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Financial Accounting and Its Importance Doc

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Added on  2020-10-05

Financial Accounting and Its Importance Doc

   Added on 2020-10-05

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Financial Accounting
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Table of ContentsINTRODUCTION...........................................................................................................................3PROJECT 1......................................................................................................................................3QUESTION 1...................................................................................................................................3A) Presenting double entry book keeping system with journal entries.......................................3Question 2........................................................................................................................................5a) Presenting Final account.........................................................................................................5PROJECT 2......................................................................................................................................7QUESTION 1...................................................................................................................................7A) Presenting BRS......................................................................................................................7B) Presenting difference between direct debit and standing order, bank charges, dis hounerCheck...........................................................................................................................................8Question2.......................................................................................................................................10a) Preparing Journal entries.......................................................................................................10B) preparing Suspense Account................................................................................................10CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12
Financial Accounting and Its Importance Doc_2
INTRODUCTIONFinancial accounting plays a significant role in business. The present report mainlyfocuses to understand the meaning of accounting and its importance. It deals with variousscenario which help to describe different accounts which are prepared at the end of accountingperiod such journal, ledger, trail balance, balance sheet (B/S) etc. The report also helps tounderstand the meaning of profitability statement and prepare all the final accounts forpartnership and limited companies with appropriate principle and conventions. The report alsoperforms bank reconciliations to ensure that company and bank records are correct or not. Itexplains the process taken to reconcile control accounts and shift recorded transaction fromsuspense accounts.PROJECT 1QUESTION 1A) Presenting double entry book keeping system with journal entriesJournal entries: it is a simplest method that are used to record all financial data by acompany into journal form i.e. debit and credit. Journal entries are help to give an audit trail andidentify the transaction on the organization's financial status. It is the first step of accountingcycle and foundation of whole accounting data. All accounting transaction are recorded by usingonly journal entries which show account names, amount and all credit and debit side of theaccounts (Zhu, 2018).Date (Year2016)ParticularsDebit Credit 1 June Cash a/c dr.to Capital a\c 65000650002 JunePurchase a\c dr.to creditors a\c 8000800007 JuneCash a\c dr.to sales a\c4000400008 JuneCreditors a\c dr.to bank a\c 5000500014 JuneInsurance a\c dr.75
Financial Accounting and Its Importance Doc_3
to bank a\c7515 JuneDebtors a\c dr.to sales a\c1200120016 JunePurchase a\c dr.to creditors a\c100001000018 JuneComputer a\c dr.to cash a\c3000300020 JuneRent a\c dr.to bank a\c15015021 JuneCash a\c dr.to sales a\c 100001000021 JuneCash a\c dr.to bank a\c 10010030 JuneExpense a\c dr.to cash 3030Ledger Accounts: it is an account which is used to sort and store balance sheet and profit& loss statement. They are the summary records which are also known as control account. As,Journal only provide complete information of daily transaction of a business but it does notprovide particular information related to specific account and to avoid this difficulty the debit &credit of journals are transferred in Ledger accounts (Elliott, 2017). This is known as destinationof entries but the transaction are not directly entered in ledger.Trial Balance: Trial balance is the most important informal accounting statement thatincludes all ledger balance but is complied into debit and credit account that are equal. It isprepared by a company at the end of accounting period and the main purpose of preparing trailbalance is to ensure that all the entries are correct or not which are recorded in books. It alsohelps to provide the information which are use in preparing final accounts and overall, booksrecord are varied by preparing trail balance (Trail Balance, 2018).
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