Financial Accounting 1: Detailed Analysis of Accounting Scenarios

This assignment provides a detailed analysis of financial accounting concepts through two distinct scenarios. The content covers the definition and types of business transactions, including currency exchange, credit exchange, internal and external exchanges, and the difference between single-entry and double-entry bookkeeping systems. It explores journal entries, ledger accounts, and the trial balance, highlighting its importance in verifying the logical coherence of accounting records. The assignment also distinguishes between financial reports and financial statements, detailing their differences in content, governance, scope, and users. Furthermore, it describes the fundamental principles of accounting, such as the traditionalism standard, traditional management, consistency standard, cost management, and management of financial materials. Scenario 2 delves into bank reconciliation and control accounts, providing a comprehensive understanding of these crucial accounting processes. The document includes journal entries, ledger accounts, trial balance and financial statements to offer a complete view of the accounting cycle.

Financial Accounting
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Contents
INTRODUCTION...........................................................................................................................3
SCENARIO 1..................................................................................................................................3
Question 1....................................................................................................................................3
Question 2....................................................................................................................................6
Question 3. Difference between financial report and statement................................................11
Question 4: Description of the fundamental principles of accounting......................................13
Question 5..................................................................................................................................16
Question 6..................................................................................................................................18
Question 7..................................................................................................................................19
SCENARIO 2................................................................................................................................21
Question 1. Description about bank reconciliation....................................................................21
Question 2. Description about control accounts........................................................................21
Question 3..................................................................................................................................22
Question 4..................................................................................................................................24
Question 5..................................................................................................................................24
REFERENCES..............................................................................................................................26
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INTRODUCTION
Financial accounting is a new piece of accounting that includes a way to manage mail, enter
and determine transactions that occur as a result of long-term business movement. These trades
are identified in the financial statement format, which includes a movement report, a financial
allowance and an income claim, which records the association's operating presentation in the
preset longevity. Both the public and private rooms are accessible to cashiers. An accountant's
responsibilities can range from those of a general accountant (who works for you rather than for
an association or membership) to those of a tax accountant (Schroeder, Clark and Cathey, 2019).
This test is needed for two workplaces, every one of which has its own arrangement of
testing questions. A few tests, for example, the sort of movement including a solitary direct
arrangement design like a two-way bookkeeping system, a basic beginning worth, ought to be
interesting to the degree that it contemplates, to finish the essentials. The second part of this
space is responsible for explaining the newspaper sections for each post, the charts and the start-
up budget. The mechanism in this section is the combination of the crown report and financial
disclosure, the basic accounting guidance and the claim for compensation. Area 2 is responsible
for accepting a full bank reconciliation report, diary allowance; some current accounts, fixed
version and various estimates.
SCENARIO 1
Question 1
Definition
In bookkeeping, an understanding (otherwise called a money trade) is a period that
should be considered as far as liquidity and materially affects the bookkeeping position of the
association. For instance, you maintain a specific business and offer your client something for $
500 in genuine cash; it is a chance that you can gauge as far as cash and that influences the
monetary situation of your business, so it is a trade. Likewise, you pay the dealer $ 400 in
genuine cash as installment. This chance is likewise a trade since it has a money volume of $ 400
and monetarily affects your business. Just these occasions can be resolved as far as amended
expenses for the association's bookkeeping records.
Types of business transaction
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1. Currency exchange and credit exchange
A trade where cash is paid or gotten expeditiously when an exchange happens. In the present
business world, money trades are not restricted to the utilization of banknotes or coins to deliver
or get profits, all exchanges end up with the utilization of appraisals or visas gave with suggested
spending bases as work camp specialists financial.
In a credit trade, the money doesn't change hands promptly when an exchange happens.
2. Internal and external exchanges
Inner trades (otherwise called non-exchanging) are those trades where outer assortments
are barred. These trades don't include quality trades between two assortments, yet the chance
introduced by exchanging is considered concerning account and impacts the monetary conditions
of the area. . Such tasks include going into a register of fixed resources and understanding the
hidden advantages of the fire, and so on
Outer trades (known as exchanging trades) are trades in which an association trades
progress with outside gatherings. Everything except one of the exchanges, aside from inward
exchanges, is generally outside exchanges. These are the typical exchanges that an association
makes consistently. Applications for outside organizations incorporate sourcing merchandise
from providers, offering items to clients, building fixed resources for business use, including
leasing the land owner, including gas, energy or water costs, worker compensations, and so on
the gathering incorporates open air makes.
Single entry and double entry book keeping
Maintaining a one-part book is considered as a necessary and appealing accounting
structure. Below is an example of how each spending work is represented in a journal part all of
the time. Single-step accounting is a cash-based accounting system in which all of the nearest
and most active currencies are recorded in a single document.
Date Description Transaction value Balance
XX-XX-XXXX £ 0000.00 £ 0000.00
The twofold bookkeeping system is part or different methods for recording a business exchange
in which, for every activity, the thing is noted in any event 2 records are permitted or charged. In
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the double framework, the complete capital proclaimed as costs is near a specific measure of
capital as credits. The two-endeavor bookkeeping framework is portrayed by the presentation of
a bookkeeping condition, for example Resource = Liabilities + proprietor possessed capital. The
copy access record framework is viewed as follows:
Date Description L.F Debit Credit
XX-XX-XXXX £ 0000.00
£ 0000.00
Trial balance and its importance
Trial balance can be presented as accounting or accounting explanations, which include
action reports in major changes or posts. Cash balancing measures are separated in areas by the
correct "Cost Adjustment", while credit balance funds are based in a single classification with a
similar entry to "Change of Credit". The number or numbers of these two classifications should
be something very similar. The test scale has a remarkable arrangement of remarkable value and
meaning that is the foundation of society in their trading industries. Two of the fundamental
problems with balance are the supported path:
• The Trial balance is an important tool as it allows the public to verify the logical
coherence of each of their employments, promising a two-handed balance in a comparable way
(n., 2018).
• The Trial balance shows credit equality and authoritative operating tax. If the identity of
the debit does not alter the credits of each other, it indicates that there are errors in the
accounting record. In this way, the course mode allows the component to recognize errors.
Trial balance allows you to ultimately control your joints. This maintains the highest equality
information base that allows an association to submit one final report. The final tables will be
designed as a discount for the financial year including cash position, performance results and
performance of actual components.
Format of trial balance
Account name Debit (£000) Credit (£000)
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Question 2
This contains effective presentation of all journal entries, ledgers accounts and trial balance.
Journal entries in relation to each transaction
Ledger accounts
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Trail balance
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Question 3. Difference between financial report and statement
The financial report is seen as records that contain information about the cash registers
within an object. The essential reason for preparing this report is to damage each company's
currency exchange in order to determine its impact on the shares ordered. Of course, there is no
time frame drawn for resolving this relationship. In any case, the cash register summaries do not
match the cash statement as shown above. Since financial details are needed, every general
public needs to plan to recognize the benefits and hardships of the people who have contributed
to it. The other difference that is clearly recognized by both is, for example, that all cash register
reports are cash registers, but not all accounting reports are part of a cash register report
(Mullinova, 2016). The degree of separation between them is shown below, supported by many
key interests;
Origin of variance Financial report Financial statement
Content This includes all financial matters
(liquidity related) related to
membership.
This covers all these operations as
information that needs to be
reconciled by the authority.
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Governance The entire liquidity reporting
strategy is regulated by the IASB.
These are known as the
International Accounting
Standards Board.
Here, the collection of expense
reports is monitored by the IASB.
Scope This level of all broad cash reports
are against the expense report. It
will be understood on 2 grounds:
first, all money-related
transactions are in such and, in
addition, all financial schemes of
the component are like reports, no
matter how all budget reports of
the component and the various
cost summaries.
The level of material financial
reporting appears to be very low
with budget reports. Regardless of
how duty-free trading is extensively
documented.
Examples There are a number of events that
may even appear in the form of
balance sheets, including bank
statements, accounting credits,
horrible guarantee reports,
guarantee valuation reports, and so
on.
In fact, there were no minutes of
minutes. Whatever the way, this is
of 4 types, for example, clearing
disclosure, financial posting,
earnings disclosure and owner value
disclosure.
Requirement Such reports are needed by
business authorities, as they
provide information on their
spending and related purchases at
least considering how they can
develop a robust cash contract for
a timeframe in the future. The
level of use of such reports is more
pronounced than others
Cash reports are used linked and for
specific purposes only. These are
clearly examined by the proponents
of the report in terms of
determining the financial basis of
the events, the status, the suitability
of financial resources and the
market position of the company.
Furthermore, such ratios are
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