Accounting Fundamentals: Recording Transactions and Financial Statements

ACCOUNTING
FUNDAMENTALS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................4
TASK 3............................................................................................................................................8
TASK 4..........................................................................................................................................12
TASK 5..........................................................................................................................................16
Difference between revenue expenditure and capital expenditure ...........................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Financial accounting refers to specialised accounting branch that keep record of financial
transaction of company. Transactions are recorded using standard guidelines in financial report
and financial statements like income statements or balance sheet. Financial accounting is
essential for generating financial statements & related disclosures appropriately reflecting
financial results and position of the organisation. They are prepared for company as well as
outside stakeholders like creditors, investors and lenders. There are various types of financial
accounting that are used by organisation for recording the transactions. Financial accounting is
helping organisations around the world. There are various standards, guiding principles and
reporting frameworks that are essential for making properly structured financial statements of the
organisations(Scott, 2015). The report will give brief understanding about the recording of
transactions in journals, ledgers and trial balance. It will also demonstrate the difference between
capital expenditure and revenue expenditure in reference with International Accounting
Standards.
TASK 1
Journal for the year ended
Date Particulars Debit Credit
05/04/19 Cash a/c Dr. £300.00
To capital a/c £300.00
07/04/19 Purchase a/c Dr. £200.00
To cash a/c £200.00
08/04/19 Cash a/c Dr. £250.00
To Tatiana £250.00
15/04/19 Motor van a/c Dr. £150.00
To cash a/c £150.00
20/04/19 Cash a/c Dr. £350.00
To sales a/c £350.00
28/04/19 Rent a/c Dr. £50.00
To cash a/c £50.00
29/04/19 Tatiana a/c Dr. £200.00
To cash a/c £200.00
30/04/19 Drawings a/c Dr. £60.00
To cash a/c £60.00
£1,560.00 £1,560.00
1

Ledgers
(Dr.) CASH A/C (Cr.)
Date Particulars Amount Date Particulars Amount
05/04/19 To capital £300.00 07/04/19 By purchase £200.00
08/04/19 To Tatiana £250.00 15/04/19 By motor van £150.00
20/04/19 To sales £350.00 28/04/19 By rent £50.00
29/04/19 By Tatiana £200.00
30/04/19 By drawings £60.00
30/04/19 By closing Bal. £240.00
£900.00 £900.00
(Dr.) CAPITAL A/C (Cr.)
Date Particulars Amount Date Particulars Amount
05/04/19 By cash a/c £300.00
30/04/19 To closing Bal. £300.00
£300.00 £300.00
(Dr.) PURCHASES A/C Dr. (Cr.)
Date Particulars Amount Date Particulars Amount
07/04/19 To cash a/c £200.00
30/04/19 By closing bal. £200.00
£200.00 £200.00
(Dr.) TATIANA A/C (Cr.)
Date Particulars Amount Date Particulars Amount
29/04/19 To cash a/c £200.00 08/04/19 By cash a/c £250.00
30/04/19 To Closing Bal. £50.00
£250.00 £250.00
(Dr.) MOTOR VAN A/C (Cr.)
Date Particulars Amount Date Particulars Amount
15/04/19 To cash a/c £150.00
30/04/19 By closing Bal. £150.00
£150.00 £150.00
(Dr.) SALES A/C (Cr.)
Date Particulars Amount Date Particulars Amount
2

20/04/19 By cash a/c £350.00
30/04/19 To closing bal. £350.00
£350.00 £350.00
(Dr.) RENT A/C (Cr.)
Date Particulars Amount Date Particulars Amount
28/04/19 To cash a/c £50.00
30/04/19 By closing Bal. £50.00
£50.00 £50.00
(Dr.) DRAWINGS A/C (Cr.)
Date Particulars Date Particulars Amount
30/04/19 To cash a/c £60.00
30/04/19 By closing Bal. £60.00
£60.00 £60.00
Trial balance
Particulars Debit Credit
Cash £240.00
Capital £300.00
Purchase £200.00
Sales £350.00
Tatiana £50.00
Drawings £60.00
Rent £50.00
Motor van £150.00
£700.00 £700.00
Profit and Loss a/c
Particulars Amount Total amount
Sales £350.00
cost of goods sold 100
Gross profit £250.00
Expenses £50.00
Net Profit £200.00
3

Balance sheet
Particulars Amount Total amount
Liabilities
Capital £300.00
Add: Profit £200.00
Less:drawings £60.00
£440.00
Current liabilities
Tatiana £50.00 £50.00
Total liabilities £490.00
Assets
Fixed assets £150.00
Current assets
Cash in hand £240.00
Closing stock £100.00 £340.00
Total assets £490.00
TASK 2
Pendo
Journal entries
Particulars Debit Credit
Cash a/c Dr. £5,000.00
To capital a/c £5,000.00
Motor van a/c Dr. £600.00
To cash a/c £600.00
Purchase a/c Dr. £1,300.00
To cash a/c £1,300.00
Cash a/c Dr. £1,000.00
To Sergei a/c £1,000.00
Expense a/c Dr. £200.00
To cash a/c £200.00
Cash a/c Dr. £300.00
TO Sales a/c £300.00
Cash a/c Dr. £500.00
TO Sales a/c £500.00
Storage Expense A/c Dr. £150.00
To cash a/c £150.00
Sergei a/c Dr. £350.00
To cash a/c £350.00
4