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Bregado Flax Secondary

Form 4

Principles of Accounts
School-Based Assessment. (Students simulation)

Use the following principles to prepare your School-Based Assessment. The steps
must be followed as provided and the examples presented must not be used as part
of your project.
Each week, some work is to be presented to your teacher for correction/review.
Step 1. Create a fictitious business. Start by giving a background of the business.
State the name and type of business as well as its location. Provide the
staff and their
responsibilities. Finally, provide a period which will cover the transactions
listed.
Example: Edwinas Hair and Body Shop sells hair products as well as
provide the best in hair
styles and trimmings to both men and women. It is located at Winaville,
Georgetown and is
operated as a sole proprietorship. The business is owned by Ms. Edwina
Jnoville who is also the
manager. The staff consists of a barber, two hair stylists and a
receptionist/secretary. The
business keeps a set of accounts which cover a three-month period from
September 1st, 2013 to
December 31st, 2013.
Step 2. You may want to start with a list of accounts, in order to present opening
balances or start as a
new enterprise. If you choose to start with a list of balances, ensure that
the balances show an
equal amount for both accounts with credit and debit balances. (The trial
balance and opening
journal entries must balance). The opening balances must comprise of
debtors, creditors,
assets, liabilities, expenses and revenues.
Step 3: Create a list of transactions to cover the time span that you have provided.
These transactions
must cover all the books of original entry. Each of the following journals
(Sales and Returns
inwards journal, Purchases and Returns outwards journal) must have at
least one
two transactions. Please ensure that the transactions have sufficient
information from which

a document can be produced.


All other journals (Petty Cash and Cash Book) must have a series of
transactions. For the Petty
Cash, a float must be established. Voucher numbers and cheque
information must also be
presented.
Examples of transactions to be presented:
September 1st.
Started a Petty Cash system with an amount of $150.
The columns used are
Cleaning, Stationery etc. Four (4) or five (5) columns
may be used. Only items
valued below $20 are recorded on the Petty Cash Book.
All items worth more
than $20 are recorded in the Cash Book.
Bought hair products worth $300 from Fashion Gala on
credit. Invoice #21,
terms 2/10, net 30 days.
6 th. Purchase receipt book $5.00
Income collected from hair services for the week, $5 500,
was banked
immediately.
Sold a bottle of hair spray and facial cream worth $55 to
Ms. Jane Wells on
Credit, Invoice#49.
8 th Paid Fashion Gala $100 on account
Purchased a new hair dryer by cheque No. 347 for $295.
13 th. Income from hair services for the week, $4 000 was
banked by the secretary.
15 th Paid salaries to workers by cheque $3 000
Cash sales of hair products amounted to $1 700
Paid Electricity by cheque No. 348 $316
Paid cable by cheque No. 349 $50
21 st. Income from hair services for the week $3 900 was lodged
at the bank. etc
(Transactions for a three (3) month period will be spaced
out much more than items for a one month period).

Step 4. Open the books of original entry and put in the appropriate entries. Use the
number of entries as a guide if it is to be done manually. These books are:

The General Journal


Sales Journal
Purchases Journal
Returns inwards Journal
Returns outwards Journal
Petty Cash Book
Cash Book

Step 5. Post the books of original entry to the Ledger.


Step 6. Balance the accounts and use the closing balances to prepare the Trial Balance. Close all
nominal accounts to the Trading account and Profit and Loss Account.
Step 7. Prepare the Financial Statements.
Trading
Profit and Loss Account
Balance Sheet
Step 8. Use the Financial Statements to prepare the ratio analysis of your business.
Step 9. Write up a short report on the performance of the business
Step 10. Provide suggestions/Recommendations on how the business could improve in different
ways.
Step 11. Conclusion: Write a short paragraph outlining whether your objectives/aims were met.