Comprehensive Analysis of Business Transactions and Accounting

This assignment delves into the core principles of accounting by analyzing and recording various business transactions. It begins with an introduction to accounting, emphasizing its role in financial reporting and decision-making, and then explores the advantages and disadvantages of accounting for a business. The assignment provides detailed journal entries, general ledger accounts, and a trial balance. Furthermore, it includes the preparation of an income statement and discusses the potential impacts of Covid-19 on income statements. The solution covers different aspects of accounting, from recording transactions to preparing financial statements and analyzing the impact of external factors, offering a comprehensive understanding of accounting practices. The assignment also includes a practical component with journal entries, ledgers, and financial statements, providing a hands-on learning experience. Finally, it balances and brings down an opening balance for the accounts.

Recording Business Transactions

Contents
Introduction.................................................................................................................................................3
Assessment 1...............................................................................................................................................3
Part 1.......................................................................................................................................................3
Part 2.......................................................................................................................................................5
Part 3.......................................................................................................................................................6
Part 4.....................................................................................................................................................10
ASSESSEMENT 2................................................................................................................................12
PART A.................................................................................................................................................12
PART B.................................................................................................................................................20
CONCLUSION.............................................................................................................................................23
References.................................................................................................................................................24

Introduction
Accounting includes monitoring, categorizing, updating and outlining the cash transactions of
the person (Cai, 2019). These documents and the reports derived from them provide the basis for
the analysis of the financial statements and the position of the company. This review concerns
the processing of financial records by the different agencies and the production of trial reports
and income statements. Costs and drawbacks in the taxation of manufacturing firms are
discussed. The impact of Covid-19 on business profits is also addressed.
Assessment 1
Part 1
A. Decision-makers and need for accounting information
Financial accounting includes the summaries and analysis of all numerical facts in such a manner
that it can be reported in the report. These findings are very helpful for smart decision. Effective
judgments from purchase to customer service decide the future of the company (Viriyasitavat
and Hoonsopon, 2019). Both decisions about the induction and dismissal of workers, the
establishment of the profit goal, the planning of news events and budgets, the use of technology
for various manufacturing operations, etc. are taken by the corporation's multiple executives. The
decision-making authority of a company is based on its control processes, governed by the
Executive Committee or the Board members. For example, the Uber Executive board, headed by
its CEO, Dara Khosrowshahi, is responsible for all the strategic vision of the business. Firm
keeps a corporate structure that takes its decisions on behalf of the ideals, mission, beliefs and
goals of the organization. These activities are then delegated to the departmental supervisors,
along with the authority required for implementing them forward.
Financial accounts have the applicable company information in objective terms, making it easy
for management and investors to make rational decisions. Accounting statements shall be drawn
up in line with general systems and policies which are consistent across the industry (Hamilton,
2020). This makes them similar to several other competitors who know their business status
through business metrics. Financial accounts also provide a basis for administrators to take
decisions on investment proposals or whether or not they will be viable and economically
sustainable. Predictions and assumptions also rely on corporate accounting information improved

under current trading environments. Financial data is not only important, since it promotes
comparison in and of itself but also constitutes the foundation for the extraction of useful
information from non-financial details.
B. Advantages and disadvantages of accounting for a business
Accounting monitors and reviews the financial reports of a major company on the grounds of the
essence of the regulation. Benefits and risks related to the handling of financial records are as
shown in:
Advantages:
 Decision-making - The executive committee wants statistics and business decision-
making. Account books have a role to play in the company (Zhang, Wang and Zhu,
2019). It includes information on cash reserves in the business as well as other
expenditures and revenues, making it easier to predict financial surpluses or losses in a
timely way. It also serves to establish supervision and accountability, which helps to
prevent and detect fraud. Evidence in legal matters - Account books function as a corporate background for the
substantial financial operation recorded within. It shall then serve as legal evidence in the
courts if any dispute exists. Entities shall maintain documents in the manner specified in
the Act and submit it to the Registrar after they've been audited by an external
investigator.
Disadvantages:
 Records only financial aspects - One of the most significant disadvantages to financial
statements is that it refers only to the accounting of transfers of a financial kind. Various
sub-considerations, like consumer conditions, political environment, legal and regulatory
rules, etc., have significant implications for business practices. They are not recorded in
financial accounts and have an erroneous picture when making smarter business
decisions.

 Historical nature - Amounts are listed in individual spending accounts and price shifts
are not taken into consideration. This helps financial documents of historical value in the
books of accounts (Mola, Microsoft Technology Licensing LLC, 2019). These
documents are then regarded as a prerequisite for predicting future outcomes. It loses the
period value of resources and the changes that come with that as well; making projections
dependent on historical costs do not necessarily have the best basis for predicting events
in the future.
Part 2
A. Journal Entries for the month of February 2020
Date Particulars Debit (£) Credit (£)
01/02/20 Asma Ltd. A/c..........................Dr.
To Office fixtures A/c
(Unsuitable office fixtures returned to Asma
Ltd.)
350
350
04/02/20 Bad debt A/c............................Dr.
To S. Keyes
(Debt from S.Keyes written off as bad)
85
85
09/02/20 Machinery A/c.........................Dr.
To Bank A/c
To TS Co. A/c
(Machinery bought from TS Co. on part cash
and part credit)
2300
200
2100
13/02/20 Bank A/c...................................Dr.
Bad debt A/c.............................Dr.
To S. Hill A/c
(Only £220 received out of £270 from
bankrupt debtor S. Hill as full and final
settlement)
220
50
270

20/02/20 Drawings A/c............................Dr.
To Purchases A/c
(Goods taken for personal use by owner)
180
180
26/02/20 Drawings A/c..........................Dr.
To Insurance A/c
(Personal insurance bill debited to business
not stands corrected)
85
85
28/02/20 TS Co. A/c..............................Dr.
To Bank A/c
(Half payment of machine credit paid by
owner to TS Co)
1050
1050
Part 3
A. General ledger
Ledger Accounts
(Amounts in GBP)
Capital Account
Date Particulars Amount Date Particulars Amount
01/02/20 By Bank A/c 21500
01/02/20 By Van A/c 25000
01/02/20 By Office Fixture A/c 800
29/02/20 To Balance c/f 47300
Total 47300 Total 47300

Bank Account
Date Particulars Amount Date Particulars Amount
03/02/20 By Cash A/c 1500 01/02/20 To Capital A/c 21500
04/02/20 By Van A/c 4800 02/02/20 To Loan A/c 2500
19/02/20 By Nissan Co. A/c 5200 25/02/20 To Cash A/c 350
28/02/20 By Office Fixture A/c 620
29/02/20 By Balance c/f 12230
Total 24350 Total 24350
Van Account
Date Particulars Amount Date Particulars Amount
01/02/20 To Capital A/c 25000
04/02/20 To Bank A/c 4800
08/02/20 To Nissan Co. A/c 5200
29/02/20 By Balance c/f 35000
Total 35000 Total 35000
Quick Office Ltd Account

Date Particulars Amount Date Particulars Amount
05/02/20 By Office Fixture A/c 1100
29/02/20 To Balance c/f 1100
Total 1100 Total 1100
Cash Account
Date Particulars Amount Date Particulars Amount
15/02/20 By Office Fixture A/c 70 03/02/20 To Bank A/c 1500
25/02/20 By Bank A/c 350
29/02/20 By Balance c/f 1080
Total 1500 Total 1500
Nissan Co. Account
Date Particulars Amount Date Particulars Amount
08/02/20 By Van A/c 5200 19/02/20 To Bank A/c 5200
Total 5200 Total 5200

Office Fixture Account
Date Particulars Amount Date Particulars Amount
01/02/20 To Capital A/c 800
05/02/20 To Quick Office Ltd A/c 1100
15/02/20 To Cash A/c 70
28/02/20 To Bank A/c 620
29/02/20 By Balance c/f 2590
Total 2590 Total 2590
Loan Account
Date Particulars Amount Date Particulars Amount
02/02/20 By Bank A/c 2500
29/02/20 By Balance c/f 2500
Total 2500 Total 2500
B. Trial Balance as at 28th Feb 2019
Trial Balance
(at the month ending 29/02/2020)
(Amounts in GBP)
Particulars Debit Credit

Capital Account 47300
Bank Account 12230
Cash Account 1080
Van Account 35000
Quick Office Ltd. Account 1100
Office Fixture Account 2590
Loan Account 2500
Total 50900 50900
Part 4
A. Income Statement for the year ending 30th Sept 2019
Profit and Loss Account
(for the year ending 30th Sept 20)
Particulars Amount Particulars Amount
Opening Stock 36000 Sales 80000
Purchases 150000 Less: Returns Inwards -2000 78000
Less: Returns Outwards -600 149400 Closing Stock 120000
Carriage Inwards 720

Gross Profit c/f 11880
Total 198000 Total 198000
Carriage Outwards 400 Gross Profit c/d 11880
Motor Expenses 1200
Rent 5000
Telephone Charges 620
Wages and Salaries 32000
Insurance 830
Office Expenses 600
Sundry Expenses 300
Net profit / (loss) -29070
Total 11880 Total 11880
B. Possible impact of Covid-19 on Income statements
Businesses require a stable fiscal, cultural and legal environment to succeed. Instability in the
business environment can result in a decrease in competitiveness and even a loss of sales
between firms, as seen in the case of Aiman Co., which has been profitable for the last 10 years
and recorded a decline this year.
This should be recalled that the implications for Aiman Co. triggered by Covid-19 will be
confined in the first two quarters, i.e. from September 2019 to March 2020, owing to the short
period between the said financial quarter and the emergence of an outbreak. There had been a
major negative impact on production, supply chain and sales after March owing to the lock-

down. Owing to the disruption in the production process, the amount and time needed for inward
and outward freight increased and income declined due to lower demand, while running
expenses had to be paid accordingly (Aladejebi and Oladimeji, 2019). This has seen the impact
on operating results, and Aiman Co. may have announced a failure due to this fiscal year. The
circumstances of the lock-down of Covid-19 are unique and peculiar. It is not possible to
determine how long the impact would are and how far the economic conditions for the business
would've been. Nor is it reasonable to associate the results of the last year at the trends of the last
ten years. Besides that, it can be assumed to have a bearing on the outcome of the next fiscal
year.
ASSESSEMENT 2
PART A
(a) Journal entries
Dates Particulars/details Dr. Cr.
1/10/2020 Bank a/c DR
Cash a/c DR
Van a/c DR
To Capital a/c
(Being capital fund invested in business)
8000
5200
3000
16200
2/10/2020 Laptop a/c DR
To bank a/c
(Being Laptop for business bought on
credit)
1000
1000
4/10/2020 Purchase a/c DR
To Toys limited
(Being Toys purchased on credit)
2450
2450
5/10/2020 Bank a/c DR
To sales a/c
(Being goods sold)
1500
1500
12/10/2020 Repairing laptop a/c DR 80