Assignment On Different Types Of Accounting Records & Their Importance

Added on -2020-02-05

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Assignment Front Cover SheetPART 1 – To be completed by the studentFirst submission [Y/N]YES....Resubmission (as per lecturer’s instruction) [Y/N]....No cheating, dishonesty or plagiarism will be accepted from any learner who enrols for a qualification/course.All sources must be properly referenced using the Harvard Referencing System. Failure to properly referenceany source constitutes plagiarism whereby the learner will be subject to disciplinary action, and will likely refer(fail) a unit. PART 2 – Student declarationBy submitting this work to LSBM, I confirm that I have read and understood the Dishonesty and PlagiarismPolicy that is applicable to all assessments and assignments submitted by me. I also confirm further that the work submitted here is my own work, save for where indicated by properreferencing. Should I not abide by the policy and be found guilty of plagiarism by my course lecturer or anyother LSBM or appointed staff member I shall be bound by the decision of that lecturer and/or staff member aswell as the terms of the Dishonesty and Plagiarism Policy.Please save your document in the following format before submitting through Moodle:First name- Surname–Course–Unit–Assignment-date.docE.g.: Rubin Gurung-APDMS-BO-Assignment-3 Dec 09.docThis page must be page 1 of your assignment. Start your work on page 2Page 1 of 20
Table of ContentsContents1Accounting...............................................................................................................................21.1Types of Accounting Records...........................................................................................21.2Concepts of Accounting....................................................................................................21.3Factors Affecting the Structure and nature of Accounting Systems.................................32Task 2.......................................................................................................................................42.1Different components of business risk associated with strategic move of an organisation42.2Control systems for identification of Fraud......................................................................52.3Risks of fraud in a business...............................................................................................53Task 3.......................................................................................................................................63.1Scope: the statements audited include the Cash flow and Balance sheet statements under theInternational Standard on Auditing (UK and Ireland). The ISA (UK and Ireland).....................63.2Audit test s(Millichamp, 2002).........................................................................................63.3The Audit process is recorded as detailed below..............................................................64Task 4.......................................................................................................................................74.1Draft Audit Report............................................................................................................74.1.1Background................................................................................................................74.1.2SCOPE.......................................................................................................................74.1.3OBJECTIVES AND RESULTS................................................................................84.1.4OBSERVATIONS AND ACTION PLAN................................................................94.2Letter to the Auditor........................................................................................................115(To Auditor) 9th November, 2015....................................................................................11AccountingAC1.1 Types of Accounting RecordsIn the accounting system, there exist different types of accounting records. There are the financial recordssuch as the journals, invoices, and receipts. Notably, every type of record has certain informationconcerning the business and are each used for a different purpose. However, each type of a record islinked to other records that constitute the financial statements. In this subtopic, different types ofaccounting records and their importance are discussed (Anthony, Breitner & Anthony, 2003).Income statement; this statement lists all transactions whether income or expenses. Mostly, it isreferred to as a profit or income statement. It is used to check the profitability of your business.Remarkably, these statements are prepared within certain periods, which can either be daily,Page 2 of 20
monthly, or annual basis. By this, they allow the business owner to know the different periods in ayear when the business makes more profits or incur losses such that when preparing a budget,considerations are made. Balance sheet; it records all the liabilities and expenses that a given business owns. Both liabilitiesand assets are arranged into long term and short-term categories and listing is made in the order ofliquidity. The most liquids assets and liabilities such as cash are listed first. Mostly, lenders andinvestors use the balance sheet to measure the potential of a business. Statement of cash flows; Used to record cash inflow and outflow. It is important to note that the cashflow statement only records all those transactions that have already been made. Therefore, such arecord is appropriately used to show if the company has enough cash to cover its current expenses. Sales Ledger: this records contains the personal accounts of the debtors (customers ) of the business.it isused to record payments made for debts owned by customers and shows also their payments of the debteither instalment or as regularly as they pay as stated in their agreement with the business.Purchase Account: purchase accounts are used by companies to record the purchase of stock. These arerecorded as soon as the liability arises.Trail Balance: trail balance are used to focus on accuracy of the recording systems of accounts of thebusiness they are used to prepare the profit and loss account also the balance sheet. Trail balance is likethe hub of all accounting data, everything put together, the reconciliation of revenues and expenses (allassets, liabilities and revenue) trail balance is split into two balance sheet and income statement asmentioned above..Page 3 of 20
AC1.2 Concepts of AccountingMoney measurement; all accounting records are made in monetary terms. Any occurrence in thebusiness such as striking workers which affects the company’s operations and financial security, are notlisted in the financial statement. Instead, any incurred losses are recorded. Going Concern, Accounting assumes that any business or company will continue to run forever;indefinitely. By this, financial statements never represent a company’s worth if all the currents assets areliquidated; instead, it represents all the available resources that the company has at its disposal; for futureuse. Accruals: accruals are when revenues and costs are recognised as they are earned or accrued. And theyare matched with one another and are dealt with in the profit and loss accounts to which they relateirrespective of the period of receipt or payment.(CIMA,2000,p.9) Historical Cost; any asset that a company has depreciates with time. By this, financial records willinclude the current cost of an asset after depreciation. That is, cost concept recognises that assets losevalue in time and hence the net cost is recorded in the records.Prudence: in prudence revenues and profits are not anticipated, only realised profits with reasonablecertainty are recognised. Provisions are made for all known expenses and lossesConsistency: consistency means companies decide to use the most suitable accountability methods andtreatments that apply consistently to them in every accounting year or period. Any change that affects itsprofits should be disclosed in the financial statement. New methods can be considered if is consideredbetter and does reflect true and fair view of the company’s financial position.Page 4 of 20

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