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Financial Accounting Assignment - Zync Solutions Limited

   

Added on  2020-10-23

33 Pages5035 Words191 Views
Financial Accounting

Table of ContentsINTRODUCTION...........................................................................................................................1A.1). Defining financial accounting and its different purpose....................................................1A.2). Explaining the regulations relating to the financial accounting.........................................2A. 3). Describing different accounting rules and principles.......................................................2A. 4). Explaining the conventions and concepts relating to consistency and materialdisclosure....................................................................................................................................4CLIENT 1........................................................................................................................................4Trail balance as of 31st may:.........................................................................................................13CLIENT 2......................................................................................................................................15A). The statement for Profit and loss of Peter Hampau............................................................15B). Financial Statement.............................................................................................................16........................................................................................................................................................17CLIENT 3......................................................................................................................................17A). Preparing the statement of profit and loss account.............................................................17...................................................................................................................................................18...................................................................................................................................................18B). financial position of Bowling Ltd. For the year ending 31st July 2018..............................18C). Explaining the accounting concepts of Consistency and Prudency....................................19D). Describing the purpose and methods of Depreciation........................................................20CLIENT 4......................................................................................................................................22A). Explaining the purpose of preparing Bank Reconciliation Statements and its essential ofpreparing it on monthly basis....................................................................................................22B). Explaining the areas which may cause the bank records to vary. ......................................23C). Preparing accounts through cash-flow statements..............................................................23CLIENT 5......................................................................................................................................25A). Preparing Control accounts.................................................................................................25B). The need and purpose of preparing Control Account.........................................................26CLIENT 6......................................................................................................................................26A). Explaining Suspense account and the main features of it...................................................26

B). Preparing trail balance.........................................................................................................27C). Trail balance with suspense account...................................................................................27D). Differentiate between suspense account and clearing account...........................................28CONCLUSION..............................................................................................................................28REFERENCES..............................................................................................................................29

INTRODUCTIONFinancial accounting is the specialised branch of the accounting which helps in gatheringand tracking the financial transaction of a company. It helps in analysed and classifying thetransactions in order to prepare the financial statements of the company. Financial accountingmainly focuses on preparing and presenting the monetary statements that are useful for theexternal users like investors and creditors. The present report is based on Zync Solutions Limitedwhich is a small accountancy firm. This report will help in understand the different aspects offinancial accounting and preparing financial statements. Report will define the purpose offinancial accounting with its regulations (Nobes, 2014). Different rules, principle and concepts ofaccounting will also be discussed. Further, report will include preparation of financial accountingusing double entry book keeping. The final accounts of sole trader, partnership will alsopresented. Report will than, discuss the methods of depreciation with examples. Furthermore, theBank reconciliation statement also discuss with appropriate calculation of cash-book.A.1). Defining financial accounting and its different purpose.It can be defined as specialised branch of accounting which indulge in keeping track ofcompany's financial transactions. It helps in classifying, analysing, summarizing and recordingof all the financial transaction in a manner that can be well utilised by external users. Financialaccounting mainly focuses on preparing the financial accounts on providing external users theinformation regarding the company's financial position and financial performance over a specifictime period (What is Financial Accounting?, 2019). These external users are the investors andcreditors, who uses the financial information of the company in order to make decisions forfurther investment in company. They use the financial information from the financial statementthat are being prepared from the financial information.Financial accounting is an important method in order to prepare the financial reportingthrough financial statements. The main purpose of financial accounting is:To provide the fair and relevant information of company's financial performance to theoutside users.To prepare financial statements of the company which reflects the financial transactionsof the company.1

To ensures that external information will be able to have quality information to maketheir financial decisions on (Edwards, 2013).The main purpose is to showcase an accurate picture and fair picture of financial affairsof the company.A.2). Explaining the regulations relating to the financial accounting.The financial reporting is the process of preparing and presenting the financial statementsof the company to the external users. In order to prepare the company's monetary statements thatcan be understandable to the users, there are some guidelines and regulations has been set. Allthe listed company has to prepare their statements as per the guidelines set (Horngren and et.al.,2012). The following are the regulation related to the financial accounting:GAAP: It is the collection of the rules and standards that are commonly formed inpreparing financial reporting. It provides general guidelines, accepted accountingprinciples and procedures that companies has to follow at the time of preparing financialstatements (Barth and et.al., 2012). GAAP has set the rules based on some basicunderlying principles and concepts such as matching principles, relevance, reliability etc.IFRS: International financial reporting standards are designed as a common globallanguage for the business transaction so that the accounting standards if the company canbe understandable and comparable across the international boundaries (Weygandt,Kimmel and Kieso, 2015). IFRS helps in facilitating the comparability betweenenterprises operating in different jurisdictions.IASB: The International Accounting Standard Board is the independent standard settingbody of the IFRS foundation (Hansen, 2011). The main mission of the board is todevelop and enforce the globally accepted International Financial Reporting Standard. A. 3). Describing different accounting rules and principles.Accounting practices can be termed as the uniform practices which entities follow inorder to record, prepare and present the financial statements (Weil, Schipper and Francis, 2013).All the companies have to prepare its financial statements as per the rules and principles which isessential in order to present the true and fair view of business. Following are the basicaccounting principles and concepts:2

Business entity concept: This concept states that the business and its owner will betreated as different from his company (Collins, Pasewark and Riley, 2012). All thefinancial transaction of owner will be treated differently with company's transaction.Money measurement concepts: As per this concepts, the business transaction that can beexpressed in term of money or currency will be taken in accounting and other types oftransaction will be kept separately (Trotman and Carson, 2018).Dual aspect concept: This concept is based on the basic accounting rule, that for everycredit a corresponding debit will made (Donelson, McInnis and Mergenthaler, 2012). Thetransaction with dual aspects will be considered and will recorded in accounting.Going concern Concept: In accounting, a business is expected to continue for a longerperiod in order to carry out its obligation and activities (Henderson and et.al., 2015).Cost concept: This concepts states that, all the fixed assets of the business will berecorded at their actual cost in the first year of the business. After that, the assets willrecorded after deducting their annual depreciation (Peytcheva, Wright and Majoor, 2014).As per this concept, the price of fixed assets will not be change on the basis of the costchange in market.Accounting year concept: This concept states that, every company has to choose aspecific time period in order to complete its accounting process cycle (McEnroe andSullivan, 2012). This time period could be monthly, quarterly, annually as per the fiscalyear.Matching concept: This concepts said that for entry of revenue that will be recorded inan accounting period, an equal amount of expense entry has to be made in order tocorrectly calculate profit and loss for a given period (Beatty and Liao, 2014).Realisation concept: As per this concept, the profit will be realised only when it isactually earned (Bailey and Sawers, 2018). Advance of any type of fee will not be treatedas profit until the good and service will be delivered to the buyer.The three rules of accounting are:Debit the receiver, credit the giver. This rule is used in case of personal account.3

Debit what comes in, credit what goes out (Macve, 2015). This principle is applied incase of real account.Debit all expenses and losses, credit all incomes and gains. A. 4). Explaining the conventions and concepts relating to consistency and material disclosure.The following are the concepts and conventions that are related to:Consistency ConceptsThis concepts states that, a company once adopted a method to treat a transaction orevents should use the same accounting method. It is important for a company to use a sameaccounting method for every year. If a company will change its accounting method every year itwill be difficult for user to compare between different year's statements (Edmonds and et.al.,2013). It does not mean that a company can never change its accounting method, a company canchange its method on some reasonable ground and has to disclose the nature of change and newmethod adopted and its effect on the financial statements.Material disclosure ConceptsThis concepts states that, the financial information of a company is the material of thefinancial statements as long it would change or affect the view of the person (McEnroe andSullivan, 2012). It can also be said that, all the important financial information that can make achange in the monetary statements users has to be included in the financial statements ofcompany.CLIENT 1Journal entries in the book of David Study’s for the month of January are as follows:4

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