Accounting and Finance: ACC System and Processes Homework Analysis

This homework assignment delves into accounting systems and processes, utilizing Microsoft Excel for financial analysis and reporting. The solution begins by explaining naming cell references and their application in calculating net profit. It then addresses the use of parentheses to denote negative figures in financial reports. The assignment further explores the benefits of separating data entry and report areas in accounting spreadsheets, including a detailed example of trading and income statements. The 'IF' function is demonstrated through a net profit/loss calculation. The solution also contrasts perpetual and periodic inventory systems, providing examples. Advantages and disadvantages of using spreadsheets in accounting are outlined, emphasizing accuracy and automation. Finally, the assignment covers inventory valuation methods, specifically average cost, FIFO (First-In, First-Out), and LIFO (Last-In, First-Out), with calculations for cost of goods sold and closing inventory values.

RUNNING HEAD: ACC SYSTEM AND PROCESSES
Acc system AND PROCESSEs

ACC SYSTEM AND PROCESSES 1
Table of Contents
Q 1...............................................................................................................................................................2
Q 2...............................................................................................................................................................3
Q 3...............................................................................................................................................................3
Q 4...............................................................................................................................................................6
Q 5.............................................................................................................................................................10
Q 6.............................................................................................................................................................11
Q 7.............................................................................................................................................................12
Average Cost Method:.......................................................................................................................12
First in First Out (FIFO):......................................................................................................................14
Last in First Out (LIFO):......................................................................................................................15
Q 8.............................................................................................................................................................16
Q 9.............................................................................................................................................................18
Q 10...........................................................................................................................................................19
Q 11...........................................................................................................................................................20
Q 12...........................................................................................................................................................21
Q 13...........................................................................................................................................................22

ACC SYSTEM AND PROCESSES 2
Q 1.
The naming cell reference is used in MS-Excel for the purpose of understanding the concept of
formula. Below is the example to calculate the Net profit using the function “Naming Cell
Reference”.
Example
Normal View:
Net Profit Calculation:
Sales ($) Expenses ($) Net Profit ($)
2566.02 2469.45 96.57
3256 1258 1998
1458 1066 392
2034 1034 1000
Formula View:
Sales ($) Expenses ($) Net Profit ($)
2566.02 2469.45
=Sales-Expenses
3256 1258
=Sales-Expenses
1458 1066
=Sales-Expenses
2034 1034
=Sales-Expenses

ACC SYSTEM AND PROCESSES 3
Q 2.
Brackets in worksheet is known as Parentheses. Negative figures in financial report denotes
credit items or expenses. There are also other forms to present negative figures are: minus sign
before the value, apply red color to the value or use brackets. Accountants normally follow the
practice of using the brackets in preparation of financial reports because it is considered to be the
best and simplest method to denote the negative figures in report. Further it can be said that
brackets highlight the negative figures easily to the person.
Example:
Particulars Amount ($)
Sales $6,50,000.00
Direct Costs ($4,25,000.00)
Gross margin $2,25,000.00
Indirect Costs ($1,68,000.00)
Net Profit $57,000.00
Q 3.
Accounting spreadsheet reports should be designed with a completely separate data entry area
and a separate report area because of the following reasons:
1. Separation of report area with the data area will provide a perfect image about the
company’s financials to the readers.
2. Worksheet used for the preparation of the financials because formulae’s and many
function keys can be used easily and one or more data can be modified or deleted without
changing of the whole data.

ACC SYSTEM AND PROCESSES 4
After the preparation of the report, all the financials must be collaborate with the data entry area.
Therefore, Separation of report area with the data area will provide profits to the stakeholders
because the company’s financial position can be easily analyzed.
Example:
Normal View:
Kapoor Ltd
Trading Account
For the year ended 30 June, 2017
Particulars Amount ($) Particulars Amount ($)
Opening Inventory: Closing Stock:
Raw Material 65000 Raw Material 25000
Work in Progress 25000 Work in Progress 10000
Purchases:
Raw Material 42000 COGS 184000
Direct labour 21000
Direct Expenses:
Depreciation 18000
Factory Insurance 8000
Manufacturing overhead:
Manufacturing
Expense 14000
Factory Salary 26000
TOTAL 219000 TOTAL 219000
Kapoor Ltd
Income Statement
For the year ended 30 June, 2017
Particulars Amount ($)
Total ($)
Revenues:

ACC SYSTEM AND PROCESSES 5
Sales 285000
Other Income 0
Total Income (A) 285000
Expenses:
COGS 184000
Salary 41000
General expenses 17000
Advertisement 7000
Light and Power 12000
Rate and Taxes 4500
Total operating expenses (B) 265500
Net Income (A-B) 19500
Formula View:
Kapoor Ltd
Trading Account
For the year ended 30 June, 2017
Particulars Amount ($) =+B4 Amount ($)
Opening Inventory: Closing Stock:
Raw Material 65000 Raw Material 25000
Work in Progress 25000 Work in Progress 10000
Purchases:
Raw Material 42000 COGS
=E17-
(E6+E7)
Direct labour 21000
Direct Expenses:
Depreciation 18000
Factory Insurance 8000
Manufacturing overhead:

ACC SYSTEM AND PROCESSES 6
Manufacturing
Expense 14000
Factory Salary 26000
TOTAL
=SUM(C5:C16
) TOTAL =C17
Kapoor Ltd
Income Statement
For the year ended 30 June, 2017
=+B4 Amount ($) Total ($)
Revenues:
Sales 285000
Other Income 0
Total Income (A) =SUM(C26:C27)
Expenses:
=D9 =E9
Salary 41000
General expenses 17000
Advertisement 7000
Light and Power 12000
Rate and Taxes 4500
Total operating expenses (B) =SUM(C30:C35)
Net Income (A-B) =D28-D36
Q 4.
‘IF’ function is used in worksheet to know something is true then apply the function otherwise
apply something else. Logical calculations between actuals and forecasted values then use
function ‘IF’ in worksheet.
The syntax for ‘IF’ Function is:
SYNTAX IF(Something is True, then apply, otherwise do something else)

ACC SYSTEM AND PROCESSES 7
Using the same example (Q 3) calculating net profit/loss using ‘IF’ function:
No Profit or Loss:
Kapoor Ltd
Trading Account
For the year ended 30 June, 2017
Particulars Amount ($) Particulars Amount ($)
Opening Inventory: Closing Stock:
Raw Material 65000 Raw Material 25000
Work in Progress 25000 Work in Progress 10000
Purchases:
Raw Material 42000 COGS 184000
Direct labour 21000
Direct Expenses:
Depreciation 18000
Factory Insurance 8000
Manufacturing overhead:
Manufacturing Expense 14000
Factory Salary 26000
TOTAL 219000 TOTAL 219000
Kapoor Ltd
Income Statement
For the year ended 30 June, 2017
Particulars Amount ($) Total
Revenues:
Sales 265500
Other Income 0
Total Income (A) 265500
Expenses:
COGS 184000
Salary 41000
General expenses 17000

ACC SYSTEM AND PROCESSES 8
Advertisement 7000
Light and Power 12000
Rate and Taxes 4500
Total operating expenses (B) 265500
Net Income (A-B) no profit no loss0
Profit:
Kapoor Ltd
Trading Account
For the year ended 30 June, 2017
Particulars Amount ($) Particulars Amount ($)
Opening Inventory: Closing Stock:
Raw Material 65000 Raw Material 25000
Work in Progress 25000 Work in Progress 10000
Purchases:
Raw Material 42000 COGS 184000
Direct labour 21000
Direct Expenses:
Depreciation 18000
Factory Insurance 8000
Manufacturing overhead:
Manufacturing Expense 14000
Factory Salary 26000
TOTAL 219000 TOTAL 219000
Kapoor Ltd
Income Statement
For the year ended 30 June, 2017
Particulars Amount ($) Total ($)
Revenues:
Sales 285000
Other Income 0
Total Income (A) 285000
Expenses:
COGS 184000

ACC SYSTEM AND PROCESSES 9
Salary 41000
General expenses 17000
Advertisement 7000
Light and Power 12000
Rate and Taxes 4500
Total operating expenses (B) 265500
Net Income (A-B) Profit/19500
Loss:
Kapoor Ltd
Trading Account
For the year ended 30 June, 2017
Particulars Amount ($) Particulars Amount ($)
Opening Inventory: Closing Stock:
Raw Material 65000 Raw Material 25000
Work in Progress 25000 Work in Progress 10000
Purchases:
Raw Material 42000 COGS 184000
Direct labour 21000
Direct Expenses:
Depreciation 18000
Factory Insurance 8000
Manufacturing overhead:
Manufacturing Expense 14000
Factory Salary 26000
TOTAL 219000 TOTAL 219000
Kapoor Ltd
Income Statement
For the year ended 30 June, 2017
Particulars Amount ($) Total
Revenues:
Sales 265000

ACC SYSTEM AND PROCESSES 10
Other Income 0
Total Income (A) 265000
Expenses:
COGS 184000
Salary 41000
General expenses 17000
Advertisement 7000
Light and Power 12000
Rate and Taxes 4500
Total operating expenses (B) 265500
Net Income (A-B) loss/-500
Q 5.
Recording of inventories in the books can be done through two different methods such as
Perpetual and periodic inventory systems.
Perpetual Inventory System Periodic Inventory System
In Perpetual inventory system, every
transaction is continuously updated. In other
words, transactions of sale and purchase, Cost
of Goods Sold entries and stocks are
continuously updated.
In Periodic inventory system, every transaction
is not continuously updated. In other words,
entries are updated at the end of accounting
period through passing a closing entry.
Example:
Date Particulars Amount ($)
01-01-2017
Opening
Stock
(150 units at
$ 10 each) 1500
16-01-2017 Purchase
(80 units at $
10 each) 800
22-01-2017 Issue
(110 units at
$ 15 each) 1650

ACC SYSTEM AND PROCESSES 11
31-01-2017 Closing Stock
(120 units at
$ 10 each) 1200
Periodic inventory system:
Particulars Amount ($) Particulars Amount ($)
Opening
Stock 1500 Sales 1650
Purchase 800
Closing
Stock 1200
Gross profit 550
Total 2850 Total 2850
Perpetual inventory system:
Date
Partic
ulars
Purchase Issue Closing Balance
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
2011
01-01-
2017
Openi
ng
Stock 150 10 1500
16-01-
2017
Purch
ase 80 10 800 150 10 2300
80 10
22-01-
2017 Issue 110 15 1650 120 10 1200
Q 6.
Overview
The Spreadsheet is a computer application program in which records are organized in columns
and rows. It is used generally for placing the numerical data and can also portray figures

ACC SYSTEM AND PROCESSES 12
graphically. In today’s world there are many applications such as lotus 1_2_3 but Microsoft
excel is most popular application.
The report contains the advantages and disadvantages of the worksheets in the accounting.
Further the worksheet can also be used by the accounting expert to allocate the costs to different
process of the corporation.
Body Framework
Advantages of worksheets in accounting:
i. The most basic benefit of using a spreadsheet is the ease of use.
ii. Worksheet will help in maintaining the accounts accurate with the help of calculator
function.
iii. Using of Formulae’s and function keys in the worksheet will make the calculations
accurate and faster as well as easier.
iv. Facility of making notes and inserting comments in worksheet is also very helpful by
elaborating data.
v. One workbook has the capacity to import many external data such as sales data, purchase
data, banking data etc. to upkeep the accounting actions. This is one of the most
important reason to use spreadsheet for the purpose of accounting.
vi. Linking of data and or worksheets is also a benefit of using a spreadsheet. This helps in
making budgets or cash flows etc.
vii. Dispersed expenses such as salary or advertisement and track easily how much spent on
these expenses on monthly basis by making table.
viii. Automation of data in spreadsheet is also an advantage.

ACC SYSTEM AND PROCESSES 13
Disadvantages of worksheets:
i. There are chances that a spreadsheet can be corrupted or crashed and thus the whole of
the data will get lost.
ii. Hoarding of data is very easy and making changes or duplication of the data without any
control is also a risk in using of spreadsheet.
iii. Storage requirements is also get increased.
iv. There is no requirement of having some special skills to operate spreadsheet, any
unskilled labor can also operate spreadsheet very easily.
Conclusion
Thus it can be concluded that Using of Worksheet for accounting purposes as a tool is
very useful because it brings the accurate results which is valuable to the company and their
stakeholders. Further it brings productivity with the using of functions and formulae’s.
Q 7.
Statement of units:
Date Purchase Issue
Closing
Balance
No of units No of units No of units
Oct-01 60
Oct-03 10 70
Oct-12 30 100
Oct-18 70 170
Oct-31 115
October $ 25000
Closing Inventory at the end of the October were 115.
Average Cost Method:

ACC SYSTEM AND PROCESSES 14
Date
Partic
ulars
Purchase Issue Closing Balance
No of
units
Unit
cost
Total
costs
No of
units
Unit
cost
Total
costs
No of
units
Unit
cost
Total
costs
Oct-
01
Openi
ng
Balan
ce 60 57
$
3,420.00
Oct-
03
Purch
ase 10 65
$
650.00 60 57 $
4,070.00
10 65
Oct-
12
Purch
ase 30 70
$
2,100.
00 60 57 $
6,170.00
10 65
30 70
Oct-
18
Purch
ase 70 72
$
5,040.
00 60 57 $
11,210.0
0
10 65
30 70
70 72
Octo
ber Issue 379 65.94
$
25,000.
00
Oct-
31
Closin
g
Balanc
e 115 65.94
$
7,583.24
Average
unit Cost
$
65.94
Cost of Closing Inventory as per Average Cost method were $ 7583.24.
Cost of Goods Sold = Opening Inventory + Purchases during the month – Closing Inventory
COGS = $3420 + $7790 - $7583.24
COGS = $ 3626.76.

ACC SYSTEM AND PROCESSES 15
First in First Out (FIFO):
Date
Partic
ulars
Purchase Issue Closing Balance
No of
units
Unit
cost
Total
costs
No of
units
Unit
cost
Total
costs
No of
units
Unit
cost
Total
costs
Oct-
01
Openi
ng
Balanc
e 60 57 3420
Oct-
03
Purch
ase 10 65 650 60 57 4070
10 65
Oct-
12
Purch
ase 30 70 2100 60 57 6170
10 65
30 70
Oct-
18
Purch
ase 70 72 5040 60 57
1121010 65
30 70
70 72
Octo
ber Issue 55
454.5
5
$
25000
Oct-
31
Closing
Balanc
e
5 57
$
8,075.00
10 65
30 70
70 72
Cost of Closing Inventory as per FIFO method were $ 8075.
Cost of Goods Sold = Opening Inventory + Purchases during the month – Closing Inventory
COGS = $3420 + $7790 - $8075

ACC SYSTEM AND PROCESSES 16
COGS = $3135.
Last in First Out (LIFO):
Date
Partic
ulars
Purchase Issue Closing Balance
No of
units
Unit
cost
Total
costs
No of
units
Unit
cost
Total
costs
No of
units
Unit
cost
Total
costs
Oct-
01
Openi
ng
Balanc
e 60 57 3420
Oct-
03
Purch
ase 10 65 650 60 57 4070
10 65
Oct-
12
Purch
ase 30 70 2100 60 57 6170
10 65
30 70
Oct-
18
Purch
ase 70 72 5040 60 57
1121010 65
30 70
70 72
Octo
ber Issue 55
454.5
5 25000
60 57
$
7,250.00Oct-
31
Closing
Balanc
e
10 65
30 70
15 72
Cost of Closing Inventory as per FIFO method were $ 7250.
Cost of Goods Sold = Opening Inventory + Purchases during the month – Closing Inventory
COGS = $3420 + $7790 - $7250
COGS = $3920.
Q 8.
Normal View:

ACC SYSTEM AND PROCESSES 17
Mickey
Data
Particulars $
Bank balance on 31 july 21453
Adjustments:
EFT Rent receipt -600
EFT Insurance payment 300
NSF Cheque from
customer -2400
Note receivable -2650
Bank error Cheque 1419 456
Bank service charges 65
Deposit in transit -2345
outstanding cheque
Cheque no. 1420 1678
Cheque no. 1421 760
Cheque no. 1422 340
Cash account balance as
of 31 july 17057
Formula View:
Mickey
Data
Particulars $
Bank balance on 31 july 21453
Adjustments:
EFT Rent receipt -600
EFT Insurance payment 300
NSF Cheque from customer -2400
Note receivable -2650
Bank error Cheque 1419 456
Bank service charges 65
Deposit in transit -2345
outstanding cheque
Cheque no. 1420 1678
Cheque no. 1421 760
Cheque no. 1422 340

ACC SYSTEM AND PROCESSES 18
Cash account balance as of 31 july =SUM(C6:C18)
Changes
Normal View:
Mickey
Data
Particulars $
Bank balance on 31 july 21453
Adjustments:
EFT Rent receipt -400
EFT Insurance payment 1300
NSF Cheque from
customer -2600
Note receivable -2150
Bank error Cheque 1419 -44
Bank service charges 65
Deposit in transit -3345
outstanding cheque
Cheque no. 1420 2178
Cheque no. 1421 560
Cheque no. 1422 40
Cash account balance as
of 31 july 17057
Formula View:
=B3
Data
Particulars $
Bank balance on 31 july 21453
Adjustments:
EFT Rent receipt =-600+200
EFT Insurance payment =300+1000
NSF Cheque from customer =-2400-200
Note receivable =-2650+500
Bank error Cheque 1419 =456-500

ACC SYSTEM AND PROCESSES 19
Bank service charges 65
Deposit in transit =-2345-1000
outstanding cheque
Cheque no. 1420 =1678+500
Cheque no. 1421 =760-200
Cheque no. 1422 =340-300
Cash account balance as of 31 july =SUM(C26:C38)
Q 9.
i. Credit sales
Particulars Debit ($) Credit ($)
Accounts Receivable Dr.
To Credit Sales
100000
100000
ii. The collection of the part of the amount owing
Particulars Debit ($) Credit ($)
Cash Account Dr.
To Accounts Receivable
80200
8200
iii. The write off of accounts receivable
Particulars Debit ($) Credit ($)
Allowance for doubtful amount Dr.
To Accounts Receivable
15000
15000
iv. The reinstatement of an amount written off (Amount in $)
Particulars Debit Credit
Accounts Receivable Dr.
To Allowance for doubtful amount
15000
15000

ACC SYSTEM AND PROCESSES 20
v. The collection in full of the amount owing (Amount in $)
Particulars Debit Credit
Cash Account Dr.
To Accounts Receivable
19800
19800
T-Account of Accounts receivable:
Particulars Amount in $ Particulars Amount in $
To credit sales 100000 By balance b/d -
By Allowance for
doubtful amount
15000 By cash 80200
To balance c/d - By Allowance for
doubtful amount
15000
By cash 19800
Q 10.
2 methods for estimating bad debts:
a) Percentage of Accounts receivable method:
Bad debt is considered as a % of accounts receivable balance.
Example:
Closing balance of Accounts receivable = $1,90,000
It is given that 1% of total Accounts receivable is uncollectible.
Bad Debt amount = $1,90,000 * 1% = $ 1,900
Journal:

ACC SYSTEM AND PROCESSES 21
Particulars Debit ($) Credit ($)
Bad debt Expense A/c Dr.
To Allowance for bad debt A/c
(Estimate of bad debts)
1900
1900
b) Percentage of Credit sales method:
Bad debt is calculated as a % of credit sales.
Example:
Credit Sales = $ 4,00,000
It is given that 1% of credit sales is uncollectible.
Bad Debt Amount = $ 4,00,000 * 1% = $4,000
Journal:
Particulars Debit ($) Credit ($)
Bad debt Expense A/c Dr.
To Allowance for bad debt A/c
(Estimate of bad debts)
4,000
4,000
Q 11.
E-commerce industry is increasing its popularity day by day. Every enterprise whether small,
medium or large trying to increase its revenue through retailing online. Also with the help of e-
business transaction costs for material acquisition and inventory storage costs reduces to the
minimum. This happens only when enterprises have personal computers, proper internet
connection etc. The market of e-business has really reshaped and consumers can easily purchase
products without physically going to the market for the same. At present there are almost online

ACC SYSTEM AND PROCESSES 22
market for many industries for example medicines, textile, grocery etc. All this happened only
because the usage of technology is very high and it is very easy to use and time saving. In
addition to above, we can also say that e-business increases the sales with increasing in gross
margins.
The example used for the online retailing is EBAY.
The EBAY is a multinational ninth largest e-commerce publicly listed company by revenue and
traded in NASDAQ: EBAY. The company is California based, US. The company sales its
products to consumers through online source either from website (ebay.com) or from the
application. The EBAY operated worldwide in nearly 30 nations and the buyers use its website
freely.
Financials of Ebay (2017) are as follows:
Revenue USD 9.567 billion
Stock price USD 37.80 (7th May, 2018)
Thus, having said that online retailing with more and more e-commerce businesses will flourish
in coming years.

ACC SYSTEM AND PROCESSES 23
Q 12.
Scenario:
AMP Ltd. Sells medicines to PAM Ltd. for $ 15,000 (credit sales) payment due in 30 days. After
30 days of non-payment, AMP ltd accepted the note receivable from the PAM ltd for $ 15,000. It
has been established that, PAM ltd had postponed the payment of $9, 000 and balance amount
$6,000 got dishonor.
Journal entries:
(1). Recording of credit sales:
Particulars Debit ($) Credit ($)
Notes Receivable A/c Dr.
Credit Sales Revenue A/c
15,000
15,000
(2). Account receivable converted to Notes Receivable:
Particulars Debit ($) Credit ($)
Notes Receivable A/c Dr.
Account Receivable A/c
15,000
15,000
(3). PAM ltd paid $9,000 after the due date:
Particulars Debit ($) Credit ($)
Account Receivable A/c Dr.
Notes Receivable A/c
9,000
9,000
(4). $6, 000 got dishonor. Journal for the dishonor of the note:
Particulars Debit ($) Credit ($)
Allowance for doubtful amount Dr. 9,000

ACC SYSTEM AND PROCESSES 24
Notes Receivable A/c 9,000
Note receivable Account:
Particulars Amount in $ Particulars Amount in $
To balance b/d - By Account
receivable
9,000
To Account
receivable
15,000 By Allowance for
doubtful amount
9,000
To credit sales
revenue
15,000 To balance c/d 12,000
Total 30,000 Total 30,000
Q 13.
Refer another DOC File