Accounting Principles and Standards

This assignment provides a comprehensive overview of accounting principles and standards. It begins with an introduction to the Australian Accounting Standards Board (AASB) and its role in establishing accounting standards. The section on professional competence and due care emphasizes the importance of maintaining relevant professional knowledge and awareness among service users. Additionally, it includes journal entries for various transactions, such as receiving rent revenue, buying stationery and office furniture on credit. These examples illustrate how accounting principles are applied in real-world scenarios.

Running head: ACCOUNTING PRINCIPLE
Accounting principle
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Question 1- Classify Account Types:........................................................................................2
Question 2 – Analyse Balance Sheet:........................................................................................2
Answer to a):..............................................................................................................................2
Answer to b):..............................................................................................................................3
Answer to c):..............................................................................................................................3
Answer to d):..............................................................................................................................3
Answer to e):..............................................................................................................................3
Answer to f):..............................................................................................................................3
Question 3 – Transaction Analysis:...........................................................................................3
Question 4 – Ethics:...................................................................................................................5
Question 5 – Reverse Engineering (working backwards):.........................................................7
Reference and Bibliography:......................................................................................................9

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Question 1- Classify Account Types:
Assets Liabilities Owner’s Equity Revenue Expenses
Cash at Bank Loan from bank–
repayable in 5
Years
Drawings by
owner
Sales of inventory Electricity
Machinery Accounts Payable Commission
Received
Rent paid on
factory
Shelving and
storage racks
Packaging and
postage
Accounts
Receivable
Interest paid on
bank loan
Inventory (stock
on hand)
Mobile phone
monthly plan
Fork lifts Legal fees
Computer
Equipment
Office Furniture
Shares in public
companies
Question 2 – Analyse Balance Sheet:
Answer to a):
The owner of the business is M. Weston.

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Answer to b):
The owner’s investment in the business is 15,000.
Answer to c):
The customers relevantly owe to the business 1700, which is depicted in the name of
account receivables under Asset section.
Answer to d):
The business relevantly owes 800 to the suppliers, which is accounted in the name of
Accounts payable, which is listed under the liability section of balance sheet.
Answer to e):
Inventories are the goods and stock, which is held by the company to support its
selling activity (Zeff 2016). The business mainly provides tilling services, where the
company is conducting floor repairs. Hence, the inventory section of the company might
hold, Tiles, fittings, ceramics, marbles, and granite.
Answer to f):
Secured loan is mainly stated when the borrower pledges some assets, as the collateral
for the loan to the loan provider. The secured loan has least risk, as the loan provider could
sell the collateral asset and get back the loan amount (Liu, Liang and Wang 2015).
Question 3 – Transaction Analysis:
Date Accounts affected & (type of account, + or -) Debit Credit
23 March Cash at bank (Asset +) $ 600

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Tilling service (Revenue +) $ 600
(Tilling service provided)
Date Accounts affected & (type of account, + or -) Debit Credit
25 March Cash at hand (Asset +) $ 200
Commission (Revenue +) $ 200
(Received commission from Tiling
Manufacturers Pty Ltd)
Date Accounts affected & (type of account, + or -) Debit Credit
28 March Builder (Asset +) $ 350
Tilling service (Revenue +) $ 350
(Repaired floor tiles and invoiced builder)
Date Accounts affected & (type of account, + or -) Debit Credit
29 March Wages (Revenue -) $ 700
Cash (Asset -) $ 700
(Paid wages to apprentice)

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Date Accounts affected & (type of account, + or -) Debit Credit
30 March Cash at bank (Asset +) $ 1150
Received payment (Liabilities -) $ 1150
(Cash received at bank from client service)
Date Accounts affected & (type of account, + or -) Debit Credit
31 March Loan repayment (Liability -) $ 800
Cash at bank (Asset -) $ 800
(Paid loan from bank)
Question 4 – Ethics:
Accounting Professional and Ethical Standards Board has five areas in which
accountants must conduct themselves ethically and act in a professional manner are Integrity,
Objectivity, Confidentiality, Professional Behaviour, Professional Competence and Due Care.
The description of the ethical standard board is depicted as follows.
Integrity:
This ethical code mainly imposes obligations on members to be honest and straight
forward in their work. In addition, the accountants also need to amplify fair dealings and
truthfulness in preparing the financial records. This relevantly indicates that accountants
mainly need to be honest in preparing and maintaining the financial records. Under section

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110, relevant measures needs to be maintained by accountants, where false, misleading,
furnished, and omissions are not conducted in financial report (Apesb.org.au 2018).
Objectivity:
The section 120 mainly comprises of objectivity, which indicates that accounts cannot
compromise with their professional or business judgment. In addition, it is also indicated that
accountants do not perform a Professional Service, where under influence is conducted on
their professional judgement. This indicates that accounts, while preparing the annual report
needs to comply with the section, where no influence from management and company is
conducted (Apesb.org.au 2018).
Confidentiality:
Under the section 140 the confidentiality clause is depicted, which needs to be
maintained by accountants, while preparing financial report of the company. However, under
the section 140.7.1 if the accountant needs to disclose the confidentiality report then relevant
legal advice needs to be conducted by appropriate authorities. Furthermore, relevant factors
are disclosed in section 140.8, where harmful implications to third party could be conducted
by the accountant and confidentiality information will be provided. This disclosure of
confidentially report is mainly conducted on the ability of the harmful information, which is
hidden by the second party and detected by the first party. The accountant of companies
during the financial crisis can provide all the financial details to the third party for disclosing
the unethical measures used by the company (Apesb.org.au 2018).
Professional Behaviour:
Under the section 150 relevant professional behaviour that needs to be maintained by
the accountant is depicted. In addition, the accountants are barred from disparaging

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references or unsubstantiated comparisons to increase their creditability in the eyes of the
company. The section also helps in controlling the exaggerated claims of accountants for
providing the relevant services to the company. This section mainly helps in controlling the
professional behaviour of accountants and reduce the change of unethical provocation
(Apesb.org.au 2018).
Professional Competence and Due Care:
Section 130 mainly comprises of Professional Competence and Due Care, where the
accountant need to maintain relevant professional knowledge. Therefore, accountant need to
maintain Attainment of professional competence and Maintenance of professional
competence. Moreover, the accounts also need to make aware their service users of the
limitations inherent in the services (Apesb.org.au 2018). For example, the section bares one
accountant firm from defaming the other accountant firm based on integrity and skill.
Question 5 – Reverse Engineering (working backwards):
Date Accounts affected Debit Credit
1 March Cash at Bank 500
Rent Revenue 500
(Received rent revenue in cash)
The above transaction is mainly conducted
after receiving the rent revenue from the
property which is been lent out. The
payment is made on cheque, which increase
the cash at bank balance and is listed in the

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journal entry.
2 March Stationery 700
Cash at Bank 700
(Bought stationery and paid in cheque)
The entry mainly occurs after the relevant
purchase of stationery with cheque.
3 March Office furniture 2 000
Accounts Payable 2 000
(Bought office furniture on credit)
The credit transaction that is conducted by
the company for buying office furniture
makes the relevant transaction. Office
furniture is increased, while accounts
payable value is also increased by 2000.

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Reference and Bibliography:
Apesb.org.au. (2018). [online] Available at:
http://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf [Accessed 6 Mar.
2018].
Board, A.P., 2015. Tetranormalization and the Accounting Standard-Setting
Process. Organizational Change and Global Standardization: Solutions to Standards and
Norms Overwhelming Organizations, p.69.
Brown, W., 2017. ACCT1310-02. Accounting Principles I. Sp17. Brown, William.
Freeman, R.J., Shoulders, C.D., McSwain, D.N. and Scott, R.B., 2017. Governmental and
nonprofit accounting. Pearson.
Kieso, D.E., 2015. Accounting Principles. John Wiley & Sons.
Larkin, R.F., DiTommaso, M. and Ruppel, W., 2017. Wiley Not-for-Profit GAAP 2017:
Interpretation and Application of Generally Accepted Accounting Principles. John Wiley &
Sons.
Liu, L.C., Liang, Q.M. and Wang, Q., 2015. Accounting for China's regional carbon
emissions in 2002 and 2007: production-based versus consumption-based principles. Journal
of Cleaner Production, 103, pp.384-392.
Ruppel, W., 2016. Wiley GAAP for Governments 2016: Interpretation and Application of
Generally Accepted Accounting Principles for State and Local Governments. John Wiley &
Sons.
Scott, W.R., 2015. Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.