Understanding And Using Computer Spreadsheets In Accounting

Using cell names in spreadsheets for easy understanding of computations

The orientation of the spreadsheet is replaced by their names in each of the cells. The main objective of substituting the cell names is to facilitate an easy understanding of the convenience and association with the computations performed with declaration provided in each of the spreadsheet (Chak & Fung, 2015). Below stated is the example of spreadsheet with reference to the names of the spreadsheet;

Normal View

 

Formula View:

 

The negative numbers in the spreadsheet are presented in the form of brackets that are in red colour. The below stated example provides the illustrations of negative numbers;

 

There is no such rule that states that an accountant cannot represents the negative numbers in bracket. Therefore presenting the negative numbers in bracket is regarded as standard practice (Schaltegger & Burritt, 2017). The primary reason for accountant to show the negative numbers in bracket is to emphasize that figure represents loss or expenditure and does not constitute a gain.

According to Fayard, (2015) it is vital for the accountants to have a separate accounting or bookkeeping data. The main objective of having a separate bookkeeping data is facilitate the representation of the single view for every single row. Similarly for accounting reports, a distinct area is required as this would enable the accountant to create a detailed report that covers the required source of information. A wide range of data entry is employed for recording the raw data whereas the part of report is employed for transmitting the record to important information.

A relevant affirmation can be made in this regard is that having a separate record keeping is necessary for recording incorrect accounting records of raw figures in the spreadsheet (Eldenburg et al., 2016). Therefore the procedure involved in the creation of separate data entry area provides the facilities of easy recording of data together with the elimination of unwanted records. The below stated example of spreadsheet provides a better understanding of the above stated declaration;

Normal View:

 

According to Taleb et al., (2015) the “IF” functions is referred as the form of functions that provides assistance in determining single value. On noticing that “IF” function criteria is met, the result would be depicted as “True” while on non-fulfilment of the criteria the result would be stated as incorrect. The “IF” functions helps in rendering the predictable intellect to the computer database with the assistance of the database and is capable to execute the decisions in respect of the established conditions together with the ascertainment of the program sequence. An example of spreadsheet is given below where the “IF” functions is applied;

Presenting negative numbers in bracket as a standard practice

 

As evident from the foot video the resources represents that a periodic method of inventory system has been followed. The primary reason for such assumption is that the physical count of each unit is depicted in the video. The differences between the perpetual and the periodic inventory system are stated below;

Basis of Distinctions	Perpetual Inventory System	Periodic Inventory System
Accounts	In the Perpetual inventory system a continuous informs is made either to the general ledger or the inventory journal since the inventory connected dealings happen (Jermias, 2017).	While under the periodic inventory system there is no recording of the cost of goods sold during the accounting period unless there is a physical count of inventory which is later used to derive the cost of goods sold (Uyar & Kuzey 2016).
Computer system	Under the perpetual inventory system it is not possible to manually keep the record of track for the reason that there might be abundant dealings at unit level in each bookkeeping period.	Under the period inventory system it permits the manual recording of transactions for a very minor inventories.
Accounting cycle	In the perpetual inventory system it is possible to obtain the correct counts of inventory in the real time (Otley, 2016).	In the periodic inventory system it is not probable to implement the sequence calculation since there is no such method of gaining correct inventory sums during actual time.

         

Introduction:

Computer spreadsheets which is usually referred as the copy format of the paper based sheets have been of late used by the accountants and bookkeepers. It is necessary for an organization to separate the spreadsheet complexities and issues of use as the requirements for control varies from one business to another (Chenhall & Moers, 2015).

Use of Electronic Spreadsheet:

The benefit of using the electronic spreadsheet is that it provides a combination of rigid layout which is used to keep records of the accounts with an inbuilt adding machine.

Companies are using the spreadsheet as the tracking and monitoring tool of workflow that helps in supporting the operational processes. This includes unpaid invoices, open claims and other forms of information that was previously retained in the paper or manual folders (Titman et al., 2015). Spreadsheets help in implementing control by monitoring and controlling the financial transactions which is captured by the spreadsheet accurately and completely. The spreadsheet act as the analytical management information system. The use of spreadsheet in accounting is regarded as the analytical review and management process of decision making. This is used to assess the reasonableness of the financial totals (Bekaert & Hodrick, 2017). Spreadsheets are used by the companies to directly determine the transactions of financial statements or the balance amounts that are recorded in the general ledger or the fiscal statements. Spreadsheet generally has wide variety of use and complexities.  

Advantages of Spreadsheet:

The advantages of spreadsheet includes the making easier calculations. With the application of spreadsheet financial calculations becomes very easy to understand as it displays the stages of development of sum with the capability of writing the notes and explaining each of the lines (Lau, 2016). The grid that encase the spreadsheet cells be either made visible or the same can be hidden at the time of printout which enables the report to be formatted according to the display of the spreadsheet.

Spreadsheet templates that comprises of the formula for constantly using the spreadsheet for the purpose of increasing the productivity by eliminating the need for highly educated operators (Barr, 2018). Spreadsheet forms can be used as the source of interactions with the database to fill up the required fields, automating most of the overall creation of the spreadsheet.

The importance of maintaining separate accounting or bookkeeping data

Disadvantages of Spreadsheet:

In spite of the several uses and advantages spreadsheet has also surrounded numerous criticism as well. One of the disadvantages of spreadsheet is that it is deskilling. Workers would not be required to possess the skills of expert of specialist and may compete with the inexpensive unskilled labour (Brooks, 2015). Individual spreadsheet are installed in almost most of the computers in an office and as result it would enable persons to hoard the data and project their own forecasts without the cooperation of the colleagues. Such phenomenon results in duplication of data as well as the efforts across the organization. The structure of spreadsheet forces an increase in the requirements of storage over the necessities of the raw data.

Conclusion:

With the development made to the spreadsheet it has enhanced its abilities to exchange the information with the other application which ultimately improves the advantages of spreadsheet and eliminating the disadvantages (McKinney, 2015). Integrating the spreadsheet with the graphic and word processing packages helps in raising the productivity of the reports, graphs and enabling figures easier to describe in the spreadsheet. Integrating the spreadsheet into the data base helps in reducing the disadvantages of hording data and creates a format overhead to store the raw information in the spreadsheet.        

Requirement 1: 

Requirement 2:

 

A: Normal View

 

Formula View:

 

B:  Normal View

 

Formula View:

 

 

The methods of approximating the bad debts that is given below;

Direct Write-off Methods:

In the direct write-off methods of writing off bad debts any form of specific amounts that turns out to be uncertain or uncollectible the loss from such amount owing to is allotted in the bad debt expenditure account (Scott, 2015). As an example, a business having the debtors balance of $4500 that would turn out to be uncollectible on 30^th June 2017, therefore the journal entry for the same is state below

 

Allowance Methods:

Under the allowance method of writing off the bad debt the expenses that results from the bad debt is written off to the statement of profit and loss account or income statement of the business as the operating expenses (Williams, 2014). The bad debt which is written off is debited to the “Allowance A/C” somewhat debiting the bad debt expenditure account.

 

In the present age technology computers have evolved as the vital constituents of the online retailing. Taking into the account the example of E-Bay that have used the computers as the tool for launching the promotional products to the online customers so that a demand among the customers is created (Macve, 2015). An argument can be bought forward in favour of E-Bay that having the correct business culture and technology in place can help in stimulating sales since computers as the promotional tool can contemplate the retail market. Therefore, the use of computers is regarded as the vital tool for keeping the records for the goods and products sold that possess the prospect of serving the increased consumer base.

The role of the ‘IF’ function in determining a single value

 

Taking in to the account the performance of the Wesfarmers the company has recorded a highest level of earnings and reported a strong operating cash flow with higher increase in the return on equity for the Wesfarmers. This defines the strength of Wesfarmers group structure and places emphasis on the cash generating capacity of the company.

Wesfarmers has recorded a substantial amount of rise in their net profit during the financial year of 2017. Apart from excluding the significance items, the underlying NPAT rose to 22.1% to $2,873 million. From the investors point of view the earnings per share of the company increased to 21.6% to stand at a record $2.55 each share and the ROE for the company increased to 9.6% to stand at 12.4%. Wesfarmers has declared a fully franked final dividend that amounted to $1.20 each share which ultimately lifted the entire year dividend to $2.23 from the previous figures of $1.86 in 2016. Evidences gained suggest that the emphasis of the management has been in the direction of providing the long run shareholder return.

The Wesfarmers management of cash flow was considerably higher for the year with the operating cash flow of the company increasing to $861 million to $4,226 million. An important assertion can be stated that the instances of higher cash flow is mainly because of the growth in earnings along with enhanced inventory management through the retail division to partially offset the requirements of higher working capital in the company.   

Taking into the account the free cash flow of the Wesfarmers the company reported a free cash flow of $4,173 million which was previously $2,940 million in 2016. This reflects Wesfarmers has higher operating cash flow with reduced net capital spending and profits of $947 million from the divestment of Cole’s credit card receivables. In addition to this, Wesfarmers has reported a strong balance sheet throughout the financial year of 2017. The net debt of Wesfarmers along with the interest rate swap assets was $4,321 million which is $2,321 lower from the figures of previous year.

Considering the approach of sustainability of Wesfarmers, the company sufficiently addresses the range of issues that is important in their own way and eventually creates an effect on the monetary results. Wesfarmers lends its support on the climate related financial disclosure to review the annual risk of climate in its business.

 

As evident from the above stated assessment of the Wesfarmers the share of non-current assets has augmented over the years and a recommendations can be provided to the investors to make an investment in the shares of Wesfarmers. In addition to this, Wesfarmers has strong balance sheet with efficient position of liquidity that can be evidently understood from the figures reported by the company.

Advantages and disadvantages of using computer spreadsheets in accounting

The outcome obtained suggest that Wesfarmers has upheld the competitive advantage both in respect of domestic as well as the international operations over the years. In accordance with the year’s present record incomes and robust cash flow the Wesfarmers board has declared a final ordinary dividend of 120 cents each share that takes the ordinary dividend to 223 cents each share.

Conclusion:

On a conclusive note it can be observed that the Wesfarmers has reported a better future prospect for investment and making an investment in shares of Wesfarmers could be considered as the viable options. The investors would be able to maximize their return from their shares and would also be able to earn a higher dividends.

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