Comprehensive Client Portfolio: Financial Accounting Principles

This assignment is a portfolio of financial accounting clients, demonstrating the application of accounting principles and regulations. It includes journal entries, ledger accounts, sales and purchase day books, cash books, and control accounts. The portfolio covers various tasks such as preparing financial statements (profit and loss, balance sheet), bank reconciliation statements, and suspense account management. It also explains key accounting concepts like consistency and prudence, and discusses depreciation methods. The document uses real-world scenarios to showcase the practical implementation of financial accounting principles in different business contexts. Desklib is a platform where you can find this and many other solved assignments to help you with your studies.

Financial Accounting Principles
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Table of Contents
A. Report..........................................................................................................................................4
1. Define financial accounting.........................................................................................................4
2. Explain the regulations relating to financial accounting.............................................................4
3. Describe accounting rules and principles....................................................................................4
4. Explain the conventions and concepts relating to consistency and material disclosure..............5
B. Portfolio of clients.......................................................................................................................6
Client 1.............................................................................................................................................6
Client 2...........................................................................................................................................24
(a) The statement of profit or loss for Peter Piper for the period ended 31st December 2017.......24
(b) The statement of financial position for Peter Piper as at 31st December 2017........................24
Client 3...........................................................................................................................................27
(a) Prepare the statement of profit and loss of Raintree Ltd., for the year ended 30 September
2017...............................................................................................................................................27
(b) The statement of financial position of Raintree Ltd. as at 30 September 2017.......................27
(c) Explain the accounting concept of “consistency” and “prudence”..........................................28
(d) Briefly discuss the purpose of depreciation in formulating accounting statements and
illustrate two widely used methods of calculating it.....................................................................28
Client 4...........................................................................................................................................30
A. Explain the purpose of preparing bank reconciliation statement..............................................30
B. List and explain some of the areas, which may cause your record to vary from the bank
records............................................................................................................................................30
C. (i) Bank reconciliation statement at December 1, 2017............................................................30
(ii) Updated cash book...................................................................................................................30
(iii) Bank reconciliation statement as on December 2017.............................................................31
Client 5...........................................................................................................................................33
A. (i) Sales ledger control account................................................................................................33
(ii) Purchase ledger control account..............................................................................................33
B. Explain the term “control account”...........................................................................................34
Client 6...........................................................................................................................................35
A. Suspense account and its features.............................................................................................35
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B. Trial balance..............................................................................................................................35
C. Journal entries to clear suspense account..................................................................................36
D. Differentiate between suspense and clearing account..............................................................37
Reference list.................................................................................................................................38
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A. Report
1. Define financial accounting
According to Deegan (2013), financial accounting is one of the specialized branches in
accountancy that is concerned with the tracking of the financial transactions of companies and
converting them into financial statements and accounts by applying standardized guidelines.
2. Explain the regulations relating to financial accounting
Williams (2014) stated that the regulations related to financial accounting is different in different
countries. For instance, the companies in Australia follow the financial accounting regulations
stated under the Australian Accounting Standard Board. On the contrary, the companies working
in UK have to follow the regulations of financial accounting mentioned under the IFRS
(International Financial Regulatory Standards) and GAAP (Generally Accepted Accounting
Principles).
However, the regulations of financial accounting in UK vary from sector to sector. For instance,
the firms in the financial and banking sector of UK need to adapt to the regulations mentioned in
“Financial Services and Markets Act, 2000”, which states that all firms are required the
maintenance of high transparency of their financial statements and accounts (Warren, 2016). The
overall regulations and frameworks in UK related to financial accounting are governed through
UK’s Financial Reporting Council (Council, 2013). According to Council (2014), the new
regulations related to financial accounting in UK had been published in the FRS 100 in
November 2012. These are major regulations related to financial accounting in the UK, which
have to be followed in every company in the country for preparing financial statements.
3. Describe accounting rules and principles
Financial accounting consists of different rules and principles. As stated by Marshall (2016), the
golden rules of accounting are the basic financial accounting rules, which are as follows -
 “Debit the receiver, credit the giver” (personal account)
 “Debit what comes in, credit what goes out” (real account)
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 “Debit losses and expenses, credit incomes and gains (nominal account)
The following are the basic principles of financial accounting -
 Materiality principle - Edgley (2016) stated the materiality principle of financial
accounting states that only material transactions of a company should be recorded in its
financial accounts.
 Conservatism principle - According to the conservatism principle, expenses and
liabilities are to be realized as and when recognized even when there are uncertainties
related to the outcomes (Penman, 2016). However, revenue and assets are to be realized
only when there it is assured to be received.
 Accrual principle - This principle of financial accounting states that financial
transactions of a company are to be recorded when they occur, not when cash is realized
from the transactions (Kausar et al., 2017).
4. Explain the conventions and concepts relating to consistency and material disclosure
Material disclosure consistency - This convention of accountancy states that a business needs to
provided all necessary information relating to the company in its financial statements (Picker et
al., 2016).
Convention of consistency - Warren (2015) stated that the convention of consistency in financial
accounting says that accounting techniques, which have been adopted once, should be
consistently applied during the future as well. In all similar situations, the accounting techniques
must be consistent.
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B. Portfolio of clients
Client 1
In the books of Alexandra Study Limited
Journal entries
For the month ended on May 2017
Date Particulars
Debit Credit
Amount
(£)
Amount
(£)
2017
May 1 Assets
Premises 340,000
Fixtures 8,100
Inventories 63,900
Van 51,250
Cash in Bank 62,400
Cash at hand 5,600
Receivables: F. Lane 3,100
P. Mullen 1,400
Liabilities
Payables: S. Hood 2,150
J. Brown 4,600
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Opening capital 529,000
535,750 535,750
In the books of Alexandra Study Limited
Ledger accounts
For the month ended on May 2017
SALES DAY BOOK
Date Particulars
Amount
(£)
2017 May 3 J. Wilson 1,120
J. Allen 910
F. Syme 2,080
F. Lane 770
P. White 2,420
T. Cole 1,640
May 9 J. Fox 1,310
T. Cole 680
10,930
SALES RETURNS DAY BOOK
Date Particulars
Amount
(£)
2017
May11 J. Wilson 270
F. Syme 410
680
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PURCHASES DAY BOOK
Date Particulars Amount (£)
2017
May 2 W. Tone 960
R. Foot 1,610
S. Hood 1,450
D. Main 2,060
May 22 L. Mole 1,830
W. Wright 1,910
9,820
PURCHASES RETURN DAY BOOK
Date Particulars
Amount
(£)
2017
May 11 R. Foot 50
50
CASHBOOK
Date Recei
pts
Discount
Allowed
Cash Bank Date Payment
s
Discount
Received
Cash Bank
Amount
(£)
Amou
nt (£)
Amou
nt (£)
Amount
(£)
Amou
nt (£)
Amou
nt (£)
2017
May 1
Balanc
e b/d
5,600 62,400 2017
May 1
Storage
cost
400
May
16
P.
Mulle
n
70 1,330 May 4 Motor
expenses
470
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F.
Lane
155 2,945 May 7
Drawings
1500
J.
Wilso
n
43 807 May
24
S. Hood 360 3,240
F.
Syme
84 1,586 J. Brown 460 4,140
R. Foot 140 1,260
May
27
Salary 4,800
May
30
Business
rates
1,320
May
31
Abel
Motors
Ltd
20,500
May
31
Balance
c/d
3630 33,408
352 5,600 69,068 960 5,600 69,068
31
May
Balanc
e b/d
3630 33,408
DR P. Mullen Account CR
Date Particulars
Amoun
t (£) Date Particulars
Amount
(£)
2017 2017
May 1
To balance brought
down 1400 May 16 By Discount allowed 70
May 16 By Cash 1330
1,400 1,400
F. Lane Account
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DR CR
Date Particulars
Amoun
t (£) Date Particulars
Amount
(£)
2017
May
2017
May
1 Balance brought down 3100 16 By Discount 155
3 Sales 770 16 By Cash 2945
31
By Balance carried
forward 770
3,870 3,870
31
To Balance brought
down 770
DR J. Wilson Account CR
Date Particulars
Amoun
t (£) Date Particulars
Amount
(£)
2017
May
2017
May
3 To Sales 1,120 11 By Sales return 270
16 By Cash 807
16 By Discount 43
1,120 1,120
DR T. Cole Account CR
Date Particulars
Amoun
t (£) Date Particulars
Amount
(£)
2017
May
2017
May
3 To Sales 1,640 31
By Balance carried
forward 2,320
9 To Sales 680
10

2,320 2,320
31
To Balance brought
down 2,320
DR F. Syme Account CR
Date Particulars
Amoun
t (£) Date Particulars
Amount
(£)
2017
May
2017
May
3 To Sales 2,080 11 By Sales return 410
16 By Cash 1,586
16 By Discount 84
2,080 2,080
DR J. Allen Account CR
Date Particulars
Amoun
t (£) Date Particulars
Amount
(£)
2017
May
2017
May
3 To Sales 910 31
By Balance carried
forward 910
910 910
31
To Balance brought
down 910
DR P. White Account CR
Date Particulars
Amoun
t (£) Date Particulars
Amount
(£)
11

2017
May
2017
May
3 To Sales 2,420 31
By Balance carried
forward 2,420
2,420 2,420
31
To Balance brought
down 2,420
DR J. Fox Account CR
Date Particulars
Amoun
t (£) Date Particulars
Amount
(£)
2017
May
2017
May
9 To Sales 1,310 31
By Balance carried
forward 1,310
1,310 1,310
31
To Balance brought
down 1,310
DR S. Hood Account CR
Date Particulars
Amoun
t (£) Date Particulars
Amount
(£)
2017
May
2017
May
24 To Cash 3,240 1
By Balance brought
down 2,150
24 To Discount 360 2 By Purchases 1,450
3,600 3,600
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