Financial Accounting: Final Accounts, Income Statement, Balance Sheet, Bank Reconciliation, Control and Suspense Accounts

FINANCIAL
ACCOUNTING

Table of Contents
INTRODUCTION................................................................................................................................3
FINAL ACCOUNTS OF GREG PALMER.........................................................................................3
FINAL ACCOUNTS OF KENNY PATON LTD.................................................................................4
DIFFERENCES BETWEEN AN INCOME STATEMENT AND STATEMENT OF FINANCIAL
POSITION............................................................................................................................................5
HYPOTHETICAL EXAMPLE OF A BANK RECONCILIATION STATEMENT ...........................7
RECONCILIATION OF CONTROL AND SUSPENSE ACCOUNTS...............................................9
CONCLUSION...................................................................................................................................11
REFERENCES...................................................................................................................................12

INTRODUCTION
Financial Accounting is a branch which is used to put a complete track about the
transactions of a company. Under this, proper guidelines and procedures are used to prepare the
final accounts of the organization. The transactions are recorded in a perfect sequence so that
companies can know that what are the expenses, income and position of the company at the end of
the year. The main aim of financial accounting is to summarize everything related to financial
transactions going in the business so that it can be useful for taking important decision by all the
stakeholders. Financial statements have to be compulsorily disclosed by the companies whose
stocks are listed on stock exchange (ScottO'Brien, 2013). In this report, income statement and
balance sheet will be prepared for both sole proprietorship and limited company and then a glimpse
on the differences between both income statement and balance sheet will be discussed. The report
will also include an example of bank reconciliation and the reconciliation of control and suspense
accounts.
FINAL ACCOUNTS OF GREG PALMER
Statement of P&L A/c of Greg Palmer
Dr. Cr.
Particulars Amount (£) Particulars Amount (£)
To Opening Stock 190000 By Sales 1301500
To Purchases 960000 By Closing Stock 120000
To Wages 330000 By Gross Loss 58500
1480000 1480000
To Gross Loss 58500 By Net Loss 388000
To Outstanding Wages 30000
To Sundry Expenses 165000
- Prepaid rent -35000
Outstanding Gas Payment 7500
To Heat & Light 92000
To Depreciation: Furniture &
Fittings - 70000
388000 388000

Balance Sheet for Greg Palmer as on..
Liabilities Amount (£) Assets Amount (£)
Capital 960500
Account
Receivables 120000
- Net Loss -388000 Prepaid Rent 35000
- Drawings -105000 Closing Stock 120000
Bank Overdraft 50000
Fixtures and
fittings 350000
Outstanding Gas Payment 7500 - Depreciation -70000 280000
Outstanding Wages 30000
555000 555000
FINAL ACCOUNTS OF KENNY PATON LTD.
Statement of P&L A/c of Kenny Paton Ltd.
Dr. Cr.
Particulars Amount (£) Particulars
Amount
(£)
To Opening Stock 86000 By Sales 2068000
To Purchases 1054000 By Closing Stock 78000
To Gross Profit 1006000
2146000 2146000
To Distribution Costs 367000 By Gross Profit 1006000
To Administration Costs 287000
To Outstanding Interest 14274
To Outstanding Dividend 152000
To Depreciation:
On Plant & Machinery 119700
On Office Equipment 26400
To Outstanding
Corporation Tax 30000
To Net Profit 9626
1006000 1006000
Balance Sheet for Kenny Paton as on..
Liabilities Amount (£) Assets Amount (£)
£1 ordinary shares fully
paid 1520000 Account Receivables 619000
Net Profit 9626 Bank 45000
Dividend declared 152000 Closing Stock 78000
Bank Loan 549000 Premises 1345000
Outstanding Interest 14274 Plant & Equipment 798000
Trade Payables 640000 - Depreciation 119700 678300
Outstanding Corporation 30000 Office Equipment 176000