Accounting Principles and Practices Tutorial Questions Assignment

This document presents solutions to a tutorial assignment on Accounting Principles and Practices (HA1020). It covers key concepts from weeks 1-5, including the difference between financial and management accounting, financial accounting assumptions, and accounting transactions. The assignment provides detailed explanations and examples, such as adjusting journal entries, the accounting equation, and the preparation of income statements and balance sheets. Furthermore, it includes closing entries and references to relevant accounting literature, offering a comprehensive overview of the topics covered in the course. This assignment is designed to help students understand and apply core accounting principles and practices. This is a solved assignment contributed by a student to be published on the website Desklib, a platform which provides all the necessary AI based study tools for students.

Accounting Principle and
Practices

Contents
WEEK 1......................................................................................................................................................3
Difference between financial accounting and management accounting...................................................3
WEEK 2......................................................................................................................................................4
Financial accounting assumption.............................................................................................................4
WEEK 3......................................................................................................................................................4
Accounting transaction for clothing Ltd..................................................................................................4
WEEK 4......................................................................................................................................................5
(a) Accounting Equation..........................................................................................................................5
(b) Adjusting journal entry......................................................................................................................5
WEEK 5......................................................................................................................................................6
(1) Adjusting journal entries....................................................................................................................6
(2) Income statement and balance sheet..................................................................................................6
(3) Closing entries...................................................................................................................................7
REFERENCES............................................................................................................................................8

WEEK 1
Difference between financial accounting and management accounting
Financial accounting is an associated with accounting division that maintains records of
cash activities within a business. The payments are reported, listed, and published in an annual
report or income statements, including a statement of financial position or a balance sheet,
utilizing structured instructions. In other terms, competitive planning is a way for shareholders,
creditors and other individuals just outside of the company entity to disclose economic operation
and payment data.
Managerial accounting is the method to classify, calculate access, analyze, and convey
financial guidance to stakeholders to achieve the objectives of the organization. It differs from
cost reporting so because expected goal of a business is to facilitate clients in making better
accurate business decisions in an organization (Khlif, 2016).
The process of preparing management reports and accounts providing reliable financial
and numerical relevant data those supervisors necessary to making daily and short-term
decisions. With exception of financial accounting, which detailed way yearly accounts for
different customers, management accounting engenders daily or quarterly estimates for specific
investors of an institution, including such department heads and the executive chairman. Such
reports usually display the availability of cash, income produced from sales, the number of
shipments in service, the condition of accounts receivable and payable balances, unpaid debts,
raw materials and inventories, and could also contain statistics analysis, variability of business.
Areas Financial accounting Management accounting
User of reports The reports are using by the external
holders like creditors, government and
shareholders. Accordingly they are
taking right decision. For example,
when any organization prepares
financial reports so these are
presenting in front of external
shareholders to analysis the actual
position of business. After that they
are taking decision for the investment
in the particular business.
The user of these report are internal
holders like managers, officers and
other employees. Such as, on the
basis of these reports they are
analyzing the financial position after
that prepare strategies to improve
performance and take all the long
term decision in regard of business
activities.
Types of reports These types of reports are categorized
into income statement, balance sheet,
cash flow statement.
For instance, these reports are
prepared by financial accounting rules
To prepare reports through
management accounting like Job
cost sheet, production cost report etc.
Such as, to prepare of this report not
require following particular rules

and methodology that follow all the
rules and regulations that set by the
government.
and regulations in business.
Frequency of
reports
These types of reports prepare by the
company on quarterly as well as
annually basis.
To prepare of this report require to
frequently time period because it
require any time in order to prepare
strategies.
WEEK 2
Financial accounting assumption
Accounting entity: An accounting entity is a specifically established financial entity
which isolates with other subdivisions or institutions accounting for some activities. An
accounting body may be a company or sole proprietorship, as well as a corporate subsidiary. The
accounting entity should though have a different series of documents or documents outlining the
assets and debts compared to the owner's. An accounting entity is portion of the business entity
concept, which states that the owners and companies cannot inter connected the financial
transactions and accounting records.
Monetary: The presumption of the monetary unit says that a firm should document its
commercial transactions in millions or some such other measure of money. Businesses are using
the dollar because it's stable in value and anywhere accessible. It also offers a reliable means of
determining one business success with that of some.
WEEK 3
Accounting transaction for clothing Ltd
(1) This is not an accounting transaction because it will not impact on the financial
statements in present time. In this case only sign into contract and work is not done.
(2) It is not accounting transaction because shareholder purchases goods for another
company not for Clothing Ltd.
(3) It is an accounting transaction that shows in the balance sheet of the business at the
liability side because it is a responsibility for business to pay out in certain period of time.
(4) Purchase sewing machine through note payable is considering as accounting transaction
because for this paid amount by the company. This transaction has been shown in the
balance sheet of assets side.
(5) This is an accounting transaction because issues of shares are showing in the balance
sheet that impact on the business activities in direct manner.

(6) It is not an accounting transaction because of two investors sold out to other shareholder
but amount remain same in the company. It cannot impact on the share amounts that
presents in the balance sheet.
(7) Clothing Ltd is ordered for the fabric that was not considering an accounting transaction
because the company only orders for goods yet not purchase.
(8) It is also considering as accounting transaction that mentioned as fees in the profit and
loss accounting that prepare in the end of financial year.
WEEK 4
(a) Accounting Equation
 Prepaid Insurance by $4000
Assets = Liabilities + Equity
$4000 = 0 + 0
 Commission to sales personnel will be paid into next year
Assets = Liabilities + Equity
$4000 = $9600 + 0
 Sales revenues
Assets = Liabilities + Equity
$4000 = $9600 + 570
 Stationery expenses adjustments
Assets = Liabilities + Equity
$4490 = $9600 + 570
 Pays interest
Assets = Liabilities + Equity
$4490 = $10100 + 570
(b) Adjusting journal entry
Particular Debit Credit
Insurance expenses a/c
To prepaid insurance a/c
4000
4000

Commission a/c
To sales personnel a/c
9600
9600
Stationery expenses a/c
To office supplies a/c
410
410
Interest a/c
To bank loan a/c
500
500
WEEK 5
(1) Adjusting journal entries
Particular Debit Credit
Depreciation a/c
To equipment a/c
3000
3000
Expired insurance a/c
To prepaid insurance a/c
450
450
Outstanding wages a/c
To employees a/c
2100
2100
Supplies expenses a/c
To supplies account
900
900
Income tax expense a/c
To bank a/c
3150
3150
(2) Income statement and balance sheet
Particular
Service revenue 48000
Less COGS 32900
Gross Profit 15100
Add Accumulated depreciation 12000
27100
Less Income tax expenses 3150
Supplies 800
Outstanding wages 2100
Insurance expired 450 6500
Net Profit 22350
Liabilities Amount Assests Amount
Outstanding wages 2100 Equipment 27000
Net profit 22350 Less: Depreciation expenses 3000 24000

Prepaid insurance 450
24450 24450
(3) Closing entries
Particular Debit Credit
Insurance expenses a/c
To Prepaid insurance
450
450
Office supplies expenses a/c
To office supplies account
800
800
Wages a/c
To wages payable a/c
2100 2100

REFERENCES
Books and Journal
Smith, R. D. and Berlinguette, C. P., 2016. Accounting for the dynamic oxidative behavior of
nickel anodes. Journal of the American Chemical Society,. 138(5). pp.1561-1567.
Christ, K.L. and Burritt, R.L., 2017. Water management accounting: A framework for corporate
practice. Journal of cleaner production. 152. pp.379-386.
Honggowati, S., Rahmawati, R., Aryani, Y. A. and Probohudono, A. N., 2017. Corporate
governance and strategic management accounting disclosure. Indonesian Journal of
Sustainability Accounting and Management. 1(1). pp.23-30.
Khlif, H., 2016. Hofstede’s cultural dimensions in accounting research: a review. Meditari
Accountancy Research.