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Accounting & Purposes of Public Limited Companies

   

Added on  2021-01-02

25 Pages5660 Words250 Views
Finance

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY..................................................................................................................................11 Define financial accounting & purposes...................................................................................12. Accounting rules & principles.................................................................................................13. Internal & External stakeholders of business organisation......................................................24. Qualitative characteristic of financial reporting impact on the financial informationpublished by public limited companies.......................................................................................3CLIENT 1........................................................................................................................................3Journal Entry in the books of Alexandra Study...........................................................................4(b) LEDGER ACCOUNTS.........................................................................................................7c. Trial balance at 31st January 2019.........................................................................................15CLIENT 2......................................................................................................................................16(a) Profit and loss account of Munteanu Limited......................................................................16(b) Balance Sheet of Munteanu Limited....................................................................................17C. Accounts concepts such as consistency & prudency............................................................18D. Meaning of depreciation & its methods................................................................................18e. Evaluate the difference between financial statements prepared by the sole trader & thelimited companies......................................................................................................................19CLIENT 3......................................................................................................................................191 . Purpose of BRS & why the business is facing difficulties...................................................192 . Areas where bank records vary from personal records........................................................20Bank reconciliation statement....................................................................................................20CLIENT 4......................................................................................................................................20(a) Books of Hilly......................................................................................................................21B .Control account.....................................................................................................................22Client 5...........................................................................................................................................22a. suspense account and its features...........................................................................................22(b) Drafting of Trail Balance:....................................................................................................22(c) Trial balance have credit balance of £ 3300 as suspense account........................................23

CONCLUSION..............................................................................................................................23REFERENCES..............................................................................................................................25

INTRODUCTIONFinance is a term describing the various elements of an business such as investments,money and other financial instruments. It is the backbone of the corporation and without itcompany can not start its business activities. To be successful it is necessary to manage financialsources so that more profits can be generated (Hong and Kostovetsky, 2012). To betterunderstand this concept, Corporate financial solutions is selected, which is London basedcompany. In this report there are following topics are covered such as: financial accounting & itspurposes, internal and external stakeholders of a large organisation. Apart from this, reportdiscuss about journal, ledger, trial balance, sole trader and Bank reconciliation statement.MAIN BODY 1 Define financial accounting & purposesFinancial accounting is the process of recording transaction, summarising and reportingand analysing the information at every financial year. In Corporate financial solutions thefinancial statements are prepared by the accountant (Huang and Kisgen, 2013). It involvesbalance sheet, income statement etc. It help the organisation to prepare their financial statementas per the accounting regulations. Importance of financial accounting is describe as below : Financial accounting is important because it helpful to record the transactions.Business organisation use financial accounting to communicate information & data toexternal parties which is helpful to take important decisions (Jordà and Taylor, 2016).Small business owners use financial accounting information to analyse competitors &identify investment opportunities. 2. Accounting rules & principles There are various accounting rules which are helpful to make financial statements whichare as: Type of accountGolden rulesReal accountDebit what comes into the businessCredit what goes out from the business Personal accountDebit the receiver (Kaczynski and Smith,2014).Credit the giver1

Nominal account Debit all the expenses and lossCredit all the incomes and gain (Law andSingh 2014).Accounting principle :Dual aspect concept : As per this principle it is necessary for the organisation to recordthe transactions on both sides which are debit as well as credit. If company follows the singleentry system than irreverent information can be produced. With the help of this concept thisproblem can be solved because every transaction has recorded both side with same amount (Lee,and Cowling, 2015).Cost principles : As per this principle it is required for the company to record the assetsin books at its acquiring cost. So it can be said that corporation can record an asset on balancesheet for the amount paid while purchasing it. Matching principles : As per this concept, all expenditures of business should be matchwith revenues which belongs to same accounting period (McLean and Zhao, 2014).3. Internal & External stakeholders of business organisationIn a large business organisation there are two types of stakeholders which are as internal& external stakeholders. Internal stakeholders are those persons who have direct interest inmaking plans, policies, strategies, project, process and product. It involves :Board of directors: The BOD are directly related to the business of organisation andthey have power to make plans for future growth and take important decisions for benefit ofcorporation (Midrigan and Xu, 2014).Employees : These are the internal stakeholders and they work for the corporation so thatit can achieve its goals and get success. They are also interested in financial information becauseif company is financially strong and it is earning profits than salaries of employees can beincreased (Okawa and Van Wincoop, 2012).External stakeholders are as follows :Customers : These are those persons who purchase the products and services oforganisation and in return it charge consideration which is in the form of money. The primaryfocus of company is to satisfy the needs of consumers (Philippon and Reshef, 2012). They areinterested in financial information because if it financially strong than it can produce quality2

products because it can use quality resources in manufacturing as a result persons get superiorproducts. Suppliers : The person who provide raw material to the organisation is known assupplier so that company can produce final products and sell it to the market. They are interestedin financial information because if corporation is financially strong than it can pay money ontime to the suppliers (Loughran and McDonald, 2016).Government : It collect the tax form the profits which is earned by organisation and itmakes rules & regulations which are needed to be follow. They are interested in financialinformation of the business as they can ascertain whether or not company is paying its all duetaxes (Guiso and Sodini, 2013).Creditors : The person from which company can borrow money so that it can expand itsbusiness and make future plans for expansion. In return it have to pay interest. On the basis offinancial information creditors can analyse the capability of organisation to pay the borrowedmoney(Greenwood and Scharfstein, 2013).4. Qualitative characteristic of financial reporting impact on the financial information publishedby public limited companiesThere are various qualitative characteristics of financial reporting which are beneficial forthe company to take important decisions. It involves: understandability, relevance, reliability andcomparability. It is necessary for the public limited companies to publish its financial statementsand it provide various information which useful in decision making process. Organisation isimpacted as they require to publish financial information in such a way that it can fulfilrelevancy & reliability feature. If these information will be reliable than important decision canbe taken for the benefit & growth of organisation (Gallagher and Koleski, 2012).CLIENT 13

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