Accounting Assignment
Accounting Assignment
Accounting Assignment
There are many potential users for the financial data that a company produces. The
following list includes the more likely users. The accounting rules require that a firm's
financial statements and related disclosures incorporate a wide range of data because, in
other words, a lot more people and organizations can access an organization's financial data.
Customers
Employees
Investment Analysts
Governments
Lenders and Creditors
Investors
Rating Agencies
Management Team
Unions
All businesses must keep proper financial records, but newly established businesses especially
need to do this. It is crucial for tax purposes as well as to make budgeting much simpler. Many
businesses may swiftly face disaster if their financial records weren't kept up to date. The results
are bad for businesses, whether they come in the form of tax audits, client loss, fraud, and the
inability to obtain new services or adequately price goods. For some businesses, maintaining
financial records may not be as easy as it initially seems. Regardless of the type of business, it is
necessary to regularly review the financial condition and make payments to the local, city, state,
and federal taxes authorities. Keeping financial records and employing a bookkeeper have
several advantages. Maintaining correct and current books is the best approach to get the
business's finances back on track. It makes it possible for businesses to successfully manage their
cash flow, bargain for the best supplier prices, and obtain the best lending terms. Lenders will
initially ask for your most current tax returns and financial statements.
Question # 2
Burj Furniture
(Journal Entries)
Date Account titles debit credit
1 cash 8000
to capital account 8000
2 goods 4000
to cash account 4000
4 wages 100
to cash account 100
5 cash 6000
to bank loan 6000
6 Purchases 3000
mega furniture payable 3000
7 cash 1500
Sales 1500
13 cash 900
SZR custom cars receivables 900
Ledger Accounts
Cash Account
to capital account 8000 goods 4000
to bank loan 6000 wages 100
Sales 1500 delivery van 5000
SZR custom cars receivables 900 stationary 20
electricity expense 300
accounts payable 1200
delivery van repairing expense 60
Ending Balance c/d 5720
16400 16400
Capital Account
Ending Balnace c/d 8000 Cash 8000
8000 8000
Purchases Account
to cash account 4000 cash 1500
mega furniture payable 3000
Ending Balance c/d 5500
7000 7000
Wages
cash 100 Ending Balance c/d 100
100 100
Stationary
to cash account 20 Ending Balance c/d 20
20 20
Electricity expense
to cash account 300 Ending Balance c/d 300
300 300
Repair
to cash account 60 Ending Balance c/d 60
60 60
1200 1200
Palm Estate
to sales 800 Ending balance c/d 800
800 800
Delivery Van
cash 5000 Ending balance c/d 5000
5000 5000
forklift truck
fork lift truck 3500 Ending balance c/d 3500
3500 3500
Accounts payable
to cash account 1200 forklift truck 3500
Ending balance c/d 5300 Purchases 3000
6500 6500
Bank Loan
Cash 6000 Ending Balance c/d 6000
6000 6000
Sales
Ending Balance c/d 3500 SZR custom cars receivables 1200
Palm Estates receivables 800
cash 1500
3500 3500
22800 22800
Income Statement
Sales 3500
Purchases 7000
Less: Closing Stock -5000 2000
Question # 3
Financial Ratios
1. ROCE
ROCE = (Net operating profit before interest and taxes / Total capital employed) *100
Formula:
3. Current Ratio
Formula:
4. Quick Ratio
Formula:
Cash 0 0.5
Current Receivables 1.6 1.4
Current Liabilities 1.2 1
Quick Ratio 1.33 1.4
5. Inventory Turnover
Formula:
6. Capital gearing.
Formula:
= (Share Capital + Reserve) / Loans
Formula:
8. Dividend cover
Formula:
Dividend cover
2020 2021
2.4 2.9
Dividend 0.4 0.9
Question # 4
1. Accruals concept
In accounting, the accrual principle holds that transactions must be recorded as they occur,
irrespective of when the transaction's actual cash flows are received.
The owner and the business are two separate entities that should be recognized according to the
business entity concept, one of the accounting concepts.
3. Going concerns
A company is considered a "going concern" in accounting if its finances are sound enough for it
to meet its obligations and continue operating for the foreseeable future. Some costs and assets
may be reported in financial reports later if a firm is thought to be a going concern.
Question # 5
1. Errors of omission
An error of omission is a blunder where the accountant completely missed the input. It signifies
that both the debit and credit sides of the transaction are left out and has no bearing on the
accuracy of the trial balance's mathematics.
2. Errors of Commission
When an accountant puts an accounting transaction into the incorrect account that belongs to the
same class of accounts, this is referred to as a commission error.
3. Errors of Principle
Like commission errors, errors of principle also use general ledger accounts rather than
individual accounts. As an illustration, you might record the acquisition of capital equipment in
the land and building account.
4. Compensating Errors
When two errors balance each other out in terms of their arithmetic impact, this is referred to as
compensating an error.
5. Complete reversal errors
Complete reversal mistakes happen when an account that needs to be debited is instead credited,
and vice versa.
6. Transportation errors
These mistakes happen when the accountant accurately does the double entry but posts the
incorrect figures.
7. Duplication errors
A transaction that is entered twice in the ledger is referred to as a duplicate error. In these
circumstances, the trial balance is unable to identify any disparity brought on by them because
the double-entry was made twice.