RBT_Assessment_2_Calin_Iulian_ (new)

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Recording Business Transactions Assessment 2 Calin Iulian ID:21556008 1

Table of Contents Part-A ......................................................................................................................................... 3 “Advantages and disadvantages of Sole trader and partnership” ........................................... 3 “Provide 5 steps for starting a new business” ......................................................................... 4 Part-B ......................................................................................................................................... 4 “Journal entries as on 31st August 2021” ............................................................................... 4 “Trial balance as of 31 August 2021” ..................................................................................... 6 “Explain the benefits and limitations of the trial balance in a business Organisation” .......... 7 References .................................................................................................................................. 9 2

Part-A “Advantages and disadvantages of Sole trader and partnership” To determine the types of financial activities that can be used to raise capital and the types of legal obligations that an organisation is obligated to fulfil in accordance with laws and regulations set according to the business structure, an understanding of the company's legal culture is essential. The tax obligations of a company are heavily influenced by the corporate structure. Sole proprietorship and partnerships are the two primary organisational forms for businesses. Sole trader If your business is a "sole trader," it means you are the single shareholder, director, manager, and decision-maker in all matters pertaining to your company (Harris, 2020). People who own their own enterprises and operate as sole traders are considered self-employed. Being a lone proprietor has several advantages. ● Due to the lack of needing to register as a distinct legal company, a single trader can launch their firm immediately (Cribb et al. 2019). ● The owner of a sole proprietorship just needs to register for income tax in order to begin the registration process (Oladunjoye 2018). ● Sole proprietors have complete say over company operations and management. ● On the other hand, being a sole proprietor comes with some inherent drawbacks. ● The sole proprietor is personally responsible for all business debts and lawsuits. ● The lack of a recognisable brand name makes it difficult for a sole proprietorship to recruit investors (Lominé et al., 2019). It can be mentally and physically draining for a lone entrepreneur to take on all of the planning and decision-making for their business on their own. Partnership ● Partnership refers to the agreement between two or more people to conduct business jointly. The benefits of working together include: ● A partnership, as opposed to a single proprietorship, consists of two or more people, which facilitates the division of labour. The financial burden of business owners is lightened when liabilities and losses are shared among partners in a partnership firm structure (Srimala et al. 2020). ● There are a number of drawbacks to operating as a partnership. 3

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● The profits of the firms are also split among the partners, which is another aspect of the distribution of losses and responsibilities. Because business partners may have different perspectives, disagreements about how to run the company often arise (Osei-Kyei et al. 2019). “Provide 5 steps for starting a new business” ● Being able to define and explain what kind of business it is. ● • Being well-versed in the numerous legal responsibilities that face the company. ● * A well-thought-out strategy for everything from business launch to daily operations. ● Establishing a number of potential funding and material resources. Realizing how the business climate affects the strategy. Part-B “Journal entries as on 31st August 2021” Table 1: Journal Entries 4

(Source: Self-developed) “Trial balance as of 31 August 2021” 5

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“Explain the benefits and limitations of the trial balance in a business Organisation” A trial balance is a worksheet used to check the accuracy of the general ledger's totals (Weygandt et al. 2019). Because of this, the ledger's debit and credit totals will always balance out. Conducting a train balance sheet is done so that all the numbers add up and match up to the official records. Creating a trial balance is typically the first step of an audit, as it verifies the mathematical accuracy of the accounting records being used. The following are some of the many advantages of using a trial balance: ● Accounting errors can be uncovered and corrected with its assistance (Kimmel et al. 2018). ● In addition, it aids in the detection of record-posting mistakes. ● Also shown are any accounting discrepancies. ● It is also possible to make adjustments for previously unrecorded transactions with the help of the trail balance. The trail balance sheet is useful for verifying the integrity of the accounting books from a purely numerical standpoint. ● Trial balance has its own restrictions, though, so keep that in mind. Below is a diagram illustrating the drawbacks of trail balancing. ● Even though the trail balance might be useful for spotting mistakes in the accounting reports caused by non-journalized transactions, it is essential to know that this is not the whole story. Unrecorded transactions might never make it into the trial balance. ● It's possible that the trial balance won't pick up on a journal entry that has been recorded in the ledgers multiple times (Kimmel et al. 2018). ● Human error, such as a clerical error by the accountant keying in the numbers, cannot be spotted by the trail balance either. Any missing journal entries will not be reflected in the trial balance or the ledger. 7

References Cribb, J., Miller, H. and Pope, T., 2019. Who are business owners and what are they doing? (No. R158). IFS Report. Harris, R., 2020. Going the Distance: Eurasian Trade and the Rise of the Business Corporation, 1400-1700 (Vol. 82). Princeton University Press. Kimmel, P.D., Weygandt, J.J. and Kieso, D.E., 2018. Accounting: Tools for business decision making . John Wiley & Sons. Lominé, L., Muchena, M. and Pierce, R., 2019. Business Management . Oxford University Press. Oladunjoye, T.G., 2018. Optimizing business education for national development. Nigerian Journal of Business Education (NIGJBED) , 3 (1), pp.1-16. Osei-Kyei, R., Chan, A.P., Yu, Y., Chen, C. and Dansoh, A., 2019. Root causes of conflict and conflict resolution mechanisms in public-private partnerships: Comparative study between Ghana and China. Cities , 87 , pp.185-195. Srimala, S. and Mittal, A., 2020. Limited liability partnership: Viable option of business in India. VIDHIGYA: The Journal of Legal Awareness , 15 (1and2), pp.17-24. Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., 2018. Financial Accounting with International Financial Reporting Standards . John Wiley & Sons. 8

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