Ms. Amanda Financial Accounting Report

 

 

Ms. Amanda Financial Accounting Report

Student’s Name

Professor’s Name

Institution Affiliation

Date

 

 

 

 

 

 

 

 

 

 

Ms. Amanda Financial Account Report

2. The major functions of bookkeeping include; production of invoices, posting of the debits and the credits, recording of monetary transactions, and lastly, maintaining as well as balancing the general accounts, the subsidiaries and also the historical accounts.
3. The major difference that occurs between the cash and the accrual basis is that under the cash method, the revenues and the expenses are immediately recognized when the cash is received or else paid out. On the contrary, under an accrual basis, accounting transactions such as revenue is recorded when it is earned while the expenses are recorded when they are incurred. Under this method, allowances for bad debts, inventory obsolescence, and sales returns are used.
6. The money measurement concept argues out that in both economic and accounting, all the transactions or events that are recorded tend to be measured in monetary form (Polski and Kearney, 2018). Examples of items that are not measured in terms of money are; the level of skill of the employees, the working conditions of the employee, among others.
7. Dual aspect concept – under this concept, the essence of coordination of two accounts that differ is highlighted. In simple terms, the concept is based on a double-entry basis. An example is; items bought on a cash basis have two aspects of being reflected, which are the giving of the cash and the receiving of the goods.

• Objectivity – the financial transactions must be free from bias hence reflecting the actual details of a transaction. An example is that; when the organization makes an order, there should be a receipt of the bill, and even after making payment, the paid receipt should be maintained. This way, the organization will have all the proof of occurrence of the transaction as required in the objectivity principle.

1. Historical cost – under the accounting principle, the historical cost of the economic items is said to be the original monetary cost of such an item. Assets and also liabilities are reported at their historical costs that change are not yet updated in the value of the items. E.g., the historical cost of a rental building was valued at $25million at the date of purchase 10 years ago. The current fair value is said to be two times the initial figure.
3. The cash purchase of an equipment transaction will lead to an increase in the equipment account and a decrease in the cash account (Bounie and François, 2016)

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1. In the event where the part of the amount from the accounts payable has been received, there will be an increase in the bank account, which is an asset, while in the accounts payable account, there will be a reduction, which is a liability.

• Whenever an individual contributes any set of assets into his own business, then the asset account will increase as well as the owner’s equity capital account (Ang, 2019).

1. When a short-term debt is paid, then the cash account decreases, which is an asset, and also, the loan account decreases, which is a liability account.
2. Under instances where the owner sells an asset at a loss in the business, then the asset account will reduce together with the equity account of the owner since the loss is an expense to the business.
4. Considering Ms. Amanda in her salon business, she ought to have bought a trading license that cost her $120.
5. Madam Irene visited Ms. Amanda’s salon and had her nails done, and paid $100 for the service before leaving. On the contrary, Mrs. Irene visited Ms. Amanda’s salon business had her hair done, but she promised to pay $30 for the services, including the previously accrued balances at the end of the month.

• Ms. Amanda’s salon business is where she may be required to pay for the electricity bills of $200 that she has used for a particular period of time.

1. Ms. Amanda visited a cosmetic shop with the aim of purchasing several beauty items, which cost a few coins; hence she paid $ 4000 in cash. At the same time, Ms. Amanda remembered she needs a new hair blow-dry, which was a bit expensive for her to pay at that moment; hence she was forced to carry with her the hair blow-dry but pay $7000 later after a period of 10 days.
2. A transaction that shows how Ms. Amanda may collect cash from the debtors is where she had previously rendered services to a customer on credit terms, and the period of time that he/she had promised to make the payment has already elapsed. Therefore, Ms. Amanda may proceed and ask the customer to make the payment of $30 as per the agreement.
3. Initially, Ms. Amanda had acquired some business equipment on credit terms, and the agreed time has already elapsed. Hence, she will be faced with the obligation of fulfilling the agreement by depositing some cash amounting to $7000 for payment in the relevant creditor’s account.
5. the journal entries

Number	Particular item	Dr.	Cr.
1	Investment of money in the business	Equipment account $120	Bank account Capital account $120
2	Performance of service in cash	Bank/ cash account $100	Owner’s equity account $100
	Performance of service on credit	Debtors account $30	Creditors account$30
3	Payment of expenses	Expenses account $200	Bank account $200
4	Purchase of an asset on cash	Assets account $400	Bank account $400
	Purchase of an asset on credit	Asset  account Debtors account $700	Accounts payable account $700

 

5	Collection of cash from debtors	Cash/ bank account $30	Debtors account $30
6	Payment of cash to creditor’s accounts	Creditors a/c $7000	Bank a/c $7000

1. the related ledger account

Capital account

Dr.	$ Cr. $
Bal c/d 220	Equipment account 120 Bank a/c           100
220	220

 

Debtors account

Dr.	$ Cr. $
Creditor’s a/c 30 Creditor’s a/c 7000 Bank a/c   30	Bank a/c 30         Bal c/d 7030
7060	7060

 

 

 

 

Creditors’ account

Dr.	$ Cr. $
Bank a/c  7000   Bal c/d 30	Debtors a/c 30 Debtor’s a/c  7000
7030	7030

 

 

 

Bank/cash account

Dr.	$ Cr. $
Capital a/c             100 Asset          400 Debtor’s        30 ball c/d                         6790	Equipment account 120 Expenses a/c                          200   Creditor’s a/c  7000
7320	7320

 

Asset account

Dr.	$ Cr. $
Bank a/c 120 Bal c/d 280	Bank a/c 400
400	400

 

 

Expenses account

Dr.	$ Cr. $
Bank a/c 200	Bal c/d 200
200	200

 

• the trial balance

No.	Particular	Dr. $	Cr. $
1	Asset a/c	280
2	Expenses a/c		200
3	Cash/ bank a/c	6790
4	Creditors a/c	30
5 6	Debtors’ a/c Capital a/c   Totals	220   7320	7030   7320

 

 

1. Financial statements are very significant to all organizations (Blessing and Onoja, 2015). The small business enterprise ought to keep proper books of financial statements in order to track their business progress. The financial statements will also be required in determining the liquidity position of the firm. When acquiring long-term loans, the lend institution may require to know the value of the company’s asset, an action that can be described better by the financial statements. In the determination of the amount of the revenue that should be paid to the government, financial statements are required.

 

 

 

 

 

 

 

 

 

 

References

Ang, J.S., 2019. Small business uniqueness and the theory of financial management. Journal of small business finance, 1(1), pp.1-13.

Bonnie, D., and François, A., 2016. Cash, check, or bank card? The effects of transaction characteristics on the use of payment instruments. Telecom Paris Economics and Social Sciences Working Paper No. ESS-06-05.

Blessing, A. and Onoja, E.E., 2015. The role of financial statements on investment decision making: a case of united bank for Africa PLC (2004-2013). European Journal of Business, Economics, and Accountancy, 3(2), pp.12-37.

Polski, M.M., and Kearney, A.T., 2018. Measuring transaction costs and institutional change in the US commercial banking industry. Institute for Development Strategies Discussion Papers. ISSN, pp.01-3.