Recording Business Transactions

This report covers the recording of business transactions, including the preparation of journal entries, general ledgers, and income statements. It discusses the roles of decision-makers in large companies, the merits and demerits of accounting, and the impact of Covid-19 on financial performance. The report includes practical examples and references to support the analysis.

RECORDING BUSINESS
TRANSACTION

Table of Contents
INTRODUCTION ..........................................................................................................................3
ASSESSMENT 1.............................................................................................................................3
PART 1............................................................................................................................................3
A. Determine the decision makers within large company and explain their needs for
accounting informations..............................................................................................................3
B. Merits and demerits of accounting within a business unit.....................................................4
PART 2............................................................................................................................................5
A. Journal Entries of David for the month February 2020 ........................................................5
PART 3............................................................................................................................................6
A. General Ledger of Pearce & Sons..........................................................................................6
B. Balance up accounts and extract trail balance as at 30 February 2019..................................8
PART 4............................................................................................................................................9
A. Draft an income statement for Airman company for year ending 30th September 2019......9
B. Impacts of Covid -19 on income statement of company's items..........................................10
CONCLUSION .............................................................................................................................10
REFERENCE.................................................................................................................................11

INTRODUCTION
Accounting refers to a processes that includes recording, classification, analysis and
summarising of financial transaction of an individual within business unit and this is only carried
out with the hep of accounting. Basically accounting is a language of finance. Which aids
company to convert the working of a firm into tangible reports that can be differentiated. All
these records and reports is made in that form that aids in evaluation of financial performance
along with position of company (Neeraj and et.al., 2017). In which the present assignment
consist question that includes financial transaction of various company and need to generate trail
balance, along with income statement from that records. Further the benefits and disadvantages
in context of commercial business is discussed. Lastly the impact of covid-19 on productivity
and profitability of company is analysed.
ASSESSMENT 1
PART 1
A. Determine the decision makers within large company and explain their needs for accounting
informations.
Financial accounting involves recoding, analysing and summarising of all financial data
in that manner which can be used in reports. And these types of report which carries financial
information is useful for making effective plan and strategies related to finance and budget
(Berry, 2018). By this company will able to deal with their short outcomes in future. As well as
able to offer a better consumer service to end users. All the function starting from recruiting to
firing includes determination of sales target, planning of promotional activities along with its
budgeting and for choosing a specific techniques and software for performing different function
and operation. And all these decision are taken by the senior executive and managers of
corporation. Responsibility of decision making within the firm depends on the organisational
structure of company for instance the in larger size company the organisational structure that
management team followed will be a hierarchical structure, managed by top management or
board of directors so that they will able to accomplish their goal within stipulated time period. In
relevance to this, a BT British telecom is a large size organisation based on stock exchange and
board of director managed by its CEO, Philip Jansen and takes all strategic decision for the
beneficial of company. This firm follows hierarchical organisational structure which is the

combination of functional and divisional structure. In that all decision of company is taken by
top level management team on the basis of goal, objective, mission and vision of firm. For this
all obligation and roles are delegates to mangers of various departments as well as authorities to
carry out them.
Financial accounts represents all financial data with relation to company in brief that
makes viable and easy for the management team along with investors of company to use that
information in devising strategies. In which the financial accounts are prepared on the basis of
standard principles and guidance which are same throughout industry (Werner, 2017). This aids
them make differentiation from other competitors for standing across benchmark of industry. It
provides basis for management to take related to investment proposal like whether these decision
are beneficial and economically feasible for company to take or not. Further the projection and
estimations are also relies on financial data within company and for improvement according to
the condition of marketplace. This is not only essential in terms of comparison but also in forms
of basis for extracting useful information from non financial data
B. Merits and demerits of accounting within a business unit.
In accounting all transaction are record and assess within a business are specific in nature
and all these are carried out on the basis of prescription of laws. In relevance to given two firm
Mc Donald and KFC some advantage and disadvantage with relation to maintenance of
accounting records are as follows:
Advantages:
Decision making:- In an organisation it is the responsibility of management team to take
effective decision related to finance and with the help of accounting they will able to accomplish
this goal by comparing financial records of present and past. In which accounting books plays
that role for business (Firmansyah, Arham and Nor, 2020). This provides information about cash
inflow and outflow along with income and expenses that makes easy to forecast surplus or
deficiency within funds and it need to be arranged timely. So this aids in developing
responsibility and accountability fixation for preventing and detection of frauds. In relevance to
Mc Donald and KFC, this process of accounting provides a huge benefits to them in making
effective decision with relation to finance.
Evidence in legal matters: Accounting books in a business firm acts as business record
as all financial transaction are recorded in it. When any legal matter arises in relation to finance

or budget, that time this books will helpful, as a proof company can use this in court. In context
of Mc Donald and KFC they prepare accounting books on the basis of specific format of act and
then submit to registrar, once audited is done from independent auditor. This makes them
accountably and legally presented towards Tax authorities.
Disadvantage:
Record only financial aspects : In a business unit it has been find that it is one of the
prominent disadvantage of financial accounting as it only includes transaction and data that are
related with the finance nature only. For this context there are various non financial factors such
as market conditions, political environments, policies, legal laws, social factors and so on. All
these puts significant impacts on business function and operations. As well as all these are left
out from being recorded in books of accounting. Due this it represents a incomplete picture
during devising strategy and making important decision of business. In context of given tow
firm, the mangers of company cannot take decision related to other factors like environmental
social etc. on the basis of this accounting book.
Historical nature: In books of accounts, amount are recorded on actual cost and prices,
fluctuations in cost will not be taken into consideration. Due to this it makes books of accounts
as a historical nature (Epstein, Buhovac and Yuthas, 2015). All these information and data will
be used as a base for future forecasting. It is not related with the time value of money and
changes that raise with this. With reference to KFC and Mc Donald, it is not necessary that the
estimation that makes on the basis of historical cost will be correct it might go in wrong direction
too for future activities.
PART 2
A. Journal Entries of David for the month February 2020
Journal Entries
Date Details Fol DT (£) CT (£)
01/02/20 Asma Ltd. A/c … Dr. 350
To office Fixtures A/c
( not suitable office fixtures returns to
Asma Ltd.)
350
04/02/20 Bad debt A/c...........Dr. 85
To S. Keyes 85

(Debt from S. Keyes , written off as bad)
09/02/20 Machinery A/c …......Dr. 2300
To TS Co. A/c 2100
To bank A/c 200
(Machines boughts from TS company on
part credit & cash)
13/02/20 Bank A/c …........Dr. 220
Bad Debt A/c..........Dr. 50
To S. Hill A/c 270
(only £220 received out of £270 from
bankrupt debtor S. Hill as final
settlement)
20/02/20 Drawings A/c ….........Dr. 180
To purchase A/c 180
(products used by owner for personal use)
26/02/20 Drawing A/c..........Dr. 85
To insurance A/c 85
(personal insurance bill debited to
business not stand corrected)
28/02/20 TS company A/c …........Dr. 1050
To bank A/c 1050
(half payment of machine is paid by
owner to TS company in credit)
PART 3
A. General Ledger of Pearce & Sons
Ledger Account
(Amount in GBP)
Date Details Amount Date Details Amount
01/02/20 By bank A/c 21500
01/02/20 By office
fixture A/c
800
01/02/20 By Van A/c 2500

29/02/20 To balance c/f 47300
Total 4300 Total 4300
Bank Account
Date Details Amount Date Details 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
company A/c
5200 25/02/20 To cash A/c 350
28/02/20 By balance c/f 12230
Total 24350 Total 24350
Van Account
Date Details Amount Date Details Amount
01/02/20 To capital A/c 2500
04/02/20 To bank A/c 4800
08/02/20 To Nissan
company A/c
5200
29/02/20 By balance c/f 35000
Total 35000 Total 35000
Quick office Ltd Account
Date Details Amount Date Details Amount
05/02/20 By office 1100

fixture A/c
29/02/20 To balance c/f 1100
Total 1100 Total 1100
Cash Account
Date Details Amount Date Details 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 company Account
Date Details Amount Date Details 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 Details Amount Date Details 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 Details Amount Date Details Amount
02/02/20 By Bank A/c 2500
29/02/20 By Balance
c/f
2500
Total 2500 Total 2500
B. Balance up accounts and extract trail balance as at 30 February 2019.
Trial Balance (At month ending 29/02/20)
(Amount in GBP)
Details Debit Credit
Capital account 47300
Cash account 1080
Van account 35000
Bank account 12230
Quick office Ltd. Account 1100
Office fixture account 2590
Loan account 2500
Total 50900 50900
PART 4
A. Draft an income statement for Airman company for year ending 30th September 2019.
Profit and Loss Account
( For year ending 30th September 2020)
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. Impacts of Covid -19 on income statement of company's items.
Business unit requires economic, social and political stability for success and
development. Instability leads to reduction in productivity and profitability of company as well
as incurring of losses in business unit like Airman company which had been profitable during 10
years sine 2009 and faces a loss in current year.

It has been seen that execution on airman company elicited by covid-19 would be limited
at initial two quarters from September 2019 to march 2020 and this is because of small period of
time between reporting period and pandemic situation. After March, it has been noted that each
and every organisation faces so many losses in production, supply chain along with sales due to
implication of lock down in each nation similarly the Airman co. also faces loss in supply chain
along with time taken by freight inwards and outwards increased (Weygandt and et.al., 2019).
Further there is loss in sales which reduces the demand of products at marketplace and company
need to pay a fixed charges accordingly. From this it has been seen that this impact on operation
and function results of company. In relevance to Airman company, they might faces a loss in this
financial which they registered in their records. Situation that was created by the Covid-19 are
unique and infrequent. It is not possible to figure out how long this pandemic will impacted on
business operation of company as well as by what frequency it will affected the economy
condition of business. Hence, a comparison between past 10 years trends and current years is not
justified. Additionally, the impact of this pandemic on future production of financial period
cannot be predictable.
CONCLUSION
From above discussed report it has been analysed that in each organisation the decision
would be taken by the senior executives for the betterment of company and with the help of
financial accounting they will able to accomplish this goal of effective budgeting. Further, it only
includes data that are related with finance not considered other factors and by which entities
would not be able to make decision apart from finance. On the other hand, a journal entries of
David is generated along with some other income statement successfully. Lastly the impacts of
Covid-19 on income statemented is seen.

REFERENCE
Books & Journal
Berry, L.E., 2018. Financial accounting demystified. McGraw-Hill,.
Epstein, M. J., Buhovac, A.R. and Yuthas, K., 2015. Managing social, environmental and
financial performance simultaneously. Long range planning. 48(1). pp.35-45.
Firmansyah, A., Arham, A. and Nor, A. M. E., 2020, August. The implementation of Micro,
Small, and Medium Enterprises accounting in Indonesia. In Public Sector Accountants and
Quantum Leap: How Far We Can Survive in Industrial Revolution 4.0?: Proceedings of
the 1st International Conference on Public Sector Accounting (ICOPSA 2019), October
29-30, 2019, Jakarta, Indonesia (p. 64). Routledge.
Neeraj, K.R., and et.al., 2017, August. A domain specific language for business transaction
processing. In 2017 IEEE International Conference on Signal Processing, Informatics,
Communication and Energy Systems (SPICES) (pp. 1-7). IEEE.
Werner, M., 2017. Financial process mining-Accounting data structure dependent control flow
inference. International Journal of Accounting Information Systems. 25. pp.57-80.
Weygandt, J. J. and et.al., 2019. Accounting Principles, Volume 2. John Wiley & Sons.