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FINANCIAL ACCOUNTING PINCIPLES TABLE OF CONTENTS INTRODUCTION 4 1. Financial Accounting Principles of Munteanu Ltd

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18 C.) Explanation on following concepts19 D.) Describing purpose of depreciation with its two methods20 E.) Critically evaluating the difference between the financial statements prepared by sole trader and the limited companies 20 CLIENT 3 21 A.) Explaining the purpose of preparing the bank reconciliation statement and reason of this preparation on monthly basis 21 B.) Explaining areas which may cause record vary from the bank records 22 C.) Explaining the term imprest which is used

FINANCIAL ACCOUNTING PINCIPLES TABLE OF CONTENTS INTRODUCTION 4 1. Financial Accounting Principles of Munteanu Ltd

   Added on 2020-10-23

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FINANCIAL ACCOUNTINGPRINCIPLES
FINANCIAL ACCOUNTING PINCIPLES TABLE OF CONTENTS INTRODUCTION 4 1. Financial Accounting Principles of Munteanu Ltd_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................41. Defining financial accounting and its purpose...................................................................42. Internal and External stakeholders of an organization and why they are interested inorganization's financial information.......................................................................................6CLIENT 1........................................................................................................................................8Journal entry in the books of Alexandra study.......................................................................8Trial balance:........................................................................................................................18CLIENT 2......................................................................................................................................18A.) Preparation of profit and loss statement of Munteanu Ltd. For the year ended 31stdecember 2018......................................................................................................................18B.) Statement of financial position of Munteanu Ltd as on 31st December 2018................18C.) Explanation on following concepts................................................................................19D.) Describing purpose of depreciation with its two methods.............................................20E.) Critically evaluating the difference between the financial statements prepared by soletrader and the limited companies..........................................................................................20CLIENT 3......................................................................................................................................21A.) Explaining the purpose of preparing the bank reconciliation statement and reason of thispreparation on monthly basis................................................................................................21B.) Explaining areas which may cause record vary from the bank records.........................22C.) Explaining the term imprest which is used in petty cash system...................................22D.) Cash book and bank reconciliation statements..............................................................22CLIENT 4......................................................................................................................................24A.) preparation of balances...................................................................................................24B.) Explaining the term Control account..............................................................................25CLIENT 5......................................................................................................................................25a.) Explaining the term suspense account with its main features.........................................25b) Trial balance.....................................................................................................................26c.) Journal entries and correction..........................................................................................26CONCLUSION..............................................................................................................................27
FINANCIAL ACCOUNTING PINCIPLES TABLE OF CONTENTS INTRODUCTION 4 1. Financial Accounting Principles of Munteanu Ltd_2
REFERENCE...................................................................................................................................1
FINANCIAL ACCOUNTING PINCIPLES TABLE OF CONTENTS INTRODUCTION 4 1. Financial Accounting Principles of Munteanu Ltd_3
INTRODUCTIONFinancial accounting is the process of recording, summarizing and reporting the financialtransactions of a company. Field of financial accounting is highly significant which in turnprovides stakeholders with suitable framework for decision making. Thus, the assessment willcreate for developing better understanding of financial accounting and its purpose. Further, inthis report two internal stakeholders and four external stakeholders for large businesses willevaluate in order to identify their interest in financial information of the organization. Smallaccountancy firm which is selected in this report is Berley Chartered accountant which deals ingiving financial services to clients. Moreover, in this report calculation related to clients will alsobe provided.1. Defining financial accounting and its purposeFinancial accounting:The financial accounting can be described as that branch of accounting that deals withtracking the financial transaction of the company. The transactions are recorded in the books ofaccount as per the guidelines, standards to summaries the same and present the information infinancial reports or statement which includes profits and loss account, balance sheet, cash flowstatement etc. This is a process of recording, summarizing and reporting the myriad oftransaction which are a result from the operations and activities of a business over a period oftime (Financial accounting, 2018). The presentation of financing information of businessactivities as per the standardized guidelines in various forms of statements record the operatingperformance of company for a specific period. This utilize pre determined accounting principlesto decide the treatments of a particulate transaction as per the established principles.The financial accounting may be performed using either of two methods accuracy andcash method or a both. In general practice accrual method is followed as this record the dualeffect of a transaction giving the exact accounting treatments of each financial transaction of theorganization. The transactions are recorded in accordance with Generally accepted Accountingprinciples (GAAP).Purpose served by financial accounting:The purpose of financial accounting is to make sure that all the certified accountingstandards are aided with in summarizing and recording of the financial transaction of the firm.The purpose served by the financial accounting are not limited but its main aims is to assists in
FINANCIAL ACCOUNTING PINCIPLES TABLE OF CONTENTS INTRODUCTION 4 1. Financial Accounting Principles of Munteanu Ltd_4
harmonized recording, decision making etc. Some of the main purpose served by it are recoupedbelow:Recording of the financial transaction:The most important aspect of financial accounting is to record the financial and monetarydata and information of a business. To be carried out in such a manner that gives the finalextract about the performance of company as well as assist in decision making process.Harmonized way record the transaction:The main purpose served by financial accounting is summarizing and recording of themonetary transaction related to a business pertaining to a particular period. This allow thebusiness to follow a uniform method in recording of the transaction with uniformity giving ascope of comparison regarding own financial performance & position and competitors as well.Assist in decision making process:The main purpose served by financial accounting is to accumulate reports on the financialinformation regarding the performance, financial position and cash flow of the business (Theimportance of financial accounting, 2018). The information is used by the management indecision making process on how to manage the business, invests and lend money etc.Adherence with prescribed standard and guidelines:This accounting emphasizes on abiding with regulatory guidelines and standards forrecording financial transaction associated with business. The transaction must be recorded as perguidelines of GAAP, FASB, IFRS etc. which fulfills the legal obligation of the businessorganization. Relevance:Purpose of financial accounting is to help its reader in making decision by analyzingfinancial capability of company. Thus, financial accounting has the purpose to for providinguseful information which must be relevant. For satisfying these objective, entity report result onquarterly and annual basis (Freedman, 2019).Reliability-It is the purpose financial accounting to provide information which must be reliable. Itreliable financial statements are not produce by company then investors are not able to gain theinformation by which they will able to develop economic decision.Comparability-
FINANCIAL ACCOUNTING PINCIPLES TABLE OF CONTENTS INTRODUCTION 4 1. Financial Accounting Principles of Munteanu Ltd_5
Another purpose of financial accounting is to provide information which is comparable.System of recording and reporting accounting information is developed in order to provideinformation which is more comparable.Consistency-It is the secondary quality of information which must be comparable where users willable to relay and develop their decision regarding investment in company.2. Internal and External stakeholders of an organization and why they are interested inorganization's financial informationStakeholders can be defined as an independent body or institutions such as organizations,individuals, groups that are concerned with the operations of a company and are interested in thefinancial results of a business concern. Such stakeholders can be internal and external that arebriefly discussed below: Internal stakeholders: Internal stakeholders can be referred as those groups or individual that are present withinin the business organisation. Examples of such internal stakeholders are:Employees- these are the group of stakeholders which have direct interest for businessoperations of the entity. Reason which states their interest is that they are one which playsmain role in developing effective business functions. They analyse their involvement byanalysing the nature of business in which they will earn of themselves. For example:transportation, mining, construction are the business where employees develop interest byanalysing health and safety policies.Management- these are also a group of internal stakeholder which has the direct interestin business operations of the entity. They generally want to earn high wages and alsowants to retain their jobs for long term perspective. Thus, they have huge interest infinancial capability and growth of business.External stakeholdersExternal stakeholders are such individuals and groups that are not within the businessorganisation but are affected by the operations of the company (Bredmar, 2016). Examples ofsuch groups or individuals are :Customers- These are the main group of stakeholder for every organisation because it issaid that the business only exists to serve their customers. That is why it is been said that
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