Accounting Fundamentals: Preparing Financial Statements and Analysis

This assignment comprehensively covers accounting fundamentals through the preparation of financial statements for various firms. It begins with journal entries and the creation of ledgers, trial balances, profit and loss accounts, and balance sheets for three different companies: Maxim, Pendo, and Mafuta. The assignment details the recording of transactions, including cash transactions, purchases, sales, and expenses. It also includes the preparation of profit and loss accounts and balance sheets to assess financial performance and position. Furthermore, the report contrasts capital and revenue expenditures in accordance with International Accounting Standards, providing a detailed understanding of accounting principles and practices.

ACCOUNTING
FUNDAMENTALS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................4
TASK 3............................................................................................................................................7
TASK 4..........................................................................................................................................12
TASK 5..........................................................................................................................................16
Difference between revenue and capital Expenditure...............................................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19
What is a capital expenditure versus a revenue expenditure?.2019. [Online].
Available:<https://www.accountingcoach.com/blog/capital-expenditure-revenue-expenditure> 19

INTRODUCTION
Accounting fundamentals include the recording, classifying, summarizing, analyzing and
interpreting the results in significant manner as provided by the accounting standards. All the
transactions and the events in terms of the money are recorded in the accounting. The results
interpreted are then communicated to the internal and the external users of the organization in
the form of the financial statements. The present report is based on the preparation of the
financial statement for various firms. Furthermore, the report throws deep insights towards the
contrast between the capital and the revenue expenditures in accordance with the International
Accounting Standards.
TASK 1
Maxim statements
Journal for the year
ended
Date Particulars Debit Credit
05/04/18 Cash a/c Dr. £300.00
To capital a/c £300.00
07/04/18 Purchase a/c Dr. £200.00
To cash a/c £200.00
08/04/18 Cash a/c Dr. £250.00
To Tatiana £250.00
15/04/18 Motor van a/c Dr. £150.00
To cash a/c £150.00
20/04/18 Cash a/c Dr. £350.00
To sales a/c £350.00
28/04/18 Rent a/c Dr. £50.00
To cash a/c £50.00
29/04/18 Tatiana a/c Dr. £200.00
To cash a/c £200.00
30/04/18 Drawings a/c Dr. £60.00
1

To cash a/c £60.00
£1,560.00 £1,560.00
Ledger
(Dr.) Cash a/c (Cr.)
Date Particulars Amount Date Particulars Amount
05/04/18 To capital a/c £300.00 07/04/18
By purchase
a/c £200.00
08/04/18 To Tatiana £250.00 15/04/18
By motor van
a/c £150.00
20/04/18 To sales a/c £350.00 28/04/18 By rent a/c £50.00
29/04/18 By tatiana a/c £200.00
30/04/18
By drawings
a/c £60.00
30/04/18 By closing Bal. £240.00
£900.00 £900.00
(Dr.) Capital a/c (Cr.)
Date Particulars Amount Date Particulars Amount
05/04/18 By cash a/c £300.00
30/04/18 To closing Bal. £300.00
£300.00 £300.00
(Dr.)
Purchase a/c
Dr. (Cr.)
Date Particulars Amount Date Particulars Amount
07/04/18 To cash a/c £200.00
30/04/18 By closing bal. £200.00
£200.00 £200.00
2

(Dr.) Tatiana a/c (Cr.)
Date Particulars Amount Date Particulars Amount
29/04/18 To cash a/c £200.00 08/04/18 By cash a/c £250.00
30/04/18
To Closing
Bal. £50.00
£250.00 £250.00
(Dr.)
Motor van a/c
Dr. (Cr.)
Date Particulars Amount Date Particulars Amount
15/04/18 To cash a/c £150.00
30/04/18 By closing Bal. £150.00
£150.00 £150.00
(Dr.) Sales a/c (Cr.)
Date Particulars Amount Date Particulars Amount
20/04/18 By cash a/c £350.00
30/04/18 To closing bal. £350.00
£350.00 £350.00
(Dr.) Rent a/c (Cr.)
Date Particulars Amount Date Particulars Amount
28/04/18 To cash a/c £50.00
30/04/18 By closing Bal. £50.00
£50.00 £50.00
3

(Dr.) Drawing a/c (Cr.)
Date Particulars Date Particulars Amount
30/04/18 To cash a/c £60.00
30/04/18 By closing Bal. £60.00
£60.00 £60.00
Trial balance
Particulars Debit Credit
Cash £240.00
Capital £300.00
Purchase £200.00
Sales £350.00
Tatiana £50.00
Drawings £60.00
Rent £50.00
Motor van £150.00
£700.00 £700.00
Profit and Loss a/c
Particulars Amount Total amount
Sales £350.00
cost of goods sold 100
Gross profit £250.00
Expenses £50.00
Net Profit £200.00
Balance sheet
4

Particulars Amount Total amount
Liabilities
Capital £300.00
Add: Profit £200.00
Less:drawings £60.00
£440.00
Current liabilities
Tatiana £50.00 £50.00
Total liabilities £490.00
Assets
Fixed assets £150.00
Current assets
Cash in hand £240.00
Closing stock £100.00 £340.00
Total assets £490.00
TASK 2
Pendo financial statements
Pendo
Journal entries
Particulars Debit Credit
Cash a/c Dr. £5,000.00
To capital a/c £5,000.00
Motor van a/c Dr. £600.00
To cash a/c £600.00
Purchase a/c Dr. £1,300.00
To cash a/c £1,300.00
Cash a/c Dr. £1,000.00
To Sergei a/c £1,000.00
5

Expense a/c Dr. £200.00
To cash a/c £200.00
Cash a/c Dr. £300.00
TO Sales a/c £300.00
Cash a/c Dr. £500.00
TO Sales a/c £500.00
Storage Expense A/c Dr. £150.00
To cash a/c £150.00
Sergei a/c Dr. £350.00
To cash a/c £350.00
Drawings a/c Dr. £175.00
To cash a/c £175.00
£9,575.00 £9,575.00
Ledger a/c
Cash A/c (Cr.)
Particulars Amount Date Particulars Amount
To capital a/c £5,000.00 02/01/18 By Motor van a/c £600.00
To Sergei a/c £1,000.00 03/01/18 By purchase a/c £1,300.00
TO Sales a/c £300.00 10/01/18 By Expense a/c £200.00
TO Sales a/c £500.00 24/01/18
By storage
Expenses a/c £150.00
27/01/18 By Sergei a/c £350.00
30/01/18 By drawings a/c £175.00
30/01/18 By Closing Bal. £4,025.00
£6,800.00 £6,800.00
Capital a/c (Cr.)
Particulars Amount Date Particulars Amount
6

01/01/18 By cash a/c £5,000.00
To Closing bal. £5,000.00
£5,000.00 £5,000.00
Motor van a/c (Cr.)
Particulars Amount Date Particulars Amount
To cash a/c £600.00
30/01/18 By Closing Bal. £600.00
£600.00 £600.00
Purchase a/c (Cr.)
Particulars Amount Date Particulars Amount
To cash a/c £1,300.00
30/01/18 By closing Bal. £1,300.00
£1,300.00 £1,300.00
Sergei a/c (Cr.)
Particulars Amount Date Particulars Amount
04/01/18 By cash a/c £1,000.00
To cash a/c £350.00
To closing bal. £650.00
£1,000.00 £1,000.00
Expense a/c (Cr.)
Particulars Amount Date Particulars Amount
To cash a/c £200.00
To cash a/c £150.00
30/01/18 By Closing Bal. £350.00
7

£350.00 £350.00
Sales a/c (Cr.)
Particulars Amount Date Particulars Amount
13/01/18 By cash a/c £300.00
20/01/18 By cash a/c £500.00
To closing bal. £800.00
£800.00 £800.00
Drawings a/c (Cr.)
Particulars Amount Date Particulars Amount
To cash a/c £175.00
30/01/18 By Closing Bal. £175.00
£175.00 £175.00
Trial balance
Particulars Debit Credit
Cash £4,025.00
Capital £5,000.00
Motor van £600.00
Purchases £1,300.00
Sergei £650.00
Expense £350.00
Sales £800.00
Drawings £175.00
£6,450.00 £6,450.00
8

Profit and loss a/c
Particulars Amount Total amount
Sales £800.00
Cost of goods sold £500.00
Gross profit £300.00
Less:Expenses £350.00
Net Profit -£50.00
Balance sheet
Particulars Amount Total amount
Liabilities
capital £5,000.00
add:profits -£50.00
less:drawings £175.00
£4,775.00
Current liabilities
Sergei £650.00
Total liabilities £5,425.00
Assets
Fixed assets
Motor van £600.00
£600.00
Current assets
Cash in hand £4,025.00
Closing stock £800.00
£4,825.00
Total assets £5,425.00
9

TASK 3
Mafuta
Journal entries
Date Particulars Debit (£) Credit(£)
02/01/18 Harvey a/c Dr. 124
To Sales a/c 124
05/01/18 Wages a/c Dr. 12
To cash a/c 12
Purchase a/c Dr. 150
To Rich a/c 150
07/01/18 Cash a/c Dr. 18
To smith a/c 18
09/01/18 Max a/c Dr. 21
To cash a/c 21
11/01/18 Cash a/c Dr. 64
To Sales a/c 64
14/01/18 Wages a/c Dr. 14
To cash a/c 14
Purchase a/c Dr. 75
To cash a/c 75
15/01/18 Rich a/c Dr. 162
To cash a/c 162
20/01/18 Office desk a/c Dr. 32
To cash a/c 32
21/01/18 Wages a/c Dr. 17
To cash a/c 17
Cash a/c Dr. 110
To Sales a/c 110
23/01/18 Office expenses a/c Dr. 3
To cash a/c 3
10