Q1. Naming cells in spreadsheets
The above shows how cell references can use names.
Q2. Negative numbers.
Paste a simple spreadsheet example showing how negative numbers can be displayed in brackets. Why do accounting financial reports follow this practice?
Accountants display negative numbers in brackets while doing financial reports so as to differentiate negative numbers from positive ones. It’s not a good idea to simply put a negative behind a number because the inadvertent may be mistaken for minus and therefore it is best to put the negatives in brackets.
Q3. Why should accounting spreadsheet reports be designed with a completely separate data entry area and a separate report area? Paste a simple spreadsheet example showing normal and formula views.
This is one of the financial modelling practices that Help the accountants in ensuring their input data and reports are kept in different tabs so that the mistakes in one file do not affect the other file. It also eases updating of data entry and reviews it for easier understanding of input and output tabs, and finally, it makes it easier to add data for new reporting periods by just modifying one tab and updating the report range (Carlberg, 2004).
Spreadsheet showing normal and formula views
Q4. Reference a You Tube video explaining IF functions.
Link to video:
https://www.youtube.com/watch?v=nU6av3m6eZs
What is an IF statement?
This is excel testing function that checks whether a condition has been met and then returns one value IF true and another value IF false.
Paste a simple spreadsheet accounting example showing an IF function for net profit/net loss.
Q5. Does the Foot video in Interact2 Resources show periodic or perpetual inventory? How can you tell?
The resources show that the inventory system used is periodic. This is because the inventory is not accounted for on a daily basis.
Explain the essential differences between perpetual and periodic inventory systems. Dive your own examples of products that or situations suited for each.
In the perpetual system, accounts are continually updated to the general ledger or inventory journals as the transactions occur, but in the periodic inventory system, there is no cost of goods sold account at all.
It is not possible to maintain the records for perpetual inventory system manually because the transactions are too many in every accounting period. On the other hand, the periodic inventory system allows for manual record keeping for small inventories.
Under periodic accounting, it is impossible to use cycle counting because it’s not easy to obtain accurate inventory counts but can be used in the perpetual inventory system.
In the perpetual system, purchases are recorded under in either the raw materials inventory account or merchandise account while in the periodic inventory system, all purchases are recorded into a purchases asset account (D. Walsh, 2014).
Examples of products suited for each.
Products that are very critical to the company are put on perpetual inventory system to ensure that supplies needed most remain in stock. Expensive products and fragile or risky products as well are put on perpetual inventory system. The periodic system is on the other hand used to record goods that are not very important to the company.
Q6. Business report
Executive summary
The first spreadsheet software that was developed was excelled in September 1985, and it was built for Macintosh, and this has helped to make the world of accounting and finance better. Since then. Several other spreadsheets have since been developed, and these include Google Sheets, Apple’s iWork and Gnumeric for Linux. However, of them all, excel has remained the most enduring and prolific and is used by more than 750 million users worldwide. Excel has been preferred over other spreadsheet options mainly because it is the number one platform used to analyze data, find information, prepare charts as well as present the charts to end users and decision makers. Excel does so well for all levels of user and makes every user satisfied. It is the most familiar and readily available, and it’s hard for one to live without.
Introduction
Spreadsheets are greatly used in accounting and especially excel. Most of the accounting systems are frustrating and do not provide specific financial information that can guide a company in making informed decisions regarding the prevailing economic conditions. Excel comes in to Help the accountants in preparing the most accurate financial reports that can be trusted and used in making decisions. Report writers waste a lot of resources and time, and this has been prevented by use of excel which provides a quick report writing platform which is adequate in providing the information that is needed (Sarkar, Jamnik, Blackwell, & Spott, 2015). It has, therefore, remained the best tool to be used in doing financial reports over a long period of time because of its efficiency and effectiveness.
Advantages of using spreadsheets in financial reporting.
One of the main advantages of spreadsheets is the ability to use historical data to be able to predict and forecast the future. This is very important because it can help a company prevent hard times ahead by developing strategies that will enable its success and prevent the risks ahead as forecasted by excel. Everyone wants to know what the future holds and how to prevent failures and promote successes and because it is enabled by the use of excel means it is a perfect tool for financial reporting. Secondly, excel has flexibility when it comes to calculations or reporting. Anyone can calculate anything using excels, from very simple calculations to the most complex ones. It has features that can accommodate any complex calculations that have really helped accountants in their reporting tasks. Another advantage of using excel is that it can allow reporters to make changes to the existing reports. BI360 is a feature that enables one to make a one- time change to a report which will then be incorporated into all the future versions of the same report. It as well allows one to add formatting to highlight variances and trends through the use of simple graphs, pie charts or visual snapcharts. Spreadsheets offer easy payment tracking, especially for small business owners. It helps to link related data to make it easier for accountants to prepare reports and Helps in decision making. Finally, excel 2010 has added features that allow one to bring data to excel through cut and paste, data links and data imports which makes work easier for the users (Sarkar & Blackwell, 2014).
Disadvantages of using spreadsheets in financial reporting.
One of the disadvantages of using spreadsheets is that they have no audit trails to preserve the integrity of data. It is hard to identify who did a certain work just by liking it. Secondly, spreadsheets errors have a waterfall effect. If a single cell in the spreadsheet is wrong, it can easily affect everything down the line. It could be a misplaced comma, wrong digit or decimal point and the entire of the computations will be wrong. Another disadvantage of using excel is that it is quite difficult to use and it, therefore, requires programming expertise, especially for financial reporting. Some models of excel are very complicated and require the use of extra software that could be expensive. Finally, it is hard to force credits and debits to balance with every transaction while using excel (Savage, 2010).
Conclusions
Spreadsheets are very important and necessary for financial reporting. Despite the drawbacks, it has been used to make work easier for the accountants in reporting financial tasks. However, it is not restricted only to financial reporters, and everyone should have the skills on the use of excel so that we can use them in our day-to-day activities, in research and in carrying out our small businesses that do not require a lot of expertise to run. Life will be easier, cheaper and enjoyable as calculations are made better.
Q7. Applications of Inventory flow assumptions.
Inventory cost flow assumptions are required to help in determining the cost of the goods sold and the ending inventory. These include the weighted average, specific identification, FIFO (First-in; First-out) and LIFO (Last-in; First-out). In my case, I will use the FIFO cost flow assumption. FIFO follows the actual flow of goods which means that the items purchased first are sold first, and those purchased last would be sold last. Those that are purchased at the ending of an accounting period are recorded as ending inventory.
Q8. Prepare a bank reconciliation statement for the following data.
Mickey
Bank Reconciliation
As at 31st July 2017
Balance as per bank, July. 31 $21453
Add: Deposit in transit 2345
Total 23798
Less: outstanding checks
Check no. 1420 1678
Check no. 1421 760
Check no. 1422 340
(2778)
Adjusted bank balance $21020
Balance as per books on 31st July $20991
Add: Note Receivable $2650
Eft insurance payment 300
Total $23941
Less:
NSF check $2400
Bank service charge 65
Error check 456
(2921)
Adjusted book balance $ 21020
Q9. Show the journal entries needed to show sales on credit, the collection of part of the amount owing, the write off of accounts receivable, reinstatement of an amount written off and collection in full of the amount owing.
Credit sales journal
Account name debit credit
Accounts receivable sales 1400
Sales 1400
Recording part of amount owing
Account name debit credit
Cash 700
Accounts receivable 700
Write off of accounts receivable
Account name debit credit
Allowance for doubtful accounts 1200
Accounts receivable 1200
Reinstatement of account written off
Account name debit credit
Accounts receivable 1200
Allowance for doubtful accounts 1200
Collection in full amount owing
Account name debit credit
Cash 1400
Accounts receivable 1400
Q 10.
Contrast two different methods of estimating bad debts. Create simple examples.
There are two methods of accounting for bad debts that is the direct method and the allowance method. In the direct method, the bad debt is charged to the bad debt expense. Example:
Dec 12: bad debts expense 400
Accounts receivable 400
In the allowance method, estimates of uncollectable accounts are estimated at the end of each accounting period. It ensures that receivables are stated at their cash and not realization value.
Example:
Dec 31: Allowance for doubtful accounts 400
Accounts Receivable 400
Q 11. Explain how computers have become essential to online retailing. Use eBay as an example.
Due to strong competition, online business has been on the rise over the past few years. Through great innovations, computers have been used to conduct businesses online without having to travel to the place where the business is situated. A good example of a company using online retailing is eBay where people are able to order basically anything from electronics, cars, fashion apparel, sporting goods, baby items, coupons and every other thing by use of computers. The business is therefore conducted worldwide but very effective and efficient.
Q 12. Write a narrative that includes a credit sale, a conversion to a note receivable, the dishonor of the note and subsequent delayed payment. Show T accounts from the narrative.
A credit sale is a purchase made by a customer, but it does not require full payment of the amount at the time of purchase. Note receivables are claims issued as evidence of debt, and a good example is a promissory note. Disowner of promissory note occurs when the there is no payment made when the maker of the note defaults in paying when required to.
T accounts
Account name debit credit
Accounts receivable 200
Sales 200
Conversion to notes
Account name debit credit
Notes payable 850
Sales 850
Dishonored notes
Account name debit credit
Accounts receivable 850
Notes 850
Q 13. Present a business report analyzing Wesfarmers as a shareholder investment.
Business report
Introduction
Wesfarmers is an Australian Farmers cooperative and one of the largest listed companies. Its main activities include operating supermarkets, departmental stores, liquor, hotels, convenient stores, department stores, home improvements, and office supplies. They also carry out businesses in areas such as energy and fertilizers, chemicals, coal, industrial and safety products. The company has approximately 220000 employees and 530000 shareholders. They are however set to satisfy the shareholders with a good return on their investments.
Financial report
In 2017, Wesfarmers recorded an increase in net profit compared to that of the year 2016. Its net profit was $2873 million, an increase of 22.1 percent from the year 2016. Earnings per share are increased by 21.6% to 2.55, and the R.O.E rose to 12.4% from 9.6%. The dividend per share rose to $2.23 from $1.86 in 2016, and all these were mainly as w result of the conglomerate structure that the company came up with. There were increased earnings from industrial businesses thereby provided the shareholders with a superior return (Wesfarmers, 2017).
Sustainability issues.
The company is expected to sustain itself into the future and is expected to grow even more with time. Today, its market value has increased 600-fold since it was founded from $80 million to $48 billion. With the success report, proper management team, adequate systems and a good culture the company is expected to grow further in the future. The company is set to beat the challenges experienced in the Australian market, deal with the external shocks and grab the opportunities that come their way for expansion and growth.
Chart
Reference
Carlberg, C. (2004). Excel’s Lists, Names, and Filters.
D. Walsh, J. C. (2014). “Strategic Positioning of Inventory to match demand in a capital projects supply chain. Journal of Construction Engineerign and Management, pg. 818.
Sarkar, A., & Blackwell, A. (2014). . “Teach and Try: A simple interaction technique for exploratory data modelling by end users. pg. 53-56.
Sarkar, A., Jamnik, M., Blackwell, A., & Spott, M. (2015). “Interactive visual machine learning in spreadsheets.” 2015 IEEE Symposium on Visual Languages and Human-Centric Computing, p. 159-163.
Savage, S. (2010). “Weighing the Pros and Cons of Decision Technology in Spreadsheets.
Wesfarmers. (2017). Wesfarmers 2017 Shareholder Review.
