Financial Accounting: Types of Company Operations, Single Entry vs Double Entry Bookkeeping, Trial Balance and Ledger Accounts

This document provides an overview of financial accounting, including the types of company operations, single entry vs double entry bookkeeping, trial balance, and ledger accounts. It explains the importance of trial balance in preparing financial reports and discusses journal entries and their significance. The document also explores the requirement of financial reports and their users. Finally, it analyzes a profit and loss account and balance sheet for a specific year.

Financial Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
SCENARIO 1..................................................................................................................................3
Question 1...................................................................................................................................3
Question 2...................................................................................................................................5
Question 3.................................................................................................................................11
Question 4.................................................................................................................................12
SCENARIO 2................................................................................................................................13
Question 1.................................................................................................................................13
Question 2.................................................................................................................................14
Question 3.................................................................................................................................15
Question 4.................................................................................................................................15
Question 5.................................................................................................................................17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................20

INTRODUCTION
Financial accounting seems to be the process of recording, evaluating, and reporting
financial transactions and occurrences which are at some largely financial in character, as well as
interpreting the outcomes in a meaningful way. Financial accounting is really a professional
sector of accounting which measures cash flow inside a corporation (Aifuwa, Embele and Saidu,
2018). Expenses are recorded, summarised, and income tax as well as financial statements, such
as with a cash flow report or a balance sheet, are prepared according to predefined rules. The
many chores of recording company activity in the form of documents, reports, trial balances, as
well as the development of yearly reports for business entities determine this assessment.This
research also included a bank examination to see if the financial records were accurate.
SCENARIO 1
Question 1
Various types of company operations have been documented in accounting records, and the
amount from which it is founded was further defined. The following are some of them:
1. Sales transactions entail the selling of a commodity to a consumer in exchange for money
or credit.
2. Acquisitions are the events that somehow a business employs to acquire the items or
resources necessary to achieve the company's goals, as well as they are a negative to cash
or receivable accounts as well as a crediting to the revenue connected accounts
throughout the sales data.
3. Money purchases resulting in such a debit throughout the financial statements as well as a
problem of financial. Unless the products were purchased on credit, the purchase will be
completed, the debit accrued income, as well as the reimbursements put into the chaining
accounts.
4. Accounts receivable were documentation that show that a firm has paid for the delivery
of the product to some other firm. The invoicing interchange is recorded in the merchant's
reporting as a cash debit balances to the prepayments.
5. Payment comprise transactions in which monies are sent to a firm that is getting funds in
exchange for goods or services. Persons are recorded in the company's accounting log,

allowing the transaction to be recorded as a sum received as well as a decrease from
accounts receivable.
Single entry bookkeeping
Single-entry accounting is unlikely to work for a business even if it is small, simple, and
has a low volume of transactions. It's typically similar to having your own private account. When
you use single-entry accountancy, you may keep track of things like money, income expenses,
and taxable income(Bishop, DeZoort and Hermanson, 2017).
Double entry bookkeeping
Many businesses, particularly start-ups, use double-entry accounting to maintain track of
their finances. The fact that each checkbook contains two sections yet expenditures are on
opposite sides is one of the hallmarks of double accounting system. The payment generates two
transfers: one deduction through one bank or each crediting from another (Ayres, Huang and
Myring, 2017).
Trial balance and its importance
The trial balance is really a spreadsheet where all accounting balances are incorporated
further into contactless payment component amounts, and the total is balanced. The business
used to make preparations trial balances on a regular basis, generally at the conclusion of each
financial month. The following are the doctoral programs of the financial statement:
Checking for reliability: This might indicate that the settlement agreement was being utilised
to validate the real figure gathered on the proper side of that equation ledger when transferring
data from many other sources like purchase records, written documents, cash books, and so on.
Aside from financial accounting considerations, the legitimacy of a specific economic industry
by improving.
Aids in the preparation of financial reports: The financial statements, capital structure, and
capital expenditures must all be revised at the conclusion of each financial reporting year. The
trial chapter also covers the total amount of all monies utilised to compile the accounting
statements, making financial facts simple to produce and comprehend.
Rectifying errors: The total deficit of both financial statements must match the total credit
including its financial statement. It is really a examination of the had therefore in the pamphlet. If
this isn't the case, the auditor will catch the mistake and correct it. Accounting professionals are
also happy when the overall debt balance as well as the overall amount owing are equal.

Adjustment assistance: During the verdict balance building process, adjustments programs
including such payroll costs, retention bonds, closure needs to share, and so on must be altered.
This helps make modifications that are only noticeable in the relevant accounting year. There at
conclusion of the fiscal year, companies typically throw out readjustment news pieces. When
people occurs, there really is no constraint on initiating new shift activities (Bolvar and et al,
2018).
Question 2
A journal entries is a form of financial entry that is used to record a business transaction in a
company's accounting records. A written request is normally recorded inside the accounting
information system; however, it can also be recorded inside a different fund, which would be
summed and inserted into the financial accounts. It creates financial statements and for
organisation using account balances. The overarching rules for a personal journal are that it must
include at least two spending programs but that the exact figure entered in the trail balance is
equivalent to the total attempted throughout the credit side.
Date Particulars Debit Credit
01-Jun Cash a/c Dr. 65000
To capital a/c 65000
(Being invest cash into
business)
02-Jun Purchase a/c Dr. 8000
To creditor a/c 8000
(Being purchase goods on
credit)
07-Jun Cash a/c Dr. 4000
To sales a/c 4000
(Being sell out inventory in
cash)
08-Jun Creditor a/c Dr. 4000
To Bank a/c 4000
(Being issue cheque for
purchase credit goods)

14-Jun Insurance a/c Dr. 75
To Bank a/c 75
(Being pay insurance amount
by cheque)
15-Jun Debtor a/c Dr. 12000
To Sales a/c 12000
(Being sell out inventory on
credit)
16-Jun Purchase a/c Dr. 10000
To Creditor a/c 10000
(Being purchase goods on
credit)
18-Jun Computer equipment a/c Dr. 3000
To Cash a/c 3000
(Being purchase computer
equipment)
20-Jun Rent a/c Dr. 150
To bank a/c 150
(Being paid rent by cheque)
21-Jun Cash a/c Dr. 10000
To sales a/c 10000
(Being sale inventory in cash)
25-Jun Cash a/c Dr. 100
To bank a/c 100
(Being withdraw amount from
bank)
30-Jun Stationary a/c Dr. 30

To cash a/c 30
(Being Purchase stationery into
cash)
Ledger Accounts:
An accounting ledger seems to be database as well as stock that is being used to show
records keeping papers throughout annual financial statements sheet operations. Monetary,
receivable accounts, deposits, inventory, accounts payables, cumulative expenditure, and known
as data are all examples of financial accounting notebook log entries (Brusca and et.al, 2016). In
the income statement, corporate accounting papers are created for certain types of payments.
Shareholders of assets including such cash or accounts receivable are included in financial
statement activities. Profits as well as expenditures are examples of financial statement activities.

Trial balance:
Trial balance
Particulars Dr. Cr.
Capital account 65,000
Cash account 76,070
Purchase account 18,000
Creditors 14,000
Sales 26,000
Bank overdraft 4,325
Insurance 75
Rent 150
Stationary 30
Debtor 12,000
Computer equipment 3,000
109,32 109,32

5 5
Question 3
The income report presents the results of financial reporting, which is a process of providing
primary contact employees the information required to make good decisions. The major
difference among financial statements and accounting is this. Financial reports are generated for
a given accounting period, which is generally a year. So because balance sheet may fluctuate
based on the records of the person or company, this accounting term is referred to as a 'fiscal
year.' It differs from a scheduled term (Gotti, 2016). Financial reports are also intended to offer
information about the company's financial status, cash flow, as well as operating
performance. The consumers of such remarks were aided in formulating appropriate decisions as
a result of this procedure. These assessments look for patterns in commodity usage, cash flow,
employee morale, as well as financial health. This enables merchants and people to make more
informed judgments about how the business must be run for better results.The terms "financial
report" as well as "financial statement" are used interchangeably but not interchangeably. The
notion of a "financial statement" is a basic notion that underpins many other types of reporting.
The revenue reports are one research that falls within the accounting records category. All
financial reports are accounting standards in several ways, although not all revenue accounts
seem to be best for company.
Requirement of financial reports and its users:
Organizations incur a price for attempting to report upon its capital gains, profit-making
profitability economic strategies, as per GAAPs. The next three primary financial reports,
comprising the income statements, balance sheet, and summary of cash flow, should be produced
in accordance with GAAP. Financial statement systems may be coupled with the present general
ledger, delivering robust and current integrated analytics, but without the high cost of upgrading
their GL or ERP. Holders might expect economic development after the company has established
the suitable long-term cooperation (Honggowati and et.al, 2017). While integrating data sources,
locations, and exchange rates, production, packaging, and marketing evaluations may be
completed with uniformity and dependability. The similar control guarantees that reports are
tailored to the subcommittee's as well as the SEC's requirements.

The revenues obtained by the business throughout the financial quarter should be addressed in
the interest expense, along with the associated operational expenditures. It includes both
operational and non-operating income, giving creditors as well as debtors the ability to set
profitability. Financial reports as well as losses statements are common terms used to describe it.
Similarly, the cost of borrowing and liabilities indicated in the financial report, as well as the
consequent cash flow, are represented in the balance sheet. Workers who seem to have a major
impact on the business outcomes of the company utilise this information. The following is a list
of everything:
 Management: The firm's productivity, adaptability, and capital expenditures should be
recognised on a regular basis so that commodity accountancy and strategic analyses may
be completed.
 Creditors: Because they are the company's proprietors and want to recognise their
money's growth, they will demand that financial reports be examined (Khoja, Chipulu
and Jayasekera, 2019).
 Competitors: Businesses might anticipate competitors to also have accessibility to their
banking records in order to assess their financial situation. Their dominating advantage
may change as a result of the expert information they learn.
 Customers: When deciding which manufacturer to hire for a major contract, the buyer
must first review his finance analysis to show the business's surplus funds to stay
profitable long enough to provide the activities or commodities required by the contract.
 Employees: A business might choose to begin giving financial statements towards its
employees, including a detailed description of the systems in place. It might be used to
build relationships with people and understanding of the market.
Question 4
Profit and loss account for the year ended 31st December 2017:
Profit and loss account
Particulars Amount Particulars amount
Opening stock 9,500 Sales 125,000
Purchase 75000 Less: Return (1000) 124,000
Less: Return (1500) 73,500 Closing stock 1,000
Wages and salaries 13,200

Gross profit 28,800
125,000 125,000
Rent and rates 1500 Gross profit 28,800
Add: Out. Rates 340 1,160 Interest received 1,000
Postage 900 Rent received - 4850
Insurance - 7500 Less: Advance rent -
490
4,360
Less: Prepaid insurance -
411
7,089
Bad debt write off 650
Net profit 24,361
34,160 34,160
Balance sheet:
Balance sheet
Liabilities amount Assets Amount
Capital – 120,800 Bank 10,594
Less: Drawings
5,150
Cash 340
Add: Net profit -
24361
140,011 Prepaid insurance 411
Provision for bad
debts
934 Advance rent 490
Debtor - 12500
Creditor 3,900 Less: Bad debt write off -
934
11,850
Outstanding rates 340 Motor van at WDV - 19600
Less: Dep - 5000 14,600
Loan 100,000
Closing stock 1,000
145,185 145,185

QUESTION 5
Calculation

QUESTION 6
Profit and Loss Account
Balance Sheet

QUESTION 7
Cash flow statement
Handling the amount of funds that enters the country out is amongst the most critical parts
of operating a company. In an ideal world, more money would be coming in than out, but it's not
always the case. They may have to pay employees and customers although waiting to get paid.
Whatever company scenario, showing a picture of what they're doing at any given time is
beneficial, and knowing how to construct a cash flow statement is the key. It offers a broad
picture of how revenue moves in and out of the company, allowing detecting and handling
patterns. Cash flow statements can be generated on a quarterly, weekly, or annual basis, or for
any other timeframe you see appropriate. Staying on top each month is important to most firms.
For example
Cash flow operating activities
Increase (decrease) in accounts receivable 25,000
Increase (decrease) in accounts payable (5,000)
Net cash flow from operating activities 20,000
Cash flow from investing activities

Purchase of land (20,000)
Sale of equipment 5,000
Net cash flow from investing activities (15,000)
Cash flow from financing activities
Dividends paid (3,000)
Increase in bank loans 0
Net cash flow from financing activities (3,000)
Net increase/decrease in cash 2,000
Cash at beginning of period 5,000
Cash at end of period 7,000
SCENARIO 2
Question 1
It is assumed that people are capable of recognising, clarifying, and accepting any
discrepancies seen between cash book as well as the amount upon on financial reports. All party
participants undertake to record the agreements seen between issuers as well as the banks
individually in their documents. These documents may be unsatisfied for a variety of reasons that
indicate varying balances. The goal of submitting a financial statement is to determine and
explain the reasons for the discrepancy in check financial accounts (Liang and Zhang, 2019).
Why does bank reconciliation necessary, and how do you do it?

Bank reconciliation processes are carried out quickly to examine the company's specific
financial documents. The difference between the 'Cash at Bank' value and the genuine balance
upon on line of credit is shown using basic accounting. Relationship papers of the same amount
of cash engaged in the economic transaction bank are held by both the business as well as the
bank. Some of the disparities stem from the fact because money transfers are documented,
although record players are not always well-versed. Money was also received via business
transactions that might be recorded but not yet recorded in bank documents, such as loan
amounts paid first from firm's checking account and also not informed by the business.
Another purpose for permitting BRSis to effectively recognize the amounts of money in
worker engagement. The sum of cash shown on the bank statement does not always correspond
to the level of dollars the company wants to pay. This might be because the banking system does
not recognise the verification charges that are not yet mentioned to the consumer. Recovery plan
is carried out by examining their personal financial records, which must be compared to their
normal bank statement in order to reconcile their capital reserves (Richard, 2015). Check every
transaction individually to ensure that now the totals are correct and to account for any
discrepancies that require further investigation. Certain companies can offer notice for cash book
to disclose the banks that are reconciled on a regular basis, and the approach could be as
organised or as informal as they like. If the organisation is incapable of performing work on a
regular basis, it could be on a more regular basis, through a yearly basis, or in any other way it
desires. It's crucial to define and test the ideal, as well as to determine whether it's the same or
not. People should have a rationale whenever they see a discrepancy or provide an explanation
for it in the same time.
Question 2
Explain control accounts:
The trial balance, also known as just an accounting system inside an accounting record,
explains and combines all connected financial data of a certain type. In other words, it's a season
accounting that's similar to the complete hierarchical accounting that's utilised to streamline
overall cash flow (Saud, Chen and Haseeb, 2020).
Accounting systems provide a variety of financial management.
 Responsibilities that are of direct benefit towards the firm and thus are mentioned
elsewhere:

 Establishes a method for redressing initial fault and fraud.
 Remove the Financial Accounting records that are disorganised.
 Large enterprises must have separate statutory employees for various regions.
 Instead of accounting system, the balance sheet forecasts provide a breakdown of the
average.
 Reduces the risk of fraud, despite the fact that the merchant services papers and the main
report were processed by distinct persons.
Question 3
Explain suspense account:
Suspense recorded in the general accounts in which a corporation maintains track of its
confusing statements and might even require further investigation to determine each person’s
personal sales process or role. Suspense fund is a type of account where an investment parks
their money for a period of time before using it for public purposes (Tahat and Alhadab, 2017).
Reasons of drafting suspense account:
This account might also be created if the proper reimbursement cannot be documented or
assessed at the moment the transaction became accepted. A few examples of this include when a
receiver sends a restricted payment, even whether they are unsure if the amount will be paid.
When payments instability is settled with the customer, the equilibrium due is moved from the
anticipated account to that same account connected.
Unless the corporation's trial balance remains out of sight, the mismatch will remain in the
anticipation account till the other discrepancy is resolved. The assumption payments would be
indicated on the balance sheet underneath the heading "Other counterparty assets" except if the
firm has realised and addressed the explanation for the discrepancy; nonetheless, the trial balance
would be associated regardless of the amount of experience.
Question 4
Updated cash book as at 28th February 2017:
Revised cash Book
Particulars Dr. Particular Cr.

Balance b/d 1,760 D.Park 270
Insurance against fire 170 Mr. Akram 105
Monthly bill 56 Bank Collection 325
Arif Paid 186
Bank Charges 25 Balance c/f 1497
2,197 2,197
Bank reconciliation statement as on 28th February 2017:
Particular Amount
Balance as per Bank 3,093
Add:
Bank Charges 25
Arif Paid 186
Monthly bill 56
Fire insurance 170
Less:
D.Park 270
Mr. Akram 105
Bank collection 325
Balance as per cash book 2,830
Explain the following terms:
Bank charges: These are the expenses as well as fees that the bank collects from its
customers. Fees are typically referred to it as charges for certain direct debits or authorized
activities that are handled on a regular basis.
Companies are offering the treasury the identification, and it is claimed that the money
was created. The conduct is deemed assassin creed until the bank refuses to pay the money to the

method of payment. In many other words, search disappointment occurs when a bank refuses to
provide the payment the checking account number (Werner, 2017). Direct debit is indeed the
fastest, least cost, and possibly most economical means of making recurring or periodic
payments, hence it is displayed in items such as municipal taxes and uses a number of money.
Direct Debit includes payment it back from your transactions once they are fully accounted for.
Many people provide permission by providing a direct debit required templates; this can be a
paper or an internet browser sending it over the internet.
Order of the day: In any organisation, a work contract which affects its employees may designate
the debit card as the cloud computing nutrition labels. A union participant's goal was to achieve
consistency in job demands as outlined in the laws. The bank's net income figure as well as the
business's finishing balance sheet are virtually always distinct whenever banks provide firms a
bank statement that includes the corporation's starting balance sheet, activities throughout the
quarter, as well as concluding cash balance. The following are some of the causes behind the
disparity:
Currency as well as cheques that were collected and documented by the firm however have not
even been registered on the balance sheet are referred to as "deposits pending route."
Inspections that were given by corporation to debtors but have still not been processed are
known as maintenance schedule.
Bank service costs: Banks extract fees from consumers' accounts for services rendered, though
these costs are often minimal. When a client deposits a cheque through a bank however the
cardholder's account does not have enough money to cover the check, the institution subtracts the
inspection from the client's account. The cheque is refunded to the debtor as a non-sufficient
funds check.
Many businesses now employ specialist accounting system for bank reconciliation to cut down
on the amount of effort and modifications necessary, as well as to enable real-time changes.
Question 5
Journal entries:
S. No Particulars Dr. Cr.
1 Goods purchase account 2000
To suspense 2000

2 Bank Account 670
To suspense 670
3 Sales 650
To G. Tahir 650
4 Electricity Bill 790
To Cash account 790
5 Expense account 500
To Motor vehicle 500
6 Sales accounts 270
To sales day book 270
7 L Samantha 190
To Discount receivable 190
Discount allowed 190
To L Samantha 190
8 D. Jones 384
To account receivable 384
Suspense account:
Suspense account
Particulars Amount Particulars Amount
By balance 1,612
By goods purchase 2,000
To balance (b.f) 4,282 By bank 670

4,282 4,282
CONCLUSION
Financial accounting is vital for firms to maintain their documents by recording each
business transaction, according to the findings of the study. Effective application of financial
reporting aids in the books of accounts and analysis for a variety of stakeholders that have relied
on them for strategic business decision-making.

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