Assignment Brief

BA (Hons) International Business & Finance Academic

Year 2017-18
Module Information:
Qualification:
BA (Hons) International Business & Finance

Module Code & Title: BAIBF08002 Introduction to Financial Accounting

Assignment Title: Report on proposed financial accounting system for a selected organization

Component Weighting: 30%

Date of Issue: 22 April 2018 Due date: 29 June 2018

To be filled by the student:

Student ID: C18Y1083

Tutor: Damien Angelo Labrooy

Date Due: 29/06/18

Date of Submission: 29/06/18

*All work must be submitted on or before the due date. If an extension of time to submit work is
required, a Mitigating Circumstance Form must be submitted.

Has an extension been approved? Yes No

If yes, please provide the new submission date ….…/.…. /……., and affix appropriate evidence.
First Marker: Second Marker:

Agreed Mark: Refer: Yes / No

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General Guidelines
1. A Cover page or title page – You should always attach a title page to your assignment. Use previous page
as your cover sheet and be sure to fill the details correctly.
2. This entire brief should be attached in first before you start answering.
3. All the assignments should be prepared using word processing software.
4. All the assignments should print in A4 sized paper, and make sure to only use one side printing.
5. Allow 1” margin on each side of the paper. But on the left side you will need to leave room for binding.
6. Ensure that your assignment is stapled or secured together in a binder of some sort and attach the
Softcopy (CD) of your final document, system on last page.
7. The submission of your work assessment should be organized and clearly structured.

Word Processing Rules

1. Use a font type that will make easy for your examiner to read. The font size should be 12 point, and should
be in the style of Times New Roman.
2. Use 1.5-line word-processing. Left justify all paragraphs.
3. Ensure that all headings are consistent in terms of size and font style.
4. Use footer function on the word processor to insert Your Student ID, Name, Subject, Module code, and
Page Number on each page. This is useful if individual sheets become detached for any reason.
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6. Ensure that your printer’s output is of a good quality and that you have enough ink to print your entire
assignment.

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Important Points:
1. Check carefully the hand in date and the instructions given with the assignment. Late submissions will not
be accepted.
2. Ensure that you give yourself enough time to complete the assignment by the due date.
3. Don’t leave things such as printing to the last minute – excuses of this nature will not be accepted for
failure to hand in the work on time.
4. A printed version of the assignment needs to be submitted physically along with an electronic version
uploaded to the student learning management system on or before the stated deadline.
5. You must take responsibility for managing your own time effectively.
6. If you are unable to hand in your assignment on time and have valid reasons such as illness, you may apply
(in writing) for an extension.
7. Non-submission of work without valid reasons will lead to an automatic REFERRAL. You will then be asked
to complete an alternative assignment.

8. Take great care that if you use other people’s work or ideas in your assignment, you properly reference
them, using the HARVARD referencing system, in you text and any bibliography, otherwise you may be
guilty of plagiarism.

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Statement of Originality and Student Declaration

I hereby, declare that I know what plagiarism entails, namely to use another’s work and to present it as my own
without attributing the sources in the correct way. I further understand what it means to copy another’s work.
1. I know that plagiarism is a punishable offence because it constitutes theft.
2. I understand the plagiarism and copying policy of the University of the West of Scotland.
3. I know what the consequences will be if I plagiaries or copy another’s work in any of the assignments for
this program.
4. I declare therefore that all work presented by me for every aspect of my program, will be my own, and
where I have made use of another’s work, I will attribute the source in the correct way.
5. I acknowledge that the attachment of this document signed or not, constitutes my agreement on it.
6. I understand that my assignment will not be considered as submitted if this document is not attached to
the attached.

Student’s Signature: …………………………… Date: ………………

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Select a small organisation (fictitious) which manufactures products, develop an accounting system which can be
used in the selected organisation and explain how this accounting system impacts on increasing the efficiency of
business process

You may assume business operates within Sri Lanka.

Word Limit: 1500 words

MARKING SCHEME
Assessment Criteria Marks

Introduction to organization

Type of the business organisation, location, nature of the business and the products offered 5
to the market.

The basic business functions (including accounting) 5

Importance of accounting as a function in the selected business 5

Accounting system in the selected Company/ Business

Documents used to collect information 25

Books of prime entry to record transactions

Different types of ledgers maintained

Adjustments made after the preparation of the trial balance

Financial statements of selected organisation

Supplementary accounting options 20
Control accounts

Bank reconciliation accounts

Manufacturing accounts
Recommendation (400 to 600 words)

Problem faced by the business in maintaining the process (3 to 5 issues) 15

How such problems can be overcome and impact on increasing the efficiency of company 15

References and overall representation 10

[TOTAL: 100 MARKS]

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OTHER REQUIREMENTS

List of Contents
This should list in sequence, with page numbers.

List of Tables and Figures

The lists of tables and figures (diagrams, graphs, illustrations) should follow the list of contents and each has their
own numbering sequence.

List of references
In text referencing should match with the list of references attached to the end of the report. It should be
represented in Harvard Referencing Style.

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Contents

Bakes by Bella ..............................................................................................................................................................8

The basic business functions of Bakes by Bella .........................................................................................................8
Importance of accounting as a function in Bakes by Bella ......................................................................................9
Accounting System of Bakes by Bella ........................................................................................................................9
Supplementary accounting options ..........................................................................................................................13
Problem faced by the business in maintaining the process and recommendation ...............................................15
References ..................................................................................................................................................................17

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Bakes by Bella

Bakes by Bella is a sole trader business and it was started in 2015. The bakery is located in
kollupitiya and it has one and only branch in Sri Lanka. Bakes by Bella bakery manufacturing and
sell lot of products such as cakes, cookies, wedding cakes, rolls, pastries and buns etc. Bakes by
bella maintains their standards up to now by manufacturing and delivering the standard products
to the customers. The bakery is running by a woman who is well known in Colombo in preparing
wedding cakes. There are 10 staffs working under her to serve the walking customers in the most
professional way. Staffs are well trained under her to manufacture the products by themselves.
They do online deliveries as well to the customers who are purchasing the cakes in big amounts.
Accounts of the business is maintaining by the owner of the business and checked by the owner at
the end of the year.

The basic business functions of Bakes by Bella

• Production Function - The production function undertakes the activities

necessary to provide the organization’s products or services. Here all products like breads,
cakes, and buns and various other products are produced. Planning and scheduling,
supervising, managing product quality and decision making are include in the production
function. (Learn, 2018)
• Purchasing Function - The purchasing function is concerned with
acquiring goods and services for use by the business organization. This will include, for an
example flour, oil, eggs, milk etc. (Anon., 2018)
• Marketing Function - Marketing is concerned with identifying and
satisfying customers needs at the right price. This is the very important function for an
organization to make the business successful in the field. (learn, 2018)
• Accounting and Finance Function - This is the function responsible for to record all
the transaction which is taking place in the business such as sales revenue, payables,
receivables, payroll, taxes, preparing the final accounts at the end of the year. (Learn, 2018)

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Importance of accounting as a function in Bakes by Bella

Having an accounting function in the Bakes by Bella bakery is helpful in communication

business’s current status and its useful for the owner to make the future plans about the
organization. Accounting provides information needed to perform tasks in accordance with an
organization’s long-term goals. Profits, however depend on the accuracy of the accounting
information. (CIMA, 2018)

Accounting System of Bakes by Bella

Accounting system is prepared to generate the data for a variety of managerial purposes. In this
case Bakes by Bella does not have any legal requirements to maintain accounts in the regular basis
but as we discussed earlier maintaining is accounting is very much helpful for an organization to
be in the comfort zone of the field.

Below mention is the process of recording transactions in the final accounts.

Transactions Source Documents Prime Entry Books Ledgers Trial Balance Financial
Statements

Transactions

A transaction is an event that happens within an organization that is measurable and expressed in
monetary terms. Accounting transactions can be break into two types

1. Capital Transactions - capital transactions relate to costs incurred that will affect the
organization in the long term.
2. Revenue Transactions - Revenue Transactions relate to expenses that will only affect the
organization in the current accounting period.

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 We can mention the following as a transaction of the organization for the month of
01January 2018 of Bakes by Bella
• 1/1 Started the business with $10,000 in the bank
• 2/1 Williamson lent $400 in cash
• 3/1 Bought goods on credit from Messi $840 and Ronaldo $3,600
• 5/1 Sold goods for cash $2,000
• 6/1 Took $250 of the cash and paid it into the bank
• 7/1 Sold goods on credit to Gayle $3,800
• 9/1 Bought goods on credit from ab de Villers $1170
• 10/1 Sold goods to Morgan $1900 on credit
• 12/1 The business returns goods to ab de Villers $440
• 15/1 Bought motor cars on credit from Manchester motors $2,600
• 17/1 Bought office furniture paying by cheque $200
• 21/1 Goods sold for cash $70
• 22/1 Paid the amount owed to ab de Villers by cheque
• 25/1 Bought goods for $700- paid by cheque
• 27/1 Returned a car bought for $600 to Manchester motors
• 30/1 Mrs. Bella put further $2000 in the bank to expand business

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 Trial Balance of Bakes by Bella as at January 2018

Account Name Debit Credit

Bank 9780
Williamson 400
Capital 12000
Cash 2220
Ronaldo 3600
Purchase 6310
Sales 7770
Gayle 3800
Morgan 1900
Purchases Return 440
Motor Van 2000
Manchester 2000
Office Furniture 200
Total 26210 26210

Source Documents

These are the documents which contain original record to prove transactions that had taken place
within the business. These documents will be received from suppliers or issued for purchases from
the business. These documents will be issued for credit sales, credit purchase, cash transactions
etc.

Prime Entry Books

The ledger accounts are the main source of information used to prepare the financial statements.
However, if a business updates its ledgers each time a transaction occurs, errors might be made
and also consumes more time. To avoid this all the transactions are initially listed in an appropriate
book called prime entry books. (system, 2018)

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Prime Entry Book Source Document
Sales Day Book Sales Invoice
Purchase Day Book Purchase Invoice
Sales Return Day Book Credit Note
Purchase Return Day Book Debit Note
General Journal Journal Voucher
Petty Cash Book Petty Cash Payment Voucher

• Sales Day book - This is a book which contains all credit sales transactions within
the business.

Date Details Amount

7-Jan Gayle 3800
10-Jan Morgan 1900
5700

• Purchase Day Book - This book Contains all credit Purchases Taking place within
the business.

Date Details Amount

3-Jan Messi 840
3-Jan Ronaldo 3600
9-Jan Ab de Villers 1170
15-Jan Manchester 2600
8210

• Sales Return Day Book - Also known as sales return book which includes transactions
such as products returned from customers based on certain reasons.

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 • Purchases Return Day Book - Also known as purchase return day book which includes
transactions of returns by the business to its suppliers due to certain reasons such damages,
excess supply etc.

Date Details Amount

12-Jan Ab de Villiers 440
27-Jan Motor 600
1040

• Petty Cash Book - This is a prime entry where small cash transactions are recorded.

Ledgers

A general ledger account is an account or record used to sort and store balance sheet and income
statement transactions.

Financial Statements

This statement would demonstrate the financial position of the company. This statement would
represent the assets, liabilities and capitals of the company. The accounting equation constitute
these three elements. The format of the statement of financial position is based on that.

Supplementary accounting options

Control Accounts - The principle on which the control account is based is simple and it as
follows. If the opening balance of an account is known, together with information of the additions
and deductions entered in the account, the closing balance can be calculated.

Control account can be categorized into two different elements

1. Sales Ledger Control Account

2. Purchases Ledger control Account (Coach, 2018)

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Bank Reconciliation accounts

Most business operate a current account with a bank for convenience. The business maintains a
record of its bank transactions in the cash book however, the method in which the business records
a bank transaction is the total opposite of how the bank records it.

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If the statement does not balance the business will check certain transactions which affects the
balancing such as: (Tools, 2018)
• Unpresented cheques
• Unrealized cheques
• Errors made by the bank
• Errors made by the business
• Standing orders
• Bank charges

Manufacturing Accounts

Statement used in accounting process of a manufacturing organization. We can’t find out the profit
or loss figures through this statement and at the same point we can find out the cost of direct
materials and labors. (Dictionary, 2018)

Problem faced by the business in maintaining the process and recommendation

• Not Maintaining a proper accounting system - Considering the costs business

organization does not maintain a proper accounting system. The result of this business
could not take correct decisions at the correct time. And more importantly because of the
unavailability of the proper accounting system there are so many ways of making frauds in
the organization. So, maintaining a proper accounting system is very much important in
the business organization.
• Inefficient staffs related to accounting - Again on order to avoid the costs business
organization recruited employees are not qualified and do not possess prior experience.
This will result of making a lot f errors in the organization and more importantly there are
lot chances to reduce the speediness of the process. Taking inefficient staff will also result
in taking bad decisions in the business process. As a result of this, this will straight away
lead the organization into the danger zone. So, recruiting efficient and well experienced
staffs to the business is very important for the organization.

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 • Overhead Expenses - At a present firm gives less considerations about the overhead
expenses. High level expenses, would bring down the business. Expenses like telephone
bill, electricity bill, and water bill are looks small but collectively those are Large amount
of expenses. So, organization should record overhead expenses in their record books also
because they can decide the profit or loss of the organization. Taking overhead expenses
into the consideration is very important for the organization.
• Unavailability of finance staff - As per Bakes by Bella organization owner her self-doing
the accounts and everything instead of having accounting assistant. This may lead the
organization into huge trouble because of handling accounts without the finance related
staff. because of this incident the transactions are not maintaining in the proper way in the
organization and it will result in poor decision making, errors in the recording transactions
and reduce in the quality of the product etc. so, recruiting professional accounting staff is
very important for this organization to run successfully in the business.

More importantly Bakes by Bella is not creating the financial statements formally, creating
financial statements for the business is very important for the organization to calculate the
profit and loss. And financial statement also used calculate the taxes and other expenses.
More importantly when the organization is applying for the bank loan bank should ask for
a financial statement of the organization so, if the organization doesn’t have the financial
statement properly the bank may refuse the loan request of the organization.

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References

Anon., 2018. Open Learn. [Online]

Available at: http://www.open.edu/openlearn/money-management/organisations-and-management-
accounting/content-section-4.4
[Accessed 15 June 2018].

CIMA, 2018. CIMA. [Online]

Available at: http://www.cimaglobal.com/Pages-that-we-will-need-to-bring-back/velocity-archive/Student-e-
magazine/Velocity-February-2015/the-role-of-finance-in-organisations/
[Accessed 20 June 2018].

Coach, A., 2018. Accounting Coach. [Online]

Available at: https://www.accountingcoach.com/blog/accounts-receivable-control-account-subsidiary-ledger
[Accessed 15 June 2018].

Dictionary, B., 2018. Business Dictionary. [Online]

Available at: http://www.businessdictionary.com/definition/manufacturing-account.html
[Accessed 21 june 2018].

learn, O., 2018. Open learn. [Online]

Available at: http://www.open.edu/openlearn/money-management/organisations-and-management-
accounting/content-section-4.5
[Accessed 10 June 2018].

Learn, O., 2018. Open Learn. [Online]

Available at: http://www.open.edu/openlearn/money-management/organisations-and-management-
accounting/content-section-4.2
[Accessed 20 June 2018].

Learn, O., 2018. Open Learn. [Online]

Available at: http://www.open.edu/openlearn/money-management/organisations-and-management-
accounting/content-section-4.7
[Accessed 01 June 2018].

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system, T. f. r., 2018. The financial reporting system. [Online]
Available at: http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Books%20of%20Prime%20Entry.aspx
[Accessed 20 June 2018].

Tools, A., 2018. Accounting Tools. [Online]

Available at: https://www.accountingtools.com/articles/2017/5/17/bank-reconciliation
[Accessed 08 June 2018].

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