Accounting Concepts and Principles Impacts on Data Base Accuracy

The provided report focuses on preparing different accounts while considering accounting concepts and principles to accurately measure the data base. It highlights various accounts such as journals, ledgers, trial balance, income statement, and balances for EPIC. The report also discusses accounting concepts like prudence and accrual in relation to recording financial transactions. It suggests that there must be an implication of accounting concepts in making proper analysis over the data base.

INTRODUCTION TO FINANCIAL
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTION 1..................................................................................................................................1
Journal entries:.............................................................................................................................1
QUESTION 2..................................................................................................................................6
Explaining the accruals and prudence concept in analysing the and identifying the outcomes.. 6
QUESTION 3..................................................................................................................................9
Determining the benefits of the computerised record keeping system........................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
To recording, summarizing and analysing the financial records of the business for evaluating
the performance by an organisation over a period which requires a financial accounting system.
Thus, the influences of such accounting techniques will benefit the firm in having appropriate
information regarding the income, expenses, assets and liabilities of a period. In the present
report, there will be analysis of various books of accounts through which the financial statements
will be developed. Along with this, there will be discussion based on accounting concepts which
are being used in the recording and transacting process.
QUESTION 1
Journal entries:
Particulars Amount (in £) Amount (in £)
Equipment a/c Dr 15000 15000To Cash a/c
Wages a/c Dr 1200 1200To O/S wages a/c
Rent a/c Dr 10120 10120To Cash
Wages a/c Dr 3000 3000To Cash
Bank a/c Dr 15000 15000To Loan a/c
Prepaid rent a/c Dr 800 800To Rent a/c
Depreciation a/c Dr 12000 12000To Equipment a/c
Sales Day Book
Sales day book
Date Customer Invoice No. Amount
(in £)
01-09-18 Balance B/d 289400
02-09-18 Cash sales 1 1200
03-09-18 Cash sales 2 1400
04-09-18 Cash sales 3 1500
05-09-18 Ben Plc 4 1800
06-09-18 Mark Plc 5 2000
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07-09-18 Taylor Plc 6 1600
08-09-18 Smith Plc 7 1500
09-09-18 Rose Plc 8 1250
10-09-18 Ben Plc 4 500
11-09-18 Mark Plc 5 600
12-09-18 Discount allowed 6 350
Total 300200
Sales return day book
Sales Returns Day Book
Date Customer Invoice No.
Amoun
t
(in £)
01-09-18 Balance B/d 1400
07-09-18 Taylor Plc 6 400
08-09-18 Smith Plc 7 600
Total 400
Purchase Day Book
Purchase Day Book
Date Customer Invoice No. Amount
(in £)
01-09-18 Opening balance 143300
02-09-18 Cash purchases 9 1200
03-09-18 Cash purchases 10 1800
04-09-18 Cash purchases 11 1500
05-09-18 Arina Plc 12 890
06-09-18 Shubhash Plc 13 1250
07-09-18 Anna Plc 14 860
08-09-18 Boat Plc 15 970
09-09-18 Den Plc 16 1400
10-09-18 Arina Plc 12 300
11-09-18 Shubhash Plc 13 250
12-09-18 Discount Received 15 150
Total 152470
Purchase Return day book
Purchase return day
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book
Date Customer Invoice No. Amount
(in £)
Opening balance 7600
08-09-18 Boat Plc 15 400
09-09-18 Den Plc 16 100
Total 8100
Cash receipts book
Cash receipt account
Date Customer Invoice No. Amount
(in £)
Loan 15000
02-09-18 Cash sales 1 1200
03-09-18 Cash sales 2 1400
04-09-18 Cash sales 3 1500
Cash Payment book
Date Customer Invoice No. Amount
(in £)
Rent 10120
Equipment purchased 15000
Wages 3000
Doubtful debts 168
30-Sep Depreciation 12000
02-09-18 Cash purchases 9 1200
03-09-18 Cash purchases 10 1800
04-09-18 Cash purchases 11 1500
Trial balance:
Trial balance of Epic at 30 September 2018
Particulars Debit (in £) Credit (in £)
Sales 300200
Purchase 152470
Carriage inwards 400
Returns outwards 8100
Wages 55400
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Rent 44620
Electricity 26100
Inventory 57000
Loans 15000
Trade receivables 52600
Allowances for receivables 600
Trade payables 34430
Equipment’s 205000
Depreciation on equipment’s 61000
Bank 42000
Drawing 15000
Capital 196400
Income statement:
Income statement of Epic at 30 September 2018
Particulars Details (in £) Amount (in £)
Sales revenue 300200
Less: COGS 154770
Opening inventory 51600
Add: Purchase 152470
Less: carriage inwards 400
Add: Return outwards 8100
Less: Closing stock 57000
Gross Profit 145430
Operating expenses
Wages expenses 3000
Rent expenses 10120
Electricity expenses 26100
Depreciation on equipment 12000
Total operating expenses 51220
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Total Profit 94210
Statement of financial position:
Epic’s Statement of financial position at 30 September 2018
Particulars Amount (in £) Amount (in £)
Assets
Current assets
Inventory
Opening inventory 51600
Add: Purchase 152470
Less: carriage inwards 400
Add: Return outwards 8100
Less: Closing stock 57000 154770
Trade receivables 52600
Less: Allowances for trade
receivables 600 52000
Bank 42000
Total current assets 248770
Non-current assets
Equipment 205000
Less: Depreciation 61000 144000
Total non-current assets 144000
Total Assets 392770
Liabilities
Current liabilities
Trade payables 34430
Total current liabilities 34430
Non-current liabilities
Loans 15000
Long term loan 196370
Total long-term liabilities 211370
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Shareholders’ equity
Capital 196400
Less: Drawings 15000 181400
Total Liabilities and
shareholders’ equity 392770
QUESTION 2
Explaining the accruals and prudence concept in analysing the and identifying the outcomes.
The impacts of accounting concepts and principles are in terms of making adequate analysis
over the data base. Thus, these are the funnelling tools which helps accounting professionals in
recoding the transactions as well as making appropriate ascertainment of the errors (Magnan and
Parbonetti, 2018). Therefore, influences of several principles are required to make fruitful
disclosure of the data base which will bring the clear anastasis over the financial position of
EPIC. Along with this, the disclosure made by auditors will be accurate and easily
understandable by the individual and corporation.
There will be communication of valid and reliable information among the internal as well as
external parties which benefits them in decision making. Investors usually seeks for the
profitability and efficiency of the business in terms of meeting the targets and achieving the
goals at the right time (Mair and Mathis, 2018). On the other side, the information which have
been used by the internal parties are basically used for future operational plans and decision
making. Moreover, the importance of two concepts in formulating the financial statements and
recording of the transaction can be defined such as:
Prudence Concept:
In this concept there have been estimation made over the amount of revenue. Thus, it is
comparatively forecasted more than the limits. Along with this, the expenses in the data base
have been determined less or undervalued (The prudence Concept, 2018). Thus, in favour of this
analysis on which it can eb said that, EPIC and the professionals denote that the revenue of the
firm will be expand in the upcoming period (Naqvi, Mehta and Sharma, 2018). To denote the
rise in the level of gains to the organisation which will fair but underestimating the expenses is
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not a best way to forecast the business performance. Thus, the costs and expenses incurred in the
business are the uncertain things which is generally being large and will affect the profit motives
in the industry.
On the other side, as per considering the conservativeness for recording the amount of
assets and liabilities on is need to be more conscious. In this concept, there is also estimation of
assets is comparatively higher than the amount of liabilities in the business. It approaches that the
short term as well as long term liabilities in the firm are on favourable state (Campbell, Khan and
Pierce, 2018). there have been demerits of this concept is that one cannot imagine the growth of
EPIC all the time. There will be downfalls and losses too so, for the long-term planning and
development on which this technique is not reliable. Thus, the estimation for revenue and assets
have been determined favourable for the organisation but for liabilities and expenses it
demonstrates the probability of the outcomes.
Accrual Concept:
In analysing the concept behind this method which have been presented by the GAAP with a
motive to make appropriate ascertainment of the transaction recorded in each book. Thus, every
transaction has two entries such as debit or a credit (Muda and et.al., 2017). The proper record of
such transaction in the relevant accounts which will be helpful and appropriate for the accounting
professionals in clearly analysing the operational aspects of EPIC. Therefore, accrual concept is s
based on the method which have been implicated by the accounting professionals such as all the
income and expenses of the year are required to be recognized in accounting period which relates
it with the cash basis.
The main purpose of this accounting concept is based on presenting the cash flow statement.
Thus, the cash flows have been prepared by the accounting professionals with considering the
amount of sales by EPIC in a period as well as expenses incurred by them with the same aspect
(Givoly, Hayn and Katz, 2017). Thus, it is necessary that all the transaction which are being
recorded in books must be belongs to a particular year or period (Accrual Concept, 2013). Thus,
it cannot undertake any estimation on revenue and expenses. Therefore, the prepaid income is
not being recorded in the income earned for a period.
Similarly, as per considering expenses which are required to be recorded in an accounting
period or the time of their occurrence. Costs incurred in any transaction will not have any dual
entries and incurrence of the transactions (Zeff, 2018). Therefore, the transaction fort expenses
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are needed to be recorded after the completed and occurrence of such activity. Thus, due to such
influences there will not be records of any accrued expenses in the books.
As considering the main motive and purpose of this accounting concept on which it states
that the accounting expenses are required to be matched with the revenue retained by the
business in an accounting period (Ng and et.al., 2017). Therefore, the accurate concept has
similarities with the matching concept which have been used by the business professionals.
Therefore, application of such concepts in the accounting techniques and activities which have
been performed by the business professionals on which determination of such factors will be
adequate in developing the fruitful analysis over the revenue and expenses incurred in a year.
Applicating such concepts will help in judging the financial stability and performance of the
organisation with respect to make appropriate analysis overs the data base (Trottier and Gordon,
2017).
It can be said that, analysing the growth and profitability of an industry on which proper
estimation and analysing of the data base plays main role in addressing the issues and keeping
the favourable determination of the performance (Magnan and Parbonetti, 2018). Along with
this, there can be rise in the level of operational practices as the actual and reliability information
must be considered by the accounting professional (Naqvi, Mehta and Sharma, 2018). It will
help them and enable them in decision making process. The planning for future gains will
become easy and conveyancing.
The planning for budgeting, forecasting the sales or expenses will has to be based on
collection of accurate information which can be useful to make appropriate analysis over the
efficiency of business in making operational efforts. For the long-term planning and control over
costs will be effective and administered as the planning and procedure of recording the
accounting transaction are to be correct and accurate.
QUESTION 3
Determining the benefits of the computerised record keeping system
To retain growth and development for the long term and ongoing operations of the business
it is necessary to keep updating the operational aspects of the firm (Mair and Mathis, 2018).
Thus, recording the accounting transaction in computer devices as well as auditing the
transaction which will be helpful in uplifting the level of operational practices. Therefore, if the
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professionals of EPIC implicate the use of such techniques which will be helpful in addressing
the issues and keeping the favourable records of all the transactions.
There are several benefits of bringing the digital influences in the accounting and auditing
procedure (Naqvi, Mehta and Sharma, 2018). It will help the organisation in making periodical
audit of all accounts. The level of accuracy will be higher as well as there will be utilisation of
less time and efforts in keeping the records of the transactions. Along with this, there will be
appropriate analysis overs the financial position and stability of the business. The information
relevant profitability and taxes paid by the corporation will easily be analysed and discussed by
professionals (Campbell, Khan and Pierce, 2018). There will be less chances of having any
manipulation and errors in calculating the brand value as well as profitability of the firm.
Therefore, there are several benefits to EPIC, as their activities recorded in the computerized
recording system such as:
 There will be records of the details relevant with the salaries to the workers, income
expenses, assets and stock value of the firm.
 It consists the less requirements for storage space and the system is efficiency in keeping
all relevant financial details of EPIC.
 It records the transaction only when there will be rise in the number of invoices for sales
not for an individual rising the gains (Muda and et.al., 2017). Thus, the revenue will be
measured only when the number of invoices incurred in the transaction which will help in
reducing the risk of manipulations.
 It eases the ways of recording the details relevant with the order, debtor, creditors,
invoices, preparation of financial statements and making inventory reports (Givoly, Hayn
and Katz, 2017). Therefore, the time and efforts utilised to analyse the financial
consideration will be shorter as this technique is being used on daily basis.
 The influences of the digital techniques which will be helpful in tallying the amount in
expenses and income which are the main beneficiary function have been used in the
reporting techniques (Zeff, 2018).
 There will be reduction in the manipulation made by the individual of corporation with
respect to make legal transaction and payment to the taxes (Ng and et.al., 2017). Thus,
there will be strictness towards following all the legal terms, laws and regulations
imposed by the government with respect to taxation system.
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 There will be no chances of having any theft, fire and accidents in lossing the data as the
cloud storage and website of the organisation which keeps the daily records will be
fruitful in saving the details (Trottier and Gordon, 2017). Therefore, it is safe for an
organisation in keeping the accurate records of the transactions which will be attentive
and adequate as per meeting the financial goals at the right time.
 Auditors and accounting professionals can operate the accounts and make transactional
entries at anywhere or anytime which have become convenient to them in proceeding the
work in a favourable manner.
 It becomes easy to keep the historical data of the organisation which will enables the
internal as well as external parties in analysing the growth and profitability of the firm
through determining the past records (Magnan and Parbonetti, 2018).
 Implication of cloud system will benefit the firm in making appropriate analysis over
transactional requirements and management of operational gains top the business.
 In operational activities of the firm, there will be proper records of the employee shift and
job efforts made by them in attaining the targets which will be fruitful in analysing their
payoff and incentives (Naqvi, Mehta and Sharma, 2018).
CONCLUSION
On the basis of above report, it can be said that, preparing of various accounts with
considering the accounting concepts and principles have impacts on measuring the data base
accurately. This report, have highlighted various accounts such as journals, ledgers, trail balance,
income statement and balances for EPIC. Further, there had been discussion based on accounting
concepts such as prudence and accrual in respect with recording the financial transaction. Thus,
Epic have been suggested that there must be implication of accounting concepts in making
proper analysis over the data base.
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REFERENCES
Books and Journals
Campbell, J. L., Khan, U. and Pierce, S., 2018. The effect of mandatory disclosure on market
inefficiencies: Evidence from Statement of Financial Accounting Standard Number
161. Columbia Business School Research Paper, (17-94).
Givoly, D., Hayn, C. and Katz, S., 2017. The changing relevance of accounting information to
debt holders over time. Review of Accounting Studies. 22(1). pp.64-108.
Magnan, M. and Parbonetti, A., 2018. Fair value accounting: a standard-setting perspective.
In The Routledge Companion to Fair Value in Accounting (pp. 59-73). Routledge.
Mair, A. and Mathis, A., 2018. Completeness of handwritten preanaesthetic records at two
veterinary referral institutions.Veterinary anaesthesia and analgesia. 45(2). pp.129-134.
Muda, I. and et.al., 2017. THE INFLUENCE OF HUMAN RESOURCES COMPETENCY
AND THE USE OF INFORMATION TECHNOLOGY ON THE QUALITY OF
LOCAL GOVERNMENT FINANCIAL REPORT WITH REGIONAL ACCOUNTING
SYSTEM AS AN INTERVENING. Journal of Theoretical & Applied Information
Technology. 95(20).
Naqvi, S. M. H., Mehta, S. C. and Sharma, A. D., 2018. Novel Methods and Regulation on
Electronic Data Collection in Clinical Trials. Journal of Clinical & Diagnostic
Research.12(3).
Ng, Y. H. and et.al., 2017. Factors influencing accounting students’ career paths. Journal of
Management Development. 36(3). pp.319-329.
Trottier, K. and Gordon, I. M., 2017. Agency theory: applications in Behavioural Accounting
Research. In The Routledge Companion to Behavioural Accounting Research (pp. 121-
130). Routledge.
Zeff, S. A., 2018. My Accounting Theory Seminar. Accounting Historians Journal. 45(1).
pp.135-140.
Online
Accrual Concept. 2013. [Online]. Available through :<
https://accountingexplained.com/financial/principles/accrual >.
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The prudence Concept. 2018. [Online]. Available through :<
https://www.accountingtools.com/articles/what-is-the-prudence-concept-in-
accounting.html >.
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