Accounting Statement of Partnership Business of a Blake, C Dairy and E Ferguson

Introduction:

The given case is the study of different accounting statement of partnership business of A Blake, C Dairy and E Ferguson ending with the financial year (30 June 2017). As per the question, different accounting transaction is prepared such as Journal, Ledger, Trial balance, adjusted trial balance, Work sheet, financial statement and Ratios.

The company has loss of ($2331.87) on the following year as per the profit and loss account. Partners are concerned with different managerial quires related to maximize the profit and minimize the losses.

Answer to the concerns:

Answer No. 1:

Bank reconciliation statement is a summary report that shows the balance as per the transaction in both cashbook and pass book and reconcile if the error is found in either of those book (Wikipedia, 2017). Every Business houses prepare reconciliation statement usually once in a month and as per the policy. There are different important reasons why these statements are prepared, some of the major reason are: preparing bank reconciliation helps the business firm to regularly monitor the cash flow, identifying the error in the accounting records of the company or bank book. Improved internal control can be insured in the company if someone other than the employee records the transactions of receipts and payment through bank reconciliation statement. Internal control deals with every single transaction thus prevents company from the loss of assets and provides accurate result to the management on these basis financial statement are made (Ingram, 2017). Account tools/technique are used to prepare financial reports which gives the clear view of company financial position and activities of business which is referred as earning management. Accounting rules are applied to prepare the financial reports that increase revenue, assets and earnings through earning management.

Answer No. 2:

In a business to identify the inventory value different techniques can be applied. In the case given the bookkeeper has used average cost method of inventory valuation, which didn’t show the positive light of the company. Hence, LIFO, FIFO and weighted average cost method can also be used for better result. LIFO method is defined as the method in which the inventories that are entered previously are sold out rather than the recent date inventory. FIFO is the method in which the inventory is sold out of current date rather than previous date i.e. first in first out. Weighted average cost is define as the method in which inventories are piled or mixed together and cannot be differentiated. Among all these three method LIFO gives the most accurate result due to following reason: minimizes the unrealized gains and losses of inventory and industries facing fast material price fluctuations can stabilize their reported operating profits, costs to the current period production can be compared to the current period revenues which results in a systematic and realistic pricing of material consumed (Pinto, 2017)