Analyzing Business Transactions: Recording for Decision Making

This report provides a comprehensive overview of recording business transactions, a vital activity for any organization to produce accurate financial statements. It begins by outlining the ten essential steps for starting a new business, from market research to opening a bank account. The report then examines the definition of accounting as involving recording, analyzing, and summarizing transactions to provide information for decision-making, using Marks and Spencer Company as an example to illustrate the various users of accounting information, including owners, lenders, suppliers, government, employees, customers, and the general public. It includes journal entries for F Polk in September 2021 and ledger accounts for Maurice & brothers, followed by a trial balance as of August 31, 2021. Finally, the report presents an income statement for B Moore as of September 30, 2021, analyzing the company's financial performance and concluding that while the company incurred a loss, there was a slight decrease compared to the previous year, suggesting a potential path to profitability. Desklib offers a wealth of similar documents to aid students in their studies.

Recording Business Transactions

Table of Contents
Introduction...........................................................................................................................................3
Assessment............................................................................................................................................3
Part A................................................................................................................................................3
Part B.................................................................................................................................................6
Part 4.................................................................................................................................................9
Conclusion...........................................................................................................................................10
References...........................................................................................................................................10

Introduction
Recording business transaction is the vital activity that is performs by ever organisation so
that financial statement can be made at the end of every year. Recording transaction is the
key responsibility of the accounting department. Transaction is the activity that happens in
the business profit and loss and affects at least two accounts. Recording business transaction
is multi step processes which start from identify the transaction and end with closing the
books. Business transaction are been recorded day to day so that omission cannot happen and
each activity are recorded on daily basis. In this first transaction are been examine so that
decision can be made about which accounts will be affected by the entry and then decision
made about which account to be debited and credited. This is important for the business
because the financial statement cannot be made by the accountant if they do not know what
are the transaction that take place in the business which involve inflow and outflow(Hasanah,
Anggraini and Purwohedi, 2019).
Assessment
There are total three parts that are being covered in this assessment. The three parts are being
discussed below:
Part A
1) David green wants to start a new business as a sole proprietor, the consultant tell David
that t start a new business there are total 10 steps which is must for starting a new venture.
a) Conduct the market research: Before starting a new business it is very important for
David to do a research on the market so that a proper idea can be get that will change the idea
into a good business opportunity. In this research are done on what is the needs and want of
the customer and what are the businesses that are already operating in the business. This is
done so that competitive advantage cab be obtained.
b) Make the business plan: business plan is like a blue print which specifies the business
vision and mission. This is the foundation because it tells about the structure of the
organisation and how it will run.

c) Provide funding to the venture: without money the business can’t be run. So in this step
a proper analysis is made about what are the sources through which amount can be raise and
how much liquidity the holder held.
d) Business location: it is one of the important elements that need to be considered.
Business location decision is crucial because on this only the cost of production, revenue,
market image and many more depends.
e) Structure of the business: every organisation whether a small or large, Online store or
offline store should have their legal structure. The business structure will impact on the taxes
that are to be pay.
f) Catchy business name: Brand name is very important because by the name only buyer
will recognise the brand. It is not easy to select a perfect name for the brand. By the name
only organisation will capture the buyer attraction. Make sure the name that will be chosen is
brand new not other business runs from that name (Bagdasaryan, 2019).
g) Registering the business: once the name is been selected the next is to register the
business. This is done so that organisation can be protected legally. The name is to be register
under federal, sate and central government.
h) Taking iDs for federal and state tax: In this step venture need to register them and take
their employer identification number so that by this id they will pay their taxes. This is
important so that business can be start. Having business id is a social security for every
company.
i) Apply for license: license is mandatory if the business man want to run their organisation
smoothly. Licenses and permits vary from industry, state, location and other factors. License
help the business to give a legal right to do the business in pre defined terms and conditions.
j) Open the business account in bank: for every business it is good to have a bank account
so that any legal or paperwork can be done easily for the business. This also helps in handling
any day to day issues. Business bank account also helps in knowing the actually capital of the
company.

2) To explain the definition “Accounting involves recording, analysing and summarising the
transactions of an entity to provide information for decision making” Marks and Spencer
Company is been selected to know the decision makers who uses this information to make
decision.
The users of Marks and Spencer who uses accounting information are:
 Owners and investor: The stakeholders need the financial information so that they
can make decision regarding whether they need to invest their capital on it or to buy
or hold their shares. They also need the recorded data so that they can know the profit
that Marks and Spencer earn.
 Lenders: Lenders are those people who grants loan to the business. They need the
recorded data and statement so that they can know the liability position of the
company and their paying capacity.
 Suppliers: They are interested in their financial data sp that they can know the
business capacity to pay the short term obligation easily. With this data they only sell
the raw material to the company.
 Government: The legal authority special the tax authority are interested in Marks
and Spencer book keeping so that they can know the amount of tax the company will
pay (Cunningham and et. al, 2020).
 Employees: Employees need this financial information so that they can make the
decision regarding the ability the firm had to pay the salary and other extra rewards.
This also helps them in making decision regarding their development in the particular
firm.
 Customers: Customers are those buyers of Marks and Spencer who buys their
product. They need the data because by knowing the financial position of the
company they continue to make purchase and become loyal customer. This data also
help them in knowing the organisation stability position.
 General public: Other members like students, teacher, journalist and many other
need data for their own purpose.

Part B
1) Journal Entry for F Polk in the month of Sep 2021
2)
a)
Ledger accounts prepared for Maurice & brothers
Bank
Date Basis £ Date Basis £
01-Aug To Capital A/C 36800 03-Aug By Cash A/C 2800
Date Journal Debit Credit
sep 1 , 2021 Bad debt A/C £105
To P Mullen A/C £105
( Bad debt written off for P
mullen)
Sep5,2021 Syme ltd. A/C £150
To Office Fixture £150
(Office fixture given back to
syme ltd which were originally
brought in credit)
sep 10,2021 Cash A/C £180
Bad debt A/C £131
To M.Abel £311
(Half amount were recived
from M. Abel and the rest
amount is become bad debts)
Sep 18,2021 Machinery A/C £1800
To Cash A/C £100
TO Bank A/C £500
TO Brown Ltd.A/C £1200
( Bought a machinery in
business from Brown Ltd in
which some amount is aid in
cash, some by cheque and rest
is in credit)
Sep26,2021 Brown Ltd. A/C £600
To Bank A/C £600
(Half of the machinery credit
amount is paid to Brown Ltd
by cheque)
Sep 28,2021 Insurance Bill A/C £130
To Bank A/C £60
To Drawings A/C £70
( Paid insurance bill for
business but later it was known
that there were some amount
which is for private house)

02-Aug To Santander Bank
A/C
12400 04-Aug By Van A/C 6200
25-Aug To Cash A/C 430 05-Aug By Office Fixture
A/C
1000
19-Aug By Toyata Co. A/C 8700
28-Aug By Office Fixture
A/C
750
31-Aug By Balance c/d 30180
49630 49630
Van
Date Basis £ Date Basis £
01-Aug To Capital A/C 32000 31-Aug By Balance c/d 46900
04-Aug To Bank A/c 6200
08-Aug To Toyota Co. 8700
46900 46900
office fixture
Date 2021 Basis £ Date Basis £
01-Aug-21 To Capital A/C 1200 31-Aug By Balance c/d 5460
05-Aug To Bank A/C 1000
To Sharp Office Ltd A/C 2400
15-Aug To Cash A/C 110
28-Aug To Bank A/C 750
5460 5460
Capital
Date Basis £ Date Basis £
31-Aug To Balance c/d 70000 01-Aug Office Fixture A/C 1200
Van A/C 32000
Bank A/C 36800
70000 70000

Santander bank
Date Basis £ Date Basis £
31-Aug To Balance c/d 12400 02-Aug By Bank A/C 12400
12400 12400
Cash
Date Basis £ Date Basis £
03-Aug To Bank A/C 2800 15-Aug By Office Fixture A/C 110
25-Aug by Bank A/C 430
31-Aug By balance c/d 2260
2800 2800
Sharp office ltd.
Date Basis £ Date Basis £
31-Aug By Balance c/d 3400 05-Aug Office Fixture A/C 3400
3400 3400
Toyota Co.
Date Basis £ Date Basis £
19-Aug To Bank A/C 8700 08-Aug Van A/C 8700
8700 8700
b) Trial Balance as at 31 August 2021.

Part 4
a) Income
Statement of B Moore as on 30th September 2021
Basis £ £
Net sales 91500
Less COGS
Opening inventory 18000
Purchase 110000
Purchase return (720)
Closing inventory (13000)
(114280)
Gross Loss (22780)
Less operating expenses
Rent 7000
Motor expense 1400
Telephone charge 830
Wages and salary 14000
Insurance 1030
Office expenses 800
Sundry expenses 250
(25310)
Net income before tax and
interest (48090)
Less interest 0
Net loss (48090)
b) From the above calculation of income statement it is been cleared that the company B
Moore has incurred loss of 48090 in 2021 as well, if the comparison is to be made from
2013 to 2021 the company is earning profit till 2019 but after the pandemic hit in 2020 and
2021 the company is suffering loss. But in 2021 there is slightly decrease in loss as compare
Accounts Debit Credit
£ £
Office fixture 5460
Van 46900
Bank 30180
Capital 70000
Santander bank 12400
Cash 2260
Sharp office ltd. 2400
84800 84800

to 2020 where the loss is of 65400 but in 2021 it came to 48090. Which means that company
is in the line where they can start earning profit after two to three year.
Conclusion
From the above data it is been concluded that recording business transaction is necessary
because all the statement and ratio are being dependent upon it. If organisation does not
record heir transaction then they cannot make their income statement as well as did not know
about the different accounts of the company.
References
Bagdasaryan, R., 2019, June. The Structure of the Trial Balance. In International
Conference on Integrated Science.–Springer, Cham (pp. 103-116).
Cunningham, B.and et. al, 2020. Accounting: information for business decisions.
Cengage AU.
Gillen, T.M., 2021. Journal entry. The Routledge International Handbook of Penal
Abolition. p.24.
Hasanah, N., Anggraini, R. and Purwohedi, U., 2019. Single entry method as the way to
improve small and medium enterprise governance. International Journal of
Entrepreneurship. 23(1). pp.1-11.
Lin, S., Martinez, D., Wang, C. and Yang, Y.W., 2018. Is other comprehensive income
reported in the income statement more value relevant? The role of financial
statement presentation. Journal of Accounting, Auditing & Finance. 33(4),.pp.624-
646.
Markovic, M., Edwards, P. and Jacobs, N., 2019, October. Recording Provenance of Food
Delivery Using IoT, Semantics and Business Blockchain Networks. In 2019 Sixth
International Conference on Internet of Things: Systems, Management and Security
(IOTSMS) (pp. 116-118). IEEE.
VA, P., 2021. Annual Statement of Accounts.