Financial Accounting Report: Zync Solutions and Practical Cases

This comprehensive financial accounting report provides a detailed overview of accounting principles and practices. It begins with an introduction to financial accounting and its purposes, followed by an exploration of accounting rules, including personal, nominal, and real accounts. The report delves into key accounting principles such as the dual aspect concept, cost principle, and matching principle. It also discusses the conventions and concepts relating to consistency and material disclosure. The report then presents practical scenarios involving various clients, including journal entries, ledger accounts, trial balances, and financial statements like profit and loss accounts and balance sheets. It covers topics such as bank reconciliation and suspense accounts, providing examples and explanations. The report concludes with a summary of the key findings and references.

Financial Accounting

Table of Contents
INTRODUCION..............................................................................................................................4
BUSINESS REPORT ....................................................................................................................4
1. Financial accounting and its purposes................................................................................4
3. Accounting rules and principles.........................................................................................6
4. The conventions and the concepts relating to consistency and the material disclosure.....7
CLIENT 1........................................................................................................................................7
(a) Journal Entry in the books of David Study......................................................................7
(b) Ledger Accounts.............................................................................................................11
(c) Trial Balance as at 31st January, 2018............................................................................18
CLIENT 2......................................................................................................................................19
(a) Statement of profit and loss for Peter Hampau for the year ended 31st July 2018 ........19
(b) Statement of financial position for Peter Hampau as at ended 31st July 2018 ..............20
CLIENT 3......................................................................................................................................21
(a) Profit and loss account of Bowling Limited for the year ended 31st July, 2018............21
(b) Balance Sheet of Bowling Limited as at 31st July, 2018...............................................22
(c) Accounts concepts such as consistency and prudency....................................................22
(d) Depreciation and its methods .........................................................................................23
CLIENT 4......................................................................................................................................23
(i) Bank reconciliation statement at 1st December, 2017.....................................................23
(ii) Durrell Ltd's updated cash book for December 2017.....................................................23
(iii) Bank Reconciliation Statement as at 31"t December 2017...........................................24
CLIENT 5......................................................................................................................................25
(a) Books of Henderson........................................................................................................25
(b) Control Account..............................................................................................................26
CLIENT 6......................................................................................................................................26
(a) Suspense Account...........................................................................................................26
(b) Drafting of Trial Balance:...............................................................................................27
(c) Trial balance have credit balance of £ 330 as suspense account....................................27
Suspense A/c.................................................28
(d) Difference between a Suspense A/c and Clearing A/c...................................................28

CONCLUSION..............................................................................................................................28
REFERENCES .............................................................................................................................30

INTRODUCION
Financial Accounting is an accounting branch which contains the track of records for all
financial transaction of an entity. Financial transactions are recorded and presented as per
standardized guidelines in a financial report or statements like statement of income and financial
position. This report is divided in two parts such as business report for Zync Solutions limited
which is small accounting firm and the second part consider the practical scenarios based upon
accounting principles and concepts (Edwards, 2013). For a junior accountant, it is necessary to
prepare financial reports by applying the guidelines of accounting principles so that true and fair
view of financial statements can be presented. This report aims to follow rules and principles of
accountancy. This report covers regulations of financial accounting and purpose of it, book
keeping system, trial balance, profit and loss account and balance sheet of sole traders,
partnership firm and a company according to the relevant principles, convention and the
standards. This report also contains the bank reconciliation, its process of reconciliation and the
suspense account along with example containing the process of clearing the suspense account.
BUSINESS REPORT
1. Financial accounting and its purposes
Accounting means the way transactions are recorded, analysed and summarised in the
business. Financial accounting contains all financial information which is recoded in such a
manner that helps in preparation and presentation of financial information of the business by
presenting true and fair view of it (Agasisti and Catalano, 2013). Financial accounting is a way
of reporting business activities and financial information to investors, creditors, suppliers and
other persons outside the business organisation. The accountant of business is responsible to
follow all the rules and regulations and the policies relating to financial accounting so that
accurate information can be analysed.
Purposes of financial accounting: The main purpose of financial accounting is to
summarise
 To provide true and fair view of financial transactions of organisation (Holthausen and
Watts, 2001).
 To understand and analyse financial statement and fundamentals used in the preparation
of financial statements (Bushman and Smith, 2001).

 With the help of financial accounting, management of organisation can know the profits
and losses of its business in current financial year and through this manager can make
future plans and strategies for future growth of organisation (Peterson, 2005).
 The financial accounting can use in production of financial information in such a manner
that make it easy to interpret performance of company using ratio analysis (White, Sondh
and Fried, 2000).
The financial accounting contains various regulations that are needed to be follow by an
accountant of business organisation so that true and fair view of the financial statements can be
produced and analysed. As a result, company can know its financial growth and on the basis of it
investors and creditors can take their decisions. Regulations relating to financial accounting are
as follows:
 In financial accounting, Generally Accepted Accounting Principle's rules, standards and
procedures of can be applied by an organisation so that financial statements of
organisation can be prepare correctly. There are various principles of GAAP which are to
be followed by the organisation in order to comply with regulations relating to financial
accounting such as: principle of consistency, precedence, regularity, periodicity etc
(Khan and Mayes, 2009)
 The International Financial Reporting Standards framed regulations which is to be
followed by accountant of organisation because it focuses that how a particular type of
transactions or an events can be reported in financial statements of entity (Saunders,
Cornett and McGraw, 2006).
 Regulations related to financial accounting such as debit and credit and their treatment in
accounts can be follow by the accountant of organisation so that relevant information and
data can be reported in financial statements of the organisation (Barth, 2015).
 As per companies act, it is compulsory to put financial statements and other necessary
documents of company in front of general public so that they can know the financial
position of company for given reporting year (Libby, Bloomfield and Nelson, 2002).
3. Accounting rules and principles
Rules for accounting
 Personal Account: The rule relating to personal account state that Debit the
receiver, credit the giver. This principle has been used in case of personal accounts.

Examples of personal account are creditors, debtors, banks, capital account etc. As
well as if a person’s receive something from organisation than amount must be debit
on name of person in books of businesses
 Nominal Account: The rule relating to nominal account state that Debit all expenses
and losses, credit all incomes and gains. In this account, capital account is considered
as liability for the business (DRURY, 2013). Thus it has a default credit balance.
 Real Account: The rule relating to the nominal account state that Debit what comes
in, credit what goes out. The real account includes land and buildings, machineries,
plant and equipment etc. For example, if a person purchases furniture of $ 20000 in
cash, then the furniture account in business would be debit by $ 20000 and cash
account would be credit by $ 20000 in books of accounts of business.
Principles:
Dual aspect concept: Dual aspect concept refers that business entity are liable to record
all transaction on both debit and credit side of books of accounts. Whereas, single entry system
records only one aspect of business transaction which leads recording of some irrelevant
information also in books of accounts. Therefore, to avoid this problem, dual aspect principle is
introduced to assure that every business transaction needs to be recorded on both debit and credit
side of accounts (Edwards, 2013).
Cost principle: This principle assists that assets should be record in the books of accounts
at its acquiring cost. The business entity can't record the assets on revalued amount and therefore
they are obliged to record an asset on their balance sheet at cost only.
Matching principle: According to this principle, all expenses of business should be
matched with the revenues which are related to the same accounting period. The business entity
records the revenues that is, along with the expenses that brought them (Fourie and et. al., 2015).
4. The conventions and concepts relating to consistency and material disclosure
The guidelines of the accounting convention consist of practical applications of principles
of accounting. This is not a legally binding practices rather, it is a convention which is generally
accepted and based upon customs and it also provide help to accountant to resolve practical
issues which are arise in preparation and presentation of financial statements of the organisation.
Some of conventions of accounting are as follows:

Convention of consistency: In accounts it is very important to compare results of different years
so that organisation can know growth of business in each year(s). Therefore, it is essential to
follow accounting principles and rules for similar transactions consistently and continuously. If
accounting policies are followed consistency then reliability of financial statements increased
and if accounting policies are continuously changes than reliability of financial statements can be
lost (Hale, Hale and Held, 2012). For example, if an organisation follows, cost or market price
method for valuation of stock and written down method for depreciation of fixed assets,
therefore it is necessary for company that it should follow these methods consistently and
continuously as per convention of consistency. As a result, comparison between financial
statement can be easy between different accounting years.
Convention of material disclosure: As per this convention, it is essential to disclose all
the significant financial information in the financial statements of the business entity, so that
accounts can prepare in such a manner that all material financial information has clearly disclose
to the reader. It is important for an organisation to provide all information in financial statements
so that investors, creditors and owners can know the true picture of the organisation and its
financial statements (Hall, 2012).
CLIENT 1
(a) Journal Entry in books of David Study
Date Particulars Debit Credit
01/01/
18
Premises A/c Dr. 440000
Motor Van A/c Dr. 45250
fixtures A/c Dr. 10100
Inventory A/c Dr. 40900
P Mole A/c Dr. 2200
F Lane A/c Dr. 2100
Bank A/c Dr. 42400
Cash A/c Dr. 10600
To S Hamid A/c 10150

To J. Brown A/c 9600
To Capital A/c (B/f) 573800
(Being Owner's Capital is calculated )
David Study's opening capital as at 1st January, 2018 is
£ 573800.
Date Particulars Debit Credit
01/01/
18
Storage cost A/c Dr. 800
To bank A/c 800
(Being storage cost is paid)
02/01/
18
Purchases A/c Dr. 7680
To S Hamid A/c 2450
To D Main A/c 2560
To W Tag A/c 1060
To R Foot A/c 1610
(Being goods purchases from various parties on credit)
03/01/
18
J Wilson A/c Dr. 2020
T Cole A/c Dr. 1840
F Seema A/c Dr. 2380
J Allen A/c Dr. 990
P White A/c Dr. 2820
F Lane A/c Dr. 1170
To Sales A/c 11220

(Being goods sold to various parties on credit)
04/01/
18
Motor Expenses A/c Dr. 670
To Cash A/c 670
(Being motor expense is paid)
07/01/
18
Capital A/c Dr. 2000
To Cash A/c 2000
(Being cash withdrawal by owner himself)
09/01/
18
T Cole A/c Dr. 1280
J fox A/c Dr. 2310
To Sales A/c
(Being goods purchase on credit with various parties)
11/01/
18
Sale Return A/c Dr. 680
To J Wilson A/c 370
To F Seema A/c 310
(Being goods is returned back by parties
16/01/
18
Bank A/c Dr. 7150
Discount Allowed A/c Dr. 461
To P Mole A/c 1710
To F Lane A/c 3364
To J Wilson A/c 963

To F Seema A/c 1574
(Being Payment received from parties after allowing
discount @ 5%)
19/01/
18
R Foot A/c Dr. 110
To Purchases Return A/c 110
(Being Goods is returned to creditor)
22/01/
18
Purchases A/c Dr. 3140
To L Mole A/c 1330
To W Wright A/c 1810
(Being goods purchased on credit)
24/01/
18
S Hamid A/c Dr. 3860
J Brown A/c Dr. 4260
R Foot A/c Dr. 1750
To Bank A/c 7500
To Discount Recieved A/c 2370
(Being payment is made to creditors after receiving 10%
discount)
27/01/
18
Salaries A/c Dr. 14500
To Bank A/c 14500
(Being salaries are paid through cheque)

30/01/
18
Business Rates A/c Dr. 2220
To Bank A/c 2220
(Being business rates are paid through cheque)

(b) Ledger Accounts