Financial Accounting: Record Transactions and Prepare Final Accounts

HNC BUSINESS
(UNIT 10 FINANCIAL
ACCOUNTING)

Assignment cover sheet
Name: Inderdeep Bal
Address: 51 Cedar Close
Armley
Leeds
Post code / Zip: LS12 1SL
Telephone No: 07581363395
Email Address: [e-mail]
Date: 15/6/18
Course Name: Business, accounting and finance
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Tutor Name: Jeremy Oughton
Assignment
Name:
Unit 10– Financial accounting
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TABLE OF CONTENT
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INTROUCTION........................................................................................................................1
LO1 Record transactions in business using double entry book keeping and also extract trial
balance........................................................................................................................................2
Define financial accounting....................................................................................................2
Explain regulations related to the financial accounting.........................................................2
Explain accounting rules and principles.................................................................................3
Describe conventions and concept of consistency and material disclosure...........................4
P1 Apply debit and credit system of the double entry book- keeping system and also record
sales and purchases transactions in a general ledger account.................................................4
P2 Develop trial balance by using the balance off rules to match the figures........................6
M1 Evaluate sales and purchase transactions to compile a trial balance by using the system
of double entry book keeping.................................................................................................7
D1 Record transactions in a correct way by producing an accurate trial balance by
completing the balance off ledger accounts in accordance with the accounting principles...8
LO2 Prepare final accounts for Sole traders, partnerships or limited companies by using
accounting principles, conventions and standards...................................................................11
P3 Prepare final accounts from trial balance figures adjusting for accrual, depreciation and
prepayments..........................................................................................................................11
P4 Generate final accounts examples for different business types such as sole traders,
partnerships or limited companies........................................................................................15
M2 Analyze various financial statements by using example such as profit and loss
accounts, balance sheet and cash flow statement.................................................................16
D2 Use appropriate calculations for preparing the final accounts.......................................19
LO3 Perform Bank reconciliation statements to ensure validity of the bank records.............20
P5 Use the bank reconciliation process to prepare a number of bank reconciliations.........20
M3 Apply the reconciliation process by reflecting the use of deposit in transit, outstanding
checks and not sufficient funds check..................................................................................21
D3 Prepare bank reconciliations by applying tools and techniques to check general
accounts and balance sheets.................................................................................................21
LO4 Reconcile control accounts and shift the recorded transactions from the suspense
account into the correct account...............................................................................................22
P6 Describe the processes to reconcile control accounts and clearing of the suspense
accounts by using several examples.....................................................................................22
M4 Show different types of accounts and explain how and why these are reconciled........23

D4 Generate accurate accounts that will reconcile by using various methods.....................24
CONCLUSION........................................................................................................................24
REFERENCES.........................................................................................................................25

INTROUCTION
Accounting has become the most integral business function which helps in managing
all the risks identified by an entity owner. The requirement of the accounting will get
increases with several changes takes places in the external entity such as changing the
taxation requirements, determining the financial position and the actual worth of an entity.
The motive of an entity behind using the accounting system is to record all the transactions
takes places in a business by using single entry or double entry system of bookkeeping which
selects by various business users according to their purpose. A focus of the current
assignment lies in reflecting the financial accounting concepts by explaining the accounting
principles, conventions and all the standards used in an entity for different business purposes.
The worth of an entity will be ascertained by the business owner by recording all the
transactions related to various categories such as purchases, sales, and expenses. This
assignment will highlight various learning objectives which help an individual in completing
this report as per the desired objectives to get the relevant data. The first learning objective of
this assignment reflects the recording of all the business transactions by using the double-
entry book-keeping system under which every transaction has double effects which are
shown while preparing the final accounts which consists of two financial statements out of
the standard three financial statements such as profit and loss account and balance sheet. A
particular transaction is recorded by showing the business transaction’s recording as debit and
credit which have different meanings as per the different business accounts in which they are
recorded. Trial balances are recorded to get rid of all the mistakes found in the journals and
all the ledger accounts by matching the balance of the overall trial balance. The
appropriateness and the validity of the entire balance are checked by using accounting
principles to determine the actual worth of the business concern as their motive is to attract
all its stakeholders by keeping a transparent relationship with all its clients who, in turn, helps
in enhancing the overall production of the company. Second learning objective of the current
report is related with the preparation of the final accounts for different users of the business
such as sole traders, partnerships or limited companies by following the double entry system
of bookkeeping which will uses the double effect of all the transactions recorded in the
journals and general ledgers as all these further posted in two of the final accounts. The final
accounts consist of two of the accounts which are two of the statements used in determining
the financial position of an enterprise. This will emphasize on several final accounts
adjustments for all the accruals, depreciation and prepayments transactions booked in the
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business which are carried forward from the general accounts to the final accounts as per
their nature of accounts. The third objective is all about the preparation of bank reconciliation
statement and its importance for an entity in comparing its business vouchers with the bank
statements to know the gaps occurred in these statements. All the differences are rectified by
using various approaches and method. Lastly, this report will focus on the reconciliation of
all the bank statements by focusing on the suspense accounts which consists of all the
adjustments used in the business transactions. In this phase, control measures are used by an
entity.
LO1 RECORD TRANSACTIONS IN BUSINESS USING DOUBLE
ENTRY BOOK KEEPING AND ALSO EXTRACT TRIAL BALANCE
Define financial accounting
Financial accounting is a term used to describe the procedure for preparing a various
set of financial statements that help in determining the entire financial performance of the
company. This will consist of preparing the income statement, positional statement, and cash
flow statements and changes in equity. This accounting procedure will focus on meeting all
the needs of the users that get benefit from the prepared statements includes inventors who
rely on the financial status of an entity before investing in it, creditors, suppliers and lastly the
major user of an entity is its customers. Financial accounting is used by an entity in
predicting future performance of the business concern as compared to the management
accounting whose motive is just to create all kinds of budgets to ensure proper business
management (Financial accounting, 2018). Different financial statements are based on using
several formulas to know the actual worth of an entity such as expenses deducted from the
generated revenues will help in determining the net income earned by the firm, liabilities
incurred in an entity + equity shareholders held by an entity will collaborated to form total
assets of the concern and cash inflow is estimated by adding up cash balances of different
sectors such as cash from operating activities, cash from financing and cash from investing
sector.
Explain regulations related to the financial accounting
Generally accepted accounting practices are a world-recognized practice that
facilitates all the users in the domestic as well as in the global region in meeting all their
accounting requirements. This regulation is a standardized framework that helps all the firms
to keep their accounting records in a systematic order. This framework consists of various
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