Accounting Portfolio: Impact of Pandemic on Financial Statements

This portfolio comprehensively covers key aspects of financial accounting. It begins with an introduction to accounting information and its users, both internal (managers, owners, employees) and external (creditors, customers, governments, investors, banks, stockbrokers), highlighting their respective needs for financial data. The portfolio then delves into the advantages and disadvantages of accounting information systems, followed by detailed examples of journal entries, ledger accounts, and the preparation of a trial balance. The assignment further includes trading and profit & loss accounts to demonstrate financial statement preparation. A significant portion of the portfolio analyzes the impact of the COVID-19 pandemic on a company's income statement, explaining how reduced sales and continued indirect costs resulted in financial losses. The references include books, journals and online resources used to create this portfolio.

PORTFOLIO

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
PART 1 ...........................................................................................................................................3
(a).................................................................................................................................................3
(b) ................................................................................................................................................4
PART 2............................................................................................................................................4
PART 3............................................................................................................................................6
(a).................................................................................................................................................6
(b).................................................................................................................................................9
PART 4............................................................................................................................................9
(a).................................................................................................................................................9
(b)...............................................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Accounting information helps the users of the financial statement to shape their decision
according to the information available to them. In this report we discuss the various decision
makers of the organisation, advantages and disadvantages of accounting information system,
how to pass journal entries of transactions, how to post journal entries into the ledger account
and after balancing the account how to prepare trial balance along with trading and profit and
loss account. In this report we also understand that how this pandemic affect the income
statement of the company.
MAIN BODY
PART 1
(a)
Accounting is a process of recording the day to day financial transaction of the business in order
to provide information to decision makers. Decision makers of financial information are
investors, creditors, government etc called external users of accounting information.(Palepu and
et.al., 2020) On the other hand decision makers of managerial information are managers, owners
and employees called internal users of accounting information.(Dewi, Azam, and Yusoff, 2019)
The need of internal decision makers of accounting information of Unilever are:
 Managers: Managers shape their decision about when and where to invest company
funds by using accounting information of Unilever.
 Owners: Owner are always keen to know that whether company is earning satisfactory
income or not and for this purpose owner uses accounting information.
 Employees: Employees wants to know that whether company are able to offer increment
to employees or not.
The need of external decision maker for accounting information of Unilever are:
1. Creditors: Creditors of the Unilever shape its decision on the base that whether company
is able to pay its debt on time or not.
2. Customer: Customer of the Unilever shape its decision by visualising the product of the
company and whether the company provide its product at fair price or not.
3. Governments: Government interference in the company depends on whether they follow
all the policies and procedure of the government or not.
4. Investors: Investors also uses accounting information in order to decide their investment

decision.
5. Banks: Banks uses accounting information in order to known the liquidity status of the
company to shape their decision regarding whether to lend money to the company or not.
6. Stockbrokers: Stockbrokers shape their decision on the basis of the Unilever investment
criteria.
(b)
Accounting is a process of recording the day to day transaction of business.(Minnis, and
Sutherland, 2017) The advantages and disadvantages of accounting information system.
Advantages of accounting information system:
 Cost effectiveness: Accounting information system reduces the manual work of the
company because of the digitalization of whole accounting work. Company is moving
towards the cost reduction by use of artificial intelligence.(Chirițescu, and Dumitru,
2019) Any hacker may amend the information of the company for their personal
benefits.
 Accuracy: Because of the accounting information system, the reliability of data is
increased. There is a very minimum chances of errors while doing accounting records.
With the accounting information system the accurate information is available to the right
person, at the right time or at the right place.
Disadvantages of accounting information system:
 Confidentiality: Confidentiality means do not disclose the information of the organisation
with the third party. There is a chance of hacking of the system which may disclose the
important information of the organisation to the public.
 Virus attack: Because of the virus attack sometimes the stored accounting information is
get modified. And as the accounting information is get changed, getting the accurate
information is become difficult for the company.
PART 2
In the book of David Wise
Journal entries

Dates Particulars Debit(£) Credit(£)
01/02/20 Asma ltd. A/c
Dr.
To Office fixtures A/c
(Being office fixtures was sold to Asma ltd.)
350
350
04/02/20 Baddebt expense A/c Dr.
To S. keyes A/c
(Being written off S. keyes account)
Profit and loss A/c Dr.
To Baddebt expenses A/c
(Being baddebt expenses transfer to profit and loss account)
85
85
85
85
09/02/20 Machinery A/c
Dr.
To Bank A/c
To TS Co. A/c
(Being machinery bought from TS Co.)
2300
200
2100
13/02/20 Bank A/c
Dr.
Baddebt expense A/c Dr.
To S. Hill A/c
(Being written off S. Hill account)
Profit and loss A/c Dr.
To Baddebt expenses A/c
(Being baddebt expense transfer to profit and loss account)
220
50
50
270
50
20/02/20 Drawings A/c
Dr.
180

To Purchase A/c
( Being goods are withdrawn by owner for their personal use)
180
26/02/20 Drawing A/c Dr.
To Insurance bill expense A/c
(Being the rectification of entry is passed)
85
85
28/02/20 TS Co. A/c
Dr.
To Bank A/c
(Being the remaining amount of TS Co. is paid by issuing
cheques)
2100
2100
PART 3
(a)
In the book of Pearce & Sons
Ledger A/c
Debit Capital A/c Credit
Dates Particulars Amount(£) Dates Particulars Amounts(£)
01/02/20 By bank A/c
By van A/c
By office fixtures A/c
21500
25000
800
28/02/20 To bal C/f 47300
47300 47300
01/03/20 By bal B/d 47300

Debit Bank A/c Credit
Dates Particulars Amount(£) Dates Particulars Amount(£)
01/02/20 To Capital A/c 21500 03/02/20 By Cash in hand A/c 1500
02/02/20 To Lloyds Bank A/c 2500 04/02/20 By Van A/c 4800
25/02/20 To Cash in hand A/c 350 19/02/20 By Nissan Co. A/c 5200
28/02/20 By Office Fixture A/c 620
28/02/20 By bal C/f 12230
24350 24350
01/03/20 To bal B/d 12230
Debit Van A/c Credit
Dates Particulars Amount(£) Dates Particulars Amount(£)
01/02/20 To Capital A/c 25000
04/02/20 To Bank A/c 4800
08/02/20 To Nissan A/c 5200
28/02/20 By bal C/f 35000
35000 35000
02/03/20 To bal B/d 35000
Debit Office Fixtures A/c Credit
Dates Particulars Amount(£) Dates 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
28/02/20 By bal C/f 2590
2590 2590
01/03/20 To bal B/d 2590
Debit Lloyds Bank A/c Credit
Dates Particulars Amount(£) Dates Particulars Amount(£)
02/02/20 By Bank A/c 2500
28/02/20 To bal C/f 2500
2500 2500
01/03/20 By bal B/d 2500
Debit Cash in hand A/c Credit
Dates Particulars Amount(£) Dates Particulars Amount(£)
03/02/20 To Bank A/c 1500 25/02/20 By Bank A/c 350
28/02/20 By bal C/f 1150
1500 1500

01/03/20 To bal B/d 1150
Debit Quick Office ltd. A/c Credit
Dates Particulars Amount(£) Dates Particulars Amount(£)
05/02/20 By Office Fixtures A/c 1100
28/02/20 To bal C/f 1100
1100 1100
01/03/20 By bal B/d 1100
Debit Nissan Co. A/c Credit
Dates Particulars Amount(£) Dates Particulars Amount(£)
19/02/20 To Nissan Co. 5200 08/02/20 By Nissan Co. 5200
5200 5200
Debit Cash A/c Credit
Dates Particulars Amount(£) Dates Particulars Amount(£)
15/02/20 By Office fixture A/c 70
28/02/20 To bal C/f 70
70 70
01/03/20 By bal B/d 70
(b)
Trial Balance

(as at 28th Feb 2020)
Particulars Debit(£) Credit(£)
Capital A/c 47300
Bank A/c 12230
Van A/c 35000
Office fixtures A/c 2590
Lloyds Bank A/c 2500
Cash in hand A/c 1150
Quick Office ltd. A/c 1100
Nissan Co. A/c _ _
Cash overdraft A/c 70
TOTAL 50970 50970
PART 4
(a)
Trading and Profit & loss A/c
(for the year ended 31st September 2020)
Airman Co.
Particulars Amount(£) Particulars Amount(£)
To Opening stock
To Purchase
To Sales Return
To Carriage inward
36000
150000
2000
720
By Sales
By Purchase Return
By Closing stock
80000
600
120000

To Gross profit C/f 11880
200600 200600
To Carriage outward
To Motor Expense
To Rent
To Telephone Charges
To Wages and Salaries
To Insurance
To Office expenses
To Sundary expenses
400
1200
5000
620
32000
830
600
300
By Gross profit B/d 11880
By Net Loss 29070
40950 40950
(b)
Due to covid-19 outbreak, businesses got shut for the particular period of time during which no
operational activities are going to happen in the organisation. Company bears the indirect cost
such as salaries or wages, rent, office expenses etc even without any sales activity in the
organisation. Purchase of raw material are done in lots but on the other hand processing activity
of converting those raw material to producs are not happening due to the temporary clouser of
business.(Sutopo, and et.al., 2018) As this expenses are incurred even during temporary clouser
and company is not earning because of low sales revenue, company face losses in the year 2020
in spite of earning profit since 2009. Indirect cost are the expenses of the organisation which
occur even when the organisation is being closed. Because of this pandemic situation such
expenses affect the income statement of the company.
CONCLUSION
In this report, we conclude that how the pandemic affect the profit and loss of the
company. We also conclude that the accounting information of the organisation is important for

the decision makers of the company, advantages and disadvantages of the accounting
information system that help in expanding and diminising of the company. In this report we also
conclude that the decision maker of the organisation take the decision on the basis of the
accounting information provided to them.

REFERENCES
Books and journals
Palepu, K. G. and et.al., 2020. Business analysis and valuation: Using financial statements.
Cengage AU.
Vanauken, H. E., Ascigil, S. and Carraher, S., 2017. Turkish SMEs' use of financial statements
for decision making. The Journal of Entrepreneurial Finance (JEF). 19(1).
Drake, M. S., Quinn, P. J. and Thornock, J. R., 2017. Who uses financial statements? A
demographic analysis of financial statement downloads from EDGAR. Accounting
Horizons. 31(3). pp.55-68.
Dewi, N., Azam, S. and Yusoff, S., 2019. Factors influencing the information quality of local
government financial statement and financial accountability. Management Science
Letters. 9(9). pp.1373-1384.
Sutopo, B. and et.al., 2018. Sustainability Reporting and value relevance of financial
statements. Sustainability. 10(3). p.678.
Minnis, M. and Sutherland, A., 2017. Financial statements as monitoring mechanisms: Evidence
from small commercial loans. Journal of Accounting Research. 55(1). pp.197-233.
Chirițescu, D. D. and Dumitru, A., 2019. The audit of the financial statements drawn up by the
entities from tourism. Infinite Study.
Online
Users of Accounting Information (Internal and External Users Explained). 2021 [Online].
Available through:<https://www.iedunote.com/users-of-accounting-information>
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