FFM/F3 Financial Reporting

Research Assignment
Topic: The report on procedures to record
sales and purchase of current assets of
Angkorbodia Logistics Co., ltd

Student Name: Tea Lida

Class: B
Due date: 9:00 a.m. Thursday, 19 February 2015
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I.

Summary

After writing a proposal to research on accounting practices in a small logistics company

and waiting for several days, I was given a precious chance to interview with an accountant of
the company. On Monday, 16th January 2015, I visited Angkorbodia Logistics Co., Ltd, which
located in Street 907, Sangkat Toul Sangke, Khan Russey Keo, Phnom Penh, Cambodia. My first
impression of the company is not bad. Actually, the company area is pretty small, but basically
looks comfortable and neat office environment.

II.

Company Overview

Angkorbodia is a small privately own logistics service company providing air, sea, and
land transportation solution. It offers a full of ocean related services including Ocean Forwarding
Consolidation and FCL container management. For air transportation, Angkorbodia offers
extensive air freight forwarding services, utilizing the world's major commercial airlines, air
cargo carriers, and charter aircrafts. Moreover, the company provides the transportation in the
region as it has the latest fleet with the state of the art equipments that includes trailers, low beds,
flat beds, reefer trucks, tippers. It has a large network of Overland Transport hubs enabling
customers to move their products economically from one place to another.
This partnership company has just been established for two years, which owned by Ms.
Lyhua Wu and Ms. Meyly Chen. The company is currently using centralized function and the
two managers (owners) control over the three departments: accounting department, operational
department and sales department. Significantly, no accounting standard is used within the
company as it practices manual accounting system in Excel.

III.

Recording Sales

As it is a small service company, the standard uses of accounting record and general
ledgers or double entry have not been applied yet. All it does is just a simply recording method
in Microsoft Excel. Before recording sales, the company has to know the cost of service sold first.
For instance, the business makes a trading to ship out the particular products oversea; therefore,
it has to prepare the documents related to shipping regulation requirement, order the ships,
appoint the time and these do need effort and cost. After knowing the cost of sales, the business
will mark up the profit based on quote setting. For air transportation, its process is done the same
as shipping. In regional transportation, it is less complicated since the business personally owns
the trucks and the business itself set a price quote for customers.
Therefore, before charging the receipt to customer, the business required to know the cost
of sales in every process and then send out receipt which also includes the tax amount (VAT) to
customer. After finish billing out the receipt, the accountant record sales, excluding value of tax.
If the sale is on credit, it is recorded in account receivable; if the sale is paid in cash, it is
recorded in cash on hand or cash at bank. Most of the time, more than 90 percent of sales is
purchased on credit, and thus most of it is listed into account receivable.
The business does not set up any types of discount (trade discount, cash discount) to
customers, and also no prepaid or deposit but involve clearance or lump sum payment. Based on
my personal observation by the words of accountant, the business seems satisfy with its current
recording sales method.

IV.

Recording Purchase

The purchase of current asset of the business mostly is office supplies. According to the
accountant, all types of expenses are recorded in one single expense account only. Indeed, the
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business always purchases current assets in cash, and thus after receives the receipt or invoice
from suppliers, it will be directly recorded in expense account. The business seems not very
satisfy with this purchase record because it is too shortcut which lead to confusion and difficult
to define the type of expense in calculation later on. In short, the business is concerning to make
improvement of recording the purchase.
By the end of the month, accountant is obliged to submit monthly income statement
which includes the overall sales made and expenses, and the profit made within a month. Yet, the
balance sheet is not required.

V.

Conclusion

All in all, by the overall observation of accounting record, the way of the business
practice has its own strengths and weaknesses. The strength is that, as it is just a small newgrown business, the procedures of accounting record are quite simple, so the firm doesnt require
professional accountant or finance officer to make the standard one. Furthermore, it is easier to
control the overall record by updating the accounting system step by step. Therefore, it does help
facilitate the process as well as save time. However, there are also some obvious faults appeared
at the same time. Because of the mixed records (no proper general ledger, book of prime entry),
the firm hits the problem of missed record and difficult to identify specific type of expense,
especially during annual closing entry. If it uses more standardized record, the recording system
will automatically classify the cost information itself.
Personally, however, I do not think the business should apply IFRs since it is not the big
organization. Moreover, IFRs requires a lot of efforts such as financial expense complying with
it, professional staffs, accountants, etc. As the firm is newly formed, IFRs may not be required
at all.

VI.

Appendix 1

Order received

Calculate cost of sales and mark up profit

based on quote

Sales account

Receivable
(sales on credit)

Cash on hand
(sales in cash)

VII.

Appendix 2

Purchase order

Invoice/ receipt received

Expense account