Recording Business Transactions: Ledger Accounts and Income Statement

This student assignment delves into the core principles of recording business transactions, encompassing a range of accounting practices. The assignment begins with an introduction to accounting, defining its role in monitoring and categorizing financial transactions. It then proceeds with an in-depth analysis of the decision-making process and the need for accounting information, highlighting the advantages and disadvantages of accounting for a business. The core of the assignment involves practical application, including journal entries for various transactions, the creation of general ledger accounts, and the preparation of a trial balance. Furthermore, it extends to the creation of an income statement and a discussion on the potential impact of external factors, such as Covid-19, on financial statements. The assignment covers a range of accounting concepts, providing a comprehensive overview of financial recording and reporting.

Recording Business Transactions

Contents
Introduction.................................................................................................................................................3
Assessment 1...........................................................................................................................................3
Part 1.......................................................................................................................................................3
Part 2.......................................................................................................................................................5
Part 3.......................................................................................................................................................6
Part 4.....................................................................................................................................................10
ASSESSEMENT 2.....................................................................................................................................12
PART A...................................................................................................................................................12
PART B...................................................................................................................................................20
CONCLUSION.............................................................................................................................................22
References.................................................................................................................................................24

Introduction
Accounting includes monitoring, categorizing, updating and outlining the cash transactions of
the person (Cai, 2019). The framework for the completion of the acquisition and the
corporation's status is established by these records and the analyses extracted from it. It technical
supports the collection by various entities of financial documents and the preparation of trial
accounts and revenue reports. Merits and demerits are addressed in the context of companies.
Covid-19's effect on business income is also discussed.
Assessment 1
Part 1
A. Decision-makers and need for accounting information
The descriptions and review of all statistical details require financial reports in such a way that it
could be recorded in the journal. Such effects are very useful for predictive analytics. Efficient
choices from purchasing to service quality determine the potential opportunity (Viriyasitavat and
Hoonsopon, 2019). The multiple company executives take all actions on the recruitment and
firing of employees, the creation of the benefit target, the preparation of current events and
expenditures, the use of technologies for separate production activities, etc. A corporation's
choice leadership is based on its management mechanisms, which are controlled by the advisory
board or the chairmen. These tasks are then assigned to the management team, together with the
approval needed for them to be executed.
In analytical words, financial statements get the necessary business statistics, making it easier for
leadership and analysts to make critical choices. Capabilities are defined are prepared in
compliance with specific frameworks and procedures that are common from across sector
(Hamilton, 2020). It allows them equivalent to many other rivals who by strategic objectives
realize their market standing. Annual statements also offer a framework for executives to
determine whether or not it should variety a strength distribution achievable and monetarily
feasible. In actual market conditions, forecasts and estimates also rely on positive business
financial information. Only is traditional monetary applicable because it enables association on
its own but it also procedures the foundation for the removing of valued information from non-
financial records.

B. Advantages and disadvantages of accounting for a business
Accounting monitors and reviews the financial reports of a major company on the grounds of the
essence of the regulation. Benefits and risks related to the handling of financial records are as
shown in:
Advantages:
 Decision-making - The executive committee wants statistics and business decision-
making. Account books have a role to play in the company (Zhang, Wang and Zhu,
2019). It delivers intelligences on the business's cash streams as well as many other
expenditure and transactions, allowing forecasting operating deficits or deficits in a
reasonable time. It also purposes to deliver mistake and accountability that can
discourage and recognize fraud.
 Proof in legal proceedings - Bookkeeping archives help as an operative background for
the main monetary contract specified confidential. After any difference happens, it will
then performance as lawful resistant beforehand the judgements. Enterprises must have
archives in the arrangement agreed in the Rule but after consuming been studied by
autonomous auditors, send them to the Recordkeeping.
Disadvantages:
 Records just financial factors - among the effective important limitations of revenue
recognition is that this implements to managing of money transfers, like consumer
conditions, political environment, legal and controlling rubrics, etc., have significant
analysis for business practices. They are not recorded in financial accounts and have an
erroneous picture during effective decision making.
 Historical nature - Amounts are listed in individual spending accounts and price shifts
are not taken into consideration. This helps financial documents of historical value in the
books of accounts (Mola, Microsoft Technology Licensing LLC, 2019). These
documents are then regarded as a prerequisite for predicting future outcomes. It loses the
period value of resources and the changes that come with that as well; making projections

dependent on historical costs do not necessarily have the best basis for predicting events
in the future.
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…..
….20….
…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
….01/02/2
0…. ……By Bank A/c…..
….21500
….
….01/02/2
0…. ….By Van A/c….
….25000
….
….01/02/2
0….
….By Office Fixture
A/c…. ….800….
….29/02/
20…. ….To Balance c/f….
….47300
….

….Total….
….47300
…. ….Total….
….47300
….
Bank Account
….Date…
. ….Particulars ….
….Amou
nt
….Date…
. ….Particulars….
….Amou
nt….
….03/02/2
0…. 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……