Principles of Financial Accounting: A Comprehensive Guide

Principles of Financial Accounting
1

Contents
Introduction.................................................................................................................................................3
LO1.............................................................................................................................................................4
Define financial accounting.....................................................................................................................4
LO2.............................................................................................................................................................5
There are some regulations of the financial accounting explain it...........................................................5
LO3.............................................................................................................................................................7
Describes the accounting rules and the principles....................................................................................7
LO4.............................................................................................................................................................9
Explain the conventions and concepts relating to consistency and material disclosure...........................9
Client 1......................................................................................................................................................10
Client 2......................................................................................................................................................18
Client 3......................................................................................................................................................19
Client 4......................................................................................................................................................21
Client 5......................................................................................................................................................23
Client 6......................................................................................................................................................24
Conclusion.................................................................................................................................................26
Bibliography...............................................................................................................................................27
2

Introduction
The main aim of the report is to provide the explanation about the financial accounting with that
the various regulations which are used for the financial accounting are also highlighted. The
journal entries are performed with the reporting of those transactions in their respective accounts.
The profit and loss and the financial statements are prepared so that the financial position of the
organization can be examined. These transactions will provide the overall understanding of the
financial accounts in the report.
3

LO1
Define financial accounting.
Financial accounting is doing everything in the financial prospects of the company; it is a
process of preparing the financial statements of the company which includes the balance sheet,
profit and loss account and other final accounts (Kwok, 2017). This system of accounting is
different from the management accounting which includes the preparation of the financial reports
to help the insider managers.
A process of preparing the financial statements of the company, which help the insiders and
outsiders of the company like the stakeholders, clients, employees, investors and company in
large (Kwok, 2017). It used to prepare the balance sheet, profit and loss account and other
financial reports.
The accounting standards which govern this accounting is the GAAP and IFRS, the purpose of
this accounting is providing the outside people an understanding towards the financial reporting
of the company which is not available to them by management accounting (Narayanaswamy,
2017). The financial reporting consists of cash flow statements, profit and loss statements,
balance sheet other statements of retained earnings.
Thus, financial reporting is successful in providing the outsiders people the study of inner facts
or statements of finance that are useful in knowing the company final position. They also help in
maintain systematic records, ascertaining the true financial position, ascertaining the equity and
solvency ratios (Adkins, 2018).
4

LO2
There are some regulations of the financial accounting explain it.
The regulations are the bind set of rules that are formed by the govern authority recognized by
the board of finance (Kwok, 2017). The regulations in the context of the financial accounting are
developed rules and principles by the independent body with which all the financial statements
are prepared in the framework of these regulations (Epstein, 2018).
Image: Financial Accounting
Source: Ng Careers, 2018
The financial statements are prepared within the framework of GAAP a regulatory authority that
regulates the rules and regulations governing the financial statements (Kwok, 2017).
The Accounting standards board (ASB): this board is made to provide the principles and rules
to guide the financial standards; it has the power to issue its own accounting standards, it tries to
bring the uniformity and accuracy in the financial accounting (Narayanaswamy, 2017). It
consists of ten members of the board, the members of board are appointed by the nomination
committee which consists of the chairman and some directors of the (FRS) council. It is a
autonomous body in issuing the accounting standards (Kwok, 2017).
5

IASB (The international accounting standards board) it is formed in 2001 April an
autonomous body in London. It is sole in providing the UK based standards on the accounting it
consist of the IASC which also gives the international accounting standards.
Statement of principles; they govern the principles used by the ASB it provides the conceptual
framework to the standards. It provides the support to the policies and methods of the ASB it
works for the betterment of the ASB (Narayanaswamy, 2017).
Financial reporting and its examples: it consist of the cash flow statement, intangible assets,
tangible fixed assets, the objectives of the FRS is to provide a authentic framework to all the
transactions conducted by this reporting (Kwok, 2017).
6