Financial Accounting - Assignment Solved

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FINANCIALACCOUNTING
Table of ContentsINTRODUCTION..........................................................................................................................3MAIN BODY...................................................................................................................................3Part (a)..........................................................................................................................................3Part (b).........................................................................................................................................6CONCLUSION..............................................................................................................................25REFRENCES.................................................................................................................................26
INTRODUCTIONFinancial accounting is a kind of accounting system which is associated with thepreparation of different kind of financial statements by using financial information (Nikolaouand Evangelinos, 2012). In other words, this accounting system is a an accounting that consistscollecting and analysing the financial transactions of the organisations. This accounting system isuseful for both to the internal and external stakeholders. In the project report, financialaccounting is defined as well as its purpose for internal and stakeholders are mentioned.Additionally, different types of tasks are completed according to the given data about clients. Inthe project report, Alpha financial marketing consultancy company is selected that is operated inthe field of providing the financial services such as tax advice, auditing etc.MAIN BODYPart (a)1. Meaning of financial accounting and purpose.Financial accounting-It is a kind of accounting system which is associated to themanagement of financial information and transactions which are presented in the form offinancial statements (Hiebl, 2014). As well as these financial statements play a significant role inthe context of both to the internal and external parties. So basically, the financial statements arevery crucial for internal stakeholders in taking important decisions as well as external parties canevaluate about the financial situation of company. The concept of financial accounting can beunderstood by example of an organisation which prepares different kind of financial statements.On the basis of these financial statements, they take their future policies and plans. Same as inthe aspect of external parties they analyse the financial condition of the companies and takedecisions regarding to the investment.So overall financial accounting system plays an important role in the organisations. Apartfrom it, this is mandatory for the companies to implement the GAAP (general acceptedaccounting principles). Basically, in the absence of these accounting principles the financialstatements can not be considered accurate and reliable. So it is required by an accountant toadopt these principles. The main purpose of financial accounting are mentioned as below:
Provide accurate information- If financial statements are prepared by use of accountingprinciples then companies can get the accurate financial informations.Provide basis of decision-making- Apart from it, the financial accounting is alsobeneficial in taking many important decisions. This is why because by financialstatements companies can derive needed information.Beneficial in making comparison- The financial accounting system is also useful inmaking comparison of current financial information with the previous year's information.Due to this companies can analyse the actual reason of deficits as well as can analysewhich year's activities was profitable or non profitable.Useful in making taxation decisions- The financial accounting system plays an importantrole in taking the taxation decisions (Adler, 2013). Like on the basis of income of aparticular year organisation can evaluate about tax payment.Useful in making future plans and strategies- Additionally, the financial accountingsystem is also useful in preparation of the future plans and policies. This is why becauseon the basis of different kind of financial statements companies can make their plansaccordingly which can help in achieving the competitive advantages.Beneficial in attracting investors- Another purpose of the financial accounting system isthat it is useful in attracting the attention of customers towards the company. This is whybecause investors invest in the companies on the basis of financial condition and it ispresented by the financial accounting system. So basically, financial accounting system isbeneficial for the organisations in getting more investment by the investors.So these are the purpose of financial accounting system. These purpose defines that financialaccounting system has equal benefit for both to the internal and external stakeholders.2. Internal and external stakeholders.Stakeholders- The stakeholders are those who have their interest in the activities andoperations of any company (Lanen, Anderson and Maher, 2015). This is why because they wantto invest money in the companies for the purpose of earning return on the invested money.Basically, the stakeholders are categorised into two parts which are such as: internal and externalstakeholders. Both the stakeholders are very important for the companies. Herein, different typesof internal and external stakeholders are mentioned below:
Internal stakeholder-The internal stakeholders are those stakeholders who are theinternal part of the organisation and participate into day to day activities. These stakeholders areemployees, board of director, managers etc. As well as these stakeholders are get effected due toorganisational policies and plans. The types of internal stakeholders are mentioned below:Employees- The employees are those who work for the companies on the basis of theirskills and capabilities (Kotas,2014). They are hired to perform any particular task oractivities and get salary or wages in return. The employees show their interest into thefinancial position of the companies because they are the main source of raising thefinancial conditions. If they will perform well then automatically financial position willraise. So this is why they show their interest.Board of director- The board of director is a kind of group of person who prepares rules,regulations which are required to be followed by other members. Eventually, for them thefinancial information is very crucial because on the basis of it they make their plans andpolicies. So that's why they show their interest in the financial information.External stakeholders-The external stakeholders are those who do not participate in the day today activities of the company. They just invest their fund in the expectation of earning profits.These stakeholders are such as customers, investors, suppliers etc. Some types of externalstakeholders are mentioned below:Government- The government is a kind of stakeholder who establish certain rules, lawsand regulations that are required to be followed by all the organisations. They show theirinterest in the financial information of the companies because on the basis of it, theydetermine the taxation. If company is earning good revenue then the tax rate will be high.Creditors- The creditors provide financial services to the companies on the basis of theirfinancial position. If financial condition is weak then they will not offer the financialservices. They might be interested in the financial condition of the company so that theycan provide fund on credit accordingly.Investors- The investors are the group of person or individual who expand their money inthe shares of companies with an expectation of earning higher return. This return dependson the financial position of the company. If financial condition is good then investors will
invest. So they show their interest in the financial position of the company to check theshare value.Suppliers- The suppliers are those who sell raw material, goods and other required thingsto the companies on the credit or cash (Deegan, 2013). If they sell these materials on thecredit then they evaluate the financila posituion of the company. So the suppliers areinterested in the financial position of the organisations so that they can provide thematerial on credit.Part (b)Client 1.(a) Journal Entries and Ledgers in the book of Alexandra Study
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