Accounting Principles and Practices

The provided assignment details a collection of resources related to accounting principles and practices, including past papers and solved assignments from various textbooks and journals. The resources cover topics such as financial accounting, management accounting, cost accounting, and corporate social responsibility reporting. The assignment is likely intended for students in an accounting course or program, and the resources can be used to supplement their learning and prepare for exams.

FINANCIAL
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
(a) 1. Examining the Financial Accounting and it's purposes......................................................1
(a) 2. Examining the regulations relating to financial accounting ..............................................2
(a) 3. Describing the Accounting rules and principles.................................................................3
(a) 4. Explaining the conventions and concepts relating to the consistency and material
disclosure.....................................................................................................................................4
CLIENT1.........................................................................................................................................5
(a) Journal Entry in the books of David Study...........................................................................5
(b) LEDGER ACCOUNTS .........................................................................................................8
(c) Trial Balance as at 31st January, 2018................................................................................14
CLIENT 2......................................................................................................................................16
(a) Statement of profit and loss for Peter Hampau for the year ended 31st July 2018 .............16
(b) Statement of financial position for Peter Hampau as at ended 31st July 2018 ...................17
CLIENT 3......................................................................................................................................17
....................................................................................................................................................18
(b) Balance Sheet of Bowling Limited......................................................................................19
(c) Accounts concepts such as consistency and prudency.........................................................19
Client 4...........................................................................................................................................21
(i) Purpose of bank reconciliation statement ............................................................................21
CLIENT 5......................................................................................................................................22
(a) Books of Henderson.............................................................................................................22
CLIENT 6......................................................................................................................................23
(a) Suspense Account.................................................................................................................23
(b) Drafting of Trail Balance:....................................................................................................24
(c) Trial balance have credit balance of £ 330 as suspense account..........................................24
(d) Difference between a Suspense A/c and Clearing A/c.........................................................25
CONCLUSION..............................................................................................................................25
REFERENCES..............................................................................................................................27

INTRODUCTION
In modern times the financial accounting plays an integral part in managing and
ascertaining the operational activities of the business entity also ascertain it's performance.
Financial accounting refers to the process of preparation of annual or financial statements that
are used to record and depicts the financial performance as well as the operational experiences of
the organisation(Weil, Schipper and Francis, 2013). These statements forms a financial or
annual report of the organisation of the organisation which are mainly useful for the internal as
well as the external parties of the business entity. Besides this, the report pertain the knowledge
and evaluation regarding the financial statements of the small accountancy organisation like Taj
Accountants (UK).
(a) 1. Examining the Financial Accounting and it's purposes
Financial Accounting refers to the process of recording, summarising and reporting the
myriad of business operational activities over an accounting era(Schaltegger and Burritt, 2017).
These operational transactions are summarized in the preparation of the financial statements,
involves balance sheet, income statements and cash flow statement that depicts the operating as
well as the financial performance of the business organisation like Taj Accountancy over a
specific accounting era.
There are some purposes of the financial accounting for the business organisation, which are
mentioned underneath.
 Financial Accounting used for maintaining the systematic records: The financial
accounting refers to the systematic record of the systematic record of the financial
transactions of the organisation. The financial accounting helps in maintaining the
systematic record of the business transactions by recording them on the accrual basis.
 It is used for the purpose of protecting the business properties: The accounting also
used for the purpose of protecting the properties or assets of the business organisation for
unreasonable or unwarrantable use(Zeff, 2016).
 Financial accounting is specialized for completing the purpose of ascertainment of
operational profit or loss: Among all the purpose the main purpose of adapting the
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financial is to find out or quantify the accurate values of the profits or losses incurred
from the business operational activities of the organisation(Edwards, 2013).
 It is used for the purpose of ascertaining the financial performance of the business:
The accounting also used for the purpose of ascertaining the the financial performance of
the business organisations. As accounting helps in keeping the systematic record of the
past accounting years that renders a base or the comparative basis that is utilised by the
organisation to compare and ascertain the profit margin as well as the probability(Khan,
2015).
 It is used to ensure effective decision making within the organisation: The financial
reporting helps the managers to make further futuristic decision regarding the business
operational activities of the organisations. With the help of accurate financial records
regarding the business activities it helps the managers to quantify the actual output from
the business activities and take further actions for ensuring more betterment and attaining
the more favourable outcomes(May, 2013).
(a) 2. Examining the regulations relating to financial accounting
There are some regulations for guiding the process of accounting in order to perform it
prominently and effectively. Some regulations are mentioned below.
 The procedure pertains some rules, standards and procedures of Generally Accepted
Accounting Principles (GAAP) which are designed as regulatory body for the prominent
and accurate preparation financial statement. The GAAP pertains several regulations like
Principle of Regularity, Consistency, Precedence and Periodicity etc.
 Regulations regarding the International Financial reporting Standards are also required to
be follow by the accountants of the organisations like Taj accountancy firm (UK) as due
to it depicts the appropriate manner for reporting of particular transactions and events in
financial statements(Broadbent and Cullen, 2012).
 Regulations regarding Financial Accounting like debit and credit rules of accounts and
their treatment in accounting are required to be follow by the accountant of organisation
like Taj accountancy firm (UK). So appropriate and accurate information reported in
financial statements.
 Accordance with the Companies Act it becomes compulsory to produce the Books of
accounts for developing the knowledge of general public for enhancing their observations
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and knowledge regarding the financial statements of any organisation and make their own
regarding the investment or disinvestment(Beatty and Liao, 2014).
(a) 3. Describing the Accounting rules and principles
Financial Accounting requires and pertain assorted set of rules and principles which are
required to be follow by each accountant of organisations like Taj Accountancy Firm (UK) while
the preparation of the financial statements which are mentioned underneath:
Debit the receiver, credit the giver: This principle mainly applied for the treatment of
Personal accounts. Some examples of personal account are debtors, banks, creditors, capital
account etc. when the organisation received something in form of cash raw material or anything
from other organisation or individual then in case of personal account the it must be crucial to
debit the account of that organisation or individual and if the organisation gives some cash or
anything to other organisation or person then it the account of that individual or organisation
must be credit(Edwards, 2013).
Debit all expenses and losses, credit all incomes and gains: This rule is applicable
while the treatment of Nominal accounts. Under the treatment of nominal account, all the
expenses and losses of the organisation are to be debited in the books of accounts and all the
incomes or gains of the organisations are to be credited(Needles, Powers and Crosson, 2013).
Debit what comes in, credit what goes out: This principle is mainly applicable while the
treatment of the real accounts. The real account pertain the machineries, land and buildings etc.
For example, an organisation acquire furniture of $ 30000 by cash, then the furniture comes
under the real account and furniture account is required to be debited by $ 30000 and cash
account must be credited by $ 30000.
Some principles of the Financial accounting are mentioned underneath:
 Dual aspect concept: Dual aspect concept defines that the organisations are required to
record their business transactions accordance with the dual reporting concepts, it states
that every transaction has its double effects or must be recorded twice in the books of
accounts as double on both debit and credit side of books. As in case of Single entry
system every transactions are to be recorded once and it has only one aspect of the
transaction which leads to recording of relevant informational data in books of accounts
an inappropriate manner. That is why, in order to prevent such kind of problem the dual
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aspect principle requires that every and each transaction is required to be recorded on
both debit and credit side of accounts.
 Cost principle: This principles examines that costs of business assets are required to be
recorded at accurate acquiring cost (costs price+installation charges). It means that
business assets must be recorded by the organisation at their costs of acquisition, as they
are obliged to evaluate the assets balances while preparing the several accounts and final
accounts such as depreciation accounting and balance sheet(Taipaleenmäki and
Ikäheimo, 2013).
 Matching principle: This principle examines that the all the relevant expenses incurred
by the organisations are required to be charged to the income statement in an accounting
era in which revenues are earned. Furthermore, the expenses are required to be record in
the same period as the income to which it is associated(Parker and Fleischman, 2017).
(a) 4. Explaining the conventions and concepts relating to the consistency and material disclosure
Financial accounting framework comprises with the conventions which acts as the
guidelines that are required to follow while applying the principles of accounting practically.
The mandatory accepted conventions depends on practical facts and it renders the prominent
method or techniques to accountant for solving practical issues which are faced while preparing
the financial statements of business entity. Some conventions of Financial accounting are
mentioned underneath:
 Convention of consistency: It is mandatory for the organisation to follow the concepts
and conventions continuously and on consistent basis. As it is crucial for the final
accounts, it is essential for ascertainment of the organisation to analyse the performances
on the basis of comparative analysis. Besides this, it is also essential for the comparative
of different organisation of different countries, if all organisations follows the same
conventions an d concepts. As from the point of view of investors it is also beneficiary
for the investors to make comparative analysis of the organisation which follows same
accounting methodology and concepts(Collier, 2015). So it can be termed as
indispensable to precede accounting principles and rules in a familiar manner and on
consistently and continuously basis. As it ensure the reliability to the financial report. For
example, if an organisation adapted the method of Straight line method for depreciating
the fixed assets but after some years the organisation changes the method and follows the
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Written down value method (WDV) , then it becomes necessary for the organisation to
follow the WDV method consistently and continuously.
 Convention of material disclosure: Accordance with this convention, it is also required
that the organization must disclose all relevant informational data for the betterment of
the accounting procedure. Therefore the accounts are prepared in most prominent manner
that all material facts or information are required to disclose. It is also crucial for the
business entity to render all informational data in financial reports so that the investors,
creditors and owners becomes able to know about relevant business information related
to material. As it helps them in taking the further futuristic decisions and investment
decisions(Porter and Norton, 2012).
CLIENT1
(a) Journal Entry in the books of David Study
5

(Being storage cost is paid)
02/0
1/18
Purchases A/c Dr. 7680
To S Hamid A/c 2450
To D Main A/c 2560
To W Tag A/c 1060
To R Foot A/c 1610
(Being goods purchases on credit from various parties)
03/0
1/18
J Wilson A/c Dr. 2020
T Cole A/c Dr. 1840
F Seema A/c Dr. 2380
6

J Allen A/c Dr. 990
P White A/c Dr. 2820
F Lane A/c Dr. 1170
To Sales A/c 11220
(Being goods sold on credit to various parties)
04/0
1/18
Motor Expenses A/c Dr. 670
To Cash A/c 670
(Being motor expense is paid)
07/0
1/18
Capital A/c Dr. 2000
To Cash A/c 2000
(Being cash withdrawal by owner himself)
09/0
1/18
T Cole A/c Dr. 1280
J fox A/c Dr. 2310
To Sales A/c
(Being goods purchase on credit with various parties)
11/0
1/18
Sale Return A/c Dr. 680
To J Wilson A/c 370
To F Seema A/c 310
(Being goods is returned back by the parties
16/0
1/18
Bank A/c Dr. 7150
7

Discount Allowed A/c Dr. 461
To P Mole A/c 1710
To F Lane A/c 3364
To J Wilson A/c 963
To F Seema A/c 1574
(Being Payment received from parties after allowing
discount @ 5%)
To Purchases Return A/c 110
(Being Goods is returned to creditor)
22/0
1/18
Purchases A/c Dr. 3140
To L Mole A/c 1330
To W Wright A/c 1810
(Being goods purchased on credit)
24/0
1/18
S Hamid A/c Dr. 3860
J Brown A/c Dr. 4260
R Foot A/c Dr. 1750
To Bank A/c 7500
To Discount Recieved A/c 2370
(Being payment is made to creditors after receiving discount
@ 10%)
27/0
1/18
Salaries A/c Dr. 14500
To Bank A/c 14500
(Being salaries are paid through cheque)
8

30/0
1/18
Business Rates A/c Dr. 2220
To Bank A/c 2220
(Being business rates are paid through cheque)
(b) LEDGER ACCOUNTS
9

10

Purchases A/c
Date Particulars Amoun
t
Date Particulars Amount
02/01/
18
To S Hamid A/c 2450 31/01/1
8
By Trading and P&L A/c 10820
To D Main A/c 2560
To W Tag A/c 1060
To R Foot A/c 1610
22/01/
18
To L Mole A/c 1330
To W Wright A/c 1810
Total 10820 Total 10820
Bank A/c
Date Particulars Amoun
t
Date Particulars Amount
01/01/
18
To Opening Balance
(B/f)
42400 01/01/1
8
By Storage cost A/c 800
16/01/
18
To P Mole A/c 1600 24/01/1
8
By S Hamid A/c 2600
To F Lane A/c 3200 By J Brown A/c 3300
To J Wilson A/c 880 By R Foot A/c 1600
To F Seema A/c 1470 27/01/1
8
By Salaries A/c 14500
30/01/1
8
By Business Rates A/c 2220
31/01/1
8
By Closing Balance C/d 24530
Total 49550 Total 49550
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D Main A/c
Date Particulars Amoun
t
Date Particulars Amount
31/01/
18
To Closing Balance
A/c
2560 02/01/1
8
By purchases A/c 2560
Total 2560 Total 2560
By Purchases Return A/c
Date Particulars Amoun
t
Date Particulars Amount
31/01/
18
To Trading and P&L
A/c
110 19/01/1
8
By R foot A/c 110
R Foot A/c
Date Particulars Amoun
t
Date Particulars Amount
19/01/
18
To Purchase Return
A/c
110 02/01/1
8
By purchases A/c 1610
24/01/
18
To Discount Received
A/c
150 31/01/1
8
By Closing Balance C/d 250
To Bank A/c 1600
Total 1860 Total 1860
T Cole A/c
Date Particulars Amoun
t
Date Particulars Amount
03/01/
18
To Sales A/c 1840 31/01/1
8
By Closing Balance C/d 3120
12

09/01/
18
To Sales A/c 1280
Total 3120 Total 3120
J Allen A/c
Date Particulars Amoun
t
Date Particulars Amount
03/01/
18
To Sales A/c 990 31/01/1
8
By Closing Balance C/d 990
Total 990 Total 990
F Lane A/c
Date Particulars Amoun
t
Date Particulars Amount
01/01/
18
To Opening Balance
(B/f)
2100 16/01/1
8
By Bank A/c 3200
03/01/
18
To Sales A/c 1170 By Discount Allowed
A/c
164
31/01/
18
To Closing Balance
C/d
94
Total 3364 Total 3364
Cash A/c
Date Particulars Amoun
t
Date Particulars Amount
01/01/
18
To Opening Balance
(B/f)
10600 04/01/1
8
By Motor Expenses A/c 670
07/01/1
8
By Capital A/c 2000
31/01/1
8
By Closing Balance C/d 7930
13

Total 10600 Total 10600
Sales Return A/c
Date Particulars Amoun
t
Date Particulars Amount
11/01/
18
To J Wilson A/c 370 31/01/1
8
By Trading and P&L A/c 680
To F Seema A/c 310
Total 680 Total 680
L Mole A/c
Date Particulars Amoun
t
Date Particulars Amount
31/01/
18
To Closing Balance
C/d
1330 22/01/1
8
By Purchases A/c 1330
Total 1330 Total 1330
W Wright A/c
Date Particulars Amoun
t
Date Particulars Amount
31/01/
18
To Closing Balance
C/d
1810 22/01/1
8
By Purchases A/c 1810
Total 1810 Total 1810
J Brown A/c
Date Particulars Amoun
t
Date Particulars Amount
24/01/
18
To Discount Received
A/c
960 01/01/1
8
By Opening Balance b/f 9600
To Bank A/c 3300 31/01/1 By Closing Balance C/d
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8
31/01/
18
To Closing Balance
C/d
5340
Total 9600 Total 9600
Business Rates A/c
Date Particulars Amoun
t
Date Particulars Amount
30/01/
18
To Bank A/c 2220 31/01/1
8
By Trading and P&L A/c 2220
Total 2220 Total 2220
(c) Trial Balance as at 31st January, 2018
15

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CLIENT 2
(a) Statement of profit and loss for Peter Hampau for the year ended 31st July 2018
WORKING NOTE: If we take prepaid expenses of advertisement amounting to £4,470 as
given in the question, then advertisement expenses for the year ended 31st July, 2018 will
become negative that is - £3,440, so the additional information given in the problem is ignored.
17

(b) Statement of financial position for Peter Hampau as at ended 31st July 2018
CLIENT 3
(a) Profit and loss account of Bowling Limited
18

19

(b) Balance Sheet of Bowling Limited
(c) Accounts concepts such as consistency and prudency
Financial Accounting comprises of the several concepts which are mandatory for the
effective and systematic preparation of the Consolidate final statements, so that relevant
information pertain in the final statement and relevant data can be analysed. There are several
accounting concepts which are mentioned underneath:
20

Consistency: It refers to the accounting concept which defines that the organisations
must follow the same accounting concepts as well as conventions so that the comparative
analysis can made easily between the final statements of two or more different organisations of
different nations. is mainly focuses on the follow the same accounting policy which is being
using from last few years in order to maintain books of accounts(Duska and Kury, 2018). This
helps in maintaining accounts in adequate manner.
Prudence: It refers to the concept which states that it is mandatory to record only those
incomes and expenses which are incurred in the same accounting year. It means it is not required
that the organisation includes the future expenses or incomes while preparing the accounts of
current year. Furthermore, overstatement or understatement of income and expenses must not be
consider in context of the financial accounting.
d) Depreciation and its methods
Depreciation leads to permanent or gradual decrease in the value of assets due to its uses
in business operations. It can be termed as non-cash expenses. It is also necessary to evaluate the
accurate value of depreciation as well as the accurate of the assets for the exact quantification of
the assets held with the organisation(Carnegie and Napier, 2012). For calculating the depreciable
there are mainly two methods widely used by the organisations across the entire world.
Straight line method: Under this, method, the depreciable amount is calculated once and
the same amount is required to be deducted every from the value of asset, irrespective it's uses
over a period of time(Bresciani-Turroni, 2013). The straight line method is used under the
circumstances when there is no particular pattern to the manner in which an asset is to be utilized
over time.
Annual depreciation expenses= [Cost of assets- residual value]/ useful life of asset
Written down value method: it refers to the method, under which the depreciable
amount is required to be calculated every year on the basis of remaining value according to the
given rate of depreciation. This methods indicates the actual amount of depreciation as well as
depicts the real remaining values of assets(Barbier, 2014). This method is used under the
circumstances of those assets that have more efficiency in the beginning and late on decreases
year after year. This method is usually adopted for plant and machinery, fixtures and fittings,
motor vehicles, etc.
21

Client 4
(i) Purpose of bank reconciliation statement
Bank reconciliation statement at 1st December 2017
Particulars Amount
Bank Balance as per pass book 17478
Less: Suspense due to wrong carry forward 987
Actual balance as per cash book after reconciliation 16491
(ii)Prepare Durrell Ltd's updated cash book for December 2017
(iii) Bank Reconciliation Statement as at 31"t December 2017
22

CLIENT 5
In the books of Henderson for January, 2018
(a) Books of Henderson
(i) Purchase Ledger Control A/c
(ii)Sales Ledger Control A/c
(b) Control Account
It can be termed as a account that depicts summary, in the general ledger. While the
preparation of this account, entries are to be record once at the end of the every accounting era
depends on the periodic sum of transactions related to subsidiary ledgers and books. The
balances of control account must be equal to total of the balances of every individual accounts in
subsidiary ledger always(Stice and Stice, 2013). There are some needs for the preparation of the
control account for explaining to Henderson are:
23

 Control account depicts the summary of every relevant transactions recorded in several
subsidiary books and which are crucial for the managerial purposes.
 Delegation of accounting work within the ledger books are possible as well as
appropriate.
 It alleviate the evaluation and presentation of consolidate profit and loss account and
balance sheet with rapidity.
 It renders internal check leading to accuracy of records.
 It also renders basis for reconciliation of cost and financial statements.
CLIENT 6
(a) Suspense Account
It refers to the account which records the amounts on temporarily basis or general ledger
because the exact account was not determined on the time while the transaction were to be
record in the books of accounts(Tschopp and Nastanski, 2014). An amount is removed from
suspense account and transferred to relevant account after determination of the account.
Example:
Received a partial payment of $100 from a customer. Credit $100 to suspense account by
opening a suspense account and debiting cash account with $100. After receiving full payment
from customer, suspense account will be debited with $100 and accounts receivable will be
credited with $100. This will close the suspense account and the payment is moved to the correct
account.
There are some main features of suspense account:
 The suspense accounts is helpful in preparation of Trail Balance.
 The suspense account is beneficial in locating the errors.
 Its is also helpful in judging the nature of errors.
 It is also beneficial in rectifying one-sided errors entirely.
 Besides all these it is also helpful in preparing the Final Accounts.
24

(b) Drafting of Trail Balance:
(c) Trial balance have credit balance of £ 330 as suspense account
Journal entries to be entered to clear the suspense account are as follows:
25

(d) Difference between a Suspense A/c and Clearing A/c
Both of these account depends upon the balance sheet and book keeping affairs of the
business entity. Suspense account in some ways may be known as interoffice or clearing
accounts. Suspense account and clearing account, both are temporary account where transactions
added are transferred to their appropriate accounts like income or expense. The basic difference
between is that a clearing account is zeroed out. Whereas suspense account is a temporary
holding accounts in which accounting is carried out until the proper account is identified.
Clearing accounts used for clearing purpose and reviewed to ensure that all the remaining
balances are either zeroed out or explained. The purpose of clearing account is to ensure that
accounts are zeroed out and ensuring that remaining values are valid or not(Weygandt, Kimmel
and Kieso, 2015).
CONCLUSION
From the above report it has been concluded that the business organization requires the
financial accounting and it's concepts or convention for the effective and efficient
implementation of the financial accounting(Pounder, 2013). It helps in the proper and effective
26

evaluation of the business operations as well as quantifies the profit and losses from the business
operation and besides all these it is beneficiary in depicting the true business performances.
27