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FINANCIAL ACCOUNTING INTRODUCTION 3 A. (A) Statement of financial position 20 (B)

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(i) Defining financial accounting3 (ii) Explaining the regulations relating to financial accounting3 (iii) Describing accounting rules and principles 4 (iv) Explaining the conventions and concepts of consistency and material disclosure 4 CLIENT 1 5 (i) Books of prime entry 5 (ii) Ledgers 11 (iii) Trial balance 19 CLIENT 2 20 (A). Key areas which may create vary balance in bank records and bank statements 24 (C) (i) Bank reconciliation

FINANCIAL ACCOUNTING INTRODUCTION 3 A. (A) Statement of financial position 20 (B)

   Added on 2020-06-05

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FINANCIAL ACCOUNTING INTRODUCTION 3 A. (A) Statement of financial position 20 (B)_1
TABLE OF CONTENTSINTRODUCTION................................................................................................................................3A. (i) Defining financial accounting.................................................................................................3(ii) Explaining the regulations relating to financial accounting.......................................................3(iii) Describing accounting rules and principles...............................................................................4(iv) Explain conventions and concepts of consistency and material disclosure...............................4CLIENT 1.............................................................................................................................................5(i) Books of prime entry...................................................................................................................5(ii) Ledgers......................................................................................................................................11(iii) Trial balance.............................................................................................................................19CLIENT 2...........................................................................................................................................20(A). Statement of profit or loss account..........................................................................................20(B). Statement of financial position................................................................................................21CLIENT 3...........................................................................................................................................22(A). Statement of profit or loss account..........................................................................................22(B). Statement of financial position................................................................................................23(C). Explaining consistency and prudence accounting concept.....................................................23(D). Depreciation, purpose and two methods.................................................................................24CLIENT 4...........................................................................................................................................24(A). Purpose of preparing bank statement......................................................................................24(B). Key areas which may create vary balance in bank records and bank statements...................24(C) (i) Bank reconciliation statement at 1st December 2016...........................................................25(ii) Updated cash book of Kendal ltd for December 2016..............................................................25(iii) Bank reconciliation statement as on December 2016..............................................................25CLIENT 5...........................................................................................................................................26A. (i) Sales ledger control account.................................................................................................26(ii) Purchase ledger control account...............................................................................................26B. Meaning of control accounts......................................................................................................26CLIENT 6...........................................................................................................................................27A. Suspense account meaning and its features...............................................................................27B. Trial balance...............................................................................................................................27C. Journal entries for rectification..................................................................................................28D. Differentiate suspense and clearing account..............................................................................28CONCLUSION..................................................................................................................................28REFERENCES...................................................................................................................................302
FINANCIAL ACCOUNTING INTRODUCTION 3 A. (A) Statement of financial position 20 (B)_2
INTRODUCTIONFinancial accounting is a field or branch of accounting that consider money as a means ofmeasuring and recognising economic performance. It gathers information regarding monetarytransactions of the business and record, summarize and interpret it by preparing annual accountsencompasses statement of comprehensive income, balance sheet and statement of cash flow as well.The current research assignment presents accounting guidelines and rules that is necessary to followwhile preparing financial statements. Moreover, different accounts such as profit and loss account,statement of financial position, bank reconciliation statement, accounts payable and accountsreceivable control accounts will be prepared following applicable standards.A. (i) Defining financial accountingFA can be defined as a entire system that records, monitor and control only monetaryactivities or the flow of money in and out from the enterprises as revenues, expenditures, assets andliabilities as well. It collects the financial information so as to construct their annual accounts i.e.income statement and balance sheet and report the result of business functioning to the topmanagement, lenders, investors, taxation authorities and others for varied purpose (Hahn, Fairchildand Dowis, 2013). Income statement reports transactions that will either bring revenue into the firmand results in outflow of cash in the form of expenditures so as to determine the net results i.e. netprofit or loss. It record transactions following accrual concepts therefore both the revenues andexpenditures of the current year will be reported regardless whether expenses is still unpaid andrevenues is still not received in cash. However, on the other side, balance sheet reports assets &liabilities to measure the financial status at the end of the period. As per Company Act, 2006, boththe statements needs to be prepared following GAAP, IAS and IFRS for improving transparencyand harmonization. (ii) Explaining the regulations relating to financial accountingThere are some regulatory requirement which is necessary to be applied and implemented bythe UK establishments while reporting their transactions in annual accounts. In order to record theactivities, accountant generally follows UK GAAP which provides essential guidelines &conventions to report the monetary transactions. However, multinational organizations need tofollow global standards i.e. international accounting standards (IAS) and International FinancialReporting Standards (IFRS) to publish their annual financial statements in the front of external useri.e. investors, lenders, suppliers, tax authorities and others (Alver, Alver and Talpas, 2013). Issuanceof IFRS mainly targeted at building faith among investors as they will be able to compare theperformance of different entities and can make rationalized investment decisions. Besides this,3
FINANCIAL ACCOUNTING INTRODUCTION 3 A. (A) Statement of financial position 20 (B)_3
company Act 2006 make legal obligations for both the private as well as publicly listed companiesto audit their accounts so as to make it sure that the constructed accounts are free from any materialmisstatement and present true and fair position and profit and loss (McAuley, 2015). It helpsoutsiders i.e. investors, lenders, suppliers, tax authorities and others to gather prominent andauthentic information so as to make successful decisions.(iii) Describing accounting rules and principlesAccrual accounting concept: It is based on the principle that every monetary activity thatwill either drive revenue into the organization or results in cash outflow as an expense will berecord immediately when occur instead of their actual impact on cash position. It means that P&Laccount records outstanding expenses and accrued revenues of the current year to determine netprofit or loss.Going concern concept: This principle believes in continual operations of theestablishments and there is no possibility that in the future period, company may go into liquidation.It enables businesses to amortize depreciation over the estimated life period of assets (Gregory, Uysand Gregory, 2014).Monetary concept: Financial accounts treat money as a source of measuring the impact oftransactions over businesses therefore; it presents only the quantitative information such as revenuesfrom sales, purchase, administration, selling and distribution expenses as well. Full disclosure concept: It states that every monetary transaction will be disclosed clearlyin the company’s annual reports along with the followed accounting rules, principles and standardsin footnotes (Beatty and Liao, 2014). (iv) Explain conventions and concepts of consistency and material disclosureConsistency concept: This concept is based on the assumption that once followedaccounting principles will be followed continually until and unless, there is no sound reason tochange it so as to improve the current financial reporting system. It helps entities to analyze andcompare the results of business operations over different accounting years. Material disclosure concept: This method demonstrates that several items which does nothave any significant effect on the accounts and consider immaterial by professional judgements canbe excluded from the financial statements (Henderson and et.al., 2015). Thus, it can be said that thisprinciple enable businesses to violate the matching accounting principles by not disclosing theimmaterial information in the annual accounts. 4
FINANCIAL ACCOUNTING INTRODUCTION 3 A. (A) Statement of financial position 20 (B)_4
CLIENT 1 (i) Books of prime entry5
FINANCIAL ACCOUNTING INTRODUCTION 3 A. (A) Statement of financial position 20 (B)_5
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