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Financial Accounting: Assignment

Added on - 08 Dec 2020

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FINANCIALACCOUNTINGPRINCIPLES
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................4Report about financial accounting along with its regulations.....................................................41. Financial Accounting with its objectives................................................................................4Representing regulations of financial accounting.......................................................................5Principles and function of Accounting for preparing financial statements................................6Justifying different concepts of accounting such as materiality, consistency and disclosure.....7CLIENT 1........................................................................................................................................81. Presenting Journal entries.......................................................................................................82. Presenting ledger account with context of double entry recording.........................................93. Determining the level of accuracy of trial balance.................................................................9CLIENT 2......................................................................................................................................10(a) Presenting statement of profit and loss for Sierra Laurent for year 2018 (July).................10(b) Presenting statement of financial position for Sierra Laurent for year 2018 (July)............12CLIENT 3......................................................................................................................................13(a) Preparing statement of Profit and loss statement of LMS Ltd for 31st July 2018...............13(b) Presenting statement of financial position for LMS Ltd for year 31st July 2018...............14(c) Explaining the accounting concept of prudence and consistence........................................14(d) Objective of depreciation for accounting along with its both method................................15CLIENT 4......................................................................................................................................15A) Objective of framing Bank Reconciliation Statement.........................................................15(B) Listing areas which might create variances from bank statements.....................................16C. Kendal's cash book along with its bank reconciliation statement........................................16CLIENT 5......................................................................................................................................19(a) Preparing Sales and Purchase ledger account.....................................................................19(b) Define Control Account.....................................................................................................20CLIENT 6......................................................................................................................................20(a) Describing Suspense account along with its features..........................................................20(b and c) Preparing trial balance...............................................................................................21(d) Compare Clearing account and Suspense account.............................................................21
CONCLUSION..............................................................................................................................22REFERENCES..............................................................................................................................24
INTRODUCTIONFinancial accounting principles plays very important role in every organization as itcreates ease for determining future expenses and for purpose of controlling its cost on specificoperation which are performed in premises. The present report is giving brief discussion aboutdifferent accounting regulations, rules along with its principles. It had reflected their majorimportance for accomplishing profitably and growth as it is followed by every industry. Furtherit had shown various financial statements such as profit and loss, balance sheet and trial balance.It is also articulating about different control account with its features and in same series it hadshown difference in suspense and clearing account.Report about financial accounting along with its regulations1. Financial Accounting with its objectivesFinancial accounting is referred as specific branch of accounting, which directly tracesthe financial statements of company in systematic manner. The transactions of any businessentity is measured, reported, collected and recorded on basis of shareholders and investors withcontext of financial accounting. It is considered as a significant source for observing financialstability and performance of any business entity, as it reflects report in fair and consistentaspects. The statement should be framed by considering various financial standards such asInternational Financial Reporting Standards (IFRS) and Generally Accepted AccountingPrinciples (GAAP).The main objectives of financial accounting are stated below:ComparabilityRelevanceConsistencyReliabilityComparability:The financial statement would be easily compared from any otherorganization's statements or with statement of previous year. There is presence of system whichhad been established for reporting and recording financial statements which are prepared. Itwould be creating too much ease for investors with reference to date which could be comparedand to be adjusted with process of decision making about its investments (Concepts ofAccounting Principles,2018).
Relevance:The financial statement provides financial information that should berelevant and applicable for its end user. All the financial statements must create ease for thepurpose of understanding and decision making with respect to financial performance of businessentity. The recent information is considered as relevant and it would be providing outcome onquarterly and annual aspects.Consistency:There is presence of various alterations in standards so this would becreating deficiency for preparing statement with appropriate consistency. It became a reason forstandards so the end users of financial statement reflected data which is consistent and forprocess of decision-making it created ease for comparing.Reliability:The financial information that had been provided through financialstatements should be reliable. If in this context, investors would be not capable for attainingreliable information as it creates difficulty for the process of decision-making. In the same series,all reliable information should not mislead others as it should be free from biases so it would beverified with much ease (McLaren, 2018).Representing regulations of financial accountingThe financial information should be unbiased, fair, comparable, understandable and fair.According to this, board has set regulations for developing, presenting and preparing financialstatements. The companies, which are listed under FTSE in United Kingdom, had to follow thestandards of GAAP. The organizations had to prepare financial statements with respect toprinciples, which are abolished through GAAP. With reference to expansion of business entitiesof global market international accounting, board have to follow these regulations such as IASBand IFRS.The various accounting regulations are stated below:International accounting standard board (IASB):The specific objective of IASB is togive appropriate disclosure of information with context of professionals. It provides significantguidelines for particular objectives for framing database and reports with respect to financialstatements. It is also applicable for giving appropriate revaluation of accounts. The stakeholderswould accept a specific legal structure for identifying financial information and it wouldinfluence number of investors with context of different countries.International Financial reporting standards (IFRS):It had directly constituted ascontribution of Financial Reporting from 2005 in United Kingdom. It had been framed for
setting various global standards for preparing and disclosing financial statements. If singleaccounting standard had been adopted for various countries as it gives financial information thatis consistent and could be comparable especially for investors. It gives guidance for purpose offinancial reporting instead of setting its regulations.Principles and function of Accounting for preparing financial statementsThere is presence of various concepts, principles and rules, which helps in governingvarious uses of accounting.The specific concepts and rules are stated below:Historical Cost:The specific value of asset had to be stated in financial statement withcontext of its original value but not on the present market value.Business Entity:The financial statements would not consider any personal transactionsof owner and in this, same series business is known as separate entity from specificowner.Monetary unit:All the specific information should be recorded on monetary prospectiveand if it is vice versa then it would not be recorded in statements. Monetary unit could bedescribes as INR, $ etc.Matching:In this principle, all expenses and revenue which are stated should be similarwithin specific accounting period for getting actual earnings (Pawlowski, Nalbantis andCoates, 2018).Going concern:It would be considering an assumption that there will be continuity byspecific organization for performing in time period which is indefinite. On this particularaspect, value of asset would be traced in financial statements.Consistency:It is referred as accounting process which is applicable for businessperspective as it must be consistent, similar and alteration is necessity.Accounting period:There is presence of accounting process within specific timeduration such as half yearly, fiscal year and quarterly.Objectivity:The amount which had been recorded with respect to financial statementsmust have presence of supporting evidence which is impartial.
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