Recording and Analyzing Business Transactions for Financial Reporting

This assignment solution provides a comprehensive overview of recording business transactions, covering essential accounting concepts and practices. The solution begins with an introduction to accounting and its importance in tracking financial data, categorizing transactions, and preparing financial statements. It includes an analysis of the need for accounting information by decision-makers and discusses the advantages and disadvantages of accounting for businesses. The solution then provides detailed journal entries for various transactions, demonstrating the process of recording financial events. It progresses to the creation of general ledger accounts and a trial balance, illustrating the steps involved in summarizing and verifying financial data. Furthermore, the solution presents an income statement, showcasing the calculation of profit or loss. Finally, it explores the potential impact of COVID-19 on income statements, analyzing how external factors can influence financial performance. The assignment references relevant academic sources and demonstrates a strong understanding of accounting principles.

Recording Business Transactions

Contents
Introduction.................................................................................................................................................3
Assessment 1...............................................................................................................................................3
Part 1.......................................................................................................................................................3
Part 2.......................................................................................................................................................5
Part 3.......................................................................................................................................................6
Part 4.....................................................................................................................................................10
REFERENCES..............................................................................................................................................13

Introduction
Accounting involves tracking, categorizing, revising and highlighting an individual's money
transfers. The foundation for the analysis of financial statements and the corporation's role is
provided by these records and the findings obtained from each other (Tillman, 2017). This
evaluation impacts the storage by various agencies of tax disclosures and the manufacturing of
trial reports and revenue declarations. Benefits and disadvantages are mentioned in the taxes of
industrial companies. Covid-19's effect on company profits is also discussed.
Assessment 1
Part 1
A. Decision-makers and need for accounting information
The descriptions and assessment of all statistical procedures involve accounting information in
just such a way that it can be identified in the document. Such results are very useful for
intelligent decision making. The success of the business is decided by efficient decisions from
buy to customer support (Adamyk, 2017). The numerous managers of the company take all
choices on the activation and work conditions, the institution of the profit objective, the making
plans of news stories and expenditures, the use of innovation for different production processes,
etc. A corporation's judgment control is based on its management mechanisms, which are
controlled by the advisory board or the committee members. For starters, for all of the clear
objectives of the firm, the Uber Executive Board, led by its Chief executive, Dara Khosrowshahi,
is accountable. The corporation retains an organizational structure that makes its actions on
behalf of the company's objectives, mission, principles and objectives. These operations are then
assigned to the individual department’s director. In analytical words, financial statements have
the necessary business statistics, making it easier for managers and analysts to make informed
decisions. Accounting statements are drawn up in line with industry-wide coherent general
systems and policies. The latter helps make them comparable to many other competing
companies who by business outcomes know their company's reputation. Company records can
provide a justification for managers to decide whether or not it will make an asset allocation
feasible and financially viable. In existing trade ecosystems, forecasts and presumptions also
depend on enhanced corporate financial reports. Not only is financial information relevant

because it facilitates correlation in itself but it also forms the basis for the extracting of valuable
knowledge from semi financial data.
B. Advantages and disadvantages of accounting for a business
Accounting controls and analyses, on the basis of the nature of the law, the financial records of a
large corporation. As seen in: Advantages and costs linked to the management of financial
documents.
Advantages:
Decision-making - Statistics and company decision-making are wanted by the executive team.
Account records of the business have a part to plan (Hanifatunnisa and Rahardjo, 2017). This
provides reports on the company's cash flows as well as other spending and sales, making it
possible to forecast operating surpluses or deficits in a timely fashion. This also aims to provide
oversight and responsibility, which helps to deter and avoid errors.
Proof in legal proceedings - Accounting records serve as an operational context for the
significant financial activity identified within. When any disagreement occurs, it will then act as
legal proof before the courts. Enterprises shall hold records in the format prescribed in the Act
and after having been reviewed by an external auditor, send them to the Registration.
Disadvantages:
Records just financial factors - One of the most relevant drawbacks of financial reporting is that
it only applies to the reporting of business transactions (Franceschi, 2017). Multiple alternative
have important consequences for market practices, such as customer dynamics, the political
climate, legal and administrative laws, etc. When providing strong business choices, they are not
reported in financial statements and have an incorrect image.
Historical existence - In the person expense accounts, sums are reported and market fluctuations
are not put into account (Härer, 2018). In the statements of accounting, this allows financial
records of historical significance. Such papers are then known to be a requirement for forecasting
future effects. It loses the valuation of capital for the duration and the adjustments that often

come with it; having forecasts based on past costs does not inherently provide the greatest
foundation for estimating future events.
Part 2
A. Journal Entries for the month of February 2020
Date Particulars Debit (£) Credit (£)
01/02/20 Asma Ltd. A/c..........................Dr.
To Office fixtures A/c
(Unsuitable office fixtures returned to Asma
Ltd.)
350
350
04/02/20 Bad debt A/c............................Dr.
To S. Keyes
(Debt from S.Keyes written off as bad)
85
85
09/02/20 Machinery A/c.........................Dr.
To Bank A/c
To TS Co. A/c
(Machinery bought from TS Co. on part cash
and part credit)
2300
200
2100
13/02/20 Bank A/c...................................Dr.
Bad debt A/c.............................Dr.
To S. Hill A/c
(Only £220 received out of £270 from
bankrupt debtor S. Hill as full and final
settlement)
220
50
270
20/02/20 Drawings A/c............................Dr.
To Purchases A/c
(Goods taken for personal use by owner)
180
180
26/02/20 Drawings A/c..........................Dr.
To Insurance A/c
85
85

(Personal insurance bill debited to business
not stands corrected)
28/02/20 TS Co. A/c..............................Dr.
To Bank A/c
(Half payment of machine credit paid by
owner to TS Co)
1050
1050
Part 3
A. General ledger
Ledger Accounts
(Amounts in GBP)
Capital Account
Date Particulars Amount Date Particulars Amount
01/02/20 By Bank A/c 21500
01/02/20 By Van A/c 25000
01/02/20 By Office Fixture A/c 800
29/02/20 To Balance c/f 47300
Total 47300 Total 47300
Bank Account
Date Particulars Amount Date Particulars 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 Co. A/c 5200 25/02/20 To Cash A/c 350
28/02/20 By Office Fixture A/c 620
29/02/20 By Balance c/f 12230
Total 24350 Total 24350
Van Account
Date Particulars Amount Date Particulars Amount
01/02/20 To Capital A/c 25000
04/02/20 To Bank A/c 4800
08/02/20 To Nissan Co. A/c 5200
29/02/20 By Balance c/f 35000
Total 35000 Total 35000
Quick Office Ltd Account
Date Particulars Amount Date Particulars Amount
05/02/20 By Office Fixture A/c 1100

29/02/20 To Balance c/f 1100
Total 1100 Total 1100
Cash Account
Date Particulars Amount Date Particulars 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 Co. Account
Date Particulars Amount Date Particulars 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 Particulars Amount Date 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
29/02/20 By Balance c/f 2590
Total 2590 Total 2590
Loan Account
Date Particulars Amount Date Particulars Amount
02/02/20 By Bank A/c 2500
29/02/20 By Balance c/f 2500
Total 2500 Total 2500
B. Trial Balance as at 28th Feb 2019
Trial Balance
(at the month ending 29/02/2020)
(Amounts in GBP)
Particulars Debit Credit

Capital Account 47300
Bank Account 12230
Cash Account 1080
Van Account 35000
Quick Office Ltd. Account 1100
Office Fixture Account 2590
Loan Account 2500
Total 50900 50900
Part 4
A. Income Statement for the year ending 30th Sept 2019
Profit and Loss Account
(for the year ending 30th Sept 20)
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. Possible impact of Covid-19 on Income statements
To prosper, businesses need a stable economic, political and religious climate. As shown in the
situation of Aiman Co., that has been successful for about the last 10 years and reported a
downturn this year, uncertainty in the market climate will result in a decrease in competition as
well as a decline in profits between companies.
It should be remembered that the effects of Covid-19 for Aiman Co. will be minimal during the
first two quarters, i.e. from September 2019 to March 2020, due to the brief time between that
quarterly report and the event of an outbreaks. After March, due to the lock-down, there was a
huge negative effect on output, distribution network and revenues. The volume and time required

for internal and external shipping rose due to the interruption in the manufacturing process, and
profits decreased due to reduced demand, while operating costs needed to be charged
accordingly (Suess, 2018). Which has had an effect on financial performance, and as a
consequence of this fiscal year, Aiman Co. may have declared a loss. The conditions of the
Covid-19 lock-down are unusual and peculiar. However long the effect would have been how far
the financial fundamentals for the sector would have been cannot be decided. Nor is it fair to
relate the success of the past year to the patterns of the last ten years. In addition, it should be
concluded that the result of the next fiscal year will be impacted.