Financial Accounting Principles Assignment - Taj Accountancy Company
Added on 2020-10-22
26 Pages3669 Words391 Views
Financial Accounting principles
ContentsINTRODUCTION...........................................................................................................................................1PART A.........................................................................................................................................................11. Financial accounting and its purpose...................................................................................................12. Assessment of internal and external stakeholders who are interested in the financial information of the organization......................................................................................................................................3PART B.........................................................................................................................................................5CLIENT 1...................................................................................................................................................51. Completing double entry recording within the relevant ledger...........................................................52. Trail balance at 31st January 2019......................................................................................................14CLIENT 2.................................................................................................................................................15(A.) Statement of profit and loss of Munteanu Ltd................................................................................15(B.) Statement of financial position of Munteanu Ltd...........................................................................15c.) Explanation of accounting concept: “consistency” and “prudency”.................................................17d. Purpose of depreciation in formulating accounting statements........................................................17e.) Evaluation of financial statements prepared by sole traders and the limited companies................18CLIENT 3.................................................................................................................................................18a.) Purpose of preparing the BRS...........................................................................................................18b.) Reasons for differences in cash book and company’s statements...................................................19c.) Term “Imprest” in petty cash system................................................................................................19(d.) Bank reconciliation statement as at 30 September 2018................................................................19CLIENT 4.................................................................................................................................................20(a.) preparation of sales and purchase ledger control account.............................................................20b.) Control account................................................................................................................................21CLIENT 5.................................................................................................................................................21a.) Features of suspense account..........................................................................................................21(b.) Trial balance from the figures.........................................................................................................22(c.) Preparation of journal entries with suspense account....................................................................22CONCLUSION.............................................................................................................................................23REFERENCES..............................................................................................................................................24
INTRODUCTION Financial accounting is the process of recording, classifying, summarizing andmonitoring financial transaction in a systematic manner in the financial statements of thecompany.Taj accountancy is a privately held company founded in the year 2010 and headquarteredin London. This is a small based financial company which offers exclusive accountancy,business planning, company secretarial, taxation advice services and business funding toindividuals as well as to corporates. This report highlights purpose of financial accounting and also includes internal andexternal stakeholders who are interested in the financial information of the organization. Furthermore, this report also includes recording of financial business transaction usingdouble entry book-keeping and extraction of trial balance. This report also includes preparationof final accounts in compliance with principles, conventions and standards. Lastly, it alsoincludes reconciliation of control accounts and suspense accounts.PART A1. Financial accounting and its purpose.Financial accounting is a specialized process of recording, classifying, summarizing,controlling and monitoring the financial transactions of Taj accountancy. These financialtransactions are presented in the financial statements or reports like profit and loss incomestatement, balance sheet, cash flow statement which records company's operation over a specificperiod of time. Financial accounting is done to provide information to stakeholders inside oroutside the organization like management, lenders, suppliers, investors, employees, taxauthorities, government regarding the operations of business performance and its productivityeffectively and efficiently.Financial accounting has to be performed in compliance with various accountingprinciples, conventions and standards. For effective validity and credibility of financialinformation company has to abide with Generally Accepted Accounting Principles ( GAAP ) .International companies prepare financial statements in accordance with International FinancialReporting Standards ( IFRS ) . Financial accounting is done to analyse and understand thefinancial position, performance and productivity of business effectively and efficiently to takestrategic decision which helps facilitate growth of the business.1
Financial accounting is a process designed to accurately determine and analyse theactivities performed by the organization in a systematic and effective manner. This allowscompany to get assess to in- depth analysis of the financials of the organization and helps inefficient allocation of resources and strategic decision making for the growth and expansion ofthe business.PURPOSE OF FINANCIAL ACCOUNTING.Disclosure of financial position: Financial accounting main purpose is to disclosefinancial position of the business for a particular period to ascertain whether the companyis making profit or loss.Facilitate in decision making: Financial accounting helps in analysing financialstatements of the company effectively and efficiently in order to make strategic decisionmaking by the management for achieving desired goals and objectives of the company. Provide information to both internal and external stakeholders: Financial accountingstatements provide information to both internal stakeholders like owners, management,employees, and as well as to external stakeholders like investors, creditors, customers,government, etc. to analyse financial statement and performance of the company in orderto take systematic decision.Systematic records of financial transaction: Financial accounting is done to keepsystematic records of financial transaction of the business effectively and efficiently inorder to take fast decision for operational efficiency and productivity. This helps in betterand accurate understanding of the financial transaction (Kimmel and et.al., 2016).Identification of unwanted financial transaction: It helps in detecting cause of anymiss-happening event and unwanted transaction which affect operational efficiency andproductivity of business.Identification of results: Financial accounting is done to analyse and ascertain the actualperformance of the organization from the set target. This helps in analysing the resultsand in case of any deviation necessary action is taken for effective working of theorganization.Provide relevant, reliable, comparable and consistent financial information:Financial accounting of the organization is done to provide organization with relevantand reliable data or information to its end users which helps in taking effective decision.2
It is free of biasness and misleading information which helps company to completely relyon such financial information for effective decision making.2. Assessment of internal and external stakeholders who are interested in the financialinformation of the organization.Stakeholders are the group of individuals, person, banks or financial institution, corporatewho are interested in the operational efficiency of the organization. Stakeholders have concern inthe company’s financial position directly or indirectly. Primary stakeholders are directlyconnected with the operation of the business and secondary stakeholders are indirectly concernedabout the financial position of the business. Stakeholders of the organization are interested incompany’s financial information which help them take strategic decision according to theoperation and finances of the organization.Internal stakeholders are also referred to primary stakeholders which consist ofindividuals, employees, owners, management, director within the organization who havesignificant interest on the welfare of the company. Internal stakeholders of the Taj accountancyare influenced by the performance of the organization and take decision accordingly. Internalstakeholders are directly influenced by the working of the organization and helps in serving theorganization effectively.Employees : They are part of primary internal stakeholders who are directly affected bythe success and failure of the organization. Employees of the Taj accountancy aredirectly influenced by the working of the organization and they are interested in thefinancial statements and reports of the organization. Employees work for remuneration,salary, bonus which is largely dependent on the working of organization. Employees areinterested in the company who has long sustainable future with higher operationalefficiency, productivity and profitability. This helps company in taking strategic decisionwhether to remain in the company for achieving greater heights or to switch to one whosefinancial statements are strong and has better growth prospects (Difference BetweenInternal and External Stakeholders, 2015).Managers : Managers are responsible for taking strategic decision in order to enhancethe operational efficiency of the organization. They are directly influenced by theoperations and performance of the organization as they are primary stakeholders of thecompany. Managers of the organization critically evaluate the financial statements and3
analyse whether goals and objectives of the company are achieved or not. This helpsthem take effective decision accordingly. Management of the organization uses financialstatements to ensure that company has long term solvency position.External stakeholders are also referred to as secondary stakeholders. External stakeholdersare individuals and corporate like customers, general public, rating agencies, competitors,investment analysts, suppliers, community, investors, shareholders, government, creditors,etc. outside the organization and are affected by the operations of business. They areinterested in financial information of the company for taking strategic decision effectivelyand efficiently.Shareholders: Shareholders of the organization have significant interest in the financialinformation of the organization because they are exposed to the risk in relation to theperformance of the company. When financial position of the company is good then theshareholders of the company will invest in that company to generate high returns whereasif the company is not performing well then, the investor is not going to get much benefitfrom the return on investment (Mosey, Kirkham and Noke, 2017). Therefore, financialstatements or information of the company is important to take strategic decisionregarding whether to invest in that company or not and helps in evaluating the return oninvestment according to the current and past performance of the company. Shareholdersof the company uses financial information to determine the viability and worthiness ofthe organization for future dividends, share growth and returns.Creditors: Lenders and creditors are the banks, individual, corporate and financialinstitution who lend funds for the effective working of the organization. They are part ofsecondary stakeholders are not directly related with the organization. Lenders criticallyevaluate the financial information and statement of the company to determine thecreditability of the company. Creditors and lenders of the company who are indirectlyrelated to the organization investigates and examine the financial information critically toanalyse the credit rating and determine solvency of the company. It also helps inanalysing if company makes default in payment. Creditors also require financialstatements to determine and evaluate the capability of the firm to pay back the funds andinterest attached to the loaned fund on a timely manner to the creditors. 4
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Financial Accounting - Sample Assignmentlg...
|22
|6586
|229
(PDF) Principles of Financial Accountinglg...
|28
|4250
|210
Financial Accounting Principles Assignment - Munteanu Ltdlg...
|21
|5839
|347
Financial Accounting Principles - Assignment Solutionlg...
|26
|4436
|180
Financial Accounting Principles Assignment - RBS Accountants Ltdlg...
|26
|7021
|485
Financial Accounting Assignment - Syedain & Colg...
|26
|4122
|453