Business Accounting
Business Accounting- the systematic recording, analysis, interpretation, and presentation of financial data is known as business accounting.
Business Accounting
Financial Analyses
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Trial Balance as at 31 October 2021 |
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£ |
£ |
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DR |
CR |
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Capital |
143600 |
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Bank |
16060 |
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Cash |
14680 |
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Sales |
11200 |
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Purchases |
10800 |
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Flat |
90000 |
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Car |
24000 |
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Computer |
5000 |
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Purchases Return |
500 |
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Printer |
400 |
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Printer Repairs |
220 |
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Receivables |
300 |
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Wages |
1640 |
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Rent |
1700 |
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Payables |
10300 |
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Rent Received |
1600 |
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Drawings |
2400 |
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167200 |
167200 |
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Trail Balance
The trial balance table shows that the total balance credited is around 143600.
The amount debited from the bank is around 16060.
The cash debited is around 14680.
The sales value credited is around 11200 (Quesadoet al. 2019).
The purchases debited are around 10800.
The amount debited for flat rent is around 90,000.
The amount debited for car purchase is around 24,000.
The amount debited for computer purchase is around 5,000.
The purchase return credited is 500 Euros.
The value for the printer debited is around 400 Euros (Yasmin, 2021).
The value for printer repairs is 220 Euros.
The receivables value is debited around 300 Euros.
The amount for wages debited is around 1640 Euros.
The rent value debited is around 1700 Euros.
The payables value credited is around 10300 Euros (Osadchyet al. 2018).
The rent received is around 1600 Euros.
The amount debited for drawings is around 2400 Euros.
The total value credited is around 167200.
The total value debited is around 167200 Euros.
Statement of Financial Position as at 31/10/2021 | ||||||
£ £ | ||||||
Non-Current Asset | ||||||
Flat 90,000 | ||||||
Car 24,000 | ||||||
Computer 5,000 | ||||||
Printer 400 | ||||||
119400 | ||||||
Current Assets | ||||||
Inventory 640 | ||||||
Receivables 300 | ||||||
Bank 16060 | ||||||
Cash 14,680 31,680 | ||||||
Total Assets 151,080 | ||||||
Less Current Liabilities | ||||||
Payables (10,300) | ||||||
140780 | ||||||
Non – current Liabilities – | ||||||
Net Assets 140,780 | ||||||
| ||||||
Capital 143,600 | ||||||
Less Net Loss (420) | ||||||
143180 | ||||||
Less Drawings 2,400 | ||||||
140780 | ||||||
The table showing the income statement states that the value related to total sales credited is around 11,200 Euros.
The total value debited related to purchases is around 10,800 Euros (Saidiet al. 2019).
The less purchase return is around 500 Euros.
Hence, the total debited value is around 10,300 Euros.
The less clock stock debited is around 640 Euros.
The total value of sales credited is around 9,660 Euros.
The gross profit credited is around 1,540 Euros.
The additional rent received is around 1,600 Euros (Rejeki, 2021).
Thus, the total value credited is around 3,140 Euros.
The cost related to printer repair is around 220 Euros that is credited from the account.
The rent is around 1700 Euros that is credited from the account.
The wage is around 1640 that is credited from the account (Totananet al. 2020).
The total credited value is around 3,560 Euros.
The net loss is around 420 Euros.
Income Statement for the year ended 30/10/2121 | ||||||
£ £ | ||||||
Sales 11,200 | ||||||
Less Cost of Goods sold: | ||||||
Purchases 10,800 | ||||||
Less Purchases return (500) | ||||||
Less Closing Stock 640 | 10300 | |||||
Gross profit 1,540 | 9,660 | |||||
Add Rent Received 1,600 | ||||||
Less Expenses: | 3,140 | |||||
Printer Repairs 220 | ||||||
Rent 1700 | ||||||
Wages 1640 | ||||||
3,560 | ||||||
NET LOSS (420 ) | ||||||
The statement of financial position states that in case of noncurrent assets,
the flat rate value is around 90,000 Euros that is credited to the account.
The car rent value is around 24,000 Euros that is credited to the account.
The computer charge is around 5000 Euros, which is credited to the financial statement.
The printer value is around 400 Euros that is credited to the account.
Thus, the total amount debited to the account is around 119400 Euros (Susanto et al. 2021).
The current assets mainly deal with the total present assets to an individual.
He inventory cost debited is around 640 Euros.
The receivable costs debited are around 300 Euros.
The total costs debited from the bank are around 16060 Euros.
The total cash debited is around 14,680 Euros.
The total cash credited is around 31,160 Euros.
Hence, the total assets credited are around 151,080. The payable is around 140,780 Euros.
The section related to Non- current liabilities consists of net assets debited is around 140,780 Euros (Alshenqeeti and Inderawati, 2020).
The capital debited is around 143,600 Euros.
The net loss is around 420 Euros.
The value related to drawings is credited around 2,400 Euros.
Thus, the total credited value is around 140,780 Euros.
Letter to Petronela Catalina regarding major drawings concerning small business
To
Petronela Catalina
Regarding Financial Cost
Financial accounting helps in keeping track of the major buying and selling through the balance sheet.
According to the words of Karagiorgoset al. (2020), developing a balance sheet,
helps in keeping track of the daily business transactions that are taking place in the business ecosystem.
Furthermore, it helps the organization to develop short term and long term goals,
such that business expansion and prosperity could be achieved.
The total contribution by Petronela Catalina is around 20,000 Euros in the bank, 9,600 Euros in cash,
90,000 Euros for Flat rent, and 24,000 Euros for car rent.
Hence, these are the major spending by the individual on whose basis the balance sheet needs to be developed.
Petronela Catalina purchased books worth 10,800 Euros on credit from Amazon Ltd.
The value of the computer purchased was around 1,600 Euros and the printer for 400 Euros.
Financial Health
The things were bought in cheques from a local shop in London.
The books sold by her amounted to 5,600 Euros and she received the money through Bank Account.
The cost for repairing the printer was around 220 Euros and she paid it through cash.
As per the words of Raza et al. (2020), keeping track of the major financial transactions makes the business more agile and swift.
Moreover, the financial health of the company could be effectively improved and the company would be able to build major assets.
Thus, it would lead to extensive business expansion and the values and ethics of the company would improve considerably.
The amount credited for returning books to Amazon Ltd. was around 500 Euros.
The amount received for flat rent is around 1,600 Euros that was deposited in the bank account.
The goods sold by the individual was around 4,200 Euros out of which 3,600 Euros was returned in cash immediately and the rest remained on credit.
The amount received while selling books to Malgorzaa was around 1,400 Euros and the amount was received in cash.
The next purchase was buying a laptop for business use with a cheque of 3,400 Euros.
The monthly wages paid to part time shopkeepers by cheque was around 1640 Euros.
The office space rented by Petronela Catalina was around 1,700 Euros and that was paid through cheque.
The space helped in effective business expansion and carry out financial transactions more accurately.
The hotel was booked and the flight to New York was appointed at a rate of 2,400 Euros.
These transactions were done for holiday purposes of the owner.
Business Bank Account
The overall transactions were done through business bank account.
The cash received from eBay was around 300 Euros.
Hence, these were the major transactions that were done by Petronela Catalina in order to gain
business efficiency and obtain overall business expansion.
The transactions are being kept appropriately in the balance sheet such that proper records could be maintained.
These records would further help the company to help in paying proper taxes to the government.
Thus, the balance sheets improve the overall efficiency of the organization and develop the financial health of the business.
The significance of conducting business accounting is to make the entire business more organized
and draw talented employees to come and work.
The moral of the employees improves and also the values and ethics of the company develop.
The employees become goal oriented and achieve company’s objectives within deadline and budget.
Advantages of Balance sheet
The advantage of having a balance sheet is that all records related to business transactions are kept intact.
Thus, the company benefits a lot since its business transactions become faster and well organized.
The expansion rate of the business happens much faster and the company is able to attain its goals at a significant budget.
The accounting helps in developing future projections for the organization.
Hence, the employees align themselves with the company’s goals and objectives in order to bring overall economic development.
The income statement of the company helps to understand the major incomes of the organization.
Based on that proper projections are made related to providing employee benefits and increasing the employee base.
Furthermore, balance sheets also help to reduce the attrition rate of the company.
Thus, these are the major financial analyses that have been obtained from the tables.
Moreover, the transactions have been effectively elaborated based on the data received from the owner.
Thus, it would be beneficial for the owner to make fewer transactions,
since it is creating major discrepancies related to business development.
The overall letter states the major inflow and outflow of cash from the business.
Proper mitigation techniques have been discussed in order to improve the overall cash flow to the company.
Thanks and Regards
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