Accounting Systems and Processes Project Report - Finance Project

This project report analyzes the accounting systems and processes of Flash Cleaning Services during its first month of operations (July 2018). It includes the preparation of journal entries for various transactions, such as investments, loans, purchases, and revenue recognition. T-accounts are created to summarize the transactions. An unadjusted trial balance is presented, followed by adjusting entries for outstanding wages, accounts receivable, and other accruals. A ten-column worksheet is used to prepare the adjusted trial balance, income statement, and balance sheet. The financial statements, including the income statement, balance sheet, and statement of changes in equity, are presented. Ratio analysis, including current and debt ratios, is performed, and recommendations are made based on the financial analysis. The report also explains the double-entry bookkeeping system, its importance, and its historical context. The assignment covers a range of accounting concepts and practical applications to provide a comprehensive overview of financial record-keeping and analysis.

Running Head: Accounting systems and Processes
1
Project Report: Accounting systems and Processes

Accounting systems and Processes 2
Contents
Question 1.........................................................................................................................3
Question 2.......................................................................................................................14
Question 3.......................................................................................................................17
References.......................................................................................................................20

Accounting systems and Processes 3
Question 1:
Journal Entries:
Flash Cleaning Services
General Journal - Period July 1, 2018 - July 31, 2018
Date Description PR Debit Credit
2018
Jul-
01 Bank a/c $ 30,000.00
Capital a/c $ 30,000.00
(Investment made.)
Jul-
01 Bank a/c $ 20,000.00
Bank Loan a/c $ 20,000.00
(Loan taken from bank)
Jul-
01 Motor vehicle a/c $ 18,000.00
Bank a/c $ 18,000.00
(Motor vehicle purchased)
Jul-
01 Prepaid insurance a/c $ 3,300.00
Insurance a/c $ 300.00
Bank a/c $ 3,600.00
(Insurance amount paid)
Jul-
01 Cleaning services equipment $ 4,800.00
Bank a/c $ 4,800.00
(cleaning services equipment
purchased)
Jul-
09 Supplies a/c $ 2,400.00
supplier a/c $ 2,400.00
(Goods purchased on credit)
Jul-
13 Bank a/c $ 500.00
services a/c $ 500.00
(Revenue received)

Accounting systems and Processes 4
Jul-
20 Wages a/c $ 1,600.00
Bank a/c $ 1,600.00
Jul-
25 Bank a/c $ 5,500.00
services a/c $ 5,500.00
(Revenue received)
Jul-
27 Supplier a/c $ 2,000.00
Bank a/c $ 2,000.00
(credit amount paid to supplier)
Jul-
31 Interest paid a/c $ 300.00
Bank a/c $ 300.00
(interest on loan paid)
Jul-
31 Advertising cost a/c $ 1,600.00
Bank a/c $ 1,600.00
(Advertising amount paid)
Jul-
31 Depreciation a/c $ 208.33
Motor vehicle a/c $ 208.33
(Depreciation charged)
T-accounts:
Bank A/C
Date Particulars Amount Date Particulars Amount
Jul-
01 Capital a/c $ 30,000.00
Jul-
01 Motor vehicle a/c $ 18,000.00
Jul-
01 Bank Loan a/c $ 20,000.00
Jul-
01
Prepaid insurance
a/c $ 3,300.00
Jul-
13 services a/c $ 500.00
Jul-
01 Insurance a/c $ 300.00
Jul-
25 services a/c $ 5,500.00
Jul-
01
Cleaning services
equipment $ 4,800.00
Jul-
20 Wages a/c $ 1,600.00

Accounting systems and Processes 5
Jul-
27 Supplier a/c $ 2,000.00
Jul-
31 Interest paid a/c $ 300.00
Jul-
31
Advertising cost
a/c $ 1,600.00
Jul-
31 Balance c/d $ 24,100.00
$ 56,000.00 $ 56,000.00
Capital A/C
Date Particulars Amount Date Particulars Amount
Jul-
31 Balance c/d $ 30,000.00
Jul-
01 Bank a/c $ 30,000.00
$ 30,000.00 $ 30,000.00
Bank Loan A/C
Date Particulars Amount Date Particulars Amount
Jul-
31 Balance c/d $ 20,000.00
Jul-
01 Bank a/c $ 20,000.00
$ 20,000.00 $ 20,000.00
Motor Vehicle A/C
Date Particulars Amount Date Particulars Amount
Jul-
01 Bank a/c $ 18,000.00
Jul-
31 Depreciation a/c $ 208.33
Jul-
31 Balance c/d $ 17,791.67
$ 18,000.00 $ 18,000.00
Prepaid insurance A/C
Date Particulars Amount Date Particulars Amount

Accounting systems and Processes 6
Jul-
01 Bank a/c $ 3,300.00
Jan-
00 Balance c/d $ 3,300.00
$ 3,300.00 $ 3,300.00
Insurance A/C
Date Particulars Amount Date Particulars Amount
Jul-
01 Bank a/c $ 300.00
Jan-
00 Balance c/d $ 300.00
$ 300.00 $ 300.00
Cleaning services equipment A/C
Date Particulars Amount Date Particulars Amount
Jul-
01 Bank a/c $ 4,800.00
Jul-
31 Balance c/d $ 4,800.00
$ 4,800.00 $ 4,800.00
Supplies A/C
Date Particulars Amount Date Particulars Amount
Jul-
09 supplier a/c $ 2,400.00
Jul-
31 Balance c/d $ 2,400.00
$ 2,400.00 $ 2,400.00
Supplier A/C
Date Particulars Amount Date Particulars Amount
Jul-
27 Bank a/c $ 2,000.00
Jul-
09 Supplies a/c $ 2,400.00
Jul-
31 Balance c/d $ 400.00
$ 2,400.00 $ 2,400.00
Services a/c

Accounting systems and Processes 7
Date Particulars Amount Date Particulars Amount
Jul-
31 Balance c/d $ 6,000.00
Jul-
13 Bank a/c $ 500.00
Jul-
25 Bank a/c $ 5,500.00
$ 6,000.00 $ 6,000.00
Wages A/C
Date Particulars Amount Date Particulars Amount
Jul-
20 Bank a/c $ 1,600.00
Jul-
31 Balance c/d $ 1,600.00
$ 1,600.00 $ 1,600.00
Interest paid A/C
Date Particulars Amount Date Particulars Amount
Jul-
31 Bank a/c $ 300.00
Jul-
31 Balance c/d $ 300.00
$ 300.00 $ 300.00
Advertising cost A/C
Date Particulars Amount Date Particulars Amount
Jul-
31 Bank a/c $ 1,600.00
Jul-
31 Balance c/d $ 1,600.00
$ 1,600.00 $ 1,600.00
Depreciation A/C
Date Particulars Amount Date Particulars Amount
Jul-
31
Motor vehicle
a/c $ 208.33
Jul-
31 Balance c/d $ 208.33
$ 208.33 $ 208.33

Accounting systems and Processes 8
Unadjusted Trial balance:
Account Name Debit Credit
Bank A/C 24100.00
Capital A/C 30000.00
Bank Loan A/C 20000.00
Motor Vehicle A/C 17791.67
Prepaid insurance A/C 3300.00
Insurance A/C 300.00
Cleaning services equipment A/C 4800.00
Supplies A/C 2400.00
Supplier A/C 400.00
Services a/c 6000.00
Wages A/C 1600.00
Interest paid A/C 300.00
Advertising cost A/C 1600.00
Depreciation A/C 208.33
56400.00 56400.00
Adjusting Entries:
Date Description PR Debit Credit
2018
Jul-31 Wages a/c
$
2,200.00
Outstanding wages
$
2,200.00
(Outstanding expenses recorded)
Jul-31 Accounts receivable
$
12,600.00
Services
$
12,600.00
(Services provided)
Jul-31 Telephone payable
$
100.00
Telephone expenses
$
100.00

Accounting systems and Processes 9
(Payable expenses of telephone)
Jul-31 Fuel payable
$
190.00
Fuel Expenses
$
190.00
(Fuel expenses payable)
Jul-31 Supplies Expenses
$
300.00
Supplies
$
300.00
(Supplies in hand)
Jul-31 Unearned revenue
$
5,000.00
Services
$
5,000.00
(Revenue unearned)
Ten column worksheet:
Trial
Balance
Adjustmen
ts
Adjusted
trial
balance
Income
Statement
Balance
sheet
Debi
t
Cre
dit
Debi
t
Cre
dit
Debi
t
Cre
dit
Exp
ense
s
Rev
enue
Asse
ts
Liab
ilitie
s
Account
Name
Debi
t
Cred
it
Bank A/C
$
24,1
00.0
0
$
24,1
00.0
0
$
24,1
00.0
0
Capital A/C
$
30,0
00.0
0
$
30,0
00.0
0
$
30,0
00.0
0
Bank Loan
A/C
$
20,0
00.0
0
$
20,0
00.0
0
$
20,0
00.0
0
Motor
Vehicle A/C
$
17,7
91.6
$
17,7
91.6
$
17,7
91.6

Accounting systems and Processes 10
7 7 7
Prepaid
insurance
A/C
$
3,30
0.00
$
3,30
0.00
$
3,30
0.00
Insurance
A/C
$
300.
00
$
300.
00
$
300.
00
Cleaning
services
equipment
A/C
$
4,80
0.00
$
4,80
0.00
$
4,80
0.00
Supplies A/C
$
2,40
0.00
$
300.
00
$
2,10
0.00
$
2,10
0.00
Supplier A/C
$
400.
00
$
400.
00
$
400.
00
Services a/c
$
6,00
0.00
$
5,00
0.00
$
12,6
00.0
0
$
13,6
00.0
0
$
13,6
00.0
0
Wages A/C
$
1,60
0.00
$
2,20
0.00
$
3,80
0.00
$
3,80
0.00
Interest paid
A/C
$
300.
00
$
300.
00
$
300.
00
Advertising
cost A/C
$
1,60
0.00
$
1,60
0.00
$
1,60
0.00
Depreciation
A/C
$
208.
33
$
208.
33
$
208.
33
Accounts
receivable
$
12,6
00.0
0
$
12,6
00.0
0
$
12,6
00.0
0
Outstanding
wages a/c
$
2,20
0.00
$
2,20
0.00
$
2,20
0.00
Telephone
payable
$
100.
00
$
100.
00
$
100.
00
Telephone
expenses
$
100.
00
$
100.
00
$
100.
00
Fuel payable
$
190.
00
$
190.
00
$
190.
00

Accounting systems and Processes 11
Fuel
expenses
$
190.
00
$
190.
00
$
190.
00
Supplies
Expenses
$
300.
00
$
300.
00
$
300.
00
Unearned
revenue
$
5,00
0.00
$
5,00
0.00
$
5,00
0.00
Profit
$
6,80
1.67
Pr
of
it
$
6,80
1.67
$
56,4
00.0
0
$
56,4
00.0
0
$
20,3
90.0
0
$
20,3
90.0
0
$
71,4
90.0
0
$
71,4
90.0
0
136
00
1360
0
$
64,6
91.6
7
$
64,6
91.6
7
Financial Statement:
Income statement
(For the month ending 31st July 2018)
Particulars Amount Particulars Amount
Insurance A/C
$
300.00 Services Revenue
$
13,600.00
Wages A/C
$
3,800.00
Interest paid A/C
$
300.00
Advertising cost
A/C
$
1,600.00
Depreciation A/C
$
208.33
Telephone expenses
$
100.00
Fuel expenses
$
190.00
Supplies Expenses
$
300.00
Net Profit
$
6,801.67
$
13,600.00
$
13,600.00
Balance sheet
As at 31st July 2018

Accounting systems and Processes 12
Particulars Amount Particulars Amount
Capital
$
36,801.67 Bank A/c
$
24,100.00
Bank Loan A/C
$
20,000.00 Motor Vehicle A/C
$
17,791.67
Supplier A/C
$
400.00 Prepaid insurance A/C
$
3,300.00
Outstanding wages
a/c
$
2,200.00
Cleaning services equipment
A/C
$
4,800.00
Telephone payable
$
100.00 Supplies A/C
$
2,100.00
Fuel payable
$
190.00 Accounts receivable
$
12,600.00
Unearned revenue
$
5,000.00
$
64,691.67
$
64,691.67
Statement of changes in equity
Opening Capital $ 30,000.00
Add:
Net profit $ 6,801.67
Total capital at the end of the
month $ 36,801.67
Ratio analysis:
Current
ratio Current Assets
$
18,000.00 2.28
Current Liabilities
$
7,890.00
Debt
Ratio Debt 20000 0.54
Capital
$
36,801.67
Revised ratios:
Debt Ratio Debt 10000 0.27