Accounting Standards and Practices

This assignment delves into various accounting concepts, methods, and their practical implications. It examines topics like depreciation, the prudence concept, consistency concept, and bank reconciliations. Additionally, it explores the influence of accounting standards on hedging decisions and financial reporting practices. Students are expected to demonstrate an understanding of these core accounting principles and their role in shaping financial reporting.

Financial Accounting
Principles

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
A Drafting a report to the line managers in consideration with analysing the accounting
principles and concepts...............................................................................................................1
1. Explaining the financial accounting........................................................................................1
2. Determining several regulations of norms relevant with financial accounting.......................2
3 Analysing the accounting rules, procedure, principles etc.......................................................3
4. Determining the consistency and material disclosure with its conventions and concepts......4
B. Portfolio to carter the various clients and resolving their financial needs.............................4
CLIENT 1........................................................................................................................................4
1 Analysing the journal entries for Alex study...........................................................................4
2 Presenting the double entry recording with the help of various ledger accounts.....................7
3. Analysing the arithmetical accuracy of double entry system with the help of trail balance.17
CLIENT 2......................................................................................................................................18
A income statement for the client Peter Piper as on 31st December 2016...............................18
B Analysing the financial position of Peter Piper as on 31st December 2016.........................19
CLIENT 3......................................................................................................................................21
A. Determining the profit and loss statement for Raintree Ltd as per 30th September 2016...21
B. Determining the financial position of Raintree Ltd as on 30th September 2016.................21
C. Explaining the accounting concepts for Prudence and Consistency....................................22
D. Analysing the depreciation formulation as well as highlighting the functioning of the two
methods of depreciations...........................................................................................................22
CLIENT 4......................................................................................................................................23
1. Presenting the Bank Reconciliation statements at its purpose..............................................23
2. Determining the transaction of Kendal Ltd as in cash book for December 2016.................23
3. Analysing the BRS for December 2016................................................................................23
CLIENT 5......................................................................................................................................24
A. Presenting and balancing various control accounts..............................................................24
B. Explaining the Concept of Control accounts........................................................................25
CLIENT 6......................................................................................................................................25

A. Presenting the Suspense account with its main features......................................................25
B. Determining the elements with the help of Trial balance Disclosure..................................26
C. Presenting the Journal entries...............................................................................................26
D. Comparing the Suspense account and Clearing account......................................................26
CONCLUSION..............................................................................................................................27
REFERENCES..............................................................................................................................28

INTRODUCTION
To enhance the industrial efficiency and have the fruitful growth in the long run there is
need to have the adequate operational activities in the firm. Therefore, with the help of financial
accounting the disclosure of accounts becomes easy and effective as it can be understand by
every individual in the world and the firm will have domestic as well as international investors.
In the present report there will be discussion based on various principles, terms, conventions and
concepts of accounting principles as well as their usefulness in making the financial disclosure
for the firm. The report will also have solutions to various accounting problems of different
clients and the preparation of various accounts of business such as BRS statement, Profit and loss
statements etc.
A Drafting a report to the line managers in consideration with analysing the accounting
principles and concepts.
To : Line manager
(Small Accountancy Firm)
Subject : Accounting rules, principles, concepts and convections are helpful in terms of
enhancing the efficiency of firm.
Sir,
The implication of the accounting principles while presenting the financial disclosure it
will be fruitful in terms of making the adequate and legal disclosure. Therefore, there has been
various principles, concepts which are presented by IFRS, GAAP and IASB with the motive of
developing the business operations.
1. Explaining the financial accounting
In order to analyse the firm's performance, efficiency, liquidity as well as profitability
the preparation of the financial statements will be helpful in terms of determining the adequate
growth of the firm. These accounts help in analysing the business operations as well as making
the correct operational aspects of the entity (Warren and Jones, 2018). The operation and
functions of the financial accounting can be as per initiating with recording of transactions,
analysing the outcomes and making the operational or investments decision by the stakeholders
of the venture. However, there as been presentation of mainly 4 kinds of financial statements
such a Balance sheet, statement of change in equity, statements of profit and loss and the cash
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flow statements.
Illustration 1: Financial statements
(Source: McCall, 2017)
In context with such statements the investors of other stakeholders of the firm fetch
information and analyse the profitability of firm in terms of meeting the debts and making
payments of the dividends (Fanning and Grant, 2017). Therefore, the disclosure of such
accounts will be helpful in terms of raising the capital funds as well as improving the industrial
operations.
2. Determining several regulations of norms relevant with financial accounting
In accordance with the operations of the business there has been implication of various
principles and concepts while making the financial accounts. Therefore, there are several
institutions, boards and standards who has presented various principles and concepts as to
funnel the accounting professionals while presenting the disclosure of such statements
(Camilleri and Camilleri, 2017). However, in order to analyse the concepts and procedure of
presenting their financial disclosure there are several standards and boards are to be analysed as:
Generally Accepted Accounting Principles:
In accordance with such institution which help in presenting the guidelines relevant with
the accounting disclosure and the record of transaction in the authenticated formate. The
motive of introducing the principles and concepts in the accounting techniques is due to making
the adequate increment in the operational activities as well as strengthening the capital structure
of entity (Tsalavoutas, 2017). There has been presentation of various principles and conventions
which help in brushing the preparation of financial accounts.
2

International Financial Reporting Standards:
This is the institution of board which offers has facilitated the standards and framework
under which the financial disclosure is need to be made. It has facilitated the universally
accepted and authenticated framework which will be fruitful in terms of making the adequate
accounting disclosure (Ismail and Sori, 2017). There has been various formate for the
statements like income statement, balance sheet, change in equity and the cash flow statement.
Thus, such techniques and methods of presenting the accounts will be fruitful for making the
adequate enhancement in the capital structure, analysing costs as well as generating the large
numbers of investors to the firm.
International Accounting Standard board:
In terms of presenting the financial statements which are relevant with the operational
transactions held during the period are to be analyse as well as facilitate the adequate
informations (McCall, 2017). Hence, the motive of such accounting standard is that it helps in
facilitating the guidance and information to present the financial disclosure to the accounting
professional in an entity.
3 Analysing the accounting rules, procedure, principles etc.
To determine or execute the favourable industrial operations there is need to make
adequate analysis over the use of various principles while presenting the financial disclosure.
However, there has been various rules and regulations which are being facilitated by the GAAP
in consideration with improving the accounting framework as well as making the adequate
industrial development (Accounting Principles, 2017). However, there are various principles
and concepts of these accounting framework which are to be analysed as:
Cost Principle: In accordance with this concept the accounting professionals make
record of al the transactions held in the premises which are to be measured and analysed and
then fruitful decision to be made in relation with the costs incurred in such transactions.
Time period assumptions: In terms with such rule the financial disclosure must be time
bound and it is to be presented on the periodic basis (Jennergren, 2017). The presentation of
financial reports will be based on the monthly, yearly and daily basis, which in turn facilitate
the informations to the stakeholders and they will make proper investment and operational
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decisions for the firm.
Monetary Unit: All the financial disclosure are to be made in accordance with
facilitating informations to the all the stakeholders such as domestic and international.
Therefore, it is universally accepted that all the amount all to be displayed on the basis of dollar.
It is because in accordance with all the currencies throughout the world Dollar is the strongest
as well as comparative stable currency (Weng and et.al., 2017). Thus, in these regards the
disclosures are based on default currency Dollar.
Full Disclosure: This concept refers to the disclosure of the financial of the firm with
full disclosure of the accounts such as profit and loss statement, financial position, change
equity etc. therefore, such informations which are presented in the statements will be used and
analysed by various internal or external users (Yashin, Trifonov and Koshelev, 2017).
Going Concern Principle: In accordance with initiating the business it is to be assumed
that the business will have the continues operations in the long run (Schipper, Francis and Weil,
2017). Thus, in these regards the firm will be treated as the going concern and will have
continues disclosure of the financial statements.
4. Determining the consistency and material disclosure with its conventions and concepts
Consistency: This concept reflect the fact that all the transactions which are relevant
with any element have their fixed method of analysing and transacting (Gumb and et.al., 2017).
Thus, it can be said that the assets are to be recorded in the balance sheet while income and
expense are to be measure din the income statement.
Material Disclosure: This principle concept lies over the record of all the transactions in
the financial statemented must be relevant with the authenticated sources which consist of the
information from where the transaction incurred (Warren and Jones, 2018). There will be use of
invoices, lists and small books where the record of all the transactions and which describes the
material facts.
From: Junior accountant
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B. Portfolio to carter the various clients and resolving their financial needs.
CLIENT 1
1 Analysing the journal entries for Alex study
S. No. Particulars Debit Credit
1
Purchase A/C DR
To D. Mian A/c
To S. Hood A/c
To W. Tone A/c
To R. Foot a/C
6080
20160
1450
960
1610
2
Storage Exp. A/c DR.
To Bank A/c
400
400
3
F. Lane a/c DR
P. White A/c Dr.
J. Allen A/c Dr.
F. Syme a/c DR.
T. Cole Ac/ Dr.
J. Wilson A/c Dr.
To Sales
770
2420
910
2080
1640
1120
8940
4
Motor Car Exp. Ac/c Dr.
To cash a/c
470
470
7
Drawing a/c dr.
To cash
1500
1500
9
J. Fox a/c DR.
T. Cole a/c dr.
To Sales A/c
1310
680
1990
11
Sales Return A/c Dr.
To F. Syme a/v
To j. Wilsoin a/c
680
410
270
14
Van a/c Dr.
To Abl Motor Ltd A/C
28500
28500
16 Bank A/c Dr. 1330 1400
5

A.
Discount allowed a/c Dr.
To P. Mullen A/c 70
B.
Bank a/c Dr.
Disc. Allowed a/c Dr.
To F. Lane a/c
2945
155
3100
C.
Bank a/c Dr.
Disc. Allowed a/c Dr.
To J. Wilson A/c
807.5
42.5
850
D.
Bank A/C dR.
DISC. Allowed a/c DR.
To F. Syme
1586.5
83.5
1670
19
R. Foot a/c Dr.
To Purc. Return a/c
50
50
22
Purchase a/c dr.
To W. Wright a/c
To L. Mole A/c
3740
1830
1910
24
A.
S. Wood A/c Dr.
To. Disc. Received
To Bank a/c
3600
3240
360
B.
J. Brown a/c DR.
To Disc. Received a/c
To Bank a/c
4600
4140
460
C.
R. Foot a/c dr.
To Disc. Received a/c
To Bank a/c
1400
140
1260
27
Wages or salaries a/c Dr.
To Bank a/c
4800
4800
30
Bus. Rates a/c dr.
To bank a/c
1320
1320
31
Abel Motor Ltd a/c Dr.
To Bank a/c
20500
20500
6

Total 21820 21820
2 Presenting the double entry recording with the help of various ledger accounts
7

8

9

10

11

12

13

14

15

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3. Analysing the arithmetical accuracy of double entry system with the help of trail balance
Particulars Debit Credit
Sales 10930
S/R 680
Purchase 38320
P/R 50
Capital 529000
Fixtures 8100
Inventory 63900
Van 51250
premises 340000
Drawings 1500
inventory storage cost A/c 400
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Cash 3630
F. lane A/c 770
motor expenses 470
Bank 36700
Miscellaneous gains 5132
Disc. Allowed A/c 352
Disc. Received A/c 960
Total 546072 546072
CLIENT 2
A income statement for the client Peter Piper as on 31st December 2016
Particulars Amount
Net Sales Revenue 1215000
Less: COGS -759360
Remuneration exp. Salaries and wages 177500
O/S Remuneration 1220
Gross profit 276920
Less: Indirect exp.
Adm. Exp. -17650
Motor exp. -87400
Advertising -13280
Lighting and Heating -4950
Less: Prepaid 8470
Dep. On Equip. -17250
Premises dep. -5400
Motor vehicle dep. -2800
Total indirect exp. -140260
Net profit 136660
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B Analysing the financial position of Peter Piper as on 31st December 2016
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CLIENT 3
A. Determining the profit and loss statement for Raintree Ltd as per 30th September 2016
B. Determining the financial position of Raintree Ltd as on 30th September 2016
Particulars Amount
Assets
Current Assets
Prepaid rent 3000
Closing inventory 18000
Bills Receivables 24000 45000
Total Current Assets 45000
Fixed Assets
Plant and Machinery 65000
Less: Dep. @ 20% 25000 40000
Land and Building 60000
Less: Dep. On Building 8000 52000
Total Fixed Assets 92000
Total Assets 137000
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Liabilities
Trade creditors 14000
O/S wages 2000
Corporation tax 4000
Bank overdraft 15000
Total Current Liabilities 35000
Retained Earnings 22000
shareholder's capital 50000
premium 20000
NP 10000
Total shareholder's capital 102000
Total Liabilities 137000
C. Explaining the accounting concepts for Prudence and Consistency
Prudence: In accordance with this concept it ensures that the liabilities and expenses of
the firm during a period are to be underestimated as well as with the revenues of the firm which
are not to be overestimated (The prudence concept, 2013). Therefore, such results of outcomes
are to be recorded in the financial statemented conservatively. For example, adjusting the
allowance for doubtful debts.
Consistency: These techniques follows the concept that all the entries are relevant with
their authenticated manner and have their own place in the specific data sheet. Therefore, it can
be understand as the record of all the revenue and expenses in the profit and loss account. Entries
of liabilities and assets in the balance sheet of financial position statement of firm (Consistency
Concept, 2013). Thus, the motive of such principle is that all the methods and techniques to
make the record of all the transactions must be consistently followed in the future.
D. Analysing the depreciation formulation as well as highlighting the functioning of the two
methods of depreciations.
This technique is helpful in terms of making the appropriate valuation of the fixed assets
in terms of analysing the reduction in their values till it becomes zero. However, with the help of
such concept and technique the business will be beneficial in terms of having the proper value of
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the asset at the time of its selling or carry forwarding the balance to the next year's financial
statements (What Is Depreciation?, 2017). It can be said that with the help of estimating the
depreciation amount it reflect the reduction in the value of assets and it cannot be taxable. Thus,
it can be said that the firm do not need to pay tax over the depreciation as it is fully exempted.
However, there has been various techniques to measure the depreciation such as:
Straight line method of depreciation: This the most helpful and convenient in terms of
analysing the depreciation over any assets (McCall, 2017). It has the consistent reduction in year
from the remaining amount of assets. Thus, as proportion of the measurement will be made in the
initial year and such depreciable value remaining consistent which will help in making easy
deductions in the value of assets till become zero.
Written Down Value of Depreciation: In accordance with this technique of measuring
the depreciation over the assets such as a fixed % of rate will have to be charges over the amount
of assets (Fanning and Grant, 2017). Thus, it can be said that such technique will be fruitful as it
charges the depreciation over the assets as it have reduction in the value in the year than the rate
is to be levied over such value. Thus, this concept will be helpful as it do not bring the zero at the
end of the operations.
CLIENT 4
1. Presenting the Bank Reconciliation statements at its purpose
In accordance with the operations of the bank and the transactional aspects of the
business the Bank reconciliation is very helpful. Therefore, the main use of such accounts or
statement as to analyse the transactions held during the period and the level of funds flowed
during the period. Therefore, it will be beneficial for an entity terms of analysing the operations
of the business such as making the adequate record of all the transaction in he cash book and
bank pass book (The purpose of a bank reconciliation, 2014). However, there has been several
benefits such as recording the errors, records of checks from consumers, suppliers, distributors as
well as analysing the credits of the firm.
2. Determining the transaction of Kendal Ltd as in cash book for December 2016
In accordance with the case of Kedal Ltd it can be said that there has been various
elements which in turn affect the recording of such transactions. Therefore, here can be record of
the funds flows in the cash book of in the bank statemented such as dishonour of checks,
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withdrawals, outstanding checks and deposits made by firm or an individual in the bank
(Camilleri and Camilleri, 2017). Thus, some times it shows variation in both the books which are
due to in process transactions. Therefore, it is necessary that all the balances in each books are to
be recorded proper and reflect the same balance.
3. Analysing the BRS for December 2016.
BRS:
Cash Book:
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CLIENT 5
A. Presenting and balancing various control accounts
Sales ledger control account:
Purchase ledger control account:
B. Explaining the Concept of Control accounts
In accordance wit presenting the Control accounts which is basically a ledger account of
the summary of various accounts (Tsalavoutas, 2017). These are to be prepared by various big
corporation which in turn helps in presenting the adequate outcome and proper analysis of the
business transactions. Therefore, it will helpful in terms of presenting the accurate balance of the
financial statements. However, in short the preparation of such accounts will facilitate the most
accurate and efficient outcomes to the stakeholders of the firm.
CLIENT 6
A. Presenting the Suspense account with its main features
To present a suspense-account which will b made as to bring promptness in the
calculation and measurements. Thus, it can be said that such accounts are prepared to balance the
25

amount of differences for a while till get solved (Ismail and Sori, 2017). Therefore, it will help
the professionals in terms of getting away from the monetary puzzles but it has to be solved
before presenting the final disclosure. Thus, such presentation will be helpful for the business in
terms of making the adequate improvements as well as measuring the operations.
B. Determining the elements with the help of Trial balance Disclosure
C. Presenting the Journal entries
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D. Comparing the Suspense account and Clearing account
The motive behind presenting the clearing and suspense account is to balancing the
variable amount for the while till it be solved and present the adequate results. Therefore, both
the accounts have differences in the recording and measuring techniques. Thus, such differences
can be analysed as follows:
CONCLUSION
In consideration with the above report it can be said hat there has been various principles
and concepts which will help and provide the adequate guidance to the accounting professionals
while presenting the financial disclosure. Further, the report has mad and presented the adequate
financial solutions to the various clients on the basis of their financial obstacles. Thus, it can be
said that with the help of such analysis the corporations and individual will be benefited in terms
of gaining the proper informations relevant with the various accounts and the concepts behind
them. This report contains the statements like, BRS, profit and loss statements, balance sheets
and various journal and ledger accounts.
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REFERENCES
Books and Journals
Camilleri, E. and Camilleri, R., 2017. Accounting for Financial Instruments: A Guide to
Valuation and Risk Management. Taylor & Francis.
Fanning, K. and Grant, R., 2017. Manual vs. Computerized Practice Set: Which Achieves
Learning Objectives the Best?. AIS Educator Journal. 12(1). pp.25-33.
Gumb, B. and et.al., 2017. The impact of accounting standards on hedging
decisions. Accounting, Auditing & Accountability Journal, (just-accepted). pp.00-00.
Ismail, N. and Sori, Z. M., 2017. A closer look at accounting for Islamic financial institutions.
In SHS Web of Conferences (Vol. 34). EDP Sciences.
Jennergren, L. P., 2017. A Note on the Linear and Annuity Class of Depreciation Methods (No.
2017: 1). Stockholm School of Economics.
McCall, N. C., 2017. Financial Reporting: An Analysis of Accounting Methods and
Principles (Doctoral dissertation, The University of Mississippi).
McCall, N. C., 2017. Financial Reporting: An Analysis of Accounting Methods and
Principles (Doctoral dissertation, The University of Mississippi).
Schipper, K., Francis, J. and Weil, R., 2017. Financial Accounting: Introduction to Concepts,
Methods and Uses. Cengage Learning.
Tsalavoutas, I., 2017. Incorporation of the Accounting Directive 2013/34/EU in Greek Law and
the Role of IFRS.
Warren, C. S. and Jones, J., 2018. Corporate financial accounting. Cengage Learning.
Weng, S. C., and et.al., 2017. Application of qualitative response models in a relevance study of
older adults' health depreciation and medical care demand. Geriatrics & gerontology
international. 17(4). pp.645-652.
Yashin, S., Trifonov, Y. and Koshelev, E., 2017. Methods of Predictive Foresight of Cluster
Development Using Arbitrage Techniques.
Online
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Accounting Principles. 2017. [Online]. Available through
:<https://www.accountingcoach.com/accounting-principles/explanation>.
Consistency Concept. 2013. [Online]. Available through
:<https://accountingexplained.com/financial/principles/consistency>.
The prudence concept. 2013. [Online]. Available through
:<https://www.accountingtools.com/articles/what-is-the-prudence-concept-in-
accounting.html>.
The purpose of a bank reconciliation. 2014. [Online]. Available through
<https://www.accountingtools.com/articles/what-is-the-purpose-of-a-bank-
reconciliation.html>.
What Is Depreciation?. 2017. [Online]. Available through :<https://www.profitbooks.net/what-
is-depreciation/>.
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