Financial Accounting: Types of Transactions, Double Entry Bookkeeping, Trial Balance, Financial Statements, Fundamental Principles

Financial Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Scenario 1........................................................................................................................................3
Question 1........................................................................................................................................3
Question 2........................................................................................................................................4
Question 3........................................................................................................................................5
Question 4........................................................................................................................................6
Question 5........................................................................................................................................7
Question 6........................................................................................................................................9
Scenario2.......................................................................................................................................11
Question 1......................................................................................................................................11
Question 2......................................................................................................................................12
Question 3......................................................................................................................................13
Question 4..................................................................................................................................14
Question 5..................................................................................................................................15
CONCLUSION..............................................................................................................................16
REFERENCES................................................................................................................................1

INTRODUCTION
This entire report demonstrated about financial accounting. Financial accounting refers to the
process of recording summarising analysing and making all the transactions within the business
for accounting period (Matringe, 2020). All the records and financial transactions are being
summarised in the form of financial statements. The popular financial statements are balance
sheet profit and loss account income statement and cash flow statement. This report provides
various information about double entry bookkeeping system and trial balance. Along with this
various reconciliation statement and suspense account has been discussed in this report. This
report also provides difference between financial statement and financial report. Apart from
these different fundamental principles of accounting is also being described in this report. Draft
cash flow statement has also been mentioned in this report. Role of control account in financial
management has also been elaborated in this report.
Scenario 1
Question 1
Types of business transaction
An organisation has different types of business transactions it doesn’t matter that the business is
small medium or large in nature but they need to conduct various business transactions on daily
basis. Some transactions are:
Purchase of goods
Any organisation can purchase the goods in the form of cash or credit. Whenever organisation go
for cash purchase then they need to pay the cash immediately therefore free organisation go for
cash purchase because most of the organisation preferred credit purchase because they get some
time to make the payment.
Purchase of services
Organisation has to purchase services as well such as if they want to leak repair and equipment it
and they go for advertisement as well in such case the need to purchase different services.
Payment of wages
In every organisation there are various employees’ works and it is the responsibility of the
organisations to pay their wages and salaries on time and therefore this is also one of the biggest
transactions of an organisation which they have to conduct on monthly basis.
Single entry

Single entry system is one of the simple and easy methods of bookkeeping (Izoulet, 2021). This
method each and every transaction is being recorded in the journal in the form of single entry.
This method is also known as cash best method in which all the incoming and outgoing of cash is
being recorded.
Double entry bookkeeping
As the name suggests it is one of the tool through which transactions are being recorded for each
business whether it is small or big. As per this transactions are being recorded on two ways one
is debit side and another is credit side. Both the site should be matched to each other.
Trial balance
Trial balance is one of the important statements of any organisation which provides a spreadsheet
about acidity of accounting for accounting period. The main objective of using trial balance is to
find out debit and credit errors within the ledger.
Importance of trial balance
Trial balance helps in finding out the errors and also it provides the location of errors. It makes
sure that all the transaction which has been recorded in the books must have debit and credit side.
Question 2
S. no Particular Amount
01/06/2016 Cash a/c Dr
To business a/c
65000
65000
02/06/2016 Purchase a/c Dr
To accounts payable
80000
8000
07/06/2016 Cash a/c Dr
To inventory a/c
4000
4000
08/06/2016 Purchase a/c Dr
To bank a/c
4000