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Principles Of Accounting Assignment Help

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Principles Of Accounting Assignment Help

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 Executive Summary

 
The first case would assist in the preparation of the financial statements. The statements include the 10 column worksheet, income statement, balance sheet and statement of changes on owners’ equity.  The second cases, aids in understanding the systems of accounting both manual and computerized package system. Benefits of computerized system are brought forward. The last case, bring about the instances of partnerships form of business activities. It elaborates the sharing of profits modes by the partners and the unethical accounting activities incorporated in the system. 
 
Case 1:  (20 points) Manual accounting system
Required:
A. What source documents would be required in a manual accounting system in order to record the sales to customers and receipt of cash, and to ensure correct payment of money to suppliers? (10 points)
 
A manual Accounting system implies to a bookkeeping system that organizations utilize to maintain their records without employment of computer system. In most cases, the transactions are written in journals from which the information is manually incorporated into set of financial statements. Numerous changes in the accounting sector have occurred across the globe hence manual system is slowly outpaced and replaced by electronic record keeping. Most owners in the globe prefer manual record keeping systems while the close to 90 percent of business utilize the electronic record keeping system. This is derived by the urge for organizations to capture the information, generate reports as well as meet tax and legal reporting requirements (Williams., et al., 2005).  
Keeping accounting records is key because it facilitates the business owners and managers to keep track of their cash receipts and the payables due to the organization. Organizations such as Magic Thread usually find it very difficult to keep track of their records of sales and purchases (Weygandt, et al., 2009).
 
Source documents 
The source documents that Samantha would use to record sales to customers and receipt of cash and enhance accuracy of payments done to the suppliers include; bank statement, cash register tape, credit card receipt, lockbox cheque images, sales order and the supplier invoice  (Yamaguchi, 2003).
 
Bank statement 
The bank statement provides a detailed record of all the cash debits and credits in the individuals and firms. Samantha would use the bank statement to record cash sales and cash payments done through the bank. It aids business owners keep track of the liquidity of the business organizations. In the manual accounting system it is utilized to make comparison of firm’s bank statement and the general ledger. Moreover, it aids in keeping track of all the actual payments done as well as assist in finding the sales not made. Firm’s undertake bank reconciliations with the view of improving the efficiency and ensure that the cash asset is secure from unscrupulous employees.  Magic Thread should make it mandatory that all sales made during the day are deposited in the bank accounts. Moreover, all payments should be made in cheques hence ensuring that no funds are misappropriated and lost as a result of cash payments to the creditors. 
 
Cash register tape
The cash register tapes are used to offer information related to the merchant. They contain information relating to the name of the merchant, the business addresses and the contact details. Moreover, the merchants with numerous locations are accorded the store numbers. The employees serving those initials or their first name or employee identification code appear at the bottom section. Magic Thread can utilize the cash register tape to record all the merchant information, commodities and services sold and the prices charged. 
The accounts can use the cash register tape to record all the transactions in the journal.
The cash register are quite advantageous because they assist business firms in tracking customer transactions as well as keeping checkout time. They are very easy to operate and have a high degree of accuracy. 
Some of the demerits of the system include the fact that are require the users to undergo some basic training in order to effectively operate them. Moreover, some cash register models vary to a large extend hence the necessity for training when new register are implemented in the organization. At times, the instructions for operating the cash register differ depending on the model as they vary precisely on the model one purchases and the kinds of entries that an accounts clerk makes in the system. Loss of data is likely to occur especially when the machine malfunctions or during instances of power outranges. Hence, they are not the best source documents items to use in the posting transactions to journals.
 
Credit card receipt
A credit card receipt implies to the hard copy document used in keeping transactions at the point of sale. The receipt generated consists of descriptions of the transactions including the date, the merchant name and location. Moreover, they contain a portion of the primary account number, the amount and the reference number. The credit card receipt is utilized as an evidence for disbursement of funds from the petty cash kit in an organization. This is because it contains the details of the transaction such hence firms would back expenses incurred in the petty cash kit
 
lockbox cheque images
The lockbox collection system is utilized by firms to facilitate them process payments from the customers. The clients usually send the payments to one or more post office lockboxes. Thereafter, an employee collects the payments and bank them in the company accounts and forward a report to the company.  Magic Thread can utilize this method to collect the payment from the customers at easy without incurring costs collecting payments from debtors (Rezaee, et al., 2001).  
The channels spends up the processing time for payments as cheques are banked immediately as the accountants matches the payments to bill and logs the payment into the manual journals. Some demerits of the system is that one to make payment for the lockbox service. At times, the cost of lockbox banking is higher than the benefits derived. Moreover, they may perpetuate the fraud instances hence the firms are likely to lose when frauds occur. 
 
Sales order 
The sales document is usually coupled with a bill of lading or even a parking list used to invoice a customer eventually resulting to a sale transaction. 
 
Supplier invoice
It is a source document that is used by the accountants in a firm to support the issuance of cash cheque and electronic payment to the suppliers of goods and services. It usually supports the intention of organization making an expense, inventory item and purchase of fixed assets in a given organization. 
 
B. In her computer course, Samantha learnt that the focus in accounting should not be on bookkeeping but on the use of the information ‘inside the computer’ to make better decisions and to better manage the business. In what ways could a computerized accounting package help Samantha make better decisions and manage her business better? (10 points)
 
Focus of computerized accounting package 
Computerized bookkeeping tool should be used to make informed and better decisions as well as better manage their business. Therefore, Samantha should not just implement the computerized accounting package  for record keeping (Sam, et al., 2012).
 
Benefits of computerized accounting package
 
Improved accounting accuracy 
The accounting software is quite beneficial to the organization because it aids them in reducing and eliminating most human errors in the calculations. It is because manual bookkeeping are prone to errors due to numerous mathematical calculations done by hand. Errors made in the early stages may have an impact in the end balance or provide inconsistent results hence delayed decision making in the organizations. Moreover, the firms would not provide the accurate information required to improve the organization financial health. Samantha should note that the computerized system is also prone to human errors especially when the inputs are not done correctly. 
 
Speed of completion 
Computerized system improves on the speed of completion of the accounts processes as compared to the manual processes. They enable the accountants and the managers to make faster and informed decisions. This is unlike the manual system where the accounts usually takes a long time as the process the transactions from the source documents to the journal ledgers. This is time consuming and the unposted transactions keep on piling each day hence not able to complete and make informed decisions on time. 
 
Reduced overall costs
The speed and efficiency of the accounting software facilitates the overall reduced costs. This is because the accounting program allows the members of the accounting team to perform more tasks over a given time. The accounting department’s payroll and administrations costs are also reduced. Organizations are keen on reducing the overall costs hence the accounting software’s implement are big win for the organizations (Bagranoff, 2007). 
 
Reduced Frustrations with filing taxes
All firms across the globe are required to file tax returns at the end of the financial year. Organizations such as Magic Thread would find it challenging to file taxes because their records are not properly updated. The accounting software would facilitate Samantha business records well updated and the tax amounts paid on time hence the firms firm does not overpay taxes and also fined due to underpaying taxations. 
 
Case 2: (20 points) Partnership 
 
A.Who are the stakeholders in this situation? (5 points)
 
Stakeholders in this business partnership are Derek Brown and Kate Wilson.  They are engaged in partnership form of business through contribution of capital to run their small retail business. Derek contributed $60,000 while Kate Contributed $50,000. In the business Derek is in the accounts department and controls all the finances due to his or her interaction with the numbers. This is attributed on the fact that he decided that the all profits must be distributed based on the initial capital contributed by the partners. 
Kate on the other side deals with other organizational aspects of the organizations including people but not on finances of the organizations. partnership is a business made of two or more people contributing initial capital to start a business activities. They share their profits based on the capital invested and other arrangement such as active engagement into the business (Svendsen, 1998). 
 
B. Does Derek appear to be doing anything wrong? Explain your response. (10 points)
Yes. There is something Derek is doing wrong in regard to the disclosure of the financials to the other partners. Derek is taking advantage of Kate’s situation of not being concerned about the financial implications of withdrawal by Derek. Kate agreed to Derek request to withdraw a total of $40,000 in which $20,000 on the second year and $20000 on the third year. However, such withdrawal did not affected the sharing profits of the partners. In the third year, Derek was left with only $20000 hence the sharing of the profits must have been effected immediately after the first withdrawals. The current total investment in the company is the initial capital less any drawings and addition of any funds. In this case, the Derek withdrew a total of $40000 during the second and third years hence the total investment was $70000 hence the profit sharing ratio is supposed to be 28.57 percent for Derek and Kate get 71.43 percent of the profits. This is not the case as Derek decided to share the profits based on the initial capital contributed where Derek get 54.54 percent and Kate get 45.46 percent. 
 
C. Are there any ethical issues involved here? If so, identify them. (5 points)
Yes. There are ethical issues involved in the case between the two stakeholders of the partnership. Derek understood Kate’s weakness in the accounting hence decided to manipulate him. Derek initial contribution to the firm was $60000 while Kate’s contribution was $50000. The two partners agreed to share profits based on initial stakeholder’s contribution. However, during the second year Derek withdrawal of $20000 from his initial contribution affected his stake in the company hence there were required to change the profit sharing based on the current shareholding. However, Derek manipulated Kate hence they continued using the initial stake as computation for profit sharing. On the third year, Derek withdrew another $20000 hence his shake was reduced to $20000. This implied that the profit sharing ratios were supposed to be changed. Derek knows clearly that his contribution to the company is very low but continues to take advantage of the situation. His actions are likely to contribute to the fall of the partnership due to unethical behavior of one partner (Goodijk, 2002).
Kate should keep track of the organization capital structure and ensure that any withdrawal made affects the profits sharing ratios (Bakre, 2007).  Failure keep track of the accounting and financial matters of the organization is likely to cripple the organization and bring it down (Shil, 2008).
 
Conclusion 
The first case involved the manual accounting process against the computerized accounting package. We learned that computerized system eased the preparation of financial statement and improved the degree of accuracy. Both the systems are prone to errors hence people should not make assumptions that computerized package eliminates all the errors.
The second cases we learned about the partnership business activities. The case of Derek and Kate illustrates how the importance of investors need to be keen on the financial performance of the organization. We learned that some unethical behavior may be incorporated into the business organizations. 
 
 
 

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