Accounting Systems and Processes: Financial Reporting and Analysis

This assignment focuses on accounting systems and processes, covering various aspects of financial reporting and analysis. It includes detailed answers to questions on topics such as cell referencing in Excel, displaying negative numbers, separating data entry and report areas, utilizing IF functions, and understanding periodic inventory systems. The assignment also explores bad debt estimation methods, the role of accounts receivable in evaluating financial position, and provides an analysis of Wesfarmers' financial statements, including its statement of comprehensive income, dividends, earnings per share, return on equity, and risk mitigation strategies. Additionally, it includes calculations of working capital ratios and provides a recommendation for investment based on the analysis. The document also references several accounting research papers.

Running head: ACCOUNTING SYSTEMS AND PROCESSES
Accounting systems and Processes
Name of the Student:
Name of the University:
Author Note:

2
ACCOUNTING SYSTEMS AND PROCESSES
Table of Contents
Question 1........................................................................................................................................3
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
Question 4........................................................................................................................................5
Question 5........................................................................................................................................6
Question 6........................................................................................................................................7
Formula View:...............................................................................................................................10
Question 7......................................................................................................................................13
Question 8......................................................................................................................................18
Revised Data:.................................................................................................................................19
Question 9:.....................................................................................................................................19
Question 10....................................................................................................................................20
Question 11....................................................................................................................................21
Question 12....................................................................................................................................21
Question 13....................................................................................................................................22
Reference List................................................................................................................................26

3
ACCOUNTING SYSTEMS AND PROCESSES

4
ACCOUNTING SYSTEMS AND PROCESSES
Question 1
Replacing cell reference with names enables users to conveniently use the formulas as it
helps in bringing out structure. Items listed in cells are managed, audited and easily updated
using the names in cell references. Using names in cells would help users in understanding the
purpose of cells (Lehman et al., 2014).
Question 2
Negative number in brackets can be displayed by highlighting it with red color and using
minus signs. Accounts display negative number in brackets for indicating that they have made
credit entire of data. It is also deed to indicated unfavorable variances of organization.
Displaying of negative numbers in bracket or sing minus sign is indicative of fact that there has
been either outflow of cash flow or figures that is not favorable for organization (Odar et al.,
2015).

5
ACCOUNTING SYSTEMS AND PROCESSES
Question 3:
It is essential for organization to separate area of report and separate data entry area for
minimizing the errors that is ascertained in financial reporting of organization. Separation of
these areas would help in proper data entry and management. Spreadsheets is not managed
properly would result in alleviation of risks and discrepancies. Separating data entry and report
area would help in easier and systematic recording of data (Atar & Birman, 2017).

6
ACCOUNTING SYSTEMS AND PROCESSES
Question 4:
IF function is one of the most widely, used function in Excel helps in facilitating logical
reasons between value and what users expect. Function is capable of performing logical test that
by providing one value for false result and another value for true result.
PERIOD Particulars Amount Remarks
September'17
Sales Revenue, less,
Total Expenses 56400
=IF(C7>0,"NET
PROFIT","NET LOSS")
September'17
Sales Revenue, less,
-14200
=IF(C8>0,"NET

7
ACCOUNTING SYSTEMS AND PROCESSES
Total Expenses PROFIT","NET LOSS")
Information can be displayed using IF function and whether the conditions are met or not
for any given circumstances are displayed by such function. Using multiple IF functions by users
would enable to make multiple comparisons.
Question 5:
When updating of inventories are done on periodic basis, such system are regarded as
period inventory. There is no updating of inventory account for each sales and purchase made
under such system. All purchase made by organization are debited to purchase account and for
computation of cost of goods sold, the purchase account total is added to inventory beginning
balance. The formula used for computing cost of goods sold under this method is
Cost of goods sold= Inventory beginning balance- Inventory closing balance+ Purchase
It can be explained with the help of an instance; say a retailer of high-end fashion
products has an opening inventory balance of $ 500000 and closing inventory balance of $
320000. They have made a purchase of $ 186000. Therefore, the cost of goods sold is $
3660000.
Question 6:
Normal view:

8
ACCOUNTING SYSTEMS AND PROCESSES
Formula View:

9
ACCOUNTING SYSTEMS AND PROCESSES
Normal view:
Formula View:

10
ACCOUNTING SYSTEMS AND PROCESSES
Normal view:

11
ACCOUNTING SYSTEMS AND PROCESSES
Formula View:

12
ACCOUNTING SYSTEMS AND PROCESSES
Question 7:
Normal View:

13
ACCOUNTING SYSTEMS AND PROCESSES
Particulars
Average
Cost FIFO LIFO
Beginning Inventory $3,420 $3,420 $3,420
Net Purchases $7,790 $7,790 $7,790
Cost of Goods Available $11,210 $11,210 $11,210
Ending Inventory $7,583 $8,075 $7,250
Cost of Goods Sold $3,627 $3,135 $3,960
Calculation of Gross Profit:-
Particulars
Average
Cost FIFO LIFO
Sales Revenue $25,000 $25,000 $25,000
Less: Cost of Goods Sold $3,627 $3,135 $3,960
GROSS PROFIT $21,373 $21,865 $21,040
Calculation of Gross Profit:-
Formula View:

14
ACCOUNTING SYSTEMS AND PROCESSES
Particulars Average Cost FIFO LIFO
Sales Revenue 25000 =B6 =C6
Less: Cost of Goods Sold 3627 3135 3960
GROSS PROFIT =B6-B7 =C6-C7 =D6-D7
Particulars Average Cost FIFO LIFO
Beginning Inventory 3420 3420 3420
Net Purchases 7790 7790 7790
Cost of Goods Available =B17+B18 =C17+C18 =D17+D18
Ending Inventory 7583 8075 7250
Cost of Goods Sold =B19-B20 =C19-C20 =D19-D20
Calculation of Gross Profit:-
Calculation of Gross Profit:-
Workings:

15
ACCOUNTING SYSTEMS AND PROCESSES

16
ACCOUNTING SYSTEMS AND PROCESSES
Revised data:

17
ACCOUNTING SYSTEMS AND PROCESSES
Workings:

18
ACCOUNTING SYSTEMS AND PROCESSES
Question 8:
Original Data:
Normal View:

19
ACCOUNTING SYSTEMS AND PROCESSES
Date Particulars Amount
30/4 Bank Balance as per Pass Book $19,670
Add:
Deposit in Transit $1,543
EFT Insurance Payment $300
Book Error Cheque 1419 $340
NSF Cheque from Customer $1,700
Bank Service Charge $40 $3,923
$23,593
Less:
Outstanding Cheques 2462
EFT Rent Receipt 600
Note Receivable $1,500
$4,562
30/04 Cash Account Balance as of 30th April $19,031
Bank Reconcilaition Statement
As on 30th April
Formula View:
Date Particulars Amount
30/4 Bank Balance as per Pass Book 19670
Add:
Deposit in Transit 1543
EFT Insurance Payment 300
Book Error Cheque 1419 340
NSF Cheque from Customer 1700
Bank Service Charge 40 =SUM(D8:D12)
=E6+E12
Less:
Outstanding Cheques =1532+700+230
EFT Rent Receipt 600
Note Receivable 1500
=SUM(D15:D18)
30/04 =IF(E20>0,"Cash Account Balance as of 30th April","Bank Overdraft Balance as of 30th April") =E13-E18
Bank Reconcilaition Statement
As on 30th April
Revised data:

20
ACCOUNTING SYSTEMS AND PROCESSES
Question 9:

21
ACCOUNTING SYSTEMS AND PROCESSES
Question 10:
The two methods that are used for estimating bad debts are allowance method and written
off method.
Allowance method- Under this method of bad debt estimation, amount that is not
collected concerning receivable are estimated at each year’s end. It can be explained with the
help of journal entries.
Written off method- In this method, when the amount of debt is not collectible, then that
is debited against account receivable account.

22
ACCOUNTING SYSTEMS AND PROCESSES
Question 11
Status of accounts receivable of organization will help in evaluating the financial
position of organization. Accounts are able to establish the relationship between financial ratios
and accounts receivable. Liquidity position of organization and the ability meet obligations will
be evaluated sing the stats and accounts receivable scenario. Receivable cycles forms an
important part of organizations trade receivable account as it evaluates the financial position of
organization along with managing the inventories needs and creditors. This will help in
facilitating strategic relationship with several departments of organization and financial
statement accuracy.

23
ACCOUNTING SYSTEMS AND PROCESSES
Question 12:
Question 13:
1. Business of Wesfarmers group
Wesfarmers is one of the largest privet retail sector listed in Australian stock exchange
and they are engaged in diverse range of activities. Activities of group include chemical, retail,
fertilizers, office suppliers, home improvement, convenience store, food and liquor and
departmental store.
2. Statement of comprehensive income
Statement of comprehensive income of Wesfarmers can be analyzed b looking at the figures in
their anal report. It can be seen that group has generated profits in current year attributable to
their parent. Some of items involve cash flow from hedge reserves and translation reserve related
to foreign currency. The amount or value of translation reserve stood at $ 15 million. Total
amount recorded for comprehensive loss as depicted in annual report is recorded at $ 78 million.

24
ACCOUNTING SYSTEMS AND PROCESSES
3. Commenting on several items of group
Dividend- For the financial year 2016, the total amount of divide paid to shareholders
stood at $ 2600 million. With regard to payment of dividend, the recognized amount is treated as
revenue.
Earnings per share- For the financial year 2016, the value of diluted and basic earnings
per share stood at 36.2 cents. Vale of basic earning per share is calculated by dividing total
amount of profit by weighted average number of equity shares.
Return on equity- Return on equity depicts organization efficiency in utilizing their
assets for generating return to shareholders. It is calculated by dividing net income by total
shareholders’ equity. Value of return on equity for financial year 2016 stood at 0.18.
Risk and mitigation- There are several risks involved in managing the finance of
organization and proving the financial statement to uses does not give the guarantee they are not
materially misstated. Financial report of organization have been specifically prepare ion
accordance with the framework of Australian standard accounting board. However, nothing has
been mentioned about the measures that can be taken for reducing the materially or errors in
financial statements.
Sustainability- For the past few years, performance of organization is consistent and the
competitive advantage over the competitors is one of the factor that helps in sustaining them in
increasing competitive retail world.

25
ACCOUNTING SYSTEMS AND PROCESSES
Corporate governance- The sustainability report of organization is prepared and all the
activities of group is carried in compliance with principle for corporate governance of ASX
corporate Governance council and with recommendations.
Income statement- Various components are involved in calculation of earnings before
interest and taxes under the income statement. Net profit of organization is arrived by deducting
income tax expenses and interest cost from revenues for calculating figures.
Balance sheet- There are two sections in the balance sheet of organization that is assets
and liabilities. Another part of shareholder’s equity. Assets include total value of current assets
and non-current assets. Liabilities on other hand includes total value of current liabilities and
total value of non-current liabilities.
4. Working capital ratio calculation:
Working capital ratio obtained by dividing current assets by current liabilities.
Particular Amount
Current liabilities $ 10424
Current assets $ 9684
Working capital ratio 0.93
5. Net profit after tax:

26
ACCOUNTING SYSTEMS AND PROCESSES
Net profit after
tax 2016 2015 2014 2013 2012
2353 2440
2689
2261 2126
Amount ($ m)
Amount ($ m)
2353
2440
2689
2261
2126
Amount ($ m)
Net profit after tax 2016 2015
2014 2013 2012

27
ACCOUNTING SYSTEMS AND PROCESSES
6. Recommendation to Vikram:
The net profit and performance of Wesfarmers quite stable for past few years.
Organization would be benefited if there were an increment in working capital ratio by asset
acquisitions. Shareholders can be provided with sufficient return and therefore, it is
recommended to Vikram to invest his $ 50000 in Wesfarmers.

28
ACCOUNTING SYSTEMS AND PROCESSES
References and Bibliography:
Aletkin, P. A. (2014). International financial reporting standards implementation into the Russian
accounting system. Mediterranean Journal of Social Sciences, 5(24), 33.
Atar, N., & Birman, S. (2017). U.S. Patent No. 9,600,536. Washington, DC: U.S. Patent and
Trademark Office.
Buranasaksee, U., Porkaew, K., & Supasitthimethee, U. (2014, February). AccAuth: Accounting
system for OAuth protocol. In Applications of Digital Information and Web
Technologies (ICADIWT), 2014 Fifth International Conference on the (pp. 8-13). IEEE.
Dalton, D. W., Harp, N. L., Oler, D. K., & Widener, S. K. (2014). Managing the review process
in accounting research: Advice from authors and editors. Issues in Accounting Education,
31(2), 235-252.
Downing, J., & Langli, J. C. (2015). “Auditor Choice and Accounting-System Quality” July 25,
2015.
Klychova, G. S., Faskhutdinova, М. S., & Sadrieva, E. R. (2014). Budget efficiency for cost
control purposes in management accounting system. Mediterranean journal of social
sciences, 5(24), 79.
Lehman, G. P., Chauhan, N., Benvenuto, A., & Ziff, P. (2014). U.S. Patent No. 8,799,116.
Washington, DC: U.S. Patent and Trademark Office.
Odar, M., Kavčič, S., & Jerman, M. (2015). The role of a management accounting system in the
decision-making process: evidence from a post-transition economy. Engineering
Economics, 26(1), 84-92.

29
ACCOUNTING SYSTEMS AND PROCESSES
Shaaban, A. F., & Thandra, V. (2017). U.S. Patent Application No. 15/465,250.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information
systems. John Wiley & Sons.
Stafford, D., & Karszes, J. (2017). Precision Management for your Accounting System
Weil, R. L., Schipper, K., & Francis, J. (2013). Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.