balance cd 138
Total 163 Total 163
Rich account
11

Date Particular Figure (£) Date Particular Figure (£)
15/01/18 To cash 162 01/01/18 By balance bd 12
05/01/18 By purchase 150
Total 162 Total 162
Max account
Date Particular Figure (£) Date Particular Figure (£)
09/01/18 To cash 21 01/01/18 By balance bd 21
Total 21 21
Purchase account
Date Particular Figure (£) Date Particular Figure (£)
05/01/18 To Rich 150 31/01/18 By balance cd 225
14/01/18 To cash 75
Total 225 Total 225
Inventory account
Date Particular Figure (£) Date Particular Figure (£)
01/01/18 To balance bd 458 31/01/18 By COGS 84
31/01/18 By balance cd 374
Total 458 Total 458
Furniture and fitting account
Date Particular Figure (£) Date Particular Figure (£)
01/01/18 To balance bd 198 31/01/18 By balance cd 198
12

Total 198 Total 198
Moon account
Date Particular Figure (£) Date Particular Figure (£)
01/01/18 To balance bd 26 31/01/18 By balance cd 26
Total 26 Total 26
Smith account
Date Particular Figure (£) Date Particular Figure (£)
01/01/18 To balance bd 18 07/01/18 By cash 18
Total 18 Total 18
b) Mafuta's trial balance at the end of the month
Trial balance at the month ended 31 January
Account Title Debit credit
Cash account 323
Sales revenue account 412
wages account 58
Office expense account 3
Office desk account 32
Harvey account 138
Purchase account 225
Inventory account 374
furniture and fittings 198
Moon account 26
capital(Balancing Figure) 965
Total 1377 1377
13

c) Mafuta's financial statement for the month ending 31 January
Profit and Loss for the month ended 31
Particular Figure (£)
Sales revenue 412
less: COGS 309
Gross profit 103
Expenses
Office expense 3
wages 58
Operating profit /net profit 42
Working note
Particulars Figure
opening Inventory 458
Add: Purchase 225
Less: closing Inventory 374
Cost of goods sold 309
Balance sheet for the Month Ended 31 January
Assets Figure Liabilities Figure
Fixed assets capital 965
furniture and fittings 198 Add: Net profit 42
Office desk 32 bank O/d 84
current assets
cash 323
Inventory 374
debtors
Harvey 138
Moon 26
Total 1091 Total 1091
14

TASK 4
Calculation of sole trader
Journal Entries
DATE PARTICULARS DEBIT(£) CREDIT (£)
02/06/18 Claire account 425
To Sales revenue 425
13/06/18 Purchase account 12000
To discount received 840
To Georgine 11160
14/06/18 Hywel account 8550
Trade account 450
To Sales revenue 9000
20/06/18 Jane account 6000
To cash 6000
21/06/18 Purchase account 4500
To discount received 90
To Andrew 4410
22/06/18 Sales revenue return account 1000
To Clarie 1000
24/06/18 Mandy account 4850
Discount payable account 150
To Sales revenue 5000
24/06/18 cash account 7075
Discount payable account 425
To claire 7500
15

25/06/18 cash account 8550
To Hywel account 8550
25/06/18 Georgina account 11160
To Ricardo 11160
27/06/18 Andrew account 4410
To Ricardo 4410
CASH ACCOUNT
DATE PARTICUL
ARS
Figure DATE PARTICULARS Figure
24/06/18 To clarie 8075 20/06/18 By Jane 6000
25/06/18 To Hywel 9000 By balance cd 11075
Total 17075 Total 17075
CLAIRE ACCOUNT
DATE PARTICULARS Figure DATE PARTICULARS Figure
02/06/18 To Sales revenue 425 22/06/18
By Sales revenue
return 1000
To discount
To balance cd 8075 24/06/18 By cash 7075
24/06/18
Total 8500 Total 8075
Sales revenue ACCOUNT
DATE PARTICULA
RS
Figure DATE PARTICULA
RS
Figure
To balance cd 14700 02/06/18 By claire 425
16

14/06/18 By Hywel 8550
14/06/18 By trade 450
24/06/18 By Mandy 4850
24/06/18 By discount 425
Total 14700 Total 14700
PURCHASE ACCOUNT
DATE PARTICULARS Figure DATE PARTICULA
RS
Figure
13/06/18 To discount received 840 By balance cd 16500
13/06/18 To georgine 11160
21/06/18 To discount received 90
21/06/18 To andrew 4410
Total 16500 Total 16500
GEORGINE ACCOUNT
DATE PARTICULARS Figure DATE PARTICULARS Figur
e
16/06/18 To discount received 840 13/06/18 By purchases 12000
25/06/18 To Ricardo 11160 By cash 9000
Total 12000 Total 12000
HYWEL ACCOUNT
DATE PARTICULA
RS
Figure DATE PARTIC
ULARS
Figure
14/06/18 To Sales
revenue
9000 14/06/18 By trade 450
17

By cash 8550
Total 9000 Total 9000
JANE ACCOUNT
DATE PARTICULARS Figure DATE PARTICULARS Figur
e
20/06/18 To cash 6000 By balance cd 6000
Total 6000 Total 6000
ANDREW ACCOUNT
DATE PARTICULARS Figure DATE PARTICUL
ARS
Figure
27/06/18 To ricardo 4410 21/06/18 By purchases 4500
21/06/18 To discount
received
90
Total 4500 Total 4500
Sales revenue RETURN ACCOUNT
DATE PARTICULARS Figure DATE PARTICUL
ARS
Figure
22/06/18 To clarie 1000 By balance
cd
1000
Total 1000 Total 1000
MANDY ACCOUNT
DATE PARTICULA Figure DATE PARTICULAR Figure
18

RS S
24/06/18 To Sales
revenue
5000 24/06/18 By discount 150
By balance cd 4850
Total 5000 Total 5000
RICARDO ACCOUNT
DATE PARTICULARS Figure DATE PARTIC
ULARS
Figure
To balance cd 15570 25/06/18 By
georgina
11160
27/06/18 By
andrew
4410
Total 15570 Total 15570
TRADE ACCOUNT
DATE PARTICULAR
S
Figure DATE PARTICULARS Figure
14/06/18 To Sales
revenue revenue
9000 14/06/18 By Hywel 8550
By balance cd 450
Total 9000 Total 9000
DISCOUNT RECEIVED ACCOUNT
DATE PARTICULARS Figure DATE PARTICULAR
S
Figure
21/06/18 To andrew 4410 21/06/18 By purchases 4500
13/06/18 To georgine 11160 13/06/18 By purchases 12000
19

To balance cd 930
Total 16500 Total 16500
DISCOUNT PAYABLE ACCOUNT
DATE PARTICULAR
S
Figure DATE PARTICULARS Figure
24/06/18 To clarie 7500 24/06/18 By cash 7075
24/06/18 To Sales revenue
revenue
5000 24/06/18 By mandy 4850
By balance cd 575
Total 12500 Total 12500
Trial balance of Ricardo for the month ended june
Accounting heads DEBIT(£) CREDIT (£)
cash 11075
Sales revenue revenue 14700
purchases 16500
discount allowed 575
trade 450
Ricardo 15570
Mandy 4850
Sales revenue return 1000
Jane 6000
discount received 930
Capital (balancing Figure) 40390
Total 56020 56020
20