Financial Accounting and its Purpose

FINANCIAL ACCOUNTING
Table of Contents
μINTRODUCTION 1
PART A 1
Business Report 1
(a) Financial Accounting and it's Purpose 1
(b) Internal and External Stakeholders 2
PART B 4
P1 Application of Double-entry Book-keeping System to record sales and purchase transactions
4
P2. Preparation of Trial Balance 13
M1. Analysing transactions showing progression from previous to current trial balance 13
D1. Application of trial balance figures showing their position in statement of final accounts
14
P3. Prepare final accounts from trial balance 15
P4. Produce final accounts 16
M2. Adjusted Balances of Sum of Accounts before preparation of final accounts 20
D2. Comparing essential features of each financial account statement 20
P5. Apply the Bank Reconciliation Statement 20
M3. Application of Reconciliation Process 21
D3. Preparation of Accurate BRS using appropriate techniques to check general accounts and
balance sheet 22
P6. The process taken to reconcile control accounts and clear suspense accounts 23
M4. Understanding of different type of accounts 24
D4. Accurate Reconciled Accounts through application of appropriate techniques 24
CONCLUSION 25

REFERENCES 26

INTRODUCTION
Financial accounting can be defined as the study of recording, journalising, summarizing
and reporting of financial transactions (Iatridis and Dimitras, 2013). Such reports are useful both
internal ans external shareholders who have different interest in regards to the financial
information presented. This report is divided into two parts A & B. In the part A, a business
report has been prepared in regards to Barclays. In the part B, various financial transactions of
sole trading, partnership and companies have been recorded to prepare final accounts such as
balance sheet, income statement and trial balance.
PART A
Business Report
(a) Financial Accounting and it's Purpose
Financial accounting is an accounting field that deals with company's financial
transactions. It mainly concerned with recording, classifying, summarizing and analysing day to
day proceedings in the books of accounts. These statement can be used for multi purpose. It
helps in determining the fiscal position of business (Edwards, Schwab and Shevlin, 2015).
Stockholders, customers are public the external elements they wants to gather information
regarding organization performance before investing in it therefore these statements are used by
them. Barclays an investment banking company uses such systems effectively to asses the
economical condition of organisation.
Let's discuss in details about the purpose of preparing such statements
Recording- The first and foremost purpose of accounting is to maintained and keeping the track
of all the transactions in systematic manner. Data related to organisation dealing with creditors
and debtors can be evaluated at any point of time. Barclays make sure that it records all the
contents in journal and ledger books.
Planning- It is prepared by management to analyse information and planning in advance about
the materials, resources required for future purpose. It ensured company does is braced to handle
issues whenever they occurs (Kim and Zhang, 2016). Barclays plans budgets and ensures
maintenance of necessary requirements.
Decision Making- Managers take effective decision after studying financial status of firm. These
statements provides them details about various alternatives available and potential of them so
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that company can avail profits by using them. Barclays has to take decisions about prospective
monetary sources and how much investment is required.
Performance- Acquiring info about company's performance based on how much sales, profits
and revenue has been earned within an accounting period. Barclays builds itself from crises after
detecting the areas where it is lacking.
Liquidity- It is an important factor to analyse business state. Maintaining cash availability can be
assured with the help of such statements. Barclays manage working capital requirements after
the issues that it has faced in past.
(b) Internal and External Stakeholders
Internal Stakeholders:
Internal Stakeholders are those which are directly or indirectly related to the operational
process carried out in a business (Abernathy and et.al, 2014). The two main internal stakeholders
of Barclays that are likely to be impacted as well as would be interested in the financial
information of the organisation are:
Employees: Since a business is created by its employees, any business decision made by the
enterprise directly affects their economic well-being. Employees are interested in financial
information of Barclays as their livelihood depends on the level of performance exhibited by the
company in a given financial period.
Management: The top management of the business includes owners, board of directors as well as
the investors of Barclays. They are especially interested in such financial information as they
want to know whether their investments and efforts are being positively rewarded through profit
maximization.
External Stakeholders:
External Stakeholders are those individuals or groups that are external to an organisation
but have the power to affect or be affected by the operations of the business. The two main
external stakeholders of Barclays that would be interested in the financial information of the
organisation are:
Vendors: A Creditor includes any supplier or other parties from whom business is conducted on
a credit basis. Thus, Creditors of Barclays would be interested in their financial information so
as to sustain their business relationships by ascertaining the liquidity of the company. This is
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