Financial Accounting Report: Statements and Bank Reconciliation

This report delves into the core principles of financial accounting, starting with the foundational elements of recording transactions using double-entry bookkeeping and preparing a trial balance. It proceeds to explain the structure and purpose of key financial statements, including the statement of income (profit and loss), balance sheet, and cash flow statement, detailing the information each provides about a company's financial health and performance. The report then focuses on bank reconciliation, clarifying its importance in businesses for ensuring the accuracy of cash balances and detecting discrepancies. It demonstrates the process of reconciling cash book balances with bank statements, including the treatment of various items like deposits in transit and outstanding checks. Finally, the report touches on the rectification of accounting errors. The report is well-structured and includes references to books and journals.

FINANCIAL ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Trial balance.....................................................................................................................3
1.2 Preparing ledgers and new trial balance...........................................................................4
1.3 Journal entries...................................................................................................................8
TASK 2..........................................................................................................................................10
2.1 Describing statements that contains financial information...........................................10
2.2.........................................................................................................................................12
2.3.........................................................................................................................................13
2.4.........................................................................................................................................14
TASK 3..........................................................................................................................................15
3.1 Bank reconciliation and its need in the business............................................................15
3.2 Cash Book to show the corrected balance......................................................................15
3.3 Bank reconciliation Statement........................................................................................16
3.4 Demonstrating the use of different items while preparing bank reconciliation statements
..............................................................................................................................................17
TASK 4..........................................................................................................................................17
4.3.........................................................................................................................................17
4.4 Rectification entries........................................................................................................18
REFERENCES..............................................................................................................................20

INTRODUCTION
Financial accounting is defined as the systematic process of recording, summarizing and
reporting the transactions of financial nature of a firm or firm for an period of accounting. The
present project report will show the recording of transaction by using double entry book keeping,
preparation of trial balance. Further, the report will show the type of information which is
presented by the way of different statement. An understanding of bank reconciliation will also be
highlighted in this project.
TASK 1
1.1 Trial balance
Statement of Trial balance as on 31st December 2018

1.2 Preparing ledgers and new trial balance

1.3 Journal entries

TASK 2
2.1 Describing statements that contains financial information
Financial statements are such records in writing that reflects the business activities and
financial position of the company. It basically shows how the company has performed in a
particular accounting year.
There are basically three types of statements which depicts financial health of company
which are mentioned below:
 Statement of Income or Profit or Loss : These can be defined as those reports which
reflects how much a firm has generated revenue and for generating that revenue, how
much it has incurred expenses. In simpler words, it shows the income and expenses of the
firm which tell how much a company made profit or loss for an accounting period.

 Balance sheet : This financial statement provides the comprehensive data relating to
assets, equity and current and long term liabilities of a firm which in turn shows the
financial position of the firm on a particular date.
 Cash flow statement: Such statements are concerned with reflecting the cash inflow and
cash outflow of a business entity. This is a crucial financial statement because this shows
whether the business has generated enough cash for financing its assets or not.
P &L statement Cash Flow Balance sheet
 Shows profit or loss  Determines whether
cash has been
generated or not
 Equity, assets and
liabilities of business
 It is for an entire
accounting period
 It is also for an entire
accounting period
 It is for a particular
point of time
 It reflects the
profitability position of
company
 It reflects the liquidity
of company
 It assesses the financial
position of firm.

2.2