Recording Business Transactions - University of West London

Level: 3

Aims:

1) Provide you with the basic skills required to keep records of business transactions using appropriate accounting methods.
2) Provide you with fundamental knowledge of financial statements.
3) Enable and encourage you to apply the principles of accounting in practice.

Learning outcome 1: Knowledge and understanding of double entry bookkeeping

Learning outcome 2: Knowledge and understanding of books of prime entry

Learning outcome 3: Knowledge and understanding of the accounting equation and financial statements

Learning outcome 4: Demonstrate ability to record and summarise accounting information

Learning outcome 5: Demonstrate ability to maintain accurate books of accounts for a business

Learning outcome 6: Demonstrate ability to make business decisions using financial information

Assessment 1: Write an essay on the following topic:

Accounting is the system of recording and summarizing business and financial transactions.

Choose any real-life company from the underlisted sectors and perform a detailed discussion on the importance of accounting for your selected business and what is the main process of accounting.

Your chosen company must be from the following sectors:
• Retail sector
• Manufacturing sector
• Transport sector
• Health care sector
• Finance sector
• Technology sector

The essay should contain the following:

1- Brief introduction of your selected company.

2- An explanation of the accounting principle and the importance of accounting for your selected business.

3- An explanation of the main process of accounting.

4- Use Harvard Referencing where applicable

5- Professional marks - Presentation and layout

Word count: 1000 words

Assessment 2: Part A.
Errol Anderson is going to set up a business repairing and servicing cars. However, he's uncertain whether to choose a sole trader business or a partnership, also he does not know about the steps for starting a business. He wants you to consult him on the following matters.

• Explain the advantages and disadvantages of each type in detail and

• provide 5 steps for starting a new business.

Part B.

1. Kavan is a trader dealing in electronic goods who commenced his business in 2018. For the following transactions that took place in the month of March 2021, pass journal entries.

• 01/03 - Purchased goods from Y and Co. on credit £60,000
• 02/03 - Sold goods to D and Co. on credit £30,000
• 03/03 - Paid Y and Co. through a bank in full settlement £58,000
• 04/03 - D and Co. accepted a bill drawn by Kavan £30,000
• 05/03 - Sold goods to L on credit £20,000
• 06/03 - Sold goods to M on credit £40,000
• 07/03 - Received a cheque from M in full settlement and deposited the same to the bank 39,000
• 08/03 - Goods returned to Y and Co. £4,000
• 09/03 - L became insolvent and only 90p per pound is received by cash in the final settlement
• 10/03 - Goods returned by M £3,000

You are required to show the Journal entries (only) (with narrative) necessary to record the following items which occur in March 2021.

2. The following are the balances on the accounts of ABC on 31 August 2021:

£
Sales 41,700
Purchases 34,680
Receivables. 6,790
Payables 5,650
General expenses. 12,760
Loan 10,000
Plant and Machinery at cost 5,000
Motor Van at cost 6,000
Drawings. 2,000
Rent and rates 6,700
Insurance 4,000
Bank overdraft 510
Capital 20,000

Required:
a) Prepare ABC's trial balance as of 31 August 2021.
b) Explain the benefits and limitations of the trial balance in a business Organisation.