Financial Accounting: Business Transactions, Double Entry System, Trial Balance, Financial Statements and Reports, Accounting Principles

FINANCIAL ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
SCENARIO 1..............................................................................................................................................3
Question 1...............................................................................................................................................3
Question 2...............................................................................................................................................4
Question 3.............................................................................................................................................11
Question 4.............................................................................................................................................12
Question 5.............................................................................................................................................14
Question 6.............................................................................................................................................16
Question 7.............................................................................................................................................18
SCENARIO 2............................................................................................................................................19
Question 1.............................................................................................................................................19
Question 2.............................................................................................................................................20
Question 3.............................................................................................................................................21
Question 4.............................................................................................................................................21
Question 5.............................................................................................................................................23
CONCLUSION.........................................................................................................................................25
REFERENCES..........................................................................................................................................27

INTRODUCTION
Financial Accounting (FA) is process of recording, summarizing and analyzing the
monetary transactions in order to have efficient decision making procedure. In the current
scenario, there is crucial requirement to gain competitive advantages through developing
systematic procedure for having effectual practices in industry to lead the company from similar
organization. The current report will include the description regarding business transactions,
double and single entry system, trail balance, difference between financial statement and
reporting, fundamental principles of accounting, etc. the practical exposure will be given by
preparing journal ledge, profit & loss account, cash flow and reconciliation statement, etc
MAIN BODY
SCENARIO 1
Question 1
Business transaction is related with interchanging goods and services between two or
more parties for the purpose accomplishing organizational goals such as profitability, higher
conversion rate, etc. There are several types of business transactions which are undertaken by
firms in industry in order to derive sufficient accomplishment of objectives. There are several
types of business transactions which are performed in form of cash and credit for the purpose of
purchasing & selling of raw materials, current and fixed assets and paying off debts, salaries,
interest, dividends, etc. In addition to this, these all practices are exerted for exchange of value.
It is measurable in terms of money which highly impacts the financial position of organization.
There are several events which can be referred as commercial transactions as they do not have
the characteristics like affecting financial position, monetary value, etc.
Single entry is the characterized by the fact that there is only one side recording of
transaction. It does not enable the firm to have effective understanding of particular transaction
to make appropriate decision making (Roberts, J., 2021). It does not associated with the formal
training and utilized by the small businesses to make the process of carrying forward activities
in comparatively easy manner due to characteristics of simplicity and cost effectiveness. In book

system double entry system is where entry to an account needs corresponding entry to different
head. This type of system has the equal and corresponding sides known as debit & credit. It
standardize the process and maintain the accuracy of through improving efficiency via providing
reliable information by preparing financial statements. It helps in reducing errors and omission
in respect to derive sufficient ability to decline the possibility of inaccurate decisions that can
influence business procedure.
Trial Balance is a basically a worksheet that is concerned to provide information through
summarizing ledger balances. The common purpose for formulating trail balance is to ensure
entries in mathematically manner are correct. Firm get the base for preparing financial statements
through identifying and improving errors at initial stage by giving emphasis on trail balance. The
validity of accuracy of trial balance is ensured by focusing on its both debit and debit side
through assuring that these are equal (Blaufus and Hoffmann, –2020). There are several purposes
for which company prepares this so that various benefits can be obtained. The significant which
organizations get through executing trial balance includes arithmetic accuracy, preparation of
financial statements, rectifying errors, making adjustments, comparatively analysis, effective
decision am king via formulating audit reports, etc
Question 2
1. Journal Entries for the month of June 2016
Date Particulars L.F Debit Credit
1-Jun Cash A/C Dr. 65000
To Capital A/C 65000
(Being capital invested for
starting company)
2-Jun Purchase A/C Dr. 8000
To Trade payables A/C 8000
(Being goods purchased on
credit)

7-Jun Cash A/C Dr. 4000
To Sales A/C 4000
(Being goods sold for cash)
8-Jun
Trade payables A/C
Dr. 4000
To Bank A/C 4000
(Being cheque issued to pay
creditors)
14-Jun
Prepaid Insurance A/C
Dr. 75
To Bank A/C 75
(Being prepaid insurance
expenses paid )
15-Jun
Trade receivables A/C
Dr. 12000
To Sales A/C 12000
(Being goods sold on credit)
16-Jun Purchase A/C Dr. 10000
To Trade payables A/C 10000
(Being goods purchased on
credit)
18-Jun
Computer Equipment A/C
Dr. 300
To Cash A/C 300
(Being computer equipment

purchased by paying in
cash)
20-Jun Prepaid rent A/C Dr. 150
To Bank A/C 150
(Being prepaid rent paid )
21-Jun Cash A/C Dr. 10000
To Sales A/C 10000
(Being goods sold for cash)
25-Jun Cash A/C Dr. 100
To Bank A/C 100
(Being amount withdrawn
from bank for keeping it into
petty cash)
30-Jun Stationary A/C Dr. 30
To Cash A/C 30
(Being stationary purchased
for taking money from petty
cash)
2. Ledger accounts
Capital A/c
Date Particulars J.F. Amount Date Particulars J.F. Amount
30-Jun To balance c/d 65000 1-Jun
By Cash
A/c 65000
65000 65000