Financial Accounting Assignment : BRS
Added on 2021-01-22
35 Pages3134 Words91 Views
Political Science
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FINANCIAL ACCOUNTING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1A) Preparation of report to Line Manager..............................................................................1CLIENT 1........................................................................................................................................4A) Producing journal entries for the client.............................................................................4B) Ledger accounts for trader.................................................................................................6C) Trial balance of the firm..................................................................................................21CLIENT 2......................................................................................................................................22A) Producing Statement of Profit and loss for client...........................................................22B) Preparation of Statement of Financial Position...............................................................23........................................................................................................................................................24CLIENT 3......................................................................................................................................24A) Statement of Profit and loss for LMS Ltd.......................................................................24B) Balance sheet of company...............................................................................................25C) Discussing consistency and prudency concept................................................................26D) Explaining purpose and methods of depreciation...........................................................27CLIENT 4......................................................................................................................................27A) Preparation of BRS for company....................................................................................27B) Discussing causes of variations in accounting records with bank records......................27C) Cash book and BRS for organisation..............................................................................28........................................................................................................................................................29CLIENT 5......................................................................................................................................29A) Sales and purchase ledger control account......................................................................29B) Control account...............................................................................................................30CLIENT 6......................................................................................................................................31A) Suspense account and features of such account..............................................................31B) Trial balance ...................................................................................................................31C) Distinguishing clearing and suspense account................................................................32CONCLUSION..............................................................................................................................32REFERENCES..............................................................................................................................33
INTRODUCTIONFinancial accounting is useful for preparation of final accounts quite effectually. Presentreport deals with various clients for which financials statements are prepared. BRS and cashbook is produced as well. Furthermore, sales and purchase ledger control account both areprepared. Along with it, financial accounting regulations, accounting concepts and principles areexplained. Moreover, guidelines imparted by accounting professional bodies are enumerated inreport. A) Preparation of report to Line ManagerTo: Line ManagerFrom: Junior AccountantSubject: Accounting concepts and regulations useful for organisationRespected Sir,Accounting is an art of recording, classifying and summarizing business transactions inthat manner which can be served as a base for preparation of final accounts. It is essentiallyrequired so that firm is able to impart true and fair information to the stakeholders oforganisation for taking better and enhanced decisions. Accounting cannot be done withoutrelying on accounting regulations and concepts for adequate preparation of financial statements.Financial accounting and its purposeMonetary transactions are recorded in that manner which serves for producing truefinancial statements in the best possible way. Past data is taken and financials are drawnshowing true performance of company. Financials such as balance sheet, income statement andcash flow statement are prepared that are beneficial to shareholders and stakeholders in takingbetter decisions (Diouf and Boiral, 2017). Creditors are benefited as they can get informationabout solvency and liquidity position with regards to overall health as depicted by suchstatements. On the other hand, investors are able to study from financials whether it isperforming well or not in market and as such, it helps them in knowing earnings' capability offirm. Other stakeholders are also able to take relevant information from financial statements inan effective manner. In all, it can be said that liquidity, profitability, solvency and efficiencyposition can be effectively clarified. Hence, financial accounting is important in analysing1
overall performance of organisation in effectual way. Financial accounting regulations Business Transaction which occurs on daily basis are recorded in systematic manner. Itis essentially required so that organisation may be able to prepare fair financials in the bestpossible manner. In order to present true financial reports, accounting regulations are vital forpreparation of financials quite effectually. Manipulation could prevail which hampersinformation and false one is presented to stakeholders. To kerb this, regulations are provided byvarious professional bodies guiding accountants, so that they may prepare true financials andusers of accounting information may be benefited with ease (Hoitash and Hoitash, 2017). UK'scorporate regulator FRC has given guidelines which are suitable for producing final accounts inaccordance to stated norms. Legal frameworks provided by the bodies are outlined as under-FRC (Financial Reporting Council)- The body is entitled to regulate all governmentdepartments and corporations so that they may strictly adhere to instructions. The guidelineshelp company in preparing financials accordingly. Moreover, main of FRC is that fosteringinvestment in the nation and regulating corporate governance, thus, benefiting country entirely. IASB (International Accounting Standards Board)- IASB guides and develops standardswhich are globally accepted and understandable to accountants, easing-off preparation ofaccounts. This helps accounting professionals in producing financials suitable for stakeholdersby applying in practice standards provided by professional body.IFRS (International Financial Reporting Standards)- It guides accountants in following allstandards and applying the same in preparation of statements with ease. The manipulations canbe eradicated quite effectively and true financials are produced (Mullinova, 2016). Accounting principlesBusiness entity concept- The business and owner are two separate entities as per the concept.However, owner might be the same person who runs business but they both are considered to bedifferent from each other.Time period concept- The concept postulates that organisation should provide informationabout financial performance or results in timely manner which may be monthly, quarterly or2
yearly. Hence, stakeholders are benefited with much ease. Historical cost principle- It states that assets and liabilities of company should be recorded attheir time of acquisition or historically. This helps to analyse historical cost of assets which canbe compared with market value.Going concern- The company will run for longer time period and will not close in short run.Under this principle, financials are prepared for business.Full disclosure- This principle states that all information must be disclosed in financial reportswhich may be beneficial for stakeholders to rely upon. Matching principle- It postulates that organisation should report expenses in the same period inwhich income has arrived. This means that income and expenditures should match in whichthey are incurred.Recognition principle- The principle outlines that company should recognise an income onlywhen it is actually earned. Hence, actual payment received must be recorded in books ofaccounts. Conservatism principle- It says all revenues and assets should be recognised only whenassurance is accomplished. While, recognition must be made of liabilities and expendituressoon when uncertainties regarding happening of the same are realised (Johnston and Petacchi,2017).Materiality concept- The concept states only that information should be recorded which couldinfluence decisions of stakeholders. On the other side, immaterial information could beeradicated and ignored which may not impact decisions by users. Concept of material disclosure and consistencyMaterial disclosure-The concept states that immaterial items can be ignored which may not have impact ondecisions to be made by users of accounting information. Material items should be includedwhich positively influences decision-making. Hence, relevant information is imparted to them.Consistency concept-3
The consistency concept postulates that firm should follow same accounting policiesand methods for longer period so as to compare its own performance. Frequent changes in thepolicies negatively impacts comparison of financial health, thus, it should be ignored. CLIENT 1A) Producing journal entries for the clientJournal entries are also termed as book of prime entry. It is said because these entries arefirst step of recording of accounts and from it, ledger accounts are extracted. Journal entries forclient is listed below-4
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B) Ledger accounts for traderLedger is used to provide summarised view of individual accounts being identified injournal. It is utilised for effective preparation of financials and next step is to produce trialbalance. Various ledger accounts are produced as under-Purchase ledger6
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