Unit 10 - Financial Accounting

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Unit 10 - Financial Accounting
Table of ContentsINTRODUCTION................................................................................................................................3MAIN BODY......................................................................................................................................3Question 1 & 2. Preparing the final accounts from the given trial balance for sole-traders,partnerships and limited companies............................................................................................3Question 3. Defining essential features of each Financial account statement & differencesbetween them in terms of purpose, structure and content.........................................................10Question 4. Defining the process of bank reconciliation statement and its usage in checkinggeneral accounts and balance sheets.........................................................................................13Question 5. Explaining reconciliation of control account and suspense account....................15CONCLUSION..................................................................................................................................16REFERENCES...................................................................................................................................17
INTRODUCTIONThe term financial accounting is defined as a process of monitoring and tracking financial as well asaccounting transactions of the business for a specific time period. It is very much essential for everybusiness organization to follow proper and accurate financial guidelines, principles and standards atthe time of preparation of final accounts of the company. Financial accounting will helpstakeholders and shareholders in having full knowledge of business transactions as taking place inthe company during an accounting year which indirectly helps them in their decision makingprocess. By following proper guidelines and norms related to accounting and financial transactionsduring recording, summarizing and presenting in financial statements, it will provide deep insightabout companies financial performance. The present will define manner in which final accounts forsole trader, limited and partnership business is prepared with the help of Trial balance in accordancewith appropriate principles, conventions and standards. Also, report will contain bank reconciliationprocess to ensure company and bank records are correct. Further, process related to the preparationof bank reconciliation will be defined. Also, explanation will be made in context of process taken toreconcile control accounts and clear suspense accounts.MAIN BODYQuestion 1 & 2. Preparing the final accounts from the given trial balance for sole-traders,partnerships and limited companies.Final accounts of the company is also known as the Financial statement which is preparedfor an accounting year as per the accounting standards and norms. It depicts the overview ofcompany's financial position along with financial transactions taken place in the business for aspecific time period. It should contain all the material disclosure which can have influencing impacton the decision making process of its investors and other stakeholders. Financial accounts basicallyincludes an Income statement, Balance sheet etc.1. Sole traders– Is a type of business organisation which is owned and formed by a single personwho runs its business operations as per own beliefs and decision. All the revenue made and lossincur are kept and bear by the owner himself. Owner is only personally liable for business liabilitiesas due on part of business firm.Final account of Sole traderIncome statement for the year ended 31stApril 2019 ofGreg PalmerDrCrParticularsAmount (£)ParticularsAmount (£)
Opening inventory160000Sales1400000Add: Purchases840000Less: Salesreturns0Less: Purchasereturns0Less: Closinginventory1000001400000Cost of sales900000Gross profit500000Expenses:Gross profit c/f500000Wages and salaries460000Heat and light80000Sundry expenses126000Depreciation96000Gas payment8000Net loss270000Net loss770000Net loss770000Statement of financial position at the year ended 31stApril 2019 of Greg PalmerParticularsAmount (£)Amount (£)Non current AssetsFixtures and fittings384000384000Current AssetsTrade receivables160000Inventory100000Prepaid expenses44000304000Total Assets688000Current liabilitiesBank overdraft8000080000Non current liabilitiesOutstanding Wages20000Gas paymentoutstanding800028000Capital960000Less: Drawing110000Less: Net loss270000580000Total Liabilities6880001.Depreciation onAmount (£)
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