Financial Accounting: Concepts and Application

Financial Accounting

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1................................................................................................................................................1
1.2................................................................................................................................................2
1.3..............................................................................................................................................11
TASK 2..........................................................................................................................................12
2.1..............................................................................................................................................12
2.2..............................................................................................................................................13
2.3..............................................................................................................................................14
2.4..............................................................................................................................................16
TASK 3..........................................................................................................................................17
3.1..............................................................................................................................................17
3.2..............................................................................................................................................18
3.3..............................................................................................................................................19
3.4..............................................................................................................................................19
TASK 4..........................................................................................................................................21
4.1..............................................................................................................................................21
4.2..............................................................................................................................................21
4.3..............................................................................................................................................22
4.4..............................................................................................................................................23
CONCLUSIONS...........................................................................................................................24
REFERENCES..............................................................................................................................25

INTRODUCTION
Financial accounting is the process that is used by the company for managing its business
operations effectively and appropriately. Financial accounting refers to the specialised
accounting branch that is used for keeping track over the financial transactions. It uses
specialised accounting guidelines and standards for recording summarising and presenting the
financial report or the financial statements like income statement, balance sheet (Schroeder,
Clark and Cathey, 2019). Present report will provide about the concepts of financial accounting
and their application for recording the business transactions. It will be providing about the
different ratios used for analysing the financial statements of company using ratio analysis
stating the financial health and position. It will provide understanding of reconciling bank and
cash balances. Report will provide how transactions are recorded, posted and balanced using trial
balance.
TASK 1
1.1
Trial Balance as on 31st March
Trial Balance at 31/3/2020
Account Debit Credit
Premises 340000
Van 51250
Fixtures 8100
Inventory 63900
P Mullen 1400
F Lane 3100
Cash at bank 62400
Cash in Hand 5600
S. Hood 2150
J. Brown 4600
Capital Account 529000
Total 535750 535750
1

1.2
i) Application of double entry system to record business transactions.
Journal Entries
Date Particulars Debit Credit
01-Apr Storage Expense 400
To Bank 400
02-Apr Purchases 5000
To S. Hood 1400
To D. Main 2000
To R. Foot 1600
03-Apr T. Cole 1650
F. Syme 2000
J. Allen 900
F. Lane 750
To Sales 5300
04-Apr Motor Expenses 470
To Cash 470
07-Apr Drawings 1500
To Cash 1500
09-Apr T. Cole 650
J. Allen 1300
To Sales 1950
14-Apr Van 28500
To Abel Motors 28500
16-Apr Bank Ac 6500
To P. Mullen 1400
To F. Lane 3100
To F. Syme 2000
2

22-Apr Purchases 1800
To D. Main 1800
24-Apr S. Hood 2150
J. Brown 4600
R. Foot 1400
To Bank 8150
27-Apr Salaries 4800
To Bank 4800
30-Apr Business Rates 1320
To Bank 1320
30-Apr Abel Motors 28500
To Bank 28500
Total 94190 94190
LEDGER ACCOUNTS
Bank a/c
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 62400 01-04-2020 Storage 400
16-04-2020 P. Mullen 1400 24-04-2020 S. Hood 2150
16-04-2020 F. Lane 3100 24-04-2020 J. Brown 4600
16-04-2020 F. Syme 2000 24-04-2020 R. Foot 1400
27-04-2020 Salaries 4800
30-04-2020
Business
Rates 1320
30-04-2020
Abel
Motors 28500
30-04-2020 By Bal c/d 25730
68900 68900
3

Cash a/c
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 5600 04-04-2020
Motor
Expenses 470
07-04-2020 Drawings 1500
30-04-2020 By Bal c/d 3630
5600 5600
Van a/c
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 51250
14-04-2020 To Abel Motors 28500
30-04-2020 By Bal c/d 79750
79750 79750
Fixtures
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 8100
30-04-2020 By Bal c/d 8100
8100 8100
Capital a/c
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 529000
4