Financial Accounting Principles - Assignment
Added on 2020-12-30
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FINANCIAL ACCOUNTINGPRINCIPLES
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1A. Report to Line Manager with brief explanation of accounting principles, regulations andrules.............................................................................................................................................1CLIENT 1........................................................................................................................................41. Representing prime entries......................................................................................................42. Double entry recording in ledger account ..............................................................................73. Identifying accuracy of trial balance with context of Trial balance......................................15CLIENT 2......................................................................................................................................15A. Disclosing profit and loss statement of Peter Piper as per year ending 31st December 2017...................................................................................................................................................15B. Disclosing financial position via balance sheet as on 31st December 2017........................16CLIENT 3......................................................................................................................................18A. Disclosing profit and loss statement of Raintree Ltd as on 30 September 2017..................18...................................................................................................................................................19B. Disclosing Financial performance of Client 3......................................................................19C. Elaborating concept of prudence and consistency in accounting.........................................24D. Depreciation and its importance using both method............................................................25CLIENT 4......................................................................................................................................26A. Identifying objective of framing bank statement for Kendal...............................................26B. Factors influencing reasons of tracing transaction of bank statements................................26C. Disclosing Bank Reconciliation statement ..........................................................................26CLIENT 5......................................................................................................................................28A. Framing purchase ledger control account and sales ledger control account........................28B. Justifying need of framing control account..........................................................................29CLIENT 6......................................................................................................................................30A. Defining Suspense account with characteristics..................................................................30B. Preparing trial balance in context of specific elements........................................................30C. Framing journal entries in context of adjustments of trial balance......................................31D. Comparison between clearing account and suspense account.............................................31
INTRODUCTIONThe current scenario reflects that financial accounting is very important conceptin each and every organization as it helps in estimating expenses of future and for appropriatecontrol over cost for specific operation which are held in premises as there is requirement ofappropriate financial control. The present report is giving brief discussion different accountingrule, regulations and its principles. As they are followed every industry and in this report allclients are using these regulations for preparing financial statements. Further there isrepresentation of financial statements such as balance sheet, profit and loss statement and trialbalance. The report consists of elaboration of control account with its kinds that is sales ledgercontrol account and purchase ledger control account. In the same series journal entries withappropriate ledger account has been signified. It has enlightened balance sheet of organization bycalculating depreciation of both methods. The report has addressed Bank reconciliation statementand cash book with their purpose in organization. In last part it has given brief discussion aboutsuspense account along with its characteristics and extracted similarities and differences fromclearing account.A. Report to Line Manager with brief explanation of accounting principles, regulations and rulesTo: Line ManagerFrom : Junior AccountantSubject: Information in context of accounting principles, regulations and rules which arerequired for financial growth of companyRespected Sir,The profitability and operational functioning can be enhanced of any firm by performinganalysis of all expenses, cost and financial level of spending of every task in specific premises.It has huge contribution in disclosure of data set which has followed all regulations and rulesaccording to accounting standards and boards. These tools provide efficient accuracy infinancial decision making like:1. Identifying Financial AccountsIt is replicated as specialized branch of accounting which traces financial transactions ofan organization. Standard guidelines are used where each and every transaction aresummarized, recorded and represented in financial statement or report such as profit and lossstatement or balance sheet (Ombati and Shukla, 2018). This information are used by accounting1
professionals, investors and owners. Basically there are four types of financial statements suchas:Balance SheetStatement of Cash FlowStatement of Change in EquityNotes to Financial Statement2. Financial Accounting RegulationsThe financial disclosure has been represented as it is very mandatory for every companyas it should follow the basic framework of accounting operations. There are various principleswhich are accepted by every individual and corporation universally. The main objective of thesefinancial accounting regulations is that organization must be capable for facilitating profit andgrowth of business for taking decisions about investment. It will be giving advantage toorganization with context of acquiring the specific capital funds for the operation in the future.Some accounting standards are as follows :Financial Regulation CouncilIt is constituted by UK and Ireland for their personal regulatory with perspective of tradepractices and financial disclosure between nations. The board comprises with relevantoperational bodies like accounting standards board, accountancy and actuarial discipline board,financial reporting review panel, auditing practices board, professional oversight board andboard for actuarial standards.International Accounting Standards BoardAll accounting standards are set by board which helps in framing favourable reports ofall financial transactions. It is giving advantage for providing adequate information and itguides professionals of accounting for following specific rules and preparing for disclosure.International Financial Regulations StandardIt provides information which is relevant for financial disclosure about organization.The principles and norms which are set according to financial standards as their objectives areto specify basic framework of representation of data set. It consists of different financialstatements like income statement, changes in cash flow, and changes in equity and Balancesheet (Li, Sougiannis and Wang, 2017). By following these standards, business will be gaining great advantage in context of attaining2
specific goals such as attracting investors and it will be directly increasing capital generation oforganization.3. Rules and Principles of AccountingThe business performance must be analysed and for strong financial decisions, there ispresence of different rules and principles of financial accounting which are provided by GAAPand Accounting Boards. The main aim of representing board is to give information in veryaccurate manner and all methods and techniques for disclosing financial data set by variousprofessionals. In this context, different principles and rules of accounts are elaborated below : Conservatism: The transactions are recorded in context of reliability and surety. It canbe applied that all transactions must be relevant with expenses and liabilities of organizationwhich are traced immediately when they are incurred. On its contrary, transactions should berecorded which are relevant to assets and revenues has been generated by organization as thereis requirement of sufficient research over sources from where they are originated. At theprimary level, losses are recognised by following this principle and it will be giving decision invery accurate manner with perspective of overcoming financial deficits.Going concern: In this principle, if business has started operating in intial time it willbe directly estimated and in coming time also it will be operated with appropiate revenuestructure. It gives assumption that if operations are continued then it will be providing briefanalysis of value of depreciation and expenses will be estimated along with future investment oforganization.Cost principles: It records transactions according to requirement such as sale ofdifferent products and services in context of fair value. It will be creating help for analysing allincome and expenses which are obtained by organization while commodity dealing. As it willbe identifying cost of all activities which will be directly considered and strong decision will belowering expenses.Monetary unit: It represents recording of business transactions which are stated interms of money. The organization cannot record non-quantifiable items like skills of employee,customer service and quality (Monetary unit principle, 2018). It has also assumption that valueof currency in which transactions are recorded remains stable so financial statement will begiving exact analysis of organization.Time period principles: The technique consists of different time boundedness from3
financial disclosure of data set. It will be giving advantage to organization in context ofpreparing financial statement even on periodic basis like monthly, quarterly, half yearly oryearly. This time limit influences various professionals of organisation and different externalwill be directly analysing performance and growth of specific duration (McLaren, 2018).4. Conventions and Concepts of material disclosure and consistency Material disclosure: All data must be recorded and transited for having material factand authenticated. The activity of purchase and sale of any services or products must berelevant with appropriate sources like requirement of recording date, time which is beneficialfor development of operations.Consistency: In this concept, it has clearly identified that financial disclosure should beon daily basis as presenting data set will be in such form as it is prepared for next presentation.Generally it builds the operation of organization in continuity aspect. There is presence ofcollecting revenue in context of appropriate business execution.CLIENT 11. Representing prime entriesAll the relevant journal entries which are on basis of given transactions which areincurred via Alexandra. It will be on basis of different adjusting entries which are relevant forpurchase and sales of business like :4
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