My business is located in Singapore, the capital city of Singapore. With the beautiful scenery presented by the island, tourist attraction are a likely aspect that makes restaurant operations a successful venture in Singapore. My business, Marionette Restaurant, operates in the hotel industry and deals in offering quality foods and services. I started the operation at the main center, a strategic place, where sales are likely to boom. This due to expansive beaches that are near the center and contain tourists who would always want to quench their hunger. The major business suppliers are those dealing in fresh farm produce such as French beans, chickens and fruits.
I initiated the Marionnete Restaurant with a starting capital of $250000. The major products that I offer include egg meals, hot drinks, French fries, corporate merchandise, meeting area, Italian drinks, sodas and foreign cuisines. This business is considered a boom because most tourists prefer to taste foreign cuisines as part of their venture.
This Shop is named as “Marionette Restaurant”
The targeted customers are mainly the tourists, middle class citizens working along the beach, and college going students.
Suppliers: Nestle (Credit Supplier)
Region Food ( Credit Supplier)
Ayamas ( Cash Supplier)
Customers: Jomalina(Credit Customer)
Simplot (Credit Customer)
UBF (Cash Customers)
Simulation of transactions
|1/3/2016||Started a restaurant business “.Marionette Rest.”Deposited $2500000 to bank account opened forMarionette Rest’.||$250,000|
|2/3/2016||Rented a space in TRM mall and paid $4000 by banker’s cheque to cater for one month of rental deposit and the rest for the month of March.||$4000|
|3/3/2016||Issued a cheque of worth $600 to Kengen Bit as a fee for installing water and electric meters.||$600|
|3/3/2016||Purchased a walk-in refrigerators, worth $400, from Jamaji shop by cheque||$400|
|4/3/2016||Issued a cheque of $600 to Faruq designers for designing the restrooms||$600|
|5/3/2016||Bought restaurant chairs by issuing a cheque of $4000 to Keen Comforters||$4000|
|6/3/2016||Issued a cheque of $400 to Faruq designers for fitting the chairs in the dining rooms||$400|
|7/3/2016||Issued a cheque of worth $200 to buy office equipments||$200|
|9/3/2016||Gave out a cheque of $9000 for printing flyers to Owiti Printers.||$9000|
|11/3/2016||Bought 20 fruit blender Ayamason credit each costing $45||$900|
|12/3/2016||Sold 120 Italian fries to Simplot on credit at the selling price of $60||$7200|
|16/3/2016||Received a cheque of $50000 from Jomalima||$50,000|
|19/3/2016||Received a return inwards from Jomalima worth 11,000||$11,000|
|22/3/2016||Sold to Outward catering, 50 units, for a credit at the selling price of $600||$30000|
|25/3/2016||Bought a car Costing $20000 using Bank loan||$20000|
|26/3/2016||Paid Insurance by Cheque $700||$700|
|28/3/2016||Paid Salary by cheque $2000||$2000|
|29/3/2016||Received Commission by Cash $400 from Simplot||$400|
|30/3/2016||Settled the water and electrical bills by $1000 in form of cheque||$1000|
The usefulness of the financial information presented for the business was enhanced through the use of various characteristics of accounting which include: timely, understandable, verifiable and comparable. The first characteristic is comparability. The information provided above enables comparisons to be made across entities and within the same business. When made within the same entity, the information provided is compared from one period of accounting to another. The second qualitative characteristic of the information provided is verifiability (Needles, 2013, 32). This is because it helps to assure the different users of the information provided. The data presented is supported by evidence and can be audited at any moment. I realized that verifiability represents faithfully what it is supposed to represent.
The third qualitative characteristic that was considered is timeliness. This is because the data was provided in good time for the purposes of influencing the decision maker’s decision. The last qualitative characteristic that was employed is understandability. The financial information is provided in a concise and clear manner. Generally, financial information should be comprehensible and understandable to various users with reasonable knowledge of economic and business activities (Horngret et al, 2006, 4). However, I did not exclude any complex items for the purposes of making the report understandable and easy.
Based on the rules of accounting, I followed keenly five fundamental concepts in the preparation of the accounting information. The first concept used is the accounting period concept. This is because, only data pertaining to a particular period was considered in the preparation of accounts for that period (Lung, 2009). To ascertain the financial position of the business, the balance sheets and the profit & loss accounts were prepared on regular interval of times. The main purpose of having the specific accounting period is for me to take corrective measures keeping in view the past performances of the business with the intention of nullifying the effects of different seasonal changes. The second accounting concept that was employed in the preparation of the above accounting information is the going concern. This means that this particular entity is in good condition and will still continue to be in operations in the projected future.
The third accounting concept is the cost basis. This means that the value of the business’s assets with which I recorded are the actual costs that were paid. Therefore, the assets recording were not based on their market value. Business entity concept is another concept used in the preparation of the financial reports. This means that the business and the owner are two separate entities (Larbardin & Marc, 149, 2009). This means that the accounting records tend to reflect the financial activities of the business and not of the employees or owner. The last concept that was used is objectivity. This means the financial statements are based on verifiable evidence specifically an audit trail.
Usefulness to external users
The financial information provided above has several benefits to the external users who include: investors, creditors, suppliers and the government. The first advantage is that the information provided tells the external users of how much the business is making. For example, the government would be able to identify the amount of tax that would be paid by the business based on the income statements. Secondly, the financial information reveals about the retained earnings (Oler & Christopher, 2010, 635). This means that it is able to tell the external users about the amount of net income revealed in the financial statement is re invested back into the business. The third benefit is that it tells the external users about the exact accounts that the business has, and the exact amount that it has in each account. This information is particularly useful to creditors who will know the amount of cash the business has, and where it qualifies for a loan or not. Another benefit is that the statement of cash flows tends to tell the external users about which activities brought in revenues and which activities expensed out revenues. This would help them make relevant and useful decisions (Droms & Wright), 2010, 18). This is particularly important for investors who gave up some of their personal money to invest in the business. For this reason, they are keenly interested in knowing about the activities that tend to generate income.
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Lung H (2009) “Fundamentals of financial accounting” Elsevier
Labardin, P & Marc N (2009) “Accounting and the words to tell it: A historical perspecrive” Accounting business and financial history 19(2): 149-166
Droms W.G &Wright J.O (2010) “Finance and Accounting for nonfinancial managers: All the basics you need to know” Basic Books
Oler D.K, Mitchel J.O & Chistopher J.S (2010) “Characterizing Accounting Research” Accounting Horizons 24(4):635-670
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Horngren C.T; Datar S.M; Foster G (2006) “Cost Accounting: A managerial Emphasis” 12 ed New Jersy: Pearson Prentice Hall