ACCT11081 Introductory Financial Accounting: Practical Application

This practical assignment focuses on applying introductory financial accounting principles. It involves analyzing a company's annual reports to understand inventory management and depreciation policies, creating journal entries for various business transactions, and preparing financial statements such as the balance sheet, profit and loss statement, and cash flow statement. The assignment uses Hill & Smith Holding Plc's annual reports for inventory and depreciation analysis and simulates transactions for Diecast Pty Ltd to demonstrate journal entries and financial statement preparation. The goal is to gain a clear understanding of accounting treatments, the double-entry system, and the preparation of financial statements, enhancing practical skills in financial accounting. Desklib provides solved assignments and resources to aid students in their studies.

Running head: INTRODUCTORY FINANCIAL ACCOUNTING
Introductory Financial Accounting
Name of the Student:
Name of the University
Author’s Note

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INTRODUCTORY FINANCIAL ACCOUNTING
Table of Contents
Step 7...............................................................................................................................................2
Step 8...............................................................................................................................................4
Step 9...............................................................................................................................................4
Step 10.............................................................................................................................................6
Reference.........................................................................................................................................8

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INTRODUCTORY FINANCIAL ACCOUNTING
Step 7
I have analyzed the annual reports which is prepared by the management of Hill & Smith
Holding Plc in order to understand the treatment of inventory and its management. The value of
inventory of the business is shown in the balance sheet of the company and further information
are provided in the notes to financial accounts which is included in the annual reports of the
business. The value of inventories in the financial statement for the year 2016 is shown to be £
71.6 million and the same is shown to have increased in the current year 2017 and the value for
the same is shown £ 84.6 which is shown to have increased significantly which is a positive sign
for the business. The inventory balance forms an important part of the current assets of the
business and the same is directly linked to the operational activities of the business (Chen, Kök
& Tong, 2013). The inventory balance which is shown in the notes to account section of the
annual report shows that the business has raw material inventories, work in progress and finished
products of the business. The company is identified to be engaged in manufacturing and supply
of products which are necessary for construction industry (Wu, 2013). The management of the
company has included the segregation of the inventory value in the notes to account section in
order to provide a clear explanation about the value which is shown for inventory during the
year. The inventories of the business form a major part of the financial statements which is
prepared by the business for the year.
The financial statements which is prepared by the management of Hill & Smith Holding
Plc does not discloses the accounting practices for the inventories of the business. Therefore, it
becomes difficult for the users to interpret the treatments which are done by the management of
the business. The users of the financial statements are unable to identify the values of inventory
and the costs which are associated with the inventories of the business (Warren, Reeve &

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INTRODUCTORY FINANCIAL ACCOUNTING
Duchac, 2013). Therefore. it is required that the management of the company needs to make
improvements in the reporting process of the inventory of the business. The management of the
company needs to mention the process which is applied by the management for the purpose of
measuring the inventory of a business.
The accounting for the journal entries of business are the basis on which transactions of
an organization are recorded in the books of accounts of the business. All transactions of a
business are recorded in the form of journal entry and then the same are pot6ed in respective
ledger accounts (Rozhkova, 2015). On the basis of the information which are shown in the ledger
accounts financial statement of the company is prepared during the year. In other words, it can be
can be said that journal entries are the basics and foundation for preparing the financial statement
of the business (Reineking et al., 2013). In case of any manipulations, which is easily possible
for an accountant, the financial statements will directly be affected and the books of accounts
will not be showing true and fair view of the situation.

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INTRODUCTORY FINANCIAL ACCOUNTING
Step 8

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INTRODUCTORY FINANCIAL ACCOUNTING

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INTRODUCTORY FINANCIAL ACCOUNTING

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INTRODUCTORY FINANCIAL ACCOUNTING

8
INTRODUCTORY FINANCIAL ACCOUNTING

9
INTRODUCTORY FINANCIAL ACCOUNTING

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INTRODUCTORY FINANCIAL ACCOUNTING
Step 9
Date Particulars Amount
01-06-2018 Capital introduced in the business - 50% by owner and 50% from bank loan
$
2,50,000.00
02-06-2018 Furniture purchased for cash (including GST)
$
75,000.00
04-06-2018 4 months' rent for the office premises paid in advance (inluding GST)
$
12,500.00
06-06-2018 Purchase of stocks for cash (including GST)
$
37,500.00
09-06-2018 Sales of goods for cash (including GST)
$
38,900.00
12-06-2018 Purchase of stocks on credit (including GST)
$
50,000.00
15-06-2018 Advance Payment received from customers
$
25,000.00
16-06-2018 Sales of goods, part advance received (including GST)
$
34,750.00
30-06-2018 Monthly repayment of Bank Loan
$
2,500.00

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INTRODUCTORY FINANCIAL ACCOUNTING
30-06-2018 Rent expired for the month of June
$
1,250.00
Step 9 shows different transactions which is passed following the application and the
transactions which is followed are shown above. I was able to obtain a clear understanding of the
treatment of various transaction in accounting terms with the help of journals, ledgers and
financial accounts which are prepared and shown below
Diecast Pty. Ltd.
General Journal
01-06-2018 To 30-06-2018
ID# Acct# Account Name Debit Credit Job No.
GJ 01-06-
2018
GJ000001 1-1110 Cheque Account $250,000.00
GJ000001 3-1100 Owner's Capital $125,000.00
GJ000001 2-2100 Bank Loans $125,000.00
GJ 02-06-
2018
GJ000002 1-3110 Furniture & Fixtures at
Cost
$68,181.82
GJ000002 1-1110 Cheque Account $75,000.00
GJ000002 2-1330 GST Paid $6,818.18
GJ 04-06-
2018
GJ000004 1-2200 Prepaid Rent $11,363.64
GJ000004 1-1110 Cheque Account $12,500.00
GJ000004 2-1330 GST Paid $1,136.36
GJ 06-06-
2018
GJ000003 5-1100 Purchases $34,090.91
GJ000003 1-1110 Cheque Account $37,500.00
GJ000003 2-1330 GST Paid $3,409.09
GJ 09-06-