Westminster International College

Name:

Module Title:Intro to Accounting

Programme:Degree Foundation

Semester:Three

Academic Year Period:June 2016 – September 2016

Lecturer:Gobu Nachiappan

Date of Completion and Submission:16th August 2016

Submission Method:Online via Turn It In with one hard copy to the Examinations Department

Assessment Type:Individual assignment

 

 

 

 

 

 

 

 

Introduction

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)

Competitors:  KFC

Starbucks

 

 

 

 

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

 

 

 

 

 

Cash Book
Date     Description Cash  Bank Date       Description Cash Bank
1/3/2016 Capital   250,000 2/3/2016 Rental deposit   5000
10/3/2016 Sales   37200 2/3/2016 Rent   2000
16/3/2016 Jomalima   50,000 3/3/2016 Installation   600
23/3/2016 Simplot   80,000 4/3/2016 Restrooms   600
27/3/2016 Jomalina   29,000 5/3/2016 Restaurant chairs   4000
29/3/2016 Commission 400   6/3/2016 Stationery   500
        7/3/2016 Office Equipment   300
        9/3/2016 Bill   9000
        26/3/2016 Insurance   700
        28/3/2016 Salary   2000
        30/3/2016 Bills   1000
               
               
               
               
               
               
               
               
               
               
               

 

 

 

 

 

Capital
Date Description RM Date Description RM
      1/3/2016 Bank 350,000
           
           

 

 

 

 

Rental deposit
Date Description RM Date Description RM
2/3/2016 Bank 5000      
           
           
Rent
Date Description RM Date Description RM
2/3/2016 Bank 2000      
           
           

 

 

Installation
Date Description RM Date Description RM
3/3/2016 Bank 600      
           
           

 

Restroom
Date Description RM Date Description RM
4/3/2016 Bank 700      
           
           

 

Restaurant chairs
Date Description RM Date Description RM
5/3/2016 Bank 4000      
           
           

 

 

 

Office Equipment
Date Description RM Date Description RM
6/3/2016 Bank 200      
           
           

 

Bill
Date Description RM Date Description RM
9/3/2016 Bank 9000      
           
           

 

 

 

 

 

 

 

Purchases
Date Description RM Date Description RM
8/3/2016 Bank 90,000 18/3/2016 Drawings 450
11/3/2016 Ayamas 9000      
           
           
           

 

 

 

 

 

 

 

Sales
Date Description RM Date Description RM
      10/3/2016 Bank 60,000
      12/3/2016 Jomalima 72,000
           
           
           
           
           

 

 

 

 

 

 

 

Jomalima Companies
Date Description RM Date Description RM
12/3/2016 Sales 72,000 16/3/2016 Bank 50,000
      19/3/2016 Returns Inward 11,000
      23/3/2016 Bank 80,000
           
           

 

 

 

 

 

Returns Inward
Date Description RM Date Description RM
19/3/2016 Jomalima 11,000      
           
           
           

 

Car
Date Description RM Date Description RM
25/3/2016 Loan 20,000      
           
           

 

 

Insurance
Date Description RM Date Description RM
26/3/2016 Bank 700      
           
           

 

 

 

 

 

 

 

Bank Loan
Date Description RM Date Description RM
      25/3/2016 Car 20,000
           
           

 

 

 

 

 

 

Salary
Date Description RM Date Description RM
28/3/2016 Bank 2000      
           
           

 

Commission
Date Description RM Date Description RM
29/3/2016 Cash 400      
           
           

 

Bills
Date Description RM Date Description RM
30/3/2016 Bank 1000      
           
           

 

 

 

Qualitative characteristics

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.

Accounting concepts

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.

 

 

 

 

 

 

 

References

Needles B.E (2013) “Principles of financial accounting” Financial Accounting Series (12 ed)     Cengage learning

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

Coyne J.G, Scott L.S Brady W. & David.W (2010) “Accounting Program Research Rankings by          Topical Area and Methodology” Issues in Accounting Education 25 (4): 631-654

Horngren C.T; Datar S.M; Foster G (2006) “Cost Accounting: A managerial Emphasis” 12 ed   New Jersy: Pearson Prentice Hall

 

 

 

 

 

INTRODUCTION TO ACCOUNTING

 

 

 

Name:

Professor

Course

Institution

Date

 

 

 

 

 

 

 

 

 

 

 

 

Business description

Marionette Company operates in consumer goods industry and has been in existence since 2014, when it first ventured into the market. Some of the products produced by this company include microwave oven and bicycles. It operates across the United States with 5 branches with more of its sales being generated from New York. It operates in a highly competitive industry, consumer goods. Among the major competitors are Nestle SA and Unilever PLC. The following is a narration of the company’s transaction s occurring during the month of March.

Preparation of financial statements

Here is the company’s status of account as at 1st of March. It shows all the balances that the company had in the account.

    01 Mar 2016
Account Number Description  Trial Balance: Opening Balance
DS-100 Fixed Assets                 9,445.00
DS-150 Accumulated Depreciation                          –
DS-200 Investments                 6,000.00
DS-300 Cash – Other                          –
DS-400 Debtors – Other                 1,000.00
DS-500 Creditors – Other                          –
DS-600 Creditors – Other                (1,160.00)
DS-700 Loan-long term liabilities              (16,200.00)
DS-800 Share Capital                   (100.00)

 

 

From this, several transactions occurred as follows:

3/1/2016 purchased a fixed asset @ 11403.51 which was financed by a loan.

3/2/2016 the company purchased product from two suppliers on credit one costing $1160 and $600 from another supplier

3/3/2016 the company paid the debtor a cheque worth 10000 to partly settle the previous balance

3/31/2016 the accumulated depreciation for the asset for the month was $5730

From this transaction, the following are the ledger accounts that are duly balanced:

dr Fixed ASSET cr
Bal b/d        9,445.00 bal c/d      15,118.51
Loan    11,403.51 Accumulated dep    (5,730.00)
     
     
   20,848.51    20,848.51
Bal b/d      15,118.51      

 

 

creditors
           
    bal b/d ds600      1,160.00
    purchases ds 500          600.00
    purchases ds600      2,003.37
       
bal c.d      3,763.37        3,763.37
           

 

 

 

 

 

Debtors
           
Bal b/d 1000 bank    10,000.00
Bal b/d    23,000.00    
sales   bal c.d    14,000.00
       
bal c.d    24,000.00      24,000.00
           

 

 

 

 

 

 

 

 

 

 

 

 

From this, the trial balance was extracted and the following are the details:

    01 Mar 2016   01 Mar 2016   31 Mar 2016
Account Number Description  Template: Opening Balance  Trial Balance: Opening Balances  Account Movement  Trial Balance: Closing Balances
DS-100 Fixed Assets                 9,445.00                9,445.00         11,403.51            20,848.51
DS-150 Accumulated Depreciation                          –                         –          (5,730.00)             (5,730.00)
DS-200 Investments                 6,000.00                6,000.00           3,750.00              9,750.00
DS-300 Cash – Other                          –                         –                    –                       –
DS-400 Debtors – Other                 1,000.00                1,000.00                    –              1,000.00
DS-500 Creditors – Other                          –                         –            (600.00)                (600.00)
DS-600 Creditors – Other                (1,160.00)               (1,160.00)          (2,003.37)             (3,163.37)
DS-700 Loan-long term liabilities              (16,200.00)             (16,200.00)          (2,360.00)           (18,560.00)
DS-800 Share Capital                   (100.00)                  (100.00)                    –                (100.00)

 

 

 

 

 

 

 

The following is the income statement:

Marionette Income Statement
For the Years Ending [Mar1, 2016 and Mar31, 2016]
   
Revenue Mar,1,2016 31/3/2016
  Income from services                                  20,193                                                  20,193
  (Less sales returns and allowances)    
  Service revenue                                359,295                                                359,295
  Interest revenue    
  Other revenue    
Total Revenues                             379,488                                             379,488
  [42]
Expenses    
  Bank charges                                    1,184                                                    1,184
  Interest expense                                    1,200                                                    1,200
  Commissions                                    6,532                                                    6,532
  computer expenses                                      966                                                       966
  Depreciation                                    5,730                                                    5,730
  office expense                                    1,004                                                    1,004
  Office Rent                                  67,368                                                  67,368
Total Expenses                               83,985                                               83,985
   
  Net Income Before Taxes                                295,502                                                295,502
  Income tax expense                                    6,300                                                    6,300
   
Income from Continuing Operations                             289,202                                             289,202
  {42} [42]
   
Net Income                             289,202                                             289,202

 

 

Balance sheet:

Account Description Mar-2016 Mar-2016
  Assets    
BS-100 Property, Plant & Equipment            9,445.00     15,118.51
BS-200 Investments            6,000.00       9,750.00
BS-DEBTORS Trade Debtors          23,000.00     12,000.00
BS-400 Other Debtors            1,000.00       1,000.00
BS-BANK Bank            4,400.00     20,446.27
BS-PCASH Petty Cash              200.00          201.00
BS-300 Other Cash Accounts                     –                –
  Total Assets          44,045.00     58,515.78
   
  Equity & Liabilities  
BS-800 Share Capital              100.00          100.00
BS-RETAINED Retained Earnings          21,485.00     21,485.00
DS-Drawing drawing                     –     13,139.41
BS-900 Reserves                     –                –
BS-700 Long Term Liabilities          15,200.00     17,560.00
BS-CREDITORS Trade Creditors            5,100.00       1,468.00
BS-500 Other Creditors            1,000.00       1,600.00
BS-600 Sales Tax Control            1,160.00       3,163.37
  Total Equity & Liabilities          44,045.00     58,515.78

 

 

Qualitative characteristics

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.

Accounting concepts

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.

 

 

 

 

 

 

 

References

Needles B.E (2013) “Principles of financial accounting” Financial Accounting Series (12 ed)     Cengage learning

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

Coyne J.G, Scott L.S Brady W. & David.W (2010) “Accounting Program Research Rankings by          Topical Area and Methodology” Issues in Accounting Education 25 (4): 631-654

Horngren C.T; Datar S.M; Foster G (2006) “Cost Accounting: A managerial Emphasis” 12 ed   New Jersy: Pearson Prentice Hall

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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