BA30592E - Recording Business Transactions: Financial Report UWL

This report provides a comprehensive analysis of financial accounting principles related to recording business transactions, particularly in the context of establishing a sole trader business and understanding the role of accounting in decision-making within a company like Ferrexpo. It includes a detailed examination of the steps necessary for setting up a business, such as market research, business plan development, and financial planning. The report also features journal entries for specific transactions and constructs an income statement to assess a company's financial performance. Furthermore, it predicts future profitability based on trend analysis, considering the impact of external factors like the COVID-19 pandemic. The analysis emphasizes the importance of accounting in providing financial information for stakeholders to make informed decisions. Desklib provides a platform for students to access similar solved assignments and study resources.

PROJECT-1

Table of Contents
ASSESSMENT-1............................................................................................................................3
INTRODUCTION...........................................................................................................................3
PART-A...........................................................................................................................................3
Q1................................................................................................................................................3
Q2................................................................................................................................................4
PART-B...........................................................................................................................................5
Q1................................................................................................................................................5
Q2................................................................................................................................................6
PART-C.........................................................................................................................................10
a..................................................................................................................................................10
b.................................................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

ASSESSMENT-1
INTRODUCTION
Accounting refers to the process that is related with the aspect of recording, analysing and
summarizing the financial information. Accounting is the base that would lead to the formation
of financial statement. With the aspect of financial statement, the financial health of the company
would be able to get analysed and determined (Hasanaj and Kuqi, 2019). This report would
discuss about the aspect of accounting, stakeholders along with preparation of financial
statements. Likewise, steps that are needed to be considered by the business regarding its
establishment would also be a part of the report.
PART-A
Q1
In order to make establishment of the business as a sole trader there are various aspect which are
needed to be focussed by the trader. The aspects which are needed to be focussed are as follows:
Market research:
It refers to the making up of the research of the market (Segal, 2019). This is the first step
that the David green must need to undertake. As per this aspect the trader need to make a
research of the market which would enable the David that what are the current trends and
changes related with the Decorator business is going on. This would enable the David to
formulate the most appropriate policies for the business.
Making up of business plan:
Under this step the David would need to make the business plan under which all the
aspect regarding the business would need to be focussed including the sales services, marketing
and various related business activities. With the making up of the business plan all the necessary
aspect of the company would be able to get determined including the framing of plans and
policies regarding the operation of the business. It would also involve the planning regarding the
various business function of the firm.
Finance:
This is one of the major aspect related with the establishment of the business. This step
would suggest that from which sources the business must need to fund (Paul, 2018). It would
also include the determination of the aspect that how the funds would be arranged i.e. personal

funding or through the mode of debt. Here all the accounting function would also need to be
determined that how the accounting would made in the business including the focus over the
double entry book keeping. Hiring of accountant or management of accounts at the personal
level would all be included in this decision.
Location:
This step would involve the determination of location where the business would going to
be operated.
Business structure:
Under this the mode of business structure would be determined that how the business
would be able to get operate. This would also enable the business that would enable the company
to get operate in the market along with taking of business decision.
With the consideration over the above steps David would be able to make establishment of
the business because it would involve the consideration of the essential aspect of the business. As
a sole trader it is very important that the financial structure of the business would be strong so
that all the debts and occurrence of any loss would be able to get bear by the business without
facing the situation of any loss. With the effective financial management not only the expenses
and revenue of the company would be able to get maintained and controlled but it would also
enable the business to run in smooth manner.
Q2
As per the aspect of accounting the financial transactions are recorded, analysed and
summarized that would be made used by the decision makers for the decision making (Cockcroft
and Russell, 2018). In case of Ferrexpo which is a community trading and mining company and
listed on the London stock exchange also make prepare its financial statement on the basis of the
use of accounting. The decision makers in case of the Ferrexpo would include the employees,
shareholders, suppliers, customers, educational institutions, buyers, investors and various others.
These are counted as major shareholders of the company who make various decision towards the
company by making an analysis of the financial statements. These are considered as major
decision makers with respect to the Ferrexpo because these are the stakeholders of the company
who have interest in the company and may have the power that their decision would affect the

decision of the company. Since with the aspect of accounting the financial information would be
recorded following by the analysis which would be further assist the concerned stakeholders in
terms taking decision regarding the company. This can further be justified with an example of
investor decision whose decision is depended upon the analysis of the income statement of the
company.
In the same way it is also to be noted that as per the above definition the concerned
stakeholders including the shareholders, owners and various other would make decision
regarding the mode of operation of the company in terms of making an upgradation of the plans
and policies so that the company would be able to meet its financial goal (Freeman, Phillips and
Sisodia, 2020). Another reason that would be considered for being a decision maker because
investor have the power to take decision regarding investment, shareholder have controlling
power, suppliers and customers have interest in the company and likewise other personnel also
have the power and interest towards the Ferrexpo which would act as major reason behind acting
as decision makers.
PART-B
Q1
Journal entries for the transaction of September 2021:

Q2
a)
Journal entries of the transactions for August 2021 in the books of ABC enterprises:

b)

PART-C
a
Income statement:
This is one of the major financial statement that would depict the financial profit and loss
of the company (Oncioiu, Calotă and Tănase, 2021). As per the above data the income statement
would be as follows:

b
The prediction regarding the profit and loss in 2022 would be low. This means that the B
Moore would incur loss in 2022. This would be made predicted on the basis of analysis of its
past trend in which it would be seem that the company is incurring loss in 2020 while making it
compared it with the other years. This trend would further be continued in terms of incurrent of
loss in 2022 with the negative impact of the covid towards the market and the companies. Since
covid has a direct impact towards the sales and revenue of the company which would be made
continued in the upcoming years that would further impact the company in terms of declining the
profit and revenue proportions. This prediction is based on the trend analysis which state that the
trend in respect to the company is showing a loss incurrence trend that would further be
continued in 2022 because of the covid pandemic.
CONCLUSION
From the above report it can be analysed that accounting is an important aspect with regard
to companies. In the same way it is also understood that with the aspect of financial statement the
financial health and the position of the company would be able to get analysed. This would also
assist the business in terms of the managing and controlling the funds and accounts. Recording of
transactions and maintenance of accounts would enable the company to keep a check on its
financial operations.

REFERENCES
Books and journals
Cockcroft, S. and Russell, M., 2018. Big data opportunities for accounting and finance practice
and research. Australian Accounting Review. 28(3). pp.323-333.
Freeman, R.E., Phillips, R. and Sisodia, R., 2020. Tensions in stakeholder theory. Business &
Society. 59(2). pp.213-231.
Hasanaj, P. and Kuqi, B., 2019. Analysis of financial statements. Humanities and Social Science
Research. 2(2). pp.p17-p17.
Oncioiu, I.V., Calotă, T.O. and Tănase, A.E., 2021. An Overview of Diversities in the Use of the
Profit and Loss Statement. Encyclopedia of Organizational Knowledge, Administration,
and Technology, pp.124-134.
Paul, K., 2018. The New Entrepreneur’s Guide to Setting Up and Running a Successful Business.
Productivity Press.
Segal, T., 2019. Setting up a new business–evidence from a business administration faculty.
In Proceedings of the International Conference on Business Excellence (Vol. 13, No. 1,
pp. 1248-1260).
1