Improving Business Performance through Accounting

This assignment focuses on the importance of accounting for successful business operations. It emphasizes how accurate financial record-keeping helps businesses analyze their performance, identify areas for improvement, and make informed decisions. The report also highlights the significance of rectifying errors in financial statements to ensure reliable and accurate financial reporting.

Financial accounting
Principles

Table of Contents
INTRODUCTION...........................................................................................................................4
CLIENT 1........................................................................................................................................4
a) Prime Book entry.....................................................................................................................4
TASK 1............................................................................................................................................4
1. Drawing journal entries and calculation of owners capital.....................................................4
A. Preparing the books of Prime Entry........................................................................................4
b) Complete double entry recording............................................................................................5
Draw trial balance......................................................................................................................12
TASK 2..........................................................................................................................................13
a. Preparing statement of profit and loss....................................................................................13
b. Preparation of balance sheet..................................................................................................14
TASK 3..........................................................................................................................................15
a. Framing profit and loss a/c for Raintree Ltd..........................................................................15
b. Statement of financial position of Raintree Ltd.....................................................................15
c. Explaining the accounting concept of consistency and prudence..........................................16
d. Illustrating two widely used methods of depreciation along with their appropriateness.......17
CLIENT 4......................................................................................................................................17
a. Explaining the purpose of preparing bank reconciliation statement......................................17
b. Assessing the reasons due to which bank records vary from cash book...............................17
c..................................................................................................................................................17
Bank reconciliation statements as at 1 December 2016............................................................17
Prepare updated cash book........................................................................................................18
Bank reconciliation statements as at 31st December..................................................................18
CLIENT 5......................................................................................................................................18
A) prepare and balance books of Henderson for May 2016......................................................18
Sales ledger control account......................................................................................................18
Purchase ledger control account................................................................................................19
b) Explain the term control account and needs to prepare control account...............................19
TASK 6..........................................................................................................................................19
a. Describing suspense account along with its main features....................................................19

b. Drafting a trial balance by using control account as balancing figure...................................20
c..................................................................................................................................................20
d. Differentiating suspense and clearing account......................................................................21
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................22

INTRODUCTION
Finance is regarded as integral role in the business in uplifting the current conditions of
an entity which needs to be managed with the passage of time that imposes external burden on an
entity to handle all the external market complexities faced by an entity in the business. Role of
business gets increases with the time as their desired aim is to fulfill all kinds of responsibilities
imposes on an entity. This is report is all about reflecting true image of an entity by considering
all the external market factors.
CLIENT 1
a) Prime Book entry
TASK 1
1. Drawing journal entries and calculation of owners capital
A. Preparing the books of Prime Entry
Journal of Alex Study’s for the month of May 2016
S. No. Particulars Debit Credit
1. Storage expenses a/c Dr.
To bank a/c
400
400
2. Purchase a/c Dr.
To S. Hood a/c
To D. Main a/c
To W. Tone a/c
To R. Foot a/c
6080
1450
2060
960
1610
3. J Wilson a/c Dr.
T. Cole a/c Dr.
F. Syme a/c Dr.
J. Allen a/c Dr.
P. White a/c Dr.
F. Lane a/c Dr.
To sales a/c
1120
1640
2080
910
2420
770
8940
4. Motor car expenses a/c Dr.
To cash a/c
470
470
7. Drawing a/c Dr.
To cash a/c
1500
1500
9. T. Cole a/c Dr.
J. Fox a/c Dr.
To sales a/c
680
1310
11. Sales return a/c Dr.
To J. Wilson
680
270

To F. Syme a/c 410
14 Van a/c Dr.
To Abel Motors Ltd
28500
28500
16 (a). Bank a/c Dr.
Discount allowed a/c Dr.
To P Mullen
(b)
Bank a/c Dr.
Discount allowed a/c Dr.
To F. Lane
(c)
Bank a/c Dr.
Discount allowed a/c Dr.
To J. Wilson
(d)
Bank a/c Dr.
Discount allowed a/c Dr.
To F. Syme
1330
70
2945
155
807.5
42.5
1586.5
83.5
1400
3100
850
1670
19 R. Foot a/c Dr.
To purchase return a/c
50
50
22 Purchase a/c Dr.
To L. Mole a/c
To W. Wright a/c
3740
1830
1910
24 a.
S. wood a/c Dr.
To Bank a/c
To Discount receive a/c
b.
J. Brown a/c Dr.
To Bank a/c
To Discount receive a/c
c.
R. Foot a/c Dr.
To Bank a/c
To Discount receive a/c
3600
4600
1400
3240
360
4140
460
140
1260
27 Salaries a/c Dr.
To bank a/c
4800
4800
30 Business rates a/c Dr
To bank a/c
1320
1320
31 Abel motors Ltd. a/c Dr.
To bank a/c
20500
20500

b) Complete double entry recording
Sales Journal account
Date Particulars Amount Date Particulars Amount
31/05/16 To balance C/d 1310 03/05/16 BY J. Wilson 1120
03/05/16 By T. Cole 1640
03/05/16 By F. Syme 2080
03/05/16 By J. Allen 910
03/05/16 By P. White 2420
03/05/16 By F. Lane 770
09/05/16 T. Cole 680
09/05/16 J. Fox 1310
1310 1310
Sales Return Journal account
Date Particulars Amount Date Particulars Amount
11/05/17
To J.
Wilson 270 31/05/16
By Balance
c/d 680
11/05/17 To F. Syme 410
680
Purchase Journal account
Date Particulars Amount Date Particulars Amount
02/05/16 To S. Hood 1450 31/05/16
By Balance
c/d 38320
02/05/16 To D. Main 2060
02/05/16 To W. Tone 960
02/05/16 To R. Foot 1610
14/05/16
To Abel
Motors Ltd 28500
22/05/16 To L. Mole 1830
22/05/16
To W.
Wright 1910
38320
Purchase Return Journal account
Date Particulars Amount Date Particulars Amount
31/05/16
By balance
c/d 50 19/05/16 By R. Foot 50

Receipt account
Date Particulars Amount Date Particulars Amount
16/05/16
To P.
Mullen 1330 31/05/16
To balance
C/d 7020
16/05/16
To Discount
allowed 70
16/05/16 To F. Lane 2945
16/05/16
To Discount
allowed 155
16/05/16
To J.
Wilson 807
16/05/16
To Discount
allowed 43
16/05/16 To F. Syme 1586
16/05/16
To Discount
allowed 84
7020 7020
Payment account
Date Particulars Amount Date Particulars Amount
31/05/16
To balance
C/d 30100 24/05/16 By s. Hood 3240
24/05/16
By discount
received 360
24/05/16 By J. Brown 4140
24/05/16
By discount
received 460
24/05/16 By R. Foot 1260
24/05/16
By discount
received 140
31/05/16
By Abel
motors 20500
30100 30100
Discount received account
Date Particulars Amount Date Particulars Amount
31/05/16 To S. Hood 360 31/05/16
By Balance
c/d 960
31/05/16 To J. Brown 460
31/05/16 To R. Foot 140
960

Discount allowed account
Date Particulars Amount Date Particulars Amount
31/05/16
To balance
C/d 352 31/05/16
By P.
Mullen 70
By F. Lane 155
BY J.
Wilson 43
By F. Syme 84
R. Foot account
Date Particulars Amount Date Particulars Amount
19/05/16
To purchase
return 50 02/05/16 By purchase 1610
31/05/16
To balance
C/d 1560 24/05/16
By discount
received 140
1610
Purchase
Return
Journal
account 1610
J. Wilson account
Date Particulars Amount Date Particulars Amount
03/05/16 To sales 1120 11/05/16
By sales
return 270
16/05/16 By bank 807
16/05/16
By discount
allowed 43
1120 1120
T. Cole account
Date Particulars Amount Date Particulars Amount
03/05/16 To sales 1640 S. Hood
By Balance
c/d 2320
09/05/16 To sales 680
2320 2320
F. Syme account
Date S. Hood Amount Date Particulars Amount
03/05/16
By Balance
c/d 2080 11/05/16
By sales
return 410

By bank 1586
By discount
allowed 84
2080 2080
J Allen account
Date Particulars Amount Date Particulars Amount
03/05/16 To sales 910 31/05/16
By Balance
c/d 910
P. White account
Date Particulars Amount Date Particulars Amount
03/05/16 To sales 2420 31/05/16
By Balance
c/d 2420
F. Lane account
Date Particulars Amount Date Particulars Amount
01/05/16
By balance
B/d 3100 16/05/16 By bank 2945
03/05/16 To sales 770 16/05/16
By discount
allowed 155
31/05/16
By Balance
c/d 770
3870 3870
S. Hood account
Date Particulars Amount Date Particulars Amount
24/05/16 To Bank 3240 01/05/16
By balance
B/d 2150
24/05/16
To discount
received 360 01/05/16 By purchase 1450
3600 3600
J. Brown account
Date Particulars Amount Date Particulars Amount
24/05/16 To J. Brown 4140 01/05/16
By balance
B/d 4600

24/05/16
To discount
received 460
4600 4600
J. Fox account
Date Particulars Amount Date Particulars Amount
09/05/16 To sales 1310 31/05/16
By Balance
c/d 1310
By Balance
c/d
P. Mullen account
Date Particulars Amount Date Particulars Amount
01/05/16
By balance
B/d 1400 16/05/16
By P.
Mullen 1330
16/05/16
By discount
allowed 70
1400 1400
L. Mole account
Date Particulars Amount Date Particulars Amount
31/05/16
To balance
C/d 1830 22/05/16 By purchase 1830
1830 1830
W. Wright account
Date Particulars Amount Date Particulars Amount
31/05/17
To balance
C/d 1910 22/05/16 By purchase 1910
1910 1910
D Main account
Date Particulars Amount Date Particulars Amount
31/05/16
To balance
C/d 2060 02/05/16 By purchase 2060
2060 2060
W. Tone account
Date Particulars Amount Date Particulars Amount

31/05/16
To balance
C/d 960 02/05/16 By purchase 960
960 960
Abel motors account
Date Particulars Amount Date Particulars Amount
31/05/16 To Bank 20500 14/05/16 By van 28500
31/05/16
To balance
C/d 8000
28500 28500
Bank account
Date Particulars Amount Date Particulars Amount
01/05/16
To balance
B/d 62400 01/05/16
By storage
costs 400
27/05/16 By salaries 4800
By Balance
c/d 31/05/16
By Abel
motors 20500
31/05/16
By Balance
c/d 36700
62400 62400
Cash account
Date Particulars Amount Date Particulars Amount
01/05/16
To balance
B/d 5600 04/05/17
By motor
expenses 470
07/05/16 By drawings 1500
31/05/16
By Balance
c/d 3630
5600 5600
Motor expenses account
Date Particulars Amount Date Particulars Amount
04/05/16 To cash 470 31/05/16
By Balance
c/d 470
Drawing account
Date Particulars Amount Date Particulars Amount
07/05/16 To cash 1500 31/05/16
By Balance
c/d 1500

Van account
Date Particulars Amount Date Particulars Amount
01/05/16
To balance
B/d 51250 31/05/16
By Balance
c/d 79750
14/05/16 To van 28500
79750 79750
Storage costs account
Date Particulars Amount Date Particulars Amount
01/05/16 To Bank 400 31/05/16
By Balance
c/d 400
Owner's capital
Particulars Amount
Assets
Premises 340000
Van 51250
Fixtures 8100
Inventory 63900
Receivables 4500
Cash at bank 62400
Cash in hand 5600
Total 535750
Liabilities
Payable 6750
Owner's capital 529000
Draw trial balance
Particulars Debit Credit
Capital 529000
Premises 340000
Van 51250
Fixtures 8100

Inventory 63900
Sales 10930
Purchase 38320
Sales return 680
Purchase return 50
Drawing account 1500
Storage costs account 400
Motor expenses account 470
Cash in hand 3630
Cash at bank 36700
F. Lane account 770
Discount received account 960
Miscellaneous income 5132
Discount allowed account 352
546072 546072
CLIENT 2
a. Preparing statement of profit and loss
P&L of Peter Pipe for the year ended at 31st December 2016 is as follows:
Income statement
Particulars Amount (in £)
Sales 1215000
Closing stock 101640
1316640
Less:
Opening stock 82200
Purchase 778800
Wages and salaries 177500
Add: Outstanding salaries and
wages 1220 178720
1039720
Gross profit 276920
Less: Indirect expenses
Motor expenses 87400
Administration expenses 17650
Heating and lighting 4950
Advertising expenses 13280
Less: prepaid 8470 4810
Depreciation on premises 5400

Depreciation on equipment 17250
Depreciation on motor vehicle 2800
Total indirect expenses 140260
Net profit 136660
b. Preparation of balance sheet
Statement of financial position of Sole trader Peter Pipe for the year ended at 31st December,
2016
Particulars Amount (in £)
Current assets
Closing stock 101640
Prepaid advertising 8470
Receivables 106960
cash in hand 2440
Total current assets 219510
Fixed assets
Freehold premises 270000
Less depreciation: 42900 227100
Equipment 172500
Less: Depreciation 114750 57750
Motor Vehicles 28000
Less: Depreciation 16800 11200
Total fixed assets 296050
Total assets 515560
Liabilities
Current liabilities
Payables 76910
Outstanding salaries 1220
Bank overdraft 11290
Total current liabilities 89420
Capital 332120
Add: net profit 136660
Less: Drawing 42640 426140
Total liabilities 515560

CLIENT 3
a. Framing profit and loss a/c for Raintree Ltd.
P&L of Raintree Ltd. For the financial year ended atn 30th September 2016
Particulars Amount (in £)
Sales 107000
Less: Sales return 2000 105000
Closing stock 18000
123000
Opening stock 17000
Purchases 32000
49000
Gross profit 74000
Depreciation on building 1000
Depreciation on plant and machinery 10000
Administration cost 28000
Distribution cost 22000
Less: Prepaid rent 3000
Add: Outstanding salaries 2000 21000
Corporation tax 4000
64000
Net profit 10000
b. Statement of financial position of Raintree Ltd
Balance sheet of Raintree Ltd for the year ended at 30th September 2016 is as follows:
Particulars Amount (in £)
Current assets
Trade receivables 24000
Prepaid rent 3000
Closing stock 18000
45000
Fixed assets
Land and building 60000
Less: Depreciation on building 8000 52000

Plant and machinery 65000
Less: Depreciation @ 20% 25000 40000
92000
Total assets
137000
Liabilities
Current liabilities
Trade payables 14000
Outstanding salaries 2000
bank overdraft 15000
Corporation tax 4000
Total current liabilities 35000
Shareholders’ equity 50000
share premium 20000
Retained earnings 22000
Net profit 10000
Total shareholders’ equity 102000
137000
c. Explaining the accounting concept of consistency and prudence
Consistency-This kind of accounting policy is selected by an entity in which various policies
selected by the organization should be followed throughout the financial year in improving the
current business performance of an entity in order to grab higher market advantage in achieving
all the goals and the objectives in fewer periods (Hosain, 2016). Consistency in organization is
important that determines an entity’s overall performance in terms of using SLM for one period
without any kind of stoppage.
Prudence- Prudence concept is essential for an entity which helps in determining future
performance of an entity by estimating specific percentage of provision of doubtful debt charged
on the total debtors of an entity.
d. Illustrating two widely used methods of depreciation along with their appropriateness
Straight line method is recommended to an entity in which amount of depreciation remains the
same throughout the business which helps an entity in order to improve the overall performance
of an entity.

Written down value method changes in the amount of depreciation which highly used by an
entity due to its decreasing amount of depreciation which improves overall performance of an
enterprise.
CLIENT 4
a. Explaining the purpose of preparing bank reconciliation statement
Bank reconciliation statement prepared by an entity in order to fill the differences arises
among the balance of cash book and balance of the pass book in order to improve the
performance of an entity in order to gain higher market advantage (vans and Porter, 2010). This
is regarded as the important step in which financial frauds will be determined by an entity in
strengthening the existing business performance of an entity in order to grab external market
opportunities.
b. Assessing the reasons due to which bank records vary from cash book
Differences arises in the cash book due to several reasons which needs to be identified by
an enterprise in order to grab higher market opportunities in order to achieve desired market aims
and targets within a given time period. Various differenced incurred in the cash boom of an
entity due to cheque deposited but doesn’t presented for the payment in order to accomplish
desired aims and the objectives of the business.
c.
Bank reconciliation statements as at 1 December 2016
Bank reconciliation statement as at 1 December
Particulars Amount
Balance as per bank statement 17478
Less Unrepresented cheque 1163
16315
Outstanding lodgements 176
Balance as per opening cash book 16491
Prepare updated cash book
Corrected cash book

Date Particulars Amount Date Particulars Amount
31/12/16 To balance B/ 19973 Bank charges 47
Error cheque
783(221-212) 9
Deposit
difference 1
Standard order
rates 137
31/12/16
Revised
balance C/f 19797
19982 19982
31/12/16
Revised
balance B/d 19797
Bank reconciliation statements as at 31st December
Particulars Amount
Balance as per bank statement 19738
Less unpresented cheque (97+260) 357
19381
Add outstanding lodgments 119
Bank error cheque no. 310923 297
Balance as per opening cash book 19797
CLIENT 5
A) prepare and balance books of Henderson for May 2016
Sales ledger control account
Date Particulars Amount Date Particulars Amount
01/05/16 To balance B/d 12600 To bad debts 120
To sales 152350
To discount
allowed 380
To sales return 7320
To receipts
from
141610

customers
To contra
purchase
ledger 330
To balance c/d 15190
164950 164950
Purchase ledger control account
Date Particulars Amount Date Particulars Amount
To discount
received 290 By balance B/d 9160
To purchase
return 1110
By Credit
purchases 116500
To contra sales
ledger 330
By refund from
supplier 400
To balance C/d 124330
126060 126060
b) Explain the term control account and needs to prepare control account
Control accounts prepared in accounting is a terminology used to describe as the general
ledger for combining the entire subsidiary ledger prepared by an entity in the books of accounts.
Controls accounts is usually prepared in order to combine all subsidiary kind of ledgers prepared
by an entity in order to reflect its overall business performance by classifying into various
categories. An entity need to regulate their overall business performance by enhancing its current
strengths and eliminating all the weaknesses of their business.
Ultimate need control account in the business is to monitor all the business activities of
an entity and review all kinds of components included in the business in order help an entity in
order to grab higher market performance.
TASK 6
a. Describing suspense account along with its main features
Temporary nature of suspense account is that it helps in recording all the business
transactions in which all the transactions which an accountant omitted several transactions in the
business are taken into consideration in order to accomplish all the desired aims and the
objectives within a given time period (Hira, 2016). Suspense account created by an entity owner

in order to match the total balance of trial balance as in this way owner of the business will close
all the business accounts. The balance lies idle in the business whether debit or credit in order to
compensate the idle balance left in the trial balance by using suspense accounts of business.
Use of suspense account in the business is to fill all kinds of gaps found in the business
due to omission of transactions which will deflate an entity’s financial performance.
b. Drafting a trial balance by using control account as balancing figure
Particulars Debit Credit
Purchase 700
Sales 1100
Rent paid 250
cash in bank 840
travel expenses 160
Receivables 320
Payable 350
Capital 710
suspense a/c 330
Total 2490 2490
c.
S. No. Particulars Debit (in £) Credit (in £)
1 Wrong entry
Smith a/c Dr.
To Sales a/c
Right entry
Simon a/c Dr.
To Sales a/c
Rectified entry
Simon a/c Dr.
To Smith a/c
220
220
220
220
220
220
2 Jones a/c Dr
To Suspense a/c
420
420
3 Whites personal a/c Dr.
To suspense a/c
750
750
d. Differentiating suspense and clearing account
Basis Suspense account Clearing account
Nature This kind of account is created
by an entity owner for
The nature of this kind of
account is also of temporary

temporary time as this account
come into existence in order to
record omitted transactions.
nature which is used to clear
various business transactions
by simplifying various
transactions occurred in the
business for the beneficial of
the business enterprise in
order to gain higher market
advantage.
Handling complexities Suspense account prepared by
an entity in order to eliminate
confusion incurred in the
business transactions that all
the transactions will be
properly recorded in the
business by taking help of
suspense account in order to
improve financial
performance.
Clearing account used by an
entity in order to clear long
legal procedures in order to
improve overall performance
of an entity by determining
true position of an entity in the
external business
environment.
CONCLUSION
It concluded from the above assignment that an entity has uses variety of accounting
principles in order to record all kinds of business transactions in order to achieve all kinds of
aims and targets by attaining all kinds of objectives (Fletcher, 2016). This report emphasizes on
improving business performance of an entity that includes basic process of accounting in order to
determine the financial position of an entity in the external business environment. This report
shows that accounting is essential for recording all kinds of transactions incurred in the business
in order to stress on all kinds of areas of business entity. Errors identified in the financial
statements are rectified by using rectification of errors that is one of the important accounting
concepts used in achieving all the aims and the objectives within a given time.

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