Financial Accounting Assignment - Syedain & Co

Added on - Nov 2020

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FINANCIAL ACCOUNTING
Table of Contents
INTRODUCTION...........................................................................................................................1
BUSINESS REPORT......................................................................................................................1
CLIENT 1........................................................................................................................................4
1. Double Entry of Recording.....................................................................................................4
2. Trial balance as for January 2019.........................................................................................14
CLIENT 2......................................................................................................................................16
1. Income Statement of Munteanu Ltd. for the year ended December 31, 2018......................16
2. Statement of Financial Position of Munteanu Ltd. for the year ended December 31, 2018.17
3. Accounting Concepts of 'Consistency' and 'Prudency'..........................................................17
4. Purpose of Deprecation and Methods Used..........................................................................18
5. Evaluating difference between preparation of financial statements by Sole Traders and
Limited Companies...................................................................................................................18
CLIENT 3......................................................................................................................................19
1. Purpose of Bank Reconciliation Statement of Burcu Ltd.....................................................19
2. Areas that may result in gaps between Bank Passbook and Cash-Book...............................19
3. Imprest System.....................................................................................................................19
4. Bank Reconciliation Statement for Burcu Ltd. as on September 30, 2019...........................20
CLIENT 4......................................................................................................................................20
1. Sales Ledger Control Account.............................................................................................20
2. Purchase Ledger Control Account.......................................................................................21
3. Concept of Control Account.................................................................................................21
CLIENT 5......................................................................................................................................21
1. Concept of Suspense Account...............................................................................................21
2. Trial Balance to show necessary corrections of all items.....................................................22
3. Journal Entries.......................................................................................................................22
CONCLUSION..............................................................................................................................23
REFERENCE................................................................................................................................24
INTRODUCTION
Financial Accounting includes all those activities that are undertaken by a business to
prepare the statements of final accounts in a given financial period. Therefore, the process of
recording, journalizing, summarizing and reporting of all business transactions form a part of this
discipline. These statements include an Income Statement that provides information regarding
profit or loss earned after deducting interest payments, taxes and other expenses. Apart from this
such statements also establish the financial position of the organisation at a given date, usually
the last date of financial period, by furnishing a Balance Sheet. This Balance Sheet also shows
information regarding the assets and liabilities that a company possesses to assist its operational
requirements(Akisik, 2013).
The main aim of this report is to provide insights in regards to accounting principles,
conventionsandconcepts.Itincludesabusinessreportstatingtheconceptoffinancial
accounting, its purpose as well as the interested stakeholders. For successful completion of this
report, Syedain & Co. has been chosen as the accountancy firm.
BUSINESS REPORT
Syedain & Co. has been providing a pool of core knowledge and expertise to its
customers in relation to accounting, tax and strategic consultation to its clients. The company's
clientele ranges from private individuals, families to businesses comprising sole proprietors,
partners and limited companies both profitable and non-profitable.
Being an accounting firm, the company understands the importance of the principles,
conventions, rules and regulations relating to accountancy. Therefore, all the services provided at
Syedain & Co. are in accordance with the prevalent accounting standards in regards to the
clientele served by it.
Financial Accounting and its purpose:
The company has a strong foothold in taxation, accountancy and strategy. The taxation
includes Income Tax Returns, Capital Gains and Tax Planning whereas Strategy component
includes business planning, formulation of growth strategy and planning. As far as Accountancy
arm of the organisation is concerned, the company provides accounts, audits, book-keeping,
corporatefinanceandmanagementaccountingservices.Therefore,thecompanyfully
understands the concept of Financial Accounting and its purpose.
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It is aware that financial accounting comprises the procedures relating to acknowledging,
journalizing, summarizing and reporting oftransactions in a chronological order for business
operations over a period of time(Ayeboafo, 2012). The accounting firm is aware that having a
clear understanding of this field is crucial. This is due the fact that financial accounting forms the
base for an effective and correct application of financial information for preparation of final
accounts. It implements a series of established accounting principles that are catered to the needs
of the company's clientele. As different clients require to follow different rules, principles or
conventions, the selection of such principles depends on their regulatory as well as the reporting
requirements. Thus, Syedain undertakes the responsibility to monitor its clients transactions that
fulfil the following purpose of financial accounting:Recording-Syedain & Co. ensures for its clients as well as for itself that a proper record
of business transactions is carried out in a chronological manner. This facilitates proper
organization of incomes and expenditures so that they can be easily referred to at any
given point of time.Planning-One of the main purpose of financial accounting is also to facilitate strategic
formulation of a business in order to achieve its goals and objectives. Since financial
records are used by Syedain's management across all levels, it helps in forecasting future
plans and creating action plans to further grow the business in a planned and efficient
manner.Decision-making-As financial accounting involves reporting of transactions, decision-
making is one of the purpose it serves for Syedain & Co. By implementation of
accounting principles and other benchmarks, the firm is able to decide its future course of
actions which maximize its profits as well as satisfaction among its stakeholders, both
internal as well external.Performance-This field of study helps in summarizing of the financial information
related to the business through the preparation of final statements. Syedain makes sure
that it is able to furnish its business transactions in the most convenient and concise
manner so as to enhance comparability. Also, the company is able to analyse its
performance to spot areas of improvement as well as keep track of its expenses and
incomes.
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Liquidity-Anotherimportantpurposethatfinancialaccountingprovidesforis
classification of assets and liabilities in a concise manner to provide the level of liquidity
in Syedain to interested stakeholders. Also, the company is able to ascertain its financial
position and health for different time periods.
Stakeholders:
Although Syedain & Co. is a small accountancy firm, the company serves a diverse client
base. A stakeholder is an individual or group or corporation that is interested in the operations of
the business either directly or indirectly(Bertomeu and Magee, 2015). These include both
internal stakeholder and external stakeholders.
Internal Stakeholders:
Internal Stakeholders are those which are directly related to the operational process
carried out in a business. They are the individuals or parties which are involved in the decision-
making process and implementation of strategic plans of the business. The two main internal
stakeholders of Syedain and Co. that are likely to be impacted as well as would be interested in
the financial information of the organisation are:
Employees:A business is created by the skill-set and efficiency of its employees. Thus,
their hard-work and primary responsibility towards the organisation makes them the most
important stakeholder of any business. As decisions made by Syedain would directly
affect the economic well-being of its accountants and other employees they are interested
to know how well the company is performing. Also, it will ensure them security of job
and payment of wages since their livelihood depends on such factors.
Management:Syedain's top management includes owners, board of directors as well as
the investors of the company. As they are responsible for managing operations and
formulating strategies to achieve business objectives, they are interested in the company's
financial information. This helps to know whether they have been successful in achieving
their goals so as to maximise profits and encourage growth of business.
External Stakeholders:
External Stakeholders are those individuals or groups that are external to an organisation
but have the power to affect or be affected by the operations of the business. Such parties are
indirectly related to the operational process of the business(Bryer, 2013). The four main external
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stakeholders of Syedain that would be interested in the financial information of the organisation
are:
Vendors:
Vendors are one of the most crucial stakeholders of a business. It is important to build long-term
relationships with such parties in order to enjoy trading benefits provided by them to a company.
Vendors for Syedain include software providers that help in easy processing of information for
accountants providing consultation services to its clients(Christensen, Cottrell and Baker, 2013).
Therefore, such parties would be interested in ascertaining the liquidity of the company so as to
sustain their relationship and estimate the capability of the firm to repay its outstanding
payments.
Financial Institutions:
Every business requires additional funds for fulfilling their working capital requirements. This
may be acquired in the form of loans or debt taken from bank and other financial institutions. In
case of Syedain, these institutions are interested in knowing whether they would be able to repay
such loans or not.Customers:Syedain'scustomersincludebusinessclientsincludingindividuals,
corporations as well as families. These parties are interested to know if the business is
able to perform their services effectively and maintain sustainability.
Investors:
Investors of Syedain would be interested in knowing if their investments are generating any
fruition. Hence, they would like to know from company's financial information the return on
equity earned by them as well as the dividends received by them from Syedain's financial
operations for a given time period.
Such requirements of internal as well as external stakeholders make them interested in
the financial information of any organisation including Syedain's. Hence, one can understand that
the company strives to maintain and quality of performance in its services offerings by adhering
to rules, regulations related to accountancy.
CLIENT 1
1. Double Entry of Recording
Journal Entries:
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