Financial Accounting 1, Semester 1 Assignment: Comprehensive Solution

This document provides a comprehensive solution to a Financial Accounting 1 assignment. The solution is split into two scenarios. The first scenario addresses various accounting concepts, including the differences between single-entry and double-entry bookkeeping, the significance of trial balance, and the distinction between financial statements and financial reports. It also covers key accounting principles and the preparation of profit and loss accounts and balance sheets. The second scenario focuses on bank reconciliation, journal entries, and control accounts. The assignment explores the process of bank reconciliation, the reasons for discrepancies between bank statements and company records, and the importance of this process in identifying and correcting errors. The solution offers detailed explanations, examples, and calculations to aid in understanding the concepts.

Financial Accounting
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INTRODUCTION
Financial accounting relates to practices or processes for readying financial statements
which a corporation uses to demonstrate its financial status and efficiency to outsiders like
creditors or lenders, investors, clients and suppliers. Simply put, this is specific accounting area
that involves different processes, like recording, efficiently summarizing as well as reporting the
outcomes of fiscal transactions from business processes over specific time-frame (Warren,
Jonick and Schneider, 2020).
The assignment is split in two parts and each of them contains different information. In
order to finish first part, some queries need to be addressed, like the kinds of transactions
involving single entry system as well as double-entry system of book keeping, trial balance as
well as its significance. The second part in such section is focused on making journal entries with
respect to each transaction, the Ledgers and a Trial Balance. The distinction between the
financial statement vs the financial report, the basic principles of the accounting and statement of
income are also key part of this portion. Section 2 is focused on preparing bank reconciliation
report, journal entries, multiple control account and many other dimensions.
SCENARIO 1
Question 1
Forms of business transaction
Business transactions are financial events that have taken place within a commercial entity that
could be specific in financial terms. Business transactions have monetary or direct effect on the
client. There are many types of business financial transaction, almost all of which are categorized
into inner versus external transactions. These are listed as follows:
Internal business transactions: The participation of outer parties isn't always allowed in such a
transaction (B Romney, 2018). These transactions have a clear effect on financial performance
of corporation, as they do not demand that value be passed to third party companies. For
example: internal investments entail monitoring deterioration of the fixed assets as well as loss of
property due to fire or robbery etc.
 External business transactions: Among these transactions, the company shall exchange
cash with third parties. These are modest dealings that are passed out by the company on
a regular basis. For instance: outer dealings involve selling of products to consumers,
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acquisition of products from manufacturers, payments of utilities or water charges,
payment of wages to staff, etc.
Single entry and double entry book keeping
Holding a single-entry book is referred to as a simple and cohesive form of accounting.
Under which as well as every financial transaction is reported at the same period as single entry
within journal. Single entry system of bookkeeping is a cash-based accounting methodology that
records all incoming and outgoing cash in journal.
Double-entry bookkeeping system is yet another mechanism or procedure for recording
commercial transactions wherein, for every deal, entry is noted in at minimum 2 accounts that
are credited or debited accounts (Duska, Duska and Kury, 2018). Through this process, the
number of recorded capital as debits would be equivalent to the total of recorded capital as
credits. This appropriate strategies according to the bookkeeping method, for example, assets =
liabilities + capital of the proprietor. It is shown as follows:
Trial balance and its importance
It may be incorporated as accounting or booking statement, that shall include the balance
sheets in each of the general ledger balances or accounts of the company. Debit balance sums are
placed in column with the correct headed 'Debit balances' while credit balance sums are placed in
an alternate column with same headed 'Credit balances.' Number or figures of both of these two
columns should be the same. There is great deal of value and meaning to Trial Balance which
supports a company in business transactions. Below role of this are mentioned in such manner
that are as:
 It is a crucial method as it permits the organization to test the mathematical consistency
of all its accounts' balance by making sure that the balance of track is comparable on each
side.
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 It shows credits and debits balance of the company transactions. If balance of debit does
not align the balance of the credits, it implies that there are several mistakes in the
accounting record (Schroeder, Clark and Cathey, 2019). As a result, trail balance allows
an entity to locate errors.
Trail balance lets the organization manage the final statements. This keeps a database of balance
of accounts that allows a company to file a finished report. The ending accounts will be drawn up
at the ending of financial year by realizing the financial situation, the operational results and
actual performance of entity.
Question 2.
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Ledger accounts
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Trail balance
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Question 3
Monetary report is known as a documentation that contains information about financial
transactions within an entity. The key purpose behind the creation of such report is to document
every financial activity of a corporation in order to assess its effect on organizational functioning
(Schaltegger and Burritt, 2017). There's really no specific time limit for the preparation of such
report. Though, financial statements are diverse from financial report as described above.
As Financial Statement is compulsory document that each organization needs to make
preparations for effective presentation of its profits and losses to its interested parties. The other
distinction that is clearly evident with both, that is separately fiscal account is report, but not
each monetary report is entity's financial statement. The comprehensive level of difference
between them is described below, with aid of multiple points;
Origin of
variance
Financial report Financial statement
Content It includes sum of monetary (money
related) transactions relating to an
It involves just those
all transactions as well as
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organization. information which are
mentioned priority by the
policymaking specialist.
Governance The entire process relating to financial
reports are governed by IASB. These are
referred to as the International Accounting
Standards Board.
Here, the framework of
drawing up financial
statements is regulated
by standards
being developed by IASB.
Scope The scope here of all financial reports
are broad in comparison to financial
statement. It will be comprehended on
2 bases: firstly, all financial transactions
under such and, secondly, all fiscal
reports of entity are reports, although not
all entity's financial reports and
different financial statements.
Scope of entity's financial
statements seems to be
narrow comparison
to financial reports. It is
even though limited
transaction is recorded in
the same way.
Examples There are multiple instances that may even
be displayed as illustrations of financial
reports, like bank statements, accounts
receivables, bad debts reports, debt analysis
reports, etc.
In addition, in terms of
financial reporting there
have been no incidents. But
that is of 4 forms of
financial statements.
Requirement These documents are needed by commercial
executives, as they provide information
about to how much spending and
purchases organization has made though
because that these can build an efficient
budget for future time-frame (Mepham,
2020). The range of use of such reports is
greater than other because it will offer all
information regarding the organization. In
addition, such reports have also been used
Financial statements being
used organizations, and
only for specific reasons.
These are obviously
explored by stakeholders of
the organization in regards
to the determination
of financial growth, the
status, the accessibility of
cash funds and market
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by mangers in developments of financial
strategy that enables them to make a huge
proportion of the profits including a
decrease in sum of expenditure.
situation of the stable. In
addition, such reports are
often used by outer
investors when it comes
to decision-making on
supporting in the
organization or not.
Users The varying range of users commonly used
in these reports includes business
management teams, members of board
and distinct users of company's financial
reports, as they are also portion of entity's
financial reports.
Users those who employ
financial statements widely
involve stockholders,
suppliers ,
lenders, creditors,
clients, public, authorities,
account receivables and
many others.
Question 4
Key bookkeeping ranges implies to rule that restrict and restrict business organization
associations whilst also producing budget reports and outlining money-related details. There’re
many different basic standards under the supervision of the business organization.
Such standards depend on measures set out in 'mostly recognized accounting gauges' as well
as 'entitre budgetary disclosure rule.' A part of the key accounting standards involves:
Money related unit supposition: This rule states that certain budgetary exchanges that
also have taken place in a business organization should be recorded using a comparable fiscal
segment in order to ensure that understanding as well as coherence can be maintained (Jeter and
Chaney, 2018).
Monetary substance presumption:pertaining to such a rule, a company should have its
own specific identity and the initials under that it could even work together here. The essential
aspect of a company should not be exactly same as that of its owner.
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