Financial Accounting and Analysis: A Comprehensive Assignment

This document presents a detailed solution to an accounting assignment, encompassing two assessments. The first assessment involves various calculations, including journal entries, and the creation of ledger accounts, trial balance, and income statement. The second assessment focuses on analyzing a business's financial performance through ratio analysis. The assignment covers topics such as different types of business structures, advantages and disadvantages of accounting for profit businesses, and the potential impact of COVID-19 on income statements. The solution includes detailed journal entries, general ledger accounts, a trial balance, and an income statement, providing a comprehensive understanding of financial accounting principles and their practical application. The document also includes an analysis of the impact of COVID-19 on financial statements.

Academic

Contents
INTRODUCTION.......................................................................................................................................3
ASSESSMENT 1....................................................................................................................................3
PART 1....................................................................................................................................................3
Part 2.......................................................................................................................................................5
Part 3.......................................................................................................................................................6
Part 4.....................................................................................................................................................11
ASSESSEMENT 2................................................................................................................................12
PART A.................................................................................................................................................12
PART B.................................................................................................................................................19
CONCLUSION.........................................................................................................................................23
REFERENCES..........................................................................................................................................24

INTRODUCTION
It essential for companies to record their business transactions in a manner by which accountants
can gather utilize key information for further processing (De Kruijff and Weigand, 2017). There
are a range of activities and operations which are performed in order to prepare financial reports
but basis is only one which is to correctively recording of financial activities. The report is based
on two assessments under which distinct type of requirement is needed. In the assessment one
different kinds of calculations are performed while in second part Linda’s business’s financial
performance is analyzed through ratio analysis.
ASSESSMENT 1
PART 1
(a) Who are the decision makers referred to in the above definition and explain their need for
accounting information?
Decision-makers are people within an organization who do have the capacity to make
informed choices, such as purchases, development, or investment. Organizational,
business processes, practical, personal, scheduled, and non-programmed decisions could
be part of any context of decision. In the Tesco plc sense, the choice is made by the
individuals referred to below, which are as follows:
Management- Administrators are also invited to take steps in order to solve challenges.
Decision-making and problem-solving require ongoing processes in which situations or
concerns are analyses, solutions discussed, decisions being made and necessary measures
taken (Deshpande, Shiurkar and Devane, 2017). The method of judgment is always very
brief and the mental analysis is almost instantaneous. In certain cases, the procedure can
take months or even years. The entire decision-making process depends on the best
information available to the relevant individual at the right time. Managers take crucial
decisions related to various kinds of aspects in the sense of the above business.

ACCOUNTING INFORMATION ROLE: Accounting Information is designed to help
administrators within the enterprise, whereas accrual reporting is designed to provide
non-organizational entities with accounting reporting.
Owner- The company owner still plays a crucial role in taking corrective decisions.
Primary owners typically guide the judgment process, work closely with additional
owners, fix challenges, delegate assignments to other roles or managers (if required),
complete the journey, have the final approval authority (if / when used) and are generally
responsible for the outcomes of the different components. Tesco plc's holder plays a
crucial part in judgment (Christensen, Cottrell and Budd, 2016). They use key accounting
data.
Accounting details role- Accounting gives significant financial expertise useful for
judgment to management and staff. Assessment of the role of the owner in preserving and
managing the organization's profits. Decide whether company money is lent or invested.
(b) Identify and explain the advantages and disadvantages of any two for profit business
structures which an accountant may encounter.
Accounting- Finance is the system of reporting of cash activities involved with
companies. Summarization, examination and report of these practices to supervisory
agencies, authorities and customs officials are necessary for the accounting process
(Zotorvie, 2017). The profit corporation describes some benefits and drawbacks below:
Benefits:
Full and Systematic Record- Accounting relies on generally accepted norms and on the
empirical means through which books represent corporate activities. For example, all
corporate operations are periodically and thoroughly registered. As any sale can be
reported and evaluated by the same process, the human limitations that cannot be taken
into consideration in all transactions are overcome by reporting.

Helps to collect loans- Business should have sufficient capital for further expansion.
Occasionally, because of the shortage of capital, the organization could not do well
(Wagner, Datascape Inc, 2016). In such situations, by obtaining loans from other
financial institutions such as banks, more funds may be collected. These commercial
banks offer loans on the basis of the business entity's feasibility and legitimacy. The
Exchange and Profit & Expense Report and cash balances, the final analyses of financial
documents, will measure the productivity and authenticity.
Drawbacks:
Preference to Rational Decision Making- Analytical decisions can be taken with the help
of financial techniques. Often accounting firms and senior management, however, favor
prior judgment expertise and insight (Hauser, Suboti LLC, 2016). This is because taking
an intuitive decision is genuinely transparent and easy.
The decisions are made by the administration. Their execution is in the possession of the
auditor in charge of operations. For the efficient operation of the management accounting
practices, the continued contributions of management accountants and the complete
involvement of all management levels are important.
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
The worldwide effects of COVID-19 (Corona virus) on people, societies, industries and systems,
which clearly seem to have such a deeply detrimental impact on culture, families, businesses and
states that everybody needs to, know what their single analysis is about (Honea, 2016). The
influence of Covid-19 on all sectors of culture which may include social, financial or regional
issues and which may take time and cost to work wonderfully in any specific state. As we talk,
the crisis is rising and we are in an area where we do not realize how far it can go. Here are a few
COVID-influenced on financial mentioned below:
The loss of revenue can be seen in the original quote there's less business value relative to
expenditures. That's also because of the negative impact on business revenues of COVID 19.
Higher returns- Owing to a lack of quality, there are higher numbers of products refused by
clients. This demonstrates COVID's immediate results.
Higher pay-Wages are 32,000 pounds, which means that the company has withdrawn this figure
from the sales, resulting in reduced production.
ASSESSEMENT 2
PART A
(a) Journal entry
Date Particulars DR CR
1/10/2020 Bank a/c DR
Cash a/c DR
8000
5200

Van a/c DR
To capital a/c
(Being capital invested)
3000
16200
2/10/2020 Laptop a/c DR
To bank a/c
(Being Laptop purchased 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
To cash a/c
(Being amount paid for repairing laptop)
80
80
18/10/2020 Toys limited a/c DR
To purchase return a/c
(Being goods returned to Toys limited)
100
100
21/10/2020 Bank a/c DR
To rent a/c
(Being rent paid)
500
500
23/09/2020 Cash a/c DR
Fred a/c DR
To sales a/c
(Being goods sold on cash and credit)
1500
400
1900
23/10/2020 Cash a/c DR
To sales a/c
(Being goods sold)
500
500
24/09/2020 Car a/c DR
To bank a/c
(Being car purchased)
2500
2500

26/10/2020 Wages a/c DR
To bank a/c
(Being wages paid)
820
820
31/10/2020 Rent a/c DR
To bank a/c
(Being rent paid)
1000
1000
30/09/2020 Drawings a/c DR
To bank a/c
(Amount withdraw from bank for holiday)
1600
1600
(b) Balance the accounts and bring down an opening balance
Bank a/c
Date Particulars Amount Date Particulars Amount
1/10/2020 To capital a/c 8000 2/10/2020 By Laptop a/c 1000
5/10/2020 To sales a/c 1500 24/09/2020 By Car a/c 2500
21/10/202
0
To rent a/c 500 26/10/2020 By Wages a/c 820
31/10/2020 By Rent a/c 1000
30/09/2020 By Drawings a/c 1600
31/10/2020 By balance c/d 3080
Cash a/c
Date Particulars Amount Date Particulars Amount
1/10/2020 To capital a/c 5200 12/10/2020 By Repairing
laptop a/c
80
23/09/202
0
To sales a/c 1500 31/10/2020 By balance c/d 7120
23/10/202
0
To sales a/c 500

Van a/c
Date Particulars Amount Date Particulars Amount
1/10/202
0
To capital a/c 3000 31/10/202
0
By balance c/d 3000
Capital a/c
Date Particulars Amount Date Particulars Amount
31/10/202
0
To balance c/d 16200 1/10/202
0
By bank a/c 8000
1/10/202
0
By Cash a/c 5200
1/10/202
0
By Van a/c 3000
Laptop a/c
Date Particulars Amount Date Particulars Amount
2/10/202
0
To bank a/c 1000 31/10/202
0
By balance c/d 1000
Purchase a/c
Date Particulars Amount Date Particulars Amount
4/10/202
0
To Toys limited 2450 31/10/202
0
By balance c/d 2450
Toys limited

Date Particulars Amount Date Particulars Amount
18/10/202
0
To purchase return
a/c
100 4/10/202
0
By Purchase a/c 2450
31/10/202
0
To balance c/d 2350
Sales a/c
Date Particulars Amount Date Particulars Amount
31/10/202
0
To balance c/d 3900 05/10/2020 By Bank a/c 1500
23/09/2020 By cash a/c 1500
23/09/2020 By Fred a/c 400
23/10/2020 By Cash a/c 500
Repairing laptop a/c
Date Particulars Amount Date Particulars Amount
12/10/202
0
To cash a/c 80 31/10/2020 By balance c/d 80
Purchase return a/c
Date Particulars Amount Date Particulars Amount
31/10/202
0
To balance c/d 100 18/10/2020 By Toys limited
a/c
100
Rent a/c
Date Particulars Amount Date Particulars Amount
31/10/202 To bank a/c 1000 21/10/2020 By Bank a/c 500

0
31/10/2020 By balance c/d 500
Fred a/c
Date Particulars Amount Date Particulars Amount
23/09/202
0
To sales a/c 400 31/10/2020 By balance c/d 400
Car a/c
Date Particulars Amount Date Particulars Amount
26/09/202
0
To bank a/c 2500 31/10/2020 By balance c/d 2500
Wages a/c
Date Particulars Amount Date Particulars Amount
26/10/202
0
To bank a/c 820 31/10/2020 By balance c/d 820
Drawings a/c
Date Particulars Amount Date Particulars Amount
30/09/202
0
To bank a/c 1600 31/10/2020 By balance c/d 1600
(c) Trial balance:

(d) Income statement:

(e) Statement of financial position
Assets
Fixed Assets
Laptop 1000

Second-hand car 2500
Van 3000
Current Assets
Bank 3080
Cash 7120
Fred 400
Inventory 250
Total Assets 17350
Equity and Liabilities
Equity
Capital 16200
Less: Drawings -1600
Retained earnings 400
Current liabilities
Toys Ltd. 2350
Total equity and Liabilities 17350
(f) The holiday-related expenses would be known as expenses for sketches. This is so
because, due to personal tension and growth, it was finished. A drawing account is a
record kept by its owner to track the payments made out by an entity. For companies that
are classified as proprietary assets or partnerships, a drawing balancing is primarily used.
Expenses can be considered as sketches in reference to the latter scenario.
PART B
Ratio analysis: For analyzing past and current financial information, investors rely on a matrix
which is considered as ratio analysis. In detailed analysis, ratio analysis can be understood as a

form of approach under each aspect of business is evaluated in terms of financial elements
including returns, expenses and many more. As well as ratio analysis is useful for making
comparative analysis of two or more companies for different types of years. In the context of
above company, such matrix has been used which is explained below:
Net profit margin Net profit/sales*100
Net profit 400
sales 3900
Net profit margin 10.26 %
Gross profit margin Gross profit/sales*100
Gross profit 1800
sales 3900
Gross profit margin 46.15%
Current ratio Current assets/current
liabilities
Current assets 10850
Current liabilities 2350
Current ratio 4.62 times
Acid test ratio Quick assets/current
liabilities
Quick assets 10600
current liabilities 2350

Acid test ratio 4.51 times
Accounts receivable collection period Sales/accounts receivables
sales 3900
accounts receivable 400
Accounts receivable collection period 9.75
Days 37.44
Accounts payable turnover ratio Purchase/accounts payables
Purchase 2450
Accounts payable. 2350
Accounts payable turnover ratio 1.042553191
days 350
(ii) Comparison of ratios:
Analyze- On the grounds of the table above, it can be mentioned that both ratios vary immensely.
The company of Linda will only achieve a ratio of 10.26 percent, while the ratio of the market is
31 percent. It indicates that because of further investments and reduced sales, the above
organization is unable to generate higher returns.

Analyze- It can be mentioned that there is not so much variation in defined as the ratio of both
enterprise and sector in comparison to the above ratio. The company ratio is 54 percent, while
the market ratio is 46.15 percent. This illustrates that the business is able to control the total cost
of products produced, but they are not as successful as the percentage of the market.
Analyze- In the sense of the present ratio, the ratio of firms is greater than the ratio of the market.
Company will generate 4.62 times the current ratio that indicates that they will have sufficient
cash flow to pay the existing liabilities. Whereas the ratio of manufacturing is 2.87, and is almost
fifty percent of the ratio of company.
Analyze- In the sense of the aforementioned ratio, it can be seen that the proportion of the
corporation is 4.51 times, which indicates that they can have sufficient liquid assets to pay the
brief debt. Although the ratio for industry is 1.35 times. This indicates that with the aid of
existing assets, the organization will manage its short-term expenditures.
Analyze- It can be mentioned that company can take the debt sum of borrowers in terms of
accounts receivable days. Although the sector's ratio is 50 days, it illustrates that the company
takes more times.

Analyze- In the sense of the above duration, it can be mentioned that the company ratio is 72
days, which means that firms in an industry are requiring this period of income to collect their
lenders. If the company ratio above is 350 days, it means that they have struggled to pay their
lenders in fewer periods.
Overall analysis- This can be claimed on the basis of the multiple ratios here that the proportion
of the business is higher than that of Linda. That's because the ratio of enterprise is stronger
relative to the company of Linda in much of the chapter.
CONCLUSION
It may be inferred, on the grounds of the aforementioned project report, that business statements
have to be reported in an acceptable accounting way. It can be inferred from the first section of
the study that firms require financial data in position to obtain strategic statements. In order to
take proper decisions, each finance department needs full funding details. This can be expressed
from the next section of the study that company transactions have to be reported efficiently and
can be derived with the aid of this trial balance. It is possible to use this accounting system for
making balance sheets and other income reports.

REFERENCES
De Kruijff, J. and Weigand, H., 2017, June. Understanding the blockchain using enterprise
ontology. In International Conference on Advanced Information Systems
Engineering (pp. 29-43). Springer, Cham.
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Compliance Framework. In 2017 IEEE International Conference on Computational
Intelligence and Computing Research (ICCIC) (pp. 1-7). IEEE.
Christensen, T.E., Cottrell, D.M. and Budd, C., 2016. Advanced financial accounting. NY
McGraw-Hill/ Irwin,.
Zotorvie, J.S.T., 2017. A study of financial accounting practices of small and medium scale
enterprises (SMEs) in Ho Municipality, Ghana. International Journal of Academic
Research in Business and Social Sciences, 7(7), pp.29-39.
Wagner, R.H., Datascape Inc, 2016. System and method for facilitating transactions through a
network portal. U.S. Patent 9,336,543.
Hauser, R.R., Suboti LLC, 2016. System, method and computer readable medium for recording
authoring events with web page content. U.S. Patent 9,336,191.
Honea, R.M., 2016. The Demise of the Recording Act as a Rule of Property.