This assessment will cover following questions:
- Discuss the nature, behaviour, and purpose of cost accounting, and implement cost accounting concepts, techniques, and methods to business transactions.
- Monitor the basic principles of accounting with the use of relevant software.
- Prepare financial statements from initial data, which is dealing with both routine and non-routine transactions and analyse financial statements with confidence.
INTRODUCTION
In present time, the elements and components that are used to record the entire accounting information within accurate books is known as accounting fundamental (Mitra, 2016). This consists of accounting standards, definitions, dual abstractions, going concern, terms of money, etc. specific accounting is assisted by accounting jargon to deal with complex situation. The report covers the definition, action and intent of cost accounting which is used to address different situation of business by implementing managerial accounting strategies. Suitable software is used to address basic financial concepts and to compile financial statements using regular and semi-routine activities. Review of the financial report is being performed after the registration of these documents.
The report covers different task in which various particular accounts are being prepared like Journal entries, ledger, trail balance, trading account, balance sheet which help to define the financial position. These statements help to discuss the overall profitability of company by evaluating the total liabilities and capital to generate income. In addition, last task covers the revenue and capital expenditure and actual difference to determine the variance.
TASK 1
Journal entries
Date |
Particulars |
Debit (£) |
Credit (£) |
April, 5 |
Cash A/c |
300.00 |
|
To Capital a/c |
300.00 |
||
April, 7 |
Purchase a/c |
200.00 |
|
To cash a/c |
200.00 |
||
April, 8 |
Cash a/c |
||
To Loan from Tatiana |
250.00 |
||
April, 15 |
Motor van a/c |
150.00 |
|
To cash a/c |
150.00 |
||
April, 20 |
Cash A/c |
350.00 |
|
To sales a/c |
350.00 |
||
April, 28 |
Rent a/c |
50.00 |
|
To cash a/c |
50.00 |
||
April, 29 |
Loan a/c |
200.00 |
|
To Cash A/c |
200 |
||
April, 30 |
Drawings a/c |
60.00 |
|
To cash a/c |
60.00 |
(a) Ledger accounts
Cash a/c
Date |
Particular |
Amount |
Date |
Particular |
Amount |
05/04/18 |
To capital a/c |
300.00 |
07/04/18 |
By purchase |
200.00 |
08/04/18 |
To loan form Tatiana |
250.00 |
15/04/18 |
By Motor van |
150.00 |
20/04/18 |
To sales |
350.00 |
28/04/18 |
By rent |
50.00 |
29/04/18 |
By loan paid |
200.00 |
|||
30/04/18 |
by Drawing |
60.00 |
|||
30/04/18 |
By closing balance |
240.00 |
|||
900.00 |
900.00 |
Capital a/c
Date |
Particular |
Amount |
Date |
Particular |
Amount |
30/04/18 |
To drawing |
60.00 |
05/04/18 |
By cash |
300.00 |
30/04/18 |
To closing balance |
240.00 |
|||
300.00 |
300.00 |
Purchase a/c
Date |
Particular |
Amount |
Date |
Particular |
Amount |
07/04/18 |
To cash |
200.00 |
30/04/18 |
By trading a/c |
200.00 |
200.00 |
200.00 |
Loan a/c
Date |
Particular |
Amount |
Date |
Particular |
Amount |
29/04/18 |
To cash |
200.00 |
08/04/18 |
By cash |
250.00 |
30/04/18 |
To closing balance |
50.00 |
|||
250.00 |
250.00 |
Motor van
Date |
Particular |
Amount |
Date |
Particular |
Amount |
15/04/16 |
To cash |
150.00 |
30/04/16 |
By closing balance |
150.00 |
150.00 |
150.00 |
Sales a/c
Date |
Particular |
Amount |
Date |
Particular |
Amount |
30/04/16 |
To Trading a/c |
350.00 |
20/04/18 |
By cash |
350.00 |
350.00 |
350.00 |
Rent a/c
Date |
Particular |
Amount |
Date |
Particular |
Amount |
28/04/18 |
To cash |
50.00 |
20/04/18 |
By P&l ac |
50.00 |
50.00 |
50.00 |
Drawing a/c
Date |
Particular |
Amount |
Date |
Particular |
Amount |
30/04/18 |
To cash a/c |
60.00 |
30/04/18 |
By capital a/c |
60.00 |
60.00 |
60.00 |
(b) Trial Balance
Particulars |
Debit (£) |
Credit (£) |
Cash A/c |
240.00 |
|
Capital a/c |
300.00 |
|
Purchase a/c |
200.00 |
|
Loan a/c |
50.00 |
|
Motor van a/c |
150.00 |
|
Rent a/c |
50.00 |
|
Sales a/c |
350.00 |
|
Drawings a/c |
60.00 |
|
700.00 |
700.00 |
(c) Final Statements of maxim
Statement of profit & loss a/c |
|
Particulars |
Amount |
Sales a/c |
350.00 |
Less – Cost of goods sold |
100.00 |
Gross Profit |
250.00 |
Less – Expenses |
|
Rent a/c |
50.00 |
Net Profit |
200.00 |
Statement of Financial position as at April, 30
Amount |
||
Non Current assets |
||
Motor van |
150.00 |
|
Current Assets |
||
Cash A/c |
240.00 |
|
Inventory |
100.00 |
340.00 |
Total Assets |
490.00 |
|
Capital a/c |
300.00 |
|
Add – Net Profit |
200.00 |
|
Less – Drawings |
60.00 |
440.00 |
Current Liabilities |
||
Short term loan |
50.00 |
|
Total Liabilities |
490.00 |
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TASK 2
(a) Ledgers accounts of Pendo
Loan from Sergei a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 27 |
To cash a/c |
350 |
Jan, 4 |
By cash a/c |
1000 |
Jan, 31 |
To Balance c/d |
650 |
|||
1000 |
1000 |
||||
Feb, 1 |
By Balance b/d |
650 |
(b) Trial balance of Pendo
Trial Balance at 31 January
Particulars |
Debit (£) |
Credit (£) |
Cash a/c |
4025 |
|
Capital a/c |
5000 |
|
Motor van a/c |
600 |
|
Purchase a/c |
1300 |
|
Loan from Sergei a/c |
650 |
|
Motor van expenses a/c |
200 |
|
Sales a/c |
800 |
|
Storage expenses a/c |
150 |
|
Drawings a/c |
175 |
|
6450 |
6450 |
(c) Income statement of Pendo
TASK 3
(a) Ledger accounts of Mafuta
Cash a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 1 |
To Balance b/d |
343 |
Jan, 5 |
By Wages a/c |
12 |
Jan, 7 |
To Smith's a/c |
18 |
Jan, 9 |
By Max's a/c |
21 |
Jan, 11 |
To Sales a/c |
64 |
Jan, 14 |
By Wages a/c |
14 |
Jan, 21 |
To Sales a/c |
110 |
Jan, 14 |
By Purchases a/c |
75 |
Jan, 23 |
To Harvey's a/c |
25 |
Jan, 15 |
By Rich's a/c |
162 |
Jan, 28 |
To Sales a/c |
84 |
Jan, 20 |
By Fixtures and fittings a/c |
32 |
Jan, 31 |
To Sales a/c |
31 |
Jan, 21 |
By Wages a/c |
17 |
Jan, 23 |
By office expenses a/c |
3 |
|||
Jan, 28 |
By Wages a/c |
15 |
|||
Jan, 31 |
By Balance c/d |
323 |
|||
674 |
674 |
||||
Feb, 1 |
To Balance b/d |
323 |
Capital a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 1 |
To Payables |
33 |
Jan, 1 |
By Cash in hand a/c |
343 |
Jan, 31 |
To balance c/d |
1049 |
By Inventory |
458 |
|
By Furniture and fittings |
198 |
||||
By Receivables |
83 |
||||
1082 |
1082 |
Fixtures and fittings a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 1 |
To Balance b/d |
198 |
Jan, 31 |
By Balance c/d |
230 |
Jan, 20 |
To cash a/c |
32 |
|||
230 |
230 |
||||
Feb, 1 |
To Balance b/d |
230 |
Sales a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 31 |
To Trading a/c |
412 |
Jan, 2 |
By Harvey's a/c |
124 |
Jan, 11 |
By Cash a/c |
64 |
|||
Jan, 21 |
By Cash a/c |
110 |
|||
Jan, 28 |
By Cash a/c |
84 |
|||
Jan, 31 |
By Cash a/c |
30 |
|||
412 |
412 |
Wages a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 5 |
To cash a/c |
12 |
Jan, 31 |
Profit and loss a/c |
58 |
Jan, 14 |
To cash a/c |
14 |
|||
Jan, 21 |
To cash a/c |
17 |
|||
Jan, 28 |
To cash a/c |
15 |
|||
58 |
58 |
Purchase a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 5 |
To Rich's a/c |
150 |
Jan, 31 |
By Trading a/c |
225 |
Jan, 14 |
To cash a/c |
75 |
|||
225 |
225 |
Office Expenses a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 23 |
To cash a/c |
3 |
Jan, 31 |
Profit and loss a/c |
3 |
Receivables from Smith's a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan,1 |
To Balance b/d |
18 |
Jan, 7 |
By Cash a/c |
18 |
Receivables from Harvey's a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 1 |
To Balance b/d |
39 |
Jan, 23 |
By Cash a/c |
25 |
Jan, 2 |
To Sales a/c |
124 |
Jan, 31 |
By Balance c/d |
138 |
163 |
163 |
||||
Feb, 1 |
To Balance b/d |
138 |
Receivables from Moon's a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 1 |
To Balance b/d |
26 |
Jan, 31 |
By Balance c/d |
26 |
Feb, 1 |
To Balance b/d |
26 |
Payable to Rich's a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 15 |
To cash a/c |
162 |
Jan, 1 |
By Balance b/d |
12 |
Jan, 5 |
By purchase a/c |
150 |
|||
162 |
162 |
Payable to Max's a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 9 |
To cash a/c |
21 |
Jan, 1 |
By Balance b/d |
21 |
Inventory a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jan, 1 |
To Balance b/d |
458 |
Jan, 31 |
By Trading a/c |
458 |
Jan, 31 |
To Trading a/c |
374 |
Jan, 31 |
By Balance c/d |
374 |
Feb, 1 |
To Balance b/d |
374 |
(b) Trial balanceof Mafuta
Trial Balance at 31 January
Particulars |
Debit (£) |
Credit (£) |
Cash in hand a/c |
323 |
|
Capital a/c |
1049 |
|
Fixtures and fittings a/c |
230 |
|
Sales a/c |
412 |
|
Wages a/c |
58 |
|
Purchase a/c |
225 |
|
Office expenses a/c |
3 |
|
Receivables a/c |
||
Harvey |
138 |
|
Moon |
26 |
|
Inventory a/c |
458 |
|
1461 |
1461 |
(c) Financial position statement of Mafuta
Statement of Profit and Loss
For the month ended 31 January
Particulars |
Amount (£) |
Sales |
412 |
Less- Cost of goods sold |
309 |
Gross profit |
103 |
Less – Expenses |
|
Wages |
58 |
Office Expenses |
3 |
Net Profit |
42 |
Statement of Financial position at 31 January
Particulars |
Amount (£) |
Non current assets |
|
Fixtures and fittings |
230 |
Current assets |
|
Inventory |
374 |
Trade receivables (138+26) |
164 |
Cash |
323 |
Total Assets |
1091 |
Capital account |
|
Add – Net Profit |
42 |
Total Liabilities |
1091 |
Working Note: Cost of goods sold = Opening inventories + Purchase – Closing stock
= 458 + 225 – 374 = 309
TASK 4
(a) Ledger accountsof Ricardo
Sales a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 27 |
To Trading a/c |
28500 |
Jun, 2 |
By Claire – Receivable a/c |
8500 |
Jun, 14 |
By Hywel – Receivable a/c |
9000 |
|||
Jun, 20 |
By Cash a/c |
6000 |
|||
Jun, 24 |
By Mandy – Receivable a/c |
5000 |
|||
28500 |
28500 |
Sales Returns a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 22 |
To Claire – Receivables |
1000 |
Jun, 27 |
By Trading a/c |
1000 |
Purchase a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 13 |
To Georgina – Payable a/c |
12000 |
Jun, 27 |
By Trading a/c |
16500 |
Jun, 21 |
To Andrew – Payable a/c |
4500 |
|||
16500 |
16500 |
Cash a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 20 |
To Sales a/c |
6000 |
Jun, 25 |
By Georgina – Payable a/c |
11160 |
Jun, 24 |
To Claire – Receivable |
7125 |
Jun, 27 |
By Andrew – Payable a/c |
4410 |
Jun, 25 |
To Hywel – Receivables |
9000 |
Jun, 27 |
By Balance c/d |
6555 |
22125 |
22125 |
||||
To Balance b/d |
6555 |
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Discount allowed a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun,24 |
To Claire – Receivable |
375 |
Jun, 27 |
By Profit and loss a/c |
375 |
Discount received a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 27 |
To Profit & loss a/c |
930 |
Jun, 25 |
By Georgina – Payable a/c |
840 |
Jun, 27 |
By Andrew – Payable a/c |
90 |
|||
930 |
930 |
Claire – receivable a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 2 |
To Sales a/c |
8500 |
Jun, 22 |
By Sales return a/c |
1000 |
Jun, 24 |
By Cash a/c |
7125 |
|||
Jun, 24 |
By Discount allowed a/c |
375 |
|||
8500 |
8500 |
Hywel – receivable a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 14 |
To Sales a/c |
9000 |
Jun, 25 |
By Cash a/c |
9000 |
Mandy – receivables a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 24 |
To Sales a/c |
5000 |
Jun, 27 |
By Balance c/d |
5000 |
To Balance b/d |
5000 |
Georgina – payable a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 25 |
To Cash a/c |
11160 |
Jun, 13 |
By Purchase a/c |
12000 |
Jun, 25 |
To Discount received a/c |
840 |
|||
12000 |
12000 |
Andrew – payable a/c
Date |
Particular |
Amount (£) |
Date |
Particular |
Amount (£) |
Jun, 27 |
To Cash a/c |
4410 |
Jun, 21 |
By Purchase a/c |
4500 |
Jun, 27 |
To Discount received a/c |
90 |
|||
4500 |
4500 |
(b) Trial balance of Ricardo
Trial balance at 27 June of Ricardo
Particulars |
Debit |
Credit |
Sales a/c |
28500 |
|
Purchase a/c |
16500 |
|
Cash a/c |
6555 |
|
Sales return a/c |
1000 |
|
Mandy – Receivable |
5000 |
|
Discount allowed a/c |
930 |
|
Discount Received a/c |
375 |
|
29430 |
29430 |
TASK 5
Capital Expenditure
Capital expenditure is money being used by company to develop and purchase fixed assets like properties, plant, infrastructure, land and building. It is also observed that capital spending is continuous expenditure which is spent on completing asset activities and expanding a current underlying asset service life (Niroomandi and et. al, 2012). That is used by the business to make capital investments and programs. Organizations often allow this kind of monetary outlay to eventually increase the scale of existing activities. In financial terms, it is taken into consideration whenever the asset is newly obtained and the expenditure increases the service life of such an additional capital resource. It is crucial to understand that cash spent on the repairing or replacement of buildings is not deemed capital investment and must be recorded on the income statement when it is actually paid.
Revenue Expenditure
The expenses which are related to the day to day of operations and management of a business to display impact on current reporting year (DeBerardinis and Chandel, 2016). Revenue expenses are define by its design that are receive for fulfilling day to day needs of a corporation with in the current accounting year. This expenditure consists of those products and services that are useful for the company but that are used in less than a year and that offer market benefits in order to maximize business-generating ability. In general, these spending are the extra expense that occur due to an additional assets but at the same time it do not add value and useful life of respective asset.
Basic difference between these revenue and capital expenses are discussed below:
Basis |
Revenue Expenses |
Capital Expenses |
Meaning |
It is the actual spending of company which is received during daily activity. |
Capital expenditure is the cost of buying assets of the company. |
Earning Capacity |
It support to preserve the actual ability of assets to generate income during an accounting year. |
This investment helps in growing the company's earning capacity. |
Benefits |
It provide benefit for shorter time basically for one year (Henderson and et. Al, 2015). |
The capital expenditure gains are spread over several years, such as more than one fiscal year. |
Recording in accounts |
These are basically recorded in annual income statements of company. |
All those spending which is being made on capital items are posted into balance sheet. |
Time frame |
These are constant and recurring in nature which is mainly for shorter time frame. |
Capital spending is one-time and non-recurring in existence. It has to do with long periods of time as it will increase efficiency (Kidwell and et. al, 2013). |
Nature of expenditure |
All those expenses which are spend on fixed assets after its usage is known as revenue expenses. |
Whenever money is invested on purchasing assets of the company that are considered as capital expenditure. |
Assets |
The spending on income may not consequence in the acquisition of assets and is considered expenditure on everyday activities |
The result of capital spending in the purchase of properties and used to make profits and selling if they become useless for the company. |
International accounting standard |
These type of expenses are recorded into IAS 16. |
Mainly capital expenses are posted in he accounting record by considering international accounting standard 18 (Drake, Guest and Twedt, 2014). |
Capital and revenue spending are essential for the company's growth and the generation of income. These both beneficial to the company in the current situation and benefit the economy to gain income in the potential future. Each spending gives advantages to the businesses as they manage their workflows with the aid of the income investment company. So capital expenditure allows in the following years to generate income so buy an estate.
CONCLUSION
In the end of the report, it is founded that accounting fundamental are regarded as the components that support company in order to record, determine and summarise entire financial information into meaningful financial statements. By analysing different annual reports exact nature, scope and behaviour of cost accounting technique is determined. Each and every financial document is prepared by implementing accurate accounting standard so that information evaluated from these statements are beneficial for external and internal parties.
REFERENCES
- Mitra, A., 2016. Fundamentals of quality control and improvement. John Wiley & Sons.
- Niroomandi, S. and et. al, 2012. Accounting for large deformations in real-time simulations of soft tissues based on reduced-order models. Computer Methods and Programs in Biomedicine. 105(1). pp.1-12.
- Henderson, S. and et. Al, 2015. Issues in financial accounting. Pearson Higher Education AU.
- DeBerardinis, R. J. and Chandel, N. S., 2016. Fundamentals of cancer metabolism. Science advances. 2(5). p.e1600200.
- Kidwell, L. A. and et. al, 2013. Developing learning objectives for accounting ethics using Bloom's taxonomy. Accounting Education. 22(1). pp.44-65.