Financial Accounting Report: Double Entry and Financial Statements

This report provides an overview of financial accounting principles and practices. It begins with an introduction to the importance of financial management and the role of financial accounting in businesses. The report then delves into the double-entry bookkeeping system, explaining its fundamental concepts and application in recording financial transactions. It also covers the preparation of a trial balance, which is crucial for ensuring the accuracy of accounting records. Furthermore, the report explores the creation of financial reports, including profit and loss statements and balance sheets, and their significance in assessing a company's financial performance. The report also includes an analysis of financial statements for both sole traders and limited companies, highlighting the key differences in their preparation and presentation. Overall, the report aims to provide a comprehensive understanding of financial accounting concepts and their practical application in real-world business scenarios. It includes examples of journal entries, ledger accounts, trial balance preparation, and financial statement formats for both sole traders and partnerships.

Financial Accounting
Part 1

TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Double entry bookkeeping system...................................................................................1
P2: Trail balance preparation..................................................................................................7
TASK 2............................................................................................................................................8
P3: Preparation of financial reports........................................................................................8
P4: Preparation of financial statements for sole trader and limited companies.....................9
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Finance is one aspects for every business in order to manage and control their daily
financial transactions in effective manner. The main aim of financial managers is to manage all
funds and investments so that chances of getting more valuable outcomes can be increase.
Financial accounting is one of the important process that deals with entire summary, analysis and
reporting of several statements as per the mentioned period of time. This project aims in
providing specific information about use of double entry bookkeeping system while preparing
trail balance of the company. Apart from this, formulation of final account is also being analyse
through adjusting accrual information, depreciation and repayment details. At last, different final
accounts those are prepared through taken use of various types of organisational statements
accordingly (Knežević, Stanković and Tepavac, 2012).
TASK 1
P1: Double entry bookkeeping system
Nowadays, it has been found that most of the accounting firms or financial institution
uses various types of accounting transactions that are done within an accounting period of time.
The manager is having wide range of roles that would results in organising various information
in proper manner into their respective format. There are various types of systems which will be
taken into account for the accountant while analyse financial position of the company. Out of
which Double entry system is the one that every business data will consists of with two effects.
Like for examples, in case a company borrows funds from their bank, the companies total cash
account will enhance and their liability account loan get increase drastically. It is an effective
accounting term that stated that every business transaction is having dual impacts on either side
of the statements.
In case of Double entry system, the value of capital that always transferred from one
reports to another as per the requirement of the company. Accountant and financial manager can
use all credit and debit value in order to analyse, whether the capital is being transferred from
parties account books as per the mentioned time (Amoako, 2013). It has been mentioned that
organisation would have plenty of ways that can have multiple effects on the entire financial
reports of the company. In the complete system of bookkeeping which is having two aspects
from every transaction that are made within the period of time. In order to evaluate several
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financial records that are prepared by financial manager are needed to be recorded initial into the
journal entry books after that posted into trail balance.
Journal entry: It is known as one of the effective logging system of accountancy that
can assist accountant to record each and every transaction that are occur in cash or credit only.
The financial officer required to considered different transaction those are valuable for the
effective decision making in near future time. The balance of debit and credit side of the
statements must be matched at both the side. There are various types of accounts those are
required to be formulate by the manager such as cash account, bill receivable and stock turnover
records.
Formulation of various kind of accounts and entries is being collectively related with the
bookkeeping outcomes. It is vital for every business organisation to keep recording of all
essential reports that are held responsible for incurring more reliable and accurate results to the
firm in near future period. Such kind of books need to be mentioned in every financial
information on regular basis in the way to avoid any kind of errors or mistakes. The primary
motive or recording of transaction is to serve all internal and external department so that actual
cost of beard by the company can easily be determine during the time (Schaltegger and Burritt,
2017).
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General Ledger accounts
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P2: Trail balance preparation
Definition: Trail balance is said to be important part of bookkeeping system under which
the balance of all ledger are compiled together into debits and credit value. It is one of the
primary statements that is being prepared by accountant by taking information from various
journal and ledger accounts. Every assist and expense must be recorded on debit and credit side
of the tail balance (Cooper, 2017). It is basic role of finance manager to prepare this particular
statements on regular basis so that future planning can be done by the company. In case of any
unbalance arise within the trail balance would directly results in huge impacts on overall
productivity of an organisation.
Particulars Debit Credit
Cash account 11070
Bank account 60675
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Capital account 65000
Purchases account 18000
Bills payable account 14000
Bills receivable account 12000
Sales account 26000
Equipment account 3000
Prepaid Insurance account 75
Rent account 150
Stationary account 30
Total 105000 105000
TASK 2
P3: Preparation of financial reports
Every financial record that is being prepared by the company must be use during the time
of framing income statements and balance sheets. The main motive of developing financial
statements is to get rid of entire data of the company in order to analyse performance of the
company within an accounting period of time. There are various financial statements that are
prepared by an organisation are mentioned below.
 Profit and loss statements: It is one of the important part of the overall statements made
by the company that consists of income and expenses incurred during the particular
period of time (Income Statement, 2018). This seems to be important report that would
indicate overall net income generated within an accounting period of time.
 Balance sheet: It is one of the effective financial statements of the company which
consists of assets, liability, equity capital and other debts. This seems to be the amount
which is owes to their creditors. the investors considered this statements for the purpose
of future decision making (Louwers and et. al., 2015).
Profit and loss statement for the year ended 31st December, 2017
Particular Amount
Revenue 125000
less: sales returns 1500
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Total Revenue 123500
Less: Cost of goods sold 83500
Discount received 1000
Rent received in advance 4850
Gross profit 45850
Expenses:
Rent & rates expenditure 1500
Telephone expenses 900
Insurance expenses 7500
Bad debts 1200
Depreciation 5000
Wages and salaries 13200
Provision for bad-debts (934)
Less: Bad debts written off (650) 284
Outstanding expenditure 340
Net profit 15926
Balance sheet as at 31st December, 2017
P4: Preparation of financial statements for sole trader and limited companies
There are various statements which are prepared by different types of organisation in order
to record necessary information on regular basis. The two important companies are sole trader
and partnership firms. They used to follow different types of accounting statements in order to
record various information so that to get desirable outcomes at the end of the year. Some of them
are discussed underneath:
Profit and loss statement for the sole trader EBay
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