Busines transactions and financial statements

Each business should have an accounting system best suited to its particular needs. The method used must provide the moat effective means of recording, summarizing, and presenting appropriate accounting data for management and for others who have an interest in the business. The accountant is responsible for the design and implementation of the accounting forms, the records, and the procedures. The Accountant must also consider the present structure of the business as well as its likely courses in the future. Modern accounting machines and data-processing equipments have substantial increased the speed with which information can be made available to management.

Then a business is being established, a system must be introduced that records all transactions in monetary terms. Transactions are either internal, that is, within the company, or external, outside the company. Typical business transactions include the following:

1. purchase of merchandise, supplies, and services;

2. sale of merchandise;

3. receipt and disbursement of cash;

4. receipt and issue of negotiable instruments, such as checks or notes;

5. acquisition of property;

6. incurring and paying debts;

7. transfer of merchandise from warehouse to store; and

8. use of supplies and services in the operation of the business.

The dollar of course, is the basic unit of measurements in accounting in the United States, and it is also widely used as a unit of measurements in international transactions. The collar amount of each transaction is entered in the accounting journals of the business. Information about the nature of the transaction and the dollar amount that is involved generally appears first on a business document, such as a sales invoice. Such documents are essential references in accounting because they reflect iterations in the company’s financial positions and operating performance.

Fine Foods Corporation

1918 Onondaga Parkway.

Syracuse, New York

Sunnyside Grocery Store 64 Roosevelt Road_____ Liverpool, New York__ ____________________

Invoice No_ Date______ Order No__ Chipped Via

16-5978________ May 5, 1976_____ 8876___________ N.Y. Lines_______

Sold to

Terms 2/10, n/30___________

Quantity Description Unit Amount

Price

50 cases Fine Foods Onion Soup 4.00 200.00

100 cases Golden Apricot Nectar 6.00 600.00

20 cases Fine Foods Peanut Butter 10.00 __200.00__

1000.00

A typical sales invoice

Central Stationery Store

Statements of Partners’ Capital

Year Ended December 31, 1976

	Hawkins	Robertson
Equity Balance
January 1, 1976	$ 92,500	$ 92,500
Profit for Year 1976	70,00	70,00
Investment During Year	5,00	5,00
	-------------	-------------
	167,500	167,500
Less Withdrawals	57,00	57,00
	-------------	-------------
Balance,
December 31, 1976	$110,500	$110,500

An Equity Statement for a partnership

Handy Andy House and Garden Suppliers

Balance Sheet

March, 14, 1976

ASSETS

Current Assets
	Cash				$2,000
	Account Receivable				6,000
	Notes Receivable				3,000
	Merchandise Inventory				80,000
	Office Suppliers				400
	Store Suppliers				600
	Prepaid Insurance				1,000
Total current Assets					93,000
Plant Assets
	Land			$10,000
	Buildings		$152,000
		Less Accumulated Depreciation	6,000	146,000
	Store Equipment		40,000
		Less Accumulated Depreciation	12,000	28,000
		Total Plant Assets			184,000
Investments					100,000
Patents					20,000
Goodwill					10,000
		TOTAL ASSETS			$407,000

LIABILITIES

Current Liabilities
	Accounts Payable			$30,000
	Notes Payable			10,000
	Accrued Salaries			2,000
	Accrued Taxes			4,000
		Total Current Liabilities		46,000
Long-term Liabilities
	Notes Payable			$40,000
	Merchandise Payable			100,000
	Total Long-term Liabilities			140,000
			TOTAL LIABILITIES	186,000

CAPITAL

Andrew Kovacs, Capital		221,000
	TOTAL LIABILITIES & CAPITAL	$407,000

A Typical balance sheet

Marjorie Breck, CPA