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Financial Accounting Principles Assignment - RBS Accountants Ltd

   

Added on  2020-10-23

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Financial AccountingPrinciples

Table of ContentsINTRODUCTION...........................................................................................................................11. Financial accounting and its purposes ....................................................................................12. Regulation of financial accounting..........................................................................................23 . Accounting principles & rules : .............................................................................................24. Conventions related to consistency and material disclosure...................................................3CLIENT 1........................................................................................................................................4(a) Journal Entry in the books of David Study...........................................................................4(b) Ledger Accounts....................................................................................................................6(c) Trial Balance as at 31st January, 2018................................................................................13CLIENT 2......................................................................................................................................14(a) Statement of profit and loss for Peter Hampau for the year ended 31st July 2018 .............14(b) Statement of financial position for Peter Hampau as at ended 31st July 2018 ...................15CLIENT 3......................................................................................................................................15(a) Profit and loss account of Bowling Limited.........................................................................15(b) Balance Sheet of Bowling Limited......................................................................................16(c) Accounts concepts such as consistency and prudency.........................................................17(d) Depreciation and its methods..............................................................................................17Client 4...........................................................................................................................................17(i) Purpose of bank reconciliation statement ............................................................................17(ii) Prepare Durrell Ltd's updated cash book for December 2017.............................................18(iii) Bank Reconciliation Statement as at 31"t December 2017................................................19CLIENT 5......................................................................................................................................19(a) Books of Henderson.............................................................................................................19(b). Control account...................................................................................................................20CLIENT 6......................................................................................................................................20A. Suspense Account.................................................................................................................20B. Drafting of Trial Balance......................................................................................................21C. Journal entry for suspense account........................................................................................21D . Difference between clearing account and suspense account ..............................................21

CONCLUSION..............................................................................................................................22REFERENCES..............................................................................................................................23

INTRODUCTIONFinancial accounting is the field of accounting concerned with the analysis, summary andrecording the financial transactions pertaining to a business. It provides help to organisations forpreparation of financial statements appropriately and reflects the financial position of company.There are various regulations and rules which are needed to be follow by the corporation. In thisreport chosen company is RBS Accountants Ltd. which is incorporated in London, UK. The aimof this report is to ensure that corporations follows the compliances and regulations ofaccounting. There are following topics which are discussed in this report such as: accountingrules and principles, conventions & concepts related to consistency and material disclosure,business transactions using double entry book- keeping and trial balance, final accounts for soletrader, partnerships & limited companies and bank reconciliation statement. Apart from this italso discusses about recorded transactions from the suspense accounts to the right accounts.1. Financial accounting and its purposes It refers to the process of recording, analysing, summarizing and interpreting thebusiness transactions over a stipulated period of time. It is useful for supplier, creditors, investorsand other stakeholders which are directly or indirectly related to the organisation. Junioraccountant of RBS Accountants Ltd. is responsible to prepare financial reports as per theregulations and rules of accounting as a result it will able to provide accurate data andinformation which help the corporation to take important business decisions. It includes cashflow statement, income statement and balance sheet. Cash flow statement is being prepared sothat company can know the inflow and outflow of cash through various activities such as:operating, investing and financing activity. Income statement is being prepared so thatorganisation can know its profitability level for a stipulated period of time. Balance sheet isbeing prepared so that RBS Accountants Ltd. can know their total liabilities and assets of itsbusiness. There are various purposes to financial accounting which are discussed as below: Purpose of financial accounting is to give relevant information about financial position ofcorporation (Agasist and Catalano, 2013).To provide useful data and information to the stakeholders of company so that they cantake important decisions about the investment.1

It provide help the corporation to take important decisions such as: expansion, investmentetc. (Barth, 2015).2. Regulation of financial accountingTo follow the regulations of financial accounting is necessary for an organisation so thatfinancial statements can be prepare in effective manner and chances of errors can be avoided.Junior accountant of RBS Accountants Ltd. is responsible to follow the regulations of financialaccounting. Regulations of financial accounting are described as below: International financial reporting standards contains various compliances and principleswhich provides help to prepare financial statements such as: cash flow statement, incomestatement and balance sheet. Junior accountant of RBS Accountants Ltd. has follow theprinciples of IFRS while preparing the financial reports. International AccountingStandard Board has issued the IFRS rules which provide the regulations to accountantthat how they have to maintain the accounts. International accounting standards has been issued by International Accounting StandardBoard. It is globally accepted accounting principle.According to the Companies Act 2006, it is the responsibility of accountant to follow thecompliances of this act and prepare accounts as per the regulations of it (Alver andTalpas, 2013).3. Accounting principles & rules: There are different rules and principles which are needed to be follow by the firms whilepreparation of financial report. It provides help to the junior accountant of RBS Accountants Ltd.to make financial statement are per the rules of accounting. Rules of accounting are discussed asbelow: Types of accountRules of accountingNominal accountCredit, the gain or income of the businessDebit, the expenditures or losses of businessReal accountCredit what goes out from the business Debit what comes into the business Personal accountCredit the giver Debit the receiver2

So, these are the three golden rules of accounting which are needed to be follow by theJunior accountant of RBS Accountants Ltd. while preparing books of accounts of company(Collins and Riley, 2012). As a result, true and relevant information and data can be generatedwhich is helpful for the organisation to take important decisions related to business growth. Money measurementprinciple: This concept is based upon the value of money and asper this principle only those transactions can be recorded which can be expressed in the terms onmoney. Junior accountant of RBS Accountants Ltd. has follow this concept while recorded theitems for preparation of financial report.Matching principle: As per this principle, all revenue and expendituresof businessshould match which are generated in same accounting period. Cost principle: According to this principle, amount of an assets should be recorded atacquiring value means value at which they have purchased by the owner of organisation. Dual aspect principle: As per this principle an organisation should record the transactionsof business in both side which are debit side and credit as well as credit side in account. Junioraccountant of RBS Accountants Ltd. can follow this principle while recorded the items(DRURY, 2013).Business entity principle: As per this principle, business and its owner are not samepersons means they are separate persons from each other. An individual can sue and it can besued as well as corporation can be sue or can be sued. 4. Conventions related to consistency and material disclosureConventions are the guidelines which are from the practical applications of principle ofaccounting. It is mandatory to follow these guidelines besides it is a generally acceptedconvention which is based upon the customs. There are various accounting conventions whichare as:Convention of consistency: To compare the data of previous year, it is important so thatorganisation can know growth of its business in current year. With the help of accountingpolicies and rules similar transactions which are followed consistently and continuously. For anexample, if corporation has follow market price or cost method for valuation of inventory andwritten down method has followed for depreciation of fixed assets so it is required for theorganisation to follow these methods continuously and consistently. It provides help to makecomparison more convenient (Edwards, 2013).3

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