logo

Financial Accounting Assignment - Mark and Spencer

   

Added on  2020-10-23

24 Pages6466 Words161 Views
FINANCIAL ACCOUNTING

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY ..................................................................................................................................1a. 1. Financial accounting and its purpose .............................................................................12. Name two internal stakeholders and four external stakeholders of Marks and Spencer....3Clients 1...........................................................................................................................................41) Double entry recording within relevant ledger .................................................................42 Closing each account ..........................................................................................................7CLIENT 2......................................................................................................................................12a) Statement of Profit and loss .............................................................................................12b) Balance sheet of Munteanu limited ................................................................................13c) Explain Consistency and Prudence .................................................................................14d) Purpose of depreciation ...................................................................................................14E) Difference between financial statement prepared by Sole trader and Limited companies14CLIENT 3 .....................................................................................................................................14A) Purpose of preparing bank reconciliation statement ......................................................14b) List and explain the areas which may cause accounting records to vary from bank records..............................................................................................................................................15c) The term “ Imprest” as used in Petty cash system ..........................................................15D) Bank reconciliation account ...........................................................................................15CLIENT 4 .....................................................................................................................................16a) Control account ...............................................................................................................16b) Need for preparing control account .................................................................................17CLIENT 5 .....................................................................................................................................17a) Explanation of Suspense account and its main features...................................................17b) Trial balance ...................................................................................................................17CONCLUSION .............................................................................................................................19REFERENCES..............................................................................................................................20

INTRODUCTIONFinancial accounting is a system designed to keep track of company's financialinformation. It consists of recording the transaction in the form of report to provideunderstanding to the readers about company's position and performance. This assignment willconsider Marks and Spencer for performing the various task assigned. It is an organisation whichis performing its activities in a retail sector. Marks and Spencer deals in clothing and provideclothing for men, women, kids etc. The revenue earned by this organisation was £10.622 billionin the year 2017. This study will include information regarding financial accounting and Itspurpose. Also, The assignment will contain information of stakeholders of Marks and Spencerand the requirement of financial information by them. MAIN BODY a. 1. Financial accounting and its purpose Financial accounting is used for recording the day to day operations of business by usingvarious reports and statements. These statements and reports are prepared for identifying thetransaction which are undertaken by organization. The organization prepare reports andstatements under financial accounting by gathering data from the operations performed bycompany. The financial statements are prepared by organization to provide understanding to theusers regarding the performance and profitability of firm (Barth, 2015). Organization preparesvarious statement to record the transaction such as profit and loss statements, Balance sheet,statement of equity and cash flow statements. Profit and loss statement is prepared byOrganization to determine the profits earned by performing their operations. This statement includes the expenses and incomes for a period for identifying profitsearned by firm in that particular period. Balance sheet is prepared by organization in order todetermine liquidity position of firm by recording assets and liabilities for a particular period.The firm by using this statement is able to get information about its position in the market.Furthermore, Statement of equity is prepared by firm to determine the change in capital balanceover the period. Firm s by preparing this statement is able to know about the profit earned on thecapital invested. Also, A cash flow statement is prepared by organization in order to know aboutcash inflow and outflow for a period (Henderson and et.al., 2015). This statement is preparedfor determining the cash balance available with organization to perform the various futureactivities. 1

The purpose of financial accounting is to provide better understanding to its usersregarding the financial health and profitability of organization. The main purpose of financialaccounting is to provide users to make economic decision on the basis of financial statements oforganization. Financial statements prepared by organization helps stakeholders in taking variousdecisions. Also, The purpose of financial statement sis to give accurate information to its usersso that they are able to make decisions regarding investment and others which may influencestheir economic decisions (Kimmel And et.al., 2016). The financial accounting ensure that thestatements are prepared in a proper ways and are made through use of simple and understandablelanguage so that the users can easily determine the results of those statements. Financial accounting is useful to determine the profits and performance of firm in themarket and on the basis of which various decisions can be made regarding the futureimprovement of business operations to enhance the profitability of business. Moreover, financialaccounting the process of recording business transaction in the form of statement to provide theusers with accurate and reliable information of firm's operations (Libby, 2017). Financialaccounting is based on two concepts one is accrual accounting method and other is cashaccounting method to record transactions. The financial statements provide information toshareholders and creditors that helps to improve investment interest. These statements are required to be maintained to measure incomes for the business.Financial accounting assist in providing information to users to make effective decisionsregarding their investment. Financial statements helps in identifying the growth and success ofbusiness through their performance (Warren and Jones, 2018). This records are prepared forstakeholders of users. Financial accounting assist organization in preparing budgets for futurewhich will assist in identifying the future profitability of business. Moreover, Financialaccounting is useful to get better understanding of organization operation and it also helps inreducing the expenses on the basis of past records to enhance profitability of firm. Organization based on financial statement can make strategies for future improvementwhich will assist firm in their growth and success of business. Overall business is benefitedthrough use of financial counting and using the statement to record the transaction understand byorganization. Financial accounting involves various stages of recording the transaction such asrecording, classifying, summarizing and interpreting the financial information (Macve, 2015).Financial accounting involves recording the information in journal and then the ledges are2

prepared based on entries passed in journals. The next step is preparing trial balance through useof closing balance so ledger account. Financial accounting is used for information systems forcollecting and communicating economic information about the business (Purpose of financialstatement, 2018). This information assist management in taking effective decisions for enhancingprofitability and performance of firm. Moreover, the purpose of financial accounting to keepsystematic record for the various activities performed by firm. The organization is able to make better decisions by preparing financial statement as it isnot possible to determine profit and loss for a period without preparing records. Marks andSpencer I for determining profitability and position of business enterprise is preparing variousfinancial statements such as profit and loss statement, balance sheet, statement so changes inequity and cash flow statement to serve their various purposes (Maskell, Baggaley and Grasso,2016). The process of financial accounting is started with recording transaction in journals andis ended with balance sheet.2. Name two internal stakeholders and four external stakeholders of Marks and SpencerThe stakeholders of company are the people to whom the information about theorganization activities are provided. Organization provides the financial statements tostakeholders to give them better and reliable information regarding the activities of firm andperformance and profitability of business. These statements assist the stakeholders in makingvarious decisions regarding investment and other decisions (Mullinova, 2016). Stakeholders ofthe company consist of internal and external. Internal stakeholders are those which are present inthe company whereas external stakeholders are those which are present outside organization.Marks and Spencer have the following stakeholders which are divided into internal and external.Two Internal Stakeholders of Marks and Spencer Management : This are the people which are responsible for managing the variousoperations of organization. The managers use the financial statement to determine theperformance of organization so that decisions can be made to improve futureperformance which will assist organization in enhancing their growth rate andprofitability. Management is responsible to understand the activities which are performedby firm. Moreover, managers by using financial statement such as profit and loss, balancesheet and cash flow statement are able to know the liquidity position and performance offirm. This helps the management in reducing the expenses which are incurred by firm to3

get better outcomes (Schaltegger and Burritt, 2017). Marks and Spencer is providing themanagement with financial information so that they are able to make effective decisionsto improve performance and profitability of firm.Employees : The workers required to know about the financial health of organization toidentify their future career opportunities. Organization by providing financialinformation to employees is able to provide better insight to them regarding businessactivities. Moreover, employees use financial information to determine their job securityand income on the basis of information present in financial statement. Marks andSpencer is providing financial information to employees to provide them understandingabout the operations of organization.External stakeholders of Marks and Spencer : Customers : Marks and Spencer is providing the financial information to the customersso that they can give them information about various resources available with the firm.Customers by using the financial information can make decision regarding firms abilityto provide them resources whenever demanded by them. Marks and Spencer is givinginformation to its customers regarding their financial performance to retain them inbusiness for a longer period.Lenders : It consists of bank and financial institution which lend money to organizationfor performing their various business operations (Users of the Financial Statements,2018). Lenders use financial statement to get better understanding about the firm's abilityto pay its debts.Shareholders : Marks and Spencer provide financial information ton shareholders so thatthey are able to identify their returns on investment. Moreover, they are able to getunderstanding about the organization ability ton provide them higher returns.Government : The financial information is provided to government authorities forvarious tax liabilities of firm. Income tax authority uses financial information todetermine firm's tax liability on the basis of statements prepared by themClients 11) Double entry recording within relevant ledger Journal entries in the books of Alexandra for January are as follows 4

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Financial Accounting Assignment Solved
|22
|4380
|420

FINANCIAL ACCOUNTING TABLE OF CONTENTS
|26
|3730
|344

Financial Accounting Solved - Assignment
|26
|3644
|144

Financial Accounting Principles Assignment - Airdri company
|30
|6507
|439

Financial Accounting Principles - Assignment Solution
|26
|4436
|180

Financial Accounting Principles Assignment - RBS Accountants Ltd
|26
|7021
|485