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Financial Accounting Statement : Assignment

   

Added on  2021-01-02

11 Pages3209 Words416 Views
X FINANCIALACCOUNTING

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3Define financial accounting and its purpose...............................................................................3Explain the regulation of the accounting ...................................................................................3Define at least 10 accounting rule...............................................................................................4Explain the concept of convention of consistency and material to disclosure............................5Part 2 ...............................................................................................................................................6Explain what is sole trader with its advantages and disadvantages............................................6Explain what is capital for the sole trader ..................................................................................6Discuss the accounting equation. ...............................................................................................7Define Financial Statement........................................................................................................7Purpose of financial statements ..................................................................................................7Explain the purpose of depreciation in formulating the accounts...............................................8Explain the term control account................................................................................................8Define the term suspense account with an example....................................................................8Explain the purpose of the bank reconciliation statements ........................................................8Explain the prudence and consistency concept ..........................................................................9Define the statement of the sole trader and the statement of company.......................................9Explain the IAS-2 inventory and evaluation...............................................................................9Define the accrual concept.......................................................................................................10CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11

INTRODUCTIONFinancial accounting plays an important role in identifying the financial position of thecompany. The present report will explain the meaning of the financial accounting and its purposewith all the regulation and concepts of the accounting. The report will provide the deeper insightor IAS-2, bank reconciliation statements and the use of depreciation. Later it has discussed theuse of suspense account and the control account in financial accounting. Moreover, the meaningof sole trader with its benefits and drawbacks in the organization has been discussed in thereport. Part 1Define financial accounting and its purposeFinancial accounting is the specific branch of the of accounting that keeps all thefinancial tracks of the organizations. With the help of standardized recommendation, thetransactions are recorded, summarized and presented in a financial reports naming incomestatements or a balance sheet. Financial statements of the company issued on a routine schedule.These statements are external because they are given to the people outside of the company.Financial accounting includes the preparation of the financial statements. Purpose of the financial accountingThe purpose of the financial accounting is to give the detail information that is requiresfor the sound decision making. Its purpose aims at preparing financial reports and provide theinformation about the organizational financial position to the external i.e. tax authorities,creditors, and investors (Barth, 2015). It accumulates and report on financial information aboutthe financial position, cash flows, and performance of the company. Later this performance isutilized in the decision making, how to manage the business, or invest in it and lend money. Explain the regulation of the accounting The success of organization is totally depended on the financial accounting. There are nnumber of regulatory bodies that directs the accounting. These regulatory bodies consist ofcertain norms which is mandatory for each of the organization to be follow. At the time of thedecision making of financial activity organization need to be follow the set standards. Theregulatory bodies include the so many associations, commission, boards etc. they include thepredefined working which need to be follow. There are some governing bodies which arediscussed under-

security and exchange commissionTo save the investor is the objective of the US security and exchange commission andmaintain easy capital formation and fair means of market. The main purpose of the SEC's is toguide the organization to implement these laws that are propounded by the congress. Financial accounting standard boardsBy security exchange commission on 1973 the financial accounting standards werepropounded. The main purpose of the financial accounting boards is to make financialaccounting and reporting standards for the public. FASB do the work on modify the standards ofFA for the public (Barth, 2015). It another aim is to protect public from the fraudulent anddeceptive information from the organizations. International financial reporting systems The foundation of the IFRS Brought international financial reporting systems intoexistence. It main aim is to provide the one common language of accounting that could beunderstand by each and every organization across the world. Define at least 10 accounting rule(i)Separate legal entity In the eye of accounting law an organization is separate from its owner. This accountingrule illustrate that the identity of the business is different to the identity of its owner. All thework done in an organization is undertaken separately form that of its owner. (ii)Ongoing process Ongoing process reflects that business keeps on moving until it cannot be windup as perthe norms of accounting. In other words in can be said that organization cannot wound up withthe mutual discussion with each other. Any sudden calamity or insolvency do not stop theorganization to work. (iii)The specific time period principles The financial statements are always worried about the specific time. The accountingsystem consisted of the beginning and closing dates of the organizations I.e from 1st April to 31stmarch. It helps the reader to identify when the transactions were conducted. (iv)The historical cost principles

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