Part Two

Question No. 1
On 5
th
July a petty cash payment amounting to $44 for the purchase of petrol was made and this amount
was inclusive of $4 for GST. For the proper authorization of this transaction, there must be a tax invoice
from an authorize vendor of the company clearly mentioning the quantity and value of the petrol being
purchased by the company. This cash payment should be approved by the company accountant with some
responsible from management as per the financial powers of the company.
Question No. 2
A journal similar to the petty cash or payments journal could be created and at the end of the month you
would total and balance your journal. You would compete this process after you have received and
reconciled your credit card statement.
The reconciliation process will involve checking that all of the payments made on your statement agree
with what you have entered in your credit card journal. You will also need to make an entry for any fees
that were charged and there could be interest incurred if there was an outstanding balance from the
previous month.
Question No. 3
The following corrections are required:
1. For the first transaction, the cash sales for men shoes was of $245 and women shoe was of $350.
This amount was wrong mentioned as $350 for men and $245 for women.
4. For this transaction, $205 was received for $220 account balance resulting in a discount of $15
while it was mentioned $20 discount in the cash receipt journal
5. For this transaction debtor amount was wrong mentioned as $350 instead of $300
7. For this transaction, commission of $200 was omitted in the commission column
8. The sale of IBM PC to staff should be reported in sundry account instead of commission column
Question No. 4
The steps for bank reconciliation are as under:
1. Record the ending balance from the bank statement
2. Prepare a detailed list of the deposits still in transit
3. Add the total of the deposits in transit to the ending balance from STEP 1
4. Prepare a detailed list of outstanding checks (sent/written, but not yet cleared)
5. Subtract the total outstanding from the ending balance. This is your adjusted bank balance
6. Adjust your ledger balance to add in any interest received from the bank and to subtract any fees
incurred. This is your adjusted general ledger balance
7. Compare the adjusted bank balance to the adjusted general ledger balance. These amounts should
agree
Question No. 5
Cash accounting system recognize revenue when it is received in cash and recognize expense when it is
paid in cash.
On the other hand, in the accrual basis of accounting system, the revenue is recognized when it is earned
and expenses are recognized when it is incur
Question No. 6
The advantages of computerized accounting system are:
1. Data entry onto the computer with its formatted screens and built-in databases of customers and
supplier details and stock records can be carried out far more quickly than any manual processing
2. Fast and accurate invoices, credit notes, purchase orders, printing statements and payroll
documents are all done automatically
3. There is less room for errors as only one accounting entry is needed for each transaction rather
than two (or three) for a manual system
4. The data is instantly available and can be made available to different users in different locations
at the same time
Question No. 7
The advantages of manual accounting system are:
1. It help to understand the overall flow of the data from the entry making to the financial statement
preparation
2. For manual accounting system, there is no need of computer and its application. A computer
illiterate person can easily prepare the financial statements with the help of data
3. Manual accounting system doesnt need to pay for annual fee charges for the accounting system
and there is no chances of data being lost due to virus or bug in the system
4. Computer files can be modified easily while the manual accounting system add transparency in
the preparation of data
Question No. 8
I will recommend peachtree accounting software as it can accommodate customization and better fit for
the purpose of record keeping for the company with financial statement preparation.
Question No. 9
The three consulting techniques are:
1. Better revenue management There is a need to better revenue management of the company with
a view to increase the sale of the company to generate more profitability
2. Proper taxation record There is a need for better management of taxation of record to record the
GST paid and collected with a view to claim the differential as tax liability or tax asset
3. Better financial reporting There is a need of better financial reporting on the part of the
company to serve the purpose of owners, managers and tax agent as owner will review the
financial statements to determine the profitability of the company. This profit is further reviewed
as taxable for the company as being reviewed by the tax agent.