Financial Accounting Principles Assignment - Solution
26 Pages4897 Words64 Views
Added on 2021-02-19
Financial Accounting Principles Assignment - Solution
Added on 2021-02-19
ShareRelated Documents
FINANCIALACCOUNTINGPRINCIPLES
Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................3Part (a).........................................................................................................................................3Part (b).........................................................................................................................................6CONCLUSION..............................................................................................................................24REFERENCES..............................................................................................................................25
INTRODUCTIONThe financial accounting is a field of accounting which is aligned with the collecting,analysing and presenting the financial information in the form of financial statements (Ebaid,2016). As well as this accounting system is beneficial for interpreting the financial position ofcompanies in front of internal and external users. Along with this accounting system plays animportant role in the context of viewing the effort of all business activities in the terms of profitor loss. Eventually, it contains various kind of financial statements and reports like P&L account,balance sheet, income statements etc. In the project report, a small accountancy firm is selectedthat is Brooks city consultancy. This firm provides accounting services at small level and it islocated in London. Apart from it, in this project report, term financial accounting is defined inbroad sense with its role in the companies. As well as internal and external stakeholders arementioned to evaluate their interest in the financial information. In another part of report varioustasks are completed on the basis of information of five clients. MAIN BODYPart (a)1. Financial accounting and its purposes.In general sense, the term financial accounting is a kind of accounting that is related tothe providing financial information to the external and internal stakeholders in the form offinancial reports (Nilsson and Stockenstrand, 2015). The main purpose of this accounting is toinforming to the companies so that they can make changes accordingly in their businessactivities. Eventually, in the financial accounting the financial reports are presented at the end ofan accounting period. In the absence of this accounting system there can be various kind ofissues. In above chosen accounting firm, Brooks city consultancy they prepare different kind offinancial statements such as P&L account, balance sheet etc. Due to this they get the fullinformation about financial situation and on the basis of it their external stakeholders makeinvest.Herein, it is important to know about accounting principles and regulations of thefinancial accounting. This is so because in the absence of these accounting principles, financialstatements will be considered invalid. Most common principle of financial accounting is GAAPthat is known as generally accepted accounting principle. These principles of financial
accounting make the statements and reports accurate. Below some purpose of financialaccounting are described such as:Preparation of financial reports- This is the main purpose of the financial accounting inwhich companies make the financial reports (Mullinova, 2016). These reports help intaking many crucial decisions for companies. Another purpose of financial accounting is that it helps in keeping the record of financialrecords in a systematic manner.It summarise about the financial transaction of the organisations.Helpful in decision-making- Apart from above benefits, the financial accounting is alsouseful for taking effective decision (Henderson, Herbohn and Howieson, 2015). Forexample, if any company's financial situation is better than they will take decision toexpand the business. Hence, the financial accounting is useful for decision-making.Beneficial in making comparison- This is one of the key purpose of financial accounting.In this companies can compare their previous year's profits and expenditures with currentyear. Due to this companies can make changes in the plans and policies accordingly. So these are the main purpose of financial accounting and due to this it is a mandatoryaccounting system for the organisations. 2. Types of internal and external stakeholders.Stakeholders- These are the group of person who are interested in the activities of anybusiness (McCarthy, Shelmon and Mattie, 2012). The aim of most stakeholders is to get theprofit. In general sense, the stakeholders are divided into two types:Internal stakeholderExternal stakeholderBoth the stakeholders are important for the companies because they have their interest in theactivities of business. Below these stakeholders are mentioned in broad sense:Internal stakeholder- The internal stakeholders are those take part in day to day activitiesof business and aware about the objectives (Pratt, 2016). The plans and policies ofcompanies can impact to these stakeholders. Some common example of thesestakeholders are such as employees, BOD (board of director), managers etc. Herein,below these stakeholders are mentioned in broad sense:
1.Board of director- The BOD is a panel of some group of people who deals in makingrules and policies (Tschopp and Huefner, 2015). As well as observe the implication ofthese rules. Generally, they are being considered as upper level department. They showtheir interest in the financial information of the company because on the basis of it theyprepare further strategies and plans.2.Employees- The employees can be defined as a person or group of person who completevarious tasks and activities with an expectation to get the wages or salary (Fourie, M. L.,Opperman, Scott and Kumar, 2015). Eventually, the employees play an important role inthe contribution of profit of organisation. For this purpose, they show the interest in thefinancial position of the company to check whether company has enough fund to paytheir wages or not. External stakeholders- The external stakeholders are those stakeholders who do not takepart in the activities of business but show their interest on each activity (Kwok, 2017).The main purpose of these stakeholders is to get the return on invested income. Somecommon example of these stakeholders are customers, suppliers, creditors etc. Thesestakeholders are mentioned below:1.Suppliers- The suppliers make credit transaction with companies on the basis of theirfinancial condition (Ferran and Ho, 2014). In other words, suppliers provide material tothe companies on credit on the basis of goodwill. Basically, the suppliers show theirinterest in financial condition so that they can sell the material. This is why because iffinancial condition is not good then they will not sell the material on credit.2.Investors- These are the group of many people who invest their funds in the share oforganisations to get return (Maynard, 2017). Before making such investment, theyevaluate the financial position of companies. So financial information is very beneficialfor them to evaluate the future return on the invested capital by them. 3.Creditors- The creditors are those who have claim on services of another party (Blake,2013). In other words, it can be defined as a person to whom money is due. Eventually,they show their interest in the financial position of the company for the purpose of takingdecision about whether they should provide financial assistance to any particularcompany or not.
4.Government- Government is a kind of stakeholder which is different from rest of otherstakeholders (Libby, 2017). They set the rules, acts and laws which are essential to followby the companies. Eventually, they show their interest in the financial position of thecompany to determine about the tax rate on the basis of total income. So these are the external stakeholders of companies which shows the interest in the companiesfor their own purpose. Part (b)Client 1.(I) Double entry with ledgers:DateParticularsDebitCredit01/01/19Premises a/c Dr.240000Motor van a/c Dr.51250Fixtures a/c Dr.8100Inventory a/c Dr.23900P mole a/c Dr.4400F lane a/c Dr.6100Bank a/c Dr.68400Cash a/c Dr.15600To S Hood a/c12150To J Brown a/c16600To capital a/c (Balancing figure)389000(Being owner's capital is calculated)Therefore, Alexandra Study's capital at 1st January is of389000DateParticulars01/01/19Storage cost a/c Dr.450To bank a/c450(Being storage cost is paid)
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Introduction to Financial Accounting (pdf)lg...
|25
|4847
|60
Financial Accounting : Solved Assignmentlg...
|30
|5400
|41
Financial Reporting Solved Assignment - Doclg...
|15
|4799
|44
Financial Accounting Principles : Stakeholderlg...
|29
|3429
|88
Financial Accounting Principleslg...
|24
|3907
|85
Finance & Accounting Assignmentlg...
|28
|5695
|38