Proprietorship Business Transactions



Proprietorship Business Transactions

Magnolia Greens Frisbee Golf Course Journal Entries

Journal Entry

Date

Accounts

Debit

Credit

1-May

Cash

$20,000

 

 

Owner's capital

 

$20,000

 

 

 

 

3-May

Land

$12,000

 

 

Land - Shed

$2,000

 

 

Equipment

$1,000

 

 

Cash

 

$15,000

 

 

 

 

5-May

Advertising expenses

$700

 

Account Payable

 

$700

 

 

 

6-May

Prepaid insurance

$600

 

Cash

 

$600

 

 

 

10-May

Equipment - Golf discs and other equipment

$1,050

 

Account Payables - Discs Are Us

 

$1,050

 

 

 

18-May

Cash

$1,100

 

Service revenue - golf fees

 

$1,100

 

 

 

19-May

Service revenue

$1,500

 

Unearned service revenue

 

$1,500

 

 

 

25-May

Owner's Drawings

$800

 

Cash

 

$800

 

 

 

30-May

Salaries and wages expense - part-time

$250

 

Account Payables

 

$250

 

 

 

30-May

Account Payables - Discs Are Us

$1,050

 

Cash

 

$1,050

 

 

 

31-May

Cash

$2,100

 

 

Service revenue

 

$2,100

Internal and External User of Accounting Data

Internal users are user within the company i.e. general managers, area managers, accountants, and anyone in the company who needs accounting for decision making.

Administrators of the company. The accounts can provide information for decision making.

External users are users who have invested in the company's. These are suppliers, creditors, customers, government agencies external auditor etc. for instances, financial statements and ratios are very important for external users due to their investment in the company. As they look for profit, these accounting data update them regarding the current and future performance of the company.

The shareholders of the company. The accounts can give summary regarding the information such as, rate of profitability on investment, return that company is offering good conditions for profitability in the medium and long term for investment.

Role Ethics in Accounting System

The role of ethics in the operation of an accounting system is an important feature due to the privacy. For instance, while doing an audit of the financial statements, auditors must know hiding important financial information from the public will put the company in huge problem and any misleading or misinterpretation would be against the ethic and can sue the company.

We can see that ethics and morality must always be guided in human affairs, and should also be applied in professional relationships. The Professional Accounting in accounting system should not be corrupted for personal gain, because there is only affecting his professional reputation but the reputation of an entire professional class which in recent years has become essential for companies. Corporations, seeking advantages in the financial market with hope to engage accountants to manipulate the financial statements and thus make them attractive to the eyes of the public. The accounting professional must protect this harassment, avoiding illicit practices that may end his career (Kimmel P., Jerry W., 2010).

Accounting Conventions

There are various accounting conventions that are applicable in the preparation of financial statements. Accounting convention refers to the practices that are applicable in recording and presenting the accounting information of the business entity. The most applicable accounting convention that is applicable in the preparation of financial statements is summarized as follows:

Convention of Consistency: The convention of consistency indicates that the consistent accounting principles are to be followed in preparing financial statements of the company.

Convention of Full Disclosure: This particular convention implies that all the material facts related to the financial statements should be disclosed in full. Full disclosure means fair and adequate disclosure of accounting information.

Convention of Materiality: The convention of materiality indicates that only material information should be included in the financial statements of ...