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Financial Accounting Principles Assignment Solution- Doc

   

Added on  2020-10-23

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Financial AccountingPrinciples

INTRODUCTIONFinancial accounting principles are helpful for an organisation because it provides help toprepare financial statements correctly. Financial accounting is the process of recording,summarizing and reporting the transactions of business over a period of time. It containsaccounting rules and principles which are needed to be follow while reporting financial data. Fora junior accountant it is essential to prepare financial reports by following the guidelines ofaccounting principles so that true and fair information and data can be provided to corporation.As a result, company can take effective decisions which help to accomplish its objectives. Themain aim of this report is ensure firm to follow the rules and principles of accountancy. Thisreport covers following topics such as: financial accounting regulations and its purposes,accounting rules and its principles, concepts relating to consistency and material disclosure,double entry book- keeping system, trial balance, partnership. Apart from this report also discussabout bank reconciliation.BUSINESS REPORT1. Financial accounting Financial accounting helps the company to prepare financial statements as per the rulesand regulations of accounting.It helps to classify, analyse, summarize and record financialtransactions of corporations (Schwaiger, 2015). Accountant is responsible to follow the rules andpolicies of financial accounting so that relevant and accurate information can be analysed. Thereare various purposes of its which are as follows: To provide true and fair picture of financial transactions of organisation. To analyse and understand the fundamentals of financial accounting (DRURY, 2013).Financial accounting provides help to know the financial health of organisation whichhelp the external parties (investors, creditors) to take effective investment decisions. Management of company can know the profits and losses of its business during currentfinancial year as a result manager can make future plans and strategies for future growth. 2. Regulations relating to financial accounting Financial accounting has various regulations which are needed to be follow by anaccountant of organisation so that true and fair information can be produce and analyse. As a1

result, company can know its financial wealth and on the basis of it investors and creditors takeinvestment decisions. Regulations relating to financial accounting are described below: In financial accounting rules, standards and procedures of Generally AcceptedAccounting Principles can be follow by an organisation so that financial statements canbe prepare appropriate(Callen, 2015). There are various principles of GAAP which areneeded to be follow such as: principle of regularity, consistency, precedence, periodicityetc.Regulations related to IFRS should follow by accountant of organisation because itfocuses that how a particular type of transactions.Regulations related to financial accounting such as debit and credit and their treatment inaccounting can be follow by the accountant of corporation so that relevant informationand data can be reported in financial statements (Alver and Talpas, 2013).As per the companies act it is mandatory to publish the books of accounts in front ofgeneral public so that they can know the financial position of corporation. 3. Rules & principlesRules of accounting can be follow by an accountant while preparing the financialstatements and these are as follows: Debit the receiver, credit the giver: Specific rule can be helpful in personal accounts.Examples of personal account are debtors, banks, creditors, capital account etc. When anindividual give something to corporation it becomes an inflow so person should be credit inbooks of accounts. As well as a persons receive something from the organisation than amountmust be debit on name of person (Hale and Held, 2012).Debit all expenses, credit all incomes : It is applied when there is something relatedwith nominal account. As capital of corporation is considered as its liability. Thus it has a defaultcredit balance. When all incomes are credited than it increases the capital & by debitingexpenditures, it decreases the capital. It helps organisation to stay in balance (Banerjee, 2012). Debit what comes in, credit what goes out: It is useful in the case of real accounts. Thisincludes machineries, buildings etc. For example, an individual purchase furniture of $ 20000 incash, in that case furniture account would be debit by $ 20000 and cash account would be creditby $ 20000. Principles:2

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