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