Principles of Accounts

School Based Assessment (CSEC)

Name: Marissa Green

Registration Number:

Centre Number:

Territory: Jamaica

Year of Submission: 2012

 Table of Contents

Title Page

Acknowledgement…………………………………………………………………………….....1

Aims of Project…………………………………………………………………………………..2

Description and Overview of Business…………………………………………………………..3

Accounting Cycle………………………………………………………………………………..4

Transaction List…………………………………………………………………………………5

Debtors and Creditors List………………………………………………………………………7

Books of Original Entry

Purchases Journal……………………………………………………………………………….8

Sales Journal……………………………………………………………………………………9

Return Inwards Journal…………………………………………………………………………10

Return Outwards Journal……………………………………………………………………….11

General Journal…………………………………………………………………………………12

Ledger Accounts

Purchases Ledger………………………………………………………………………………12

Sales Ledger……………………………………………………………………………………13
 Table of Contents

Title Page

General Ledger………………………………………………………………………………….14

Final Accounts

Bought and Sold Schedule………………………………………………………………………18

Cash Book……………………………………………………………………………………….19

Stock Valuation………………………………………………………………………………….20

Trial Balance………………………………………………………………………………….....21

Trading, Profit and Loss Account………………………………………………………………22

Balance Sheet……………………………………………………………………………………23

Performance Evaluation and Interpretation of Results

Statement of Performance……………………………………………………………………….24

Ratios and Comparisons………………...……………………………………………………….25

Recommendations……………………………..……………………………………………….29

Conclusion…..………………………………………………………………………………….30

Appendices……………………………………………………………………………………..31
 Acknowledgement

Sincere gratitude is given to everyone who has made a significant contribution to the successful

completion of this school based assessment.

1
 Aims of Project

The researcher would like to achieve the following aims of:

 Making a profit

 Providing service that is efficient

 Drawing up accurate financial statements for Cellular World for the year 2011

 Acquiring a full understanding of the accounting concepts in order to develop a

high level of competence in the financial sector.

2
 Description and Overview of Business

Cellular World is a developed retail company which provides cellular phones to most parishes in

convenient locations. Cellular World is owned and operated by Marissa Green who is the sole

proprietor. The company allows customers to purchase the cellular phones on credit. The

business also purchases cellular phones on credit from its suppliers.

The company employs fourteen staff members with Miss. Green as its chief executive officer.

The staff includes three supervisors and eleven general workers including cashiers, assistance,

security etc.

CEO

Supervisor Supervisor Supervisor

General
Workers

Diagram illustrating the lines of authority within the business.

The accounting records of Cellular World are kept on double entry principles with all the

mandatory journals, ledgers, cash books etc of the business.

The period under review is November 2011

3
 Accounting Cycle

Cellular World keeps records conforming to the standard form of double entry principles and the

accounting cycle below:

Journalising
/Books of
Original Entry

Final Posting to
Accounts Ledgers

Adjustments
and Closing Trial Balance
Entries

4
 Transaction List

2011

November 1. Started business by depositing $20,000 into a bank account.

November 2. Placed $5000 cheque into cash account.

November 3. Bought display stands on credit from J. Owens, $3000.

November 4. Bought office furniture on credit from J. McIntyre, $1500.

November 5. Bought 20 phones on credit from M. McIntyre, $20000.

November 6. Sold 1 phone for cash $1000.

November 7. Sold 9 phones for cash $9000.

November 8. Sold 3 phones on credit to K. McFarlane, $3000.

November 9. Sold 5 phones on credit to G. Gordon, $5000.

November 10. Bought 20 phones on credit from M. McIntyre, $2000.

November 11. Sold 2 phones for cash $2000.

November 12. G. Gordon returned 1 phone due to faults, $10.

November 13. K. McFarlane returned 1 phone due to faults, $30.

November 14. Sold 8 phones for cash $8000.

5
 Transaction List

2011

November 15. Sold 5 phones for cash $5000.

November 19. Sold 3 phones for cash $3000.

November 21. Bought 20 phones on credit from M. McIntyre, $2000.

November 24. Sold 1 phone for cash $1000.

November 25. Paid insurance by cash $250

November 26. Paid rent by cash $1500.

November 28. Paid sundry by cash $10.

November 30. Withdrew $2500 from bank account.

November 30. We returned 2 phones to M. McIntyre, $200.

6
Books of Original Entry
 Purchases Ledger

Invoice (page 50)

Number Folio Amount
2011 $
November 3. J. Owens 9101 PL1 3000

November 4. J. McIntyre 9102 PL2 1500

November 5. M. McIntyre 9103 PL3 2000
November 10. M. McIntyre 9104 PL3 2000
November 21. M. McIntyre 9105 PL3 2000
Transferred to Purchases GL8 10500
account

8
 Sales Journal

Invoice (page 52)

Number Folio Amount
2011 $
November 8. K. McFarlane 1244 SL5 3000
November 9. G. Gordon 1245 SL6 5000
Transferred to Sales GL10 8000
account

9
 Return Inwards Journal

Invoice (page 53)

Number Folio Amount
2011 $
November 12. G. Gordon 1247 SL6 10
November 13. K. McFarlane 1244 SL5 30
Transferred to Return GL13 40
Inwards account

10
 Return Outwards Journal

Invoice (page 53)

Number Folio Amount
2011 $
November 20. M. McIntyre 1244 PL4 200
Transferred to Return GL8 200
Outwards account

11
Ledger Accounts
 Purchases Ledger

J. Owens a/c (pg.1)

2011 $ 2011 $
November 30 Bal. c/d 3000 November 3 Purchases PJ 30 3000

December 1 Bal. b/d 3000

J. McIntyre a/c (pg.2)

2011 $ 2011 $
November 30 Bal. c/d 1500 November 4 Purchases PJ 30 1500

December 1 Bal. b/d 1500

M. McIntyre a/c (pg.3)

2011 $ 2011 $
November 30 Return Outwards RO 13 200 November 5 Purchases PJ 30 2000
November 30 Bal. c/d 5800 November 10 Purchases PJ 30 2000
____ November 21 Purchases PJ 30 2000
6000 6000
December 1 Bal. b/d 5800

12
 Sales Ledger

K. McFarlane a/c (pg.5)

2011 $ 2011 $
November 8 Sales SJ 10 3000 November 12 Return Inwards RI 14 10
____ November 30 Bal. c/d 2990
3000 3000

December 1 Bal. b/d 2990

G. Gordon a/c (pg. 8)

2011 $ 2011 $
November Sales SJ 10 5000 November 13 Return Inwards RI 14 30
____ November 30 Bal. c/d 4970
5000 5000

December 1 Bal. b/d 4970

13
 General Ledger

Capital a/c

2011 $ 2011 $
November 30 Bal. c/d 20000 November 1 Bank 20000

December 1 Bal. b/d 20000

Purchases a/c

2011 $ 2011 $
November 5 M. McIntyre 2000 November 30 Bal. c/d 6000
November 10 M. McIntyre 2000
November 21 M. McIntyre 2000 ____
6000 6000
December 1 Bal. b/d 6000

Display Stands a/c

2011 $ 2011 $
November 3 J. Owens 3000 November 30 Bal. c/d 3000

December 1 Bal. b/d 3000

14
 General Ledger

Office Furniture a/c

2011 $ 2011 $
November 4 J. McIntyre 1500 November 30 Bal. c/d 1500

December 1 Bal. b/d 1500

Sales a/c

2011 $ 2011 $
November 30 Bal. c/d 37000 November 6 Cash 1000
November 7 Cash 9000
November 8 K. McFarlane 3000
November 9 C. Jones 5000
November 11 Cash 2000
November 14 Cash 8000
November 15 Cash 5000
November 19 Cash 3000
_____ November 24 Cash 1000
37000 37000

December 1 Bal. b/d 37000

15
 General Ledger

Insurance a/c

2011 $ 2011 $
November 25 Cash 250 November 30 Bal. c/d 250

December 1 Bal. b/d 250

Rent a/c

2011 $ 2011 $
November 26 Cash 1500 November 30 Bal. c/d 1500

December 1 Bal. b/d 1500

Sundry a/c

2011 $ 2011 $
November 28 Cash 10 November 30 Bal. c/d 10

December 1 Bal. b/d 10

16
 General Ledger

Drawings a/c

2011 $ 2011 $
November 30 Bank 2500 November 30 Bal. c/d 2500

December 1 Bal. b/d 2500

Return Inwards a/c

2011 $ 2011 $
November 12 G. Gordon 10 November 30 Bal. c/d 40
November 13 K. McFarlane 30 __
40 40

December 1 Bal. b/d 40

Return Outwards a/c

2011 $ 2011 $
November 30 Bal. c/d 200 November 30 M. McIntyre 200

December 1 Bal. b/d 200

17
Final Accounts
 Bought and Sold Schedule

Date Bought Date Sold

2011 $ 2011 $
November 5 20 at $100 each 2000 November 6 1 at $1000 1000
November 10 20 at $100 each 2000 November 7 9 at $1000 each 9000
November 21 20 at $100 each 2000 November 8 3 at $1000 each 3000
November 9 5 at $1000 each 5000
November 11 2 at $1000 each 2000
November 14 8 at $1000 each 8000
November 15 5 at $1000 each 5000
November 19 3 at $1000 each 3000
November 24 1 at $1000 each 1000
____ _____
6000 37000

18
 The Cash Book

Cash Book
Cash Bank Cash Bank
Date $ $ Date $ $
2011 2011
November 1 Capital 20000 November 2 Cash 5000
November 2 Bank 5000 November 25 Insurance 250
November 6 Sales 1000 November 26 Rent 1500
November 7 Sales 9000 November 28 Sundry 10
November 11 Sales 2000 November 30 Drawing 2500
November 14 Sales 8000 November 30 Bal. c/d 32240 12500
November 15 Sales 5000
November 19 Sales 3000
November 24 Sales 1000 _____ _____ ______
34000 20000 34000 20000
December 1 Bal. b/d 32240 12500

19
 Stock Valuation

First In, First Out

Date Bought Sold Stock after each transaction

2011 $ $
November 5 20 at $100 each 20 at $100 each 2000
November 6 1 at $100 each 19 at $100 each 1900
November 7 9 at $100 each 10 at $100 each 1000
November 8 3 at $100 each 7 at $100 each 700
November 9 5 at $100 each 2 at $100 each 200
November 10 20 at $100 each 2 at $100 each 200
20 at $100 each 2000 2200
November 11 2 at $100 each 20 at $100 each 2000
November 14 8 at $100 each 12 at $100 each 1200
November 15 5 at $100 each 7 at $100 each 700
November 19 3 at $100 each 4 at $100 each 400
November 21 20 at $100 each 4 at $100 each 400
20 at $100 each 2000 2400
November 24 1 at $100 each 3 at $100 each 300
20 at $100 each 2000
23 at $100 each 2300

20
 Trial Balance

Cellular World
Trial Balance as at 30 November 2011
Dr. Cr.
Capital 20000
Bank 12500
Cash 32240
Purchases 6000
J. Owens 3000
Display Stands 3000
J. McIntyre 1500
Office furniture 1500
M. McIntyre 5800
Sales 37000
K. McFarlane 2970
G. Gordon 4990
Return Inwards 40
Return Outwards 200
Insurance 250
Rent 1500
Drawings 2500
Sundry 10__ _____
67500 67500

Closing Stock $2300

21
 Trading, Profit and Loss Account

Cellular World

_________ Trading, Profit and Loss Account as at 30 November 2011______________

$ $

Sales 37000

Less Returns Inwards (40)_ 36960

Less Cost of goods sold

Purchases 6000

Less Returns Outwards (200)_

5800

Less Closing Stock (2300)_ (3500)

Gross Profit 33460

Less Expenses

Insurance 250

Rent 1500

Sundry 10_ (1760)_

Net Profit 31700

22
 Balance Sheet

Cellular World
________________________Balance Sheet as at 30 November 2011_____________________
Fixed Assets $ $ $
Display Stands 3000
Office Furniture 1500 4500

Current Assets
Stock 2300
Debtors 7960
Bank 12500
Cash 32240
55000

Current Liabilities
Creditors 5800
Other Creditors 4500 (10300)
Working Capital 44700
49200

Financed By:
Capital 20000
Net Profit 31700
51700
Less Drawings (2500)
49200

23
 Debtors and Creditors List

Debtors

G. Gordon 5000

K. McFarlane 3000

Creditors

J. Owens 3000

J. McIntyre 1500

M. McIntyre 6000

7
 Principles of Accounts

School Based Assessment (CSEC)

Name: Marissa Green

Registration Number:

School: Manchester High

Centre Number:

Territory: Jamaica

Teacher: Mrs. Black-Miller

Year of Submission: 2012

Performance Evaluation and

Interpretation of Results
 Statement of Performance

In preparing the financial statements for the business, the Trading, Profit and Loss account

showed a net profit of thirty one thousand seven hundred dollars ($31700) during the month of

November in the year 2011.

At the end of the financial year there was an increase in capital. This indicated that the business

was profitable as shown in the ratios calculated.

24
 Ratios and Comparisons

1. Gross Profit to Sales Ratio

Gross Profit = 33460 = 0.9

Sales 37000

Gross Profit as a percentage of sales

Gross Profit * 100 = 33460 * 100 = 90%

Sales 37000

This gives the amount of gross profit for every one hundred dollars ($100) of sales. This

therefore means that for every one hundred dollars of sale ninety ($90) was made before any

expense were paid.

Gross Profit to Sales

47%
53% Gross Profit
Sales

Diagram 2: Pie chart showing gross profit to sales during the financial year

25
 Ratios and Comparisons

2. Net Profit to Sales Ratio

Net Profit = 31700 = 0.9

Sales 37000

Net Profit to Sales Ratio Percentage

Net Profit *100 = 31700 * 100 = 90%

Sales 37000

The calculation above shows how much net profit has been made for every one hundred dollar

($100) of sales. It can be seen that for every one hundred dollars of sales ninety dollars was

made. This ratio brings the expenses into the calculation as opposed to the gross profit

percentage.

Net Profit to Sales

46%
54% Net Profit
Sales

Diagram 3: Pie Chart showing the net profit to sales in during the financial period.
26
 Ratios and Comparisons

3. Return on Capital Employed

Net Profit = Net Profit = 31700 = 0.6

Capital Employed Fixed Assets+ Current-Liabilities 49200

Return on Capital Employed Percentage

Net Profit * 100 = 31700 * 100 = 60%

Capital Employed 49200

Net Profit to Capital Employed

39%

Net Profit
61%
Capital Employed

Diagram 4 : Pie chart showing net profit to the capital employed during the financial year.

This ratio illustrates how well the capital has been employed. Cellular world has achieved a

return of sixty dollars ($60) for every one hundred dollars invested.

27
 Ratios and Comparisons

4. Rate of Stock Turnover

Cost of Goods Sold = 3500 = 1.5

Stock 2300

This equation illustrates how quickly the stick has been turned over.

5. Acid Test

Current Assets- Stock = 55000-3000 = 5.1:1

Current Liabilities 10300

In order to bring about further aspects of liquidity this ratio is used. The current assets –

stock to current liabilities is 5.1 to 1.

6. Current Ratio

Current Assets = 55000 = 5.3:1

Current Liabilities 10300

This ratio is used to measure current assets to current liabilities. This is basically

comparing assets that will be turned into cash within the next twelve months with liabilities that

will be paid within the same period. The current ratio for this financial period is 5.3 to 1.

Alternatively this may be said to be 5.3 times.

28
 Recommendations

In order to make Cellular World more successful excess money that is earned will be used to

expand the business by opening another store and also introduce new phones into the business.

Cellular World will also find cheaper suppliers that are able to meet the demand of the phones so

that profitability will be greater.

29
 Conclusion

It is clear that the aims of this project have been achieved in that the business had made a profit,

the service provided was efficient, accurate financial statements were prepared and a full

understanding of the accounting concepts was gained.

30
31