(PDF) Financial Accounting Principles
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Added on 2020-12-24
(PDF) Financial Accounting Principles
Added on 2020-12-24
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FINANCIAL ACCOUNTINGPRINCIPLES
Table of ContentsINTRODUCTION...........................................................................................................................1BUSINESS REORT........................................................................................................................11. Defining financial accounting.................................................................................................12. Regulations related to financial accounting............................................................................23. Accounting rules and principles..............................................................................................44. The conventions and concepts relating to consistency and material disclosure.....................5CLIENT 1........................................................................................................................................6CLIENT 2........................................................................................................................................9a) Profit and loss statement ........................................................................................................9b) Financial position statement.................................................................................................10CLIENT 3......................................................................................................................................11a) Profit and loss of Raintree Ltd..............................................................................................11b) Financial position statement of Raintree Ltd........................................................................11c) Accounting concepts.............................................................................................................12d) Purpose of depreciation in formulating accounting statements............................................12CLIENT 4......................................................................................................................................13a) Bank reconciliation Statement..............................................................................................13b) cash book..............................................................................................................................14CLIENT 5......................................................................................................................................15a) Sales ledger control account and purchase ledger control account.......................................15b) Importance of control account..............................................................................................15CLIENT 6......................................................................................................................................16a) Suspense account and main features.....................................................................................16b) Trial balance (£)....................................................................................................................16(c) Reconcile suspense account.................................................................................................16d) Difference between clearing accounts and suspense accounts.............................................16CONCLUSION..............................................................................................................................17REFERENCES..............................................................................................................................18
INTRODUCTIONAccounting and management are the key requirement of business and organisations.There are type of strategies and plans are made in terms of maintaining financial ethicalness andconsistency. Accounting principles and concepts frame the structure of keeping records anddetails in organised manner. Financial accounting rules, legislations and standards assistmanagers and accountants to operate the business and functions according to rules andlegislations (Edwards, 2013).There is a business report prepared which defines the meaning of financial accounting,regulations related to financial accounting. There are rules and principles defined subject tomaintain financial ethicalness and discipline are defined in this context. Conventions andconsistency which remain related to consistency and material disclosure are also defined in thiscontext. Practical evaluation done subject to book-keeping system, trial balance, accountingrules, retaining of transactions and information in books of accounts elaborated in this context.Analysis of financial information by using various data are reconciled and operated in financialaccounting.BUSINESS REORT1. Defining financial accountingFinancial accountingFinancial management and accounting is one of the important branch of managementaccounting which assist managers and accountants to keep financial records and information insystematic manner. There are guidelines, legislations and rules made subject to financialaccounting. These rules are followed by organisations to present financial reports and publishrelevant information for stockholders, shareholders and owners of organisation. Mainly financialaccounting is used to maintain the financial records and information in effective manner andpresent these reports to managers and stakeholders of organisation. These statements are mainlyassociated with external and internal environment of business (Hatfield, 2014).Financial accounting is also considered as a language of organisation whichcommunicates the organisational aim and objectives in financial terms and provides aninformation related to economic and financial information for outside parties as shareholders andcreditors. Financial accountants and chartered are hired by the business to maintain and analyse1
the essential aspect in terms of business and operations. There are type of financial statementsare prepared by organisations which present the information related to financial performance andanalyse the financial health of business.Cash flow statement: this is the statement which present the information related toconsumption of cash during the year. This statement mainly contains the information ofutilization of cash in in various activities such as cash flow from operating activities, cash flowfrom investing activities and cash flow from financing activities. Overall cash inflows andoutflows information are presented in this statements. With the help of this statements managersand accountants be able to make strategies and plans for arrangement of cash (Songini, Gnan andMalmi, 2013).Income and expenditure statement: this is the statement which defines the profitabilityof organisation. This statement covers all the revenue expenditure and income to evaluate theprofit and loss for the year. All the expenses are recorded in the debit side of statement and allthe income and revenues are recorded in credit side. Excess over expenditure is considered as aprofit and excess over income indicates loss. Evaluation of income statement helps mangers andaccountants to make profit strategies and plans. Financial position statement: this statement mainly associated with identifying the totalassets and liabilities of organisation. This statement present the clear picture of financial positionof organisation to stakeholders, investors, financiers and directors. Current assets, fixed assets,current liabilities, share capital (Equity and preference), non current and current liabilities are theelements which are considered in this statement. To generate financial help and funds, there arestrategies and plans are prepared by mangers of association.Change in equity statement: this statement mainly associated with analysing thevariations in equity and share capital of organisation. There is a statement prepared whichcontains equity share capital, shares issued during the year, sum of reserves and surplus,securities premiums and profit. With the help of this statement managers be able to identify thedifference and variations done during the year subject to equity (Zeff, van der Wel andCamfferman, 2016). 2. Regulations related to financial accountingRules, regulation and legislations helps to maintain and control the accounting records inmore effective and efficient manner. To get accurate information and results managers and2
accountants adopt financial rules and legislations. By adhering financial rules and regulationsorganisation be able to maintain its financial information and details in systematic way. Financialaccounting is a process which starts form gathering information, collecting financial data andkeeping the records for making financial plans and strategies. It is very important for thebusiness to present the financial information accurately and as per the legal structure.IASB (International Accounting Standards Board)IASB was formed in April 2001 which is one of the independent accounting standardboard produces rules and regulations related to financial accounting. There is a committeeoperates the IASB and keep align with making financial plans and strategies for bettermanagement and operations. There are two main bodies as the trustees and the IASB works uponfinancial accounting standards. Financial reporting standards and Standard Advisory councilworks together to produce financial rules and regulations.FRSFinancial Reporting standards and the quality management are the essential aspect interms of making the financial rules and regulations for better evaluation and management offinance department. FRS 1 mainly associated with handling cash flows, operating activities,taxation treatment, return on investments and producing finance, acquisition and disposals,equity dividends and management are considered in this context (Aletkin, 2014). FRS 3 provides rules and regulations related to present the financial performance in termsof profit and loss of organisation. Financial performance of organisation is evaluated on the basisof following components under FRS 3;Outcomes of regular operations containing acquisitionOutcomes subject to discontinued operationsRevenues and losses on the sale or termination of an operation, costs of a fundamentalreorganisation or reconstructing, profitability and losses on the disposal of non currentassetsRecords of extraordinary items and transactions. There are also some financial reporting standards made which are adopted by organisationswhich are as followsFRS 10 which is related to treatment of goodwill and intangible assets. 3
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