Financial Accounting Principles Aspects Assignment

Financial
Accounting
Principles

Table of Contents
INTRODUCTION...........................................................................................................................5
BUSINESS REPORT......................................................................................................................5
Internal and external stakeholders:.........................................................................................6
TASK...............................................................................................................................................8
CLIENT 1:.......................................................................................................................................8
1.1...........................................................................................................................................8
1.2.........................................................................................................................................16
CLIENT 2:.....................................................................................................................................17
2.1.........................................................................................................................................17
2.2.........................................................................................................................................17
2.3.........................................................................................................................................18
2.4.........................................................................................................................................19
Critically evaluate the difference between the financial statements prepared by the Sole Trader
and the Limited Companies:.................................................................................................19
CLIENT 3......................................................................................................................................19
3.1.........................................................................................................................................19
3.2.........................................................................................................................................20
3.3.........................................................................................................................................20
CLIENT 4......................................................................................................................................21
4.1.........................................................................................................................................21
4.2.........................................................................................................................................22
4.3.........................................................................................................................................22
CLIENT 5......................................................................................................................................23
5.1.........................................................................................................................................23
Trail Balance by using a control account as balancing Figure:............................................24
..............................................................................................................................................25
CONCLUSION..............................................................................................................................25
REFERENCES..............................................................................................................................26

INTRODUCTION
Financial accounting is an area of accounting which includes recording and monitoring of
various financial transactions of business organisation. Under financial transactions are recorded
by accountants and managerial personnels as per specific guidelines issued by relevant
authorities for example in UK, business organisation applying GAAP for recording of financial
transactions (Archer, Ahmed Abdel Karim and Sundararajan, 2010). This report covers various
aspects of financial accounting, its purposes, accounting concepts, main aim of preparation of
bank reconciliation statement and, various internal and external stakeholders in the context of
Access Accounting Ltd. This report also contains a practical sum of recording financial
transactions, preparation of control accounts and bank reconciliation statement.
BUSINESS REPORT
Financial accounting is a managed process of recording transactions, summarizing them
systematically and report them in organised manner to assess the performance of business
organisation for a particular period. Information generated from financial accounting assist
managers in decision making activities. Financial accounting provides a systematic framework
for preparation of financial statements like balance sheet, cash flow statement, profit and loss,
change in equity statement etc (Ahn, Amiti and Weinstein, 2011). It is a process under which
financial transactions are classified in systematic manner to prepare final accounts. Final
accounts prepared under financial accounting process provide a base for comparison of financial
information of more than one year. Financial transaction are recorded by accountants by
considering appropriate principles and concepts. In UK, listed companies and large business
organisations usually follows generally accepted accounting principles, which creates uniformity
in financial accounts across the country. In order to enhance the reliability and accuracy of data
and information of financial accounting various accounting conventions, concepts and policies
are also adopted by companies. Financial statements prepared using such accounting
conventions, concepts and policies are accepted by all stakeholders. Following are some key
objectives and purpose of financial accounting, as follows:
 It assist in formulation of financial statements and other reports that is used by lenders,
creditors and investors for decision making activities.
 It emphasises on compliance of double entry system while preparation of final accounts.

 It exhibits the true and fair picture about business organisation's performance and growth
in market.
 It provide reliable data and information though financial statements which enhance the
confidence of investors and stakeholder.
 One of the purpose of financial accounting is to attract new and potential investors by
providing reliable financial information.
 It assist in identification of any potential issue or problem that may affect the financial
performance of company in near future.
 It ensures the proper compliance of statutory requirement, rules and regulations and other
guidelines.
 It also ensures effectively utilisation of organisation's resources and funds.
 It provide a detailed assessment of company's profitability and efficiency.
 It provide a framework for managerial and strategic decision making while considering
organisation's short term and long term objectives.
Internal and external stakeholders:
Stakeholder are key of success for a business organisation because stakeholder decides
the future path of business organisation. Stakeholder are those individuals and personnels that
have significant interest in a business organisation. Decisions taken by various stakeholder
affects a business organisation directly or indirectly. Stakeholder may be internal and external as
per their nature and extent of interest in business organisation. Analysis of stakeholders decisions
and preferences is necessary for business organisation to ensure its survival in market or industry
(Fraser, Ormiston and Fraser, 2010). Following are the two types of stakeholders, as follows:
Internal Stakeholders: These stakeholders are those individual who reside within a business
organisation and directly affects organisation's activities and functions. Internal stakeholder of a
business organisation are employees, managerial personnels, board of directors, owners etc.
Following is a brief discussion about major internal stakeholders, as follows:
Employees: Employees are most considerable internal stakeholders which affects
organisation's activities and functions. In large organisation's employees play a vital role in
strategy formulation and implementation. Most or the companies in UK invites the feedback and
review of employees to ensure proper implementation of strategy. On other side, employee are
interested in company's growth because employee wants to ensure their growth in employment

and career in business organisation. Employees help organisation to performance effectively in
long run and acting as a key resource of organisation.
Shareholders and owners: Shareholders and owner are key stakeholder of business
organisation. They are directly influenced by organisation's decisions and vice versa. Owner and
shareholders holding their stake in company in form of securities and shares. In listed company
most of the decisions are taken by shareholders and owners in order to achieve predetermined
objectives and goals.
External Stakeholders: External stakeholders are those enterprises or individuals who
reside outside the business organisation but can influence the performance and growth of a
business organisation (Dyreng and Lindsey, 2009). An organisation's external stockholder's are
government, customers, regulators or government, suppliers etc. Following is a brief discussion
about key external stakeholder of business organisation, as follows:
Customers: Customers are only the source of revenue in a business organisation.
Customer can influence the demand and supply of products and services of business
organisation. Decisions of customers have direct impact on organisation's profitability and
revenues. On other side customers also interested in organisation's brand value and performance
in market because they are ultimate consumer of organisation's product and services.
Investors: Investors are key sources of funds for a business organisation. Investors
holding stake in business organisation in form of their investment made. They want return on
their investment. Company is highly influenced by the decision of investors as they provide
funds to organisation for operating their operations and functions.
Government: Company prepare final accounts as per the government policies and
procedures. Government also decides the way of operations of particular industry or market
which makes government a significant stakeholder of business organisations. Government is
interested in organisation's performance because different companies' performance affects
economy of country. Government also wants to ensure compliance of rules and regulations.
Suppliers: Supplier are external stakeholders who can affect the supply of raw material
other goods in a business organisation. Generally in large business organisations, suppliers
provides goods and raw material at credit so they want to make sure about timely recovery of
their payments. Suppliers decisions can affect organisation's survival in industry.

TASK
CLIENT 1:
1.1