Accounting Fundamentals: Principles, Concepts, and Conventions

Accounting
Fundamentals

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
1.a) Prepare income statement.....................................................................................................3
1.b) Prepare Balance sheet...........................................................................................................3
2. Discuss the accounting principles and their usage in the financial statements........................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Accounting principles provides framework for maintaining books of accounts for
business entity. It facilitates decision making process and helps in analysis and interpretation of
records. Whenever the books of accounts are prepared theses are to be considered mandatorily
(Churyk Reinstein and Smith, 2018). In this report, Angela 's a business entity's trial balance is
given based on which income statement and balance sheet for the organisation have to be
prepared. The relevance of accounting standards and concepts such as going concern, dual
aspect, business entity etc. will be defined to have a better understanding of how accounting is
done.
MAIN BODY
1.a) Prepare income statement
Income Statement
Particular Amount Particular Amount
Opening stock 30222 Sales 310423
Purchases 214165 Closing stock 25164
Gross profit 91200
Total 335587 Total 335587
Sundry expenses 2250 Gross profit 91200
Rent and insurance cost 19200
Administration expenses 2772
Salaries and wages 35804
Bad debt 980
Depreciation 8138
Net profit 22056
Total 91200 Total 91200
1.b) Prepare Balance sheet
Balance sheet
Liabilities Amount Assets Amount
Shareholders Fund 8779 Van 16142
Creditors 34420 Shop fittings 3660
Creditors for VAT 7729 Cash at bank 82
Trade debtors 5880