Recording Business Transactions BA30592E

This report discusses the significance of recording business transactions, the role of decision makers in utilizing accounting information, and the advantages and disadvantages of different business structures. It includes practical examples of journal entries and financial statements, particularly in the context of the impact of COVID-19 on business operations.

Recording Business
Transaction

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Decision makers and their need for accounting information: ....................................................1
Advantage and Disadvantage of recording accounting information:..........................................2
PART 2............................................................................................................................................4
Journal entries with narration for the David wises:....................................................................4
PART 3............................................................................................................................................5
Ledger and trail balance of Pearce & sons:................................................................................5
PART 4............................................................................................................................................8
Income statement for Airman co.:...............................................................................................8
Impact of COVID 19 on company income statement items:......................................................9
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Every business transaction has been recorded in the journal books of the company. Hence
all the transactions are found in journal itself that is considering as subsidiary books. Recording
the transactions is called as journalizing. In the accounting books record those transactions that
measurable in money such as purchase a machinery from suppliers (Deshpande, Shiurkar and
Devane, 2019). All the transactions impact on the business in twice manner and presents the
actual position of the business. This report based on the various business transactions that occur
in the company in a financial year. In this report consist of Journal entry, ledger and trial balance.
Along with it covers need of accounting information and identify advantage & disadvantage of
profit business structure.
PART 1
Decision makers and their need for accounting information:
Decision making is a procedure of analysing different situation of business, collecting
information and determine alternative resolutions. For this procedure require to take step by step
and make more deliberate by decisions and defining alternatives.
Decision makers are those persons who have the ability to take though decision in regard
of business such as, sales, growth as well as development. These person’s analysis the all the
transactions of business that occur in the a financial year after that prepare a strategy and make
decision for development. In this procedure consisting of corporate, policy, realistic, planned and
non-programmed choices. In this report selected business Cadbury which is a British
multinational confectionery business that listed into London stock exchange. It was founded in
1824 by John Cadbury. In the context of Cadbury mentioned those people who are taking
decision such as:
 Management department: This department in Cadbudry play essential role in decision
making procedure. All the activities analysing by the department people and follow as per
the rules & regulations. Along with focus on the issues and problems that occur in the
business and impact on the decision making. For this prepare different business strategy
to get rid of from such problems and take required action. In this procedure is often very
short and effective analysis is immediate (Kumar, 2019).
Need of information:
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 Accounting information plays essential role and these information use by the
management team for allocation funds in each department as per the requirement.
 All the information deliver on time to right person and utilise for decision making.
 Management people makes important decisions for Cadbury after the determining various
accounting information of different departments.
Owner: Board of directors plays crucial role in decision making procedure and coordinate with
each other’s. In board of directors consist of stakeholders, sales manager, finance manager and
many others. The manager of Cadbury conducts a meeting to make any big decision for company
future and take suggestions from every people. For financial activities require to conduct
different tasks in proper manner.
Need of information:
 The accounting information require for owner in future investment procedure in order to
complete task.
 It helps to generating more profitability in large manner.
 The need of accounting information to use to assess business operations in proper manner
and take right decisions.
Manager: The manager of Cadbury plays essential role in decision making procedure that
provides management team and other shareholder to direction in regard of different tasks.
They are analysing the performance of every team member for generating more profitability.
Need for accounting data:
 For the preparation of financial statement requires to collect all accounting data that
supports to business in decision making procedure.
 Accounts executives and staff members with significant financial knowledge.
 Along with analysis of stakeholder role for managing activities and controlling people.
Advantage and Disadvantage of recording accounting information:
Accounting is a procedure of financial transactions in analysing, determining, reviewing
and recording the transactions in the company books. The procedure follow by the oversight
agencies, tax collection organisation and regulatory bodies. On the basis of accounting
information compare business with another business and understand their strategy effectively. It
can also help to understand the actual position of business. Along with it supports to manager in
decision making procedure in the context of sales, promotions activities. Most of the
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organisations are following Generally Accepted Accounting Principles (GAAP). There are
selecting two business structure such as, limited company and Partnership organisation.
Partnership: It is a form of business structure that comprise two or more owners. It is easiest
form of the business structure that use by the people for conduct business. In this structure
selecting John Lewis & Partners company. It is a high brand department stores conducting their
business activities throughout Great Britain. The brand sells general merchandise which is part of
employee owned mutual organization. There are mentioned advantage and disadvantage of
accounting information in the context of John Lewis & partner such as:
Advantages
 Helps in preparing financial statements: The accounting information helps in preparing
financial statements for analysing the profitability and losses of business. Along with it
helps to know actual value of all the transactions of different items which are recorded on
the accounting books. By the Profit & loss statement know profit and loss of the business
and create financial reports.
 Records business items: Accounting presents each transactions of business finance that
record in different accounting books as per nature of item. Every transaction important
for decision making because it effects on business in twice manner. It records all the
transactions routine basis in credit and cash basis (Lemieux, 2017).
 Helps to raise loans: For the development in business require to raise loans from different
financial institution. So such accounting information of Cadury presenting in front of
loan manager. On the basis of these information they are approving Loan for business.
Disadvantage
 Does not help in decision making procedure: The accounting information is not
helping in decision making procedure in which use different types of accounting methods
and analytical judgement. When company prepare different types of financial statement
in which mentioned some cost of market basis and some are outstanding so company
cannot predict future things easily. Thus, it will not help to entity in decision making
procedure.
 Provides only financial data: The accounting system develop and submit different
options before the administration. Many times it does not provide sufficient information
of each items so these are consisting on the assumption basis. On the basis of financial
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data company cannot measure its efficiency effectively and do not make investment
decision properly (Markovic, Edwards and Jacobs, 2019).
 It is main drawback of accounting information is that records the transactions on
estimation basis and accuracy of records many not possible.
Limited company: A limited liability company is considering hybrid business structure that
combines the best of both worlds. This structure provides personal liability protection to business
owners at the time of tax deduction. For this form select Tesco Plc which is Public limited
liability organisation which is situated in United Kingdom. The company is mainly dealing into
groceries and general merchandise retailer. There are mentioned advantage and disadvantage for
Tesco in regard of accounting information underneath:
Advantage:
 Accounting information can help to Tesco in comparison of financial statement with
other company for the improvement and growth in proper manner.
 Accounting information provide overview of company in financial manner so it helps in
investment decision.
 Complete and systematic records are keeping that use in financing activities.
Disadvantages
 All the accounting information use by the Tesco in monetary manner not in qualitative
manner.
 The accounting information use by the accountant in wrong manner and manipulate of
financial statements.
 On the basis of accounting information do not able to take proper decision.
PART 2
Journal entries with narration for the David wises:
Journal Entries
S. NO Date Particulars L.F £ £
1 01/02/20 purchase return A/C Dr. 350
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To Purchase A/c 350
( Being purchase return with full
settlement)
2 04/02/20 Bad debts A/c Dr. 85
To S. keys A/c 85
(being debt debt written off by
S. keys)
3 09/02/20
Machinery A/c
DR. 2300
To Bank 200
To TS CO. 2100
( Being machinery purchase with
cash Rs. 200 and 2100 on credit)
4 13/02/20 Cash account 220
Bad debts A/c 50
To S. hill Ltd. 270
( money owed by S. hill 270 and
paid only 220, Rs. 50 declare as
bad debts)
5 20/02/20 Drawing A/s Dr. 180
To Stock 180
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6 26/02/20 Insurance A/c Dr. 85
To Cash A/c 85
( Business paid money for
private house insurance)
7 28/02/20
Machinery A/c
DR. 1050
To bank A/c 1050
(amount paid by TS CO. for half
amount credit on machinery)
Total 4320 4320
PART 3
Ledger and trail balance of Pearce & sons:
A. General ledger
Ledger Accounts
(Amounts in GBP)
Capital Account
Date Particulars Amt. Date Particulars Amt.
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
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Bank Account
Date Particulars Amt. Date Particulars Amt.
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 Amt. Date ParticularsAmt. Amt.
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 Amt. Date Particulars Amt.
05/02/20 By Office Fixture A/c 1100
29/02/20 To Balance c/f 1100
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Total 1100 Total 1100
Cash Account
Date Particulars Amt. Date Particulars Amt.
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 Amt. Amt. Date Particulars Amt.
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 Amt. Date Particulars Amt.
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
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Loan Account
Date Particulars Amt. Date Particulars Amt.
02/02/20 By Bank A/c 2500
29/02/20 By Balance c/f 2500
Total 2500 Total 2500
Trial Balance
(in 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
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PART 4
Income statement for Airman co.:
Income statement in the year end 30th Sept. 2020
Profit & Loss Account
(In 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
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Impact of COVID 19 on company income statement items:
Every business environment based on the internal and external factors that impact on the
business in direct manner. The internal factors control; by the organisation and external factors
are not controllable. The culture, staff members, activities are part of inner environment and
political, economical, social activities part of external environment. Currently every organisation
face pandemic situation due to COVID 19. All the businesses affected by the disease and do not
able to operate business activities in proper manner. Airman Company conduct their business
activities effectively from last 10 years and generate profitability. But in the year 2020, face
different problems due to Lock down. After the Lock down business face economic down and
sales fall down continuously so it impacts on the revenue of an entity. Company had not enough
funds to keep employees so they were starting to fire staff members and keep enough people in
business (Menna Agrafiotis and Georgopoulos, 2018). Due to COVID 19 faces different
financial and operational challenges in business entity.
 Cash inflow slow down and cash out flow increase with manufacturing sector. As per the
reason company faces low revenues and have to paid fix amount of property.
 Lack of sales: Company is not operating online business and mostly people prefer to
purchase things online. Thus after the Lock down it impacts on the selling activities and
generate low profitability.
 Most of the people prefer to stay home and order online food and other things that
become reason of decreasing sales of Airman Co.
 Higher wages: The wages are increasing and reaching about 30000 Pounds had paid this
amount.
CONCLUSION
As per the above report it has been concluded that recording the transactions of each
items in the business is essential. For this require to prepare all the financial statements that
presents actual position of the business and supports in decision making procedure.
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REFERENCES
Books and Journals
Deshpande, R., Shiurkar, U. and Devane, S., 2019. Study and Effect of Architecture Deployed in
BPO on Screen Recording Compliance for In-Centre Versus at-Home Agents. In
Computing, Communication and Signal Processing (pp. 489-498). Springer, Singapore.
Kumar, K. S., 2019. Factors affecting the adoption of computerized accounting system (CAS)
among smes in Jaffna District. SAARJ Journal on Banking & Insurance Research.8(6).
pp.11-15.
Lemieux, V. L., 2017. Evaluating the use of blockchain in land transactions: An archival science
perspective. European Property Law Journal, 6(3), pp.392-440.
Markovic, M., Edwards, P. and Jacobs, N., 2019. October. Recording Provenance of Food
Delivery Using IoT, Semantics and Business Blockchain Networks. In 2019 Sixth
International Conference on Internet of Things: Systems, Management and Security
(IOTSMS) (pp. 116-118). IEEE.
Menna, F., Agrafiotis, P. and Georgopoulos, A., 2018. State of the art and applications in
archaeological underwater 3D recording and mapping. Journal of Cultural Heritage. 33.
pp.231-248.
Nair, V., 2018. An eye for an I: recording biometrics and reconsidering identity in postcolonial
India. Contemporary South Asia. 26(2). pp.143-156.
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