Financial Accounting Homework Solution: Analysis and Calculations

This document presents a comprehensive solution to a financial accounting assignment, covering a range of topics including different types of business transactions (internal and external), single and double-entry bookkeeping, and the importance of trial balances. The assignment delves into the differences between financial statements and financial reports, and it discusses key accounting principles such as going concern, conservatism, and the cost principle. It includes calculations for profit and loss accounts and balance sheets, as well as an analysis of cash flow statements and bank reconciliation. The document also covers topics such as control accounts and suspense accounts, providing a complete overview of financial accounting concepts and their practical application.

Financial Accounting

Contents
INTRODUCTION...........................................................................................................................................3
QUESTION 1.................................................................................................................................................3
Different types of business transaction...................................................................................................3
QUESTION 2.................................................................................................................................................6
Calculation...............................................................................................................................................6
QUESTION 3...............................................................................................................................................11
Different between financial statement and financial report.................................................................11
QUESTION4................................................................................................................................................13
Principles of accounting.........................................................................................................................13
QUESTION 5...............................................................................................................................................14
Calculation.............................................................................................................................................14
QUESTION 7...............................................................................................................................................17
Cash flow statement..............................................................................................................................17
SCENARIO 2...............................................................................................................................................19
QUESTION 1...............................................................................................................................................19
Bank Reconciliation...............................................................................................................................19
QUESTION 2...............................................................................................................................................20
Control accounts....................................................................................................................................20
QUESTION 3...............................................................................................................................................22
Suspense Account..................................................................................................................................22
QUESTION 4...............................................................................................................................................22
Updated bank reconciliation and cash book as on 28th February 2010.................................................22
QUESTION 5...............................................................................................................................................23
REFERENCES..............................................................................................................................................25

INTRODUCTION
Financial accounting refers to the techniques and procedures for analyzing financial reports
that a company employs to show its financially quality of health to outside parties such as
debtors, bankers, owners, consumers, and vendors. Generally described, this is a specialized
accounting sector that entails several activities such as documenting, effectively summarizing,
and communicating the results of budgetary operations and business operations over a certain
time period. The project is divided into two sections, each with its own set of facts (Mepham,
2020). Some questions, such as the types of contracts requiring single-entry and double-entry
accountancy, accounting policies, and its relevance, must be answered before the first section can
be completed. The second component of this section focuses on creating diary entries by each
operation, as well as the Accounting records and a Bank Statement. The difference between a
cash flow and a tax return, as well as the basic concepts of bookkeeping and the statement of
comprehensive income, are all covered in this section. Section 2 covers reconcile bank reports,
reflective journals; various control accounts, and a variety of other topics.
QUESTION 1
Different types of business transaction
Monetary occurrences that have occurred inside a commercial company that are particular in
financial terms are referred to as corporate activities. Clients are affected by business interactions
in either a financial or realistic way. There are many different forms of financial operations in
company, practically that are all divided into inner and external operations. The following is a
list of them:
Internal business transaction: External parties are not always permitted to participate in a really
trade. Those agreements have a noticeable impact on a company's financial performance since
they do not need revenue to be transferred on to other parties. Interior expenditures, for instance,
require evaluating the degradation of capital assets and also financial losses caused by fire or
theft (Jeter and Chaney, 2019).
External business transaction: The Corporation will transfer money with third parties as part of
certain operations. These would be simple transactions that the firm distributes on a regular

basis. External interactions, for example, include the sale of items to customers; the purchase of
items from manufactures, the payments of electricity or water rates, the payment of salaries to
employees, and so on.
Single entry and double entry bookkeeping:
A single-entry book is a straightforward and consistent part of allocating. Each business activity,
and every single item inside the journal, is recorded at the same time. A money accountancy
approach that captures all entering and departing money in a notebook is known as the single
entry system of accountancy.
A double-entry bookkeeping system is just another technique or technique for documenting
business activities, in which each deal is recorded in at least two accounts, both of which are
charged or debit. The whole amount of registered capital as disbursements would be equal to the
whole amount of registered material as crediting after this procedure. This strategy is acceptable
based on the accounting system, such as assets = liabilities + capital of the owners. The
following is an example:
Trial balance and its importance
It might be included as an accountancy or booking statement, which included the balance sheets
for each of the organization's corporate ledger balances or accounts. Amounts of ledger accounts
are entered in a column labelled 'Debit balances,' whereas sums of outstanding payments are
entered in a column labelled 'Credit balances.' Either of these sections should have the same
quantity or values. Trial Balance, which assists a corporation in financial activities, has a lot of
value and importance. The following are some of the roles that this plays:

• It's an important approach since it allows the company to check the statistical integrity of all of
its accounts' balances by ensuring that now the track account is consistent on both sides.
•It displays the amount of the corporation's financial transactions. Whereas if balance of debits
does not match the balance of credits, it indicates that the attribute has multiple errors. As a
consequence, trail balancing enables an entity to identify and correct problems (Karabarbounis
and Neiman, 2019).
The organisation can control the final accounts with income statement. This contains a record of
account balances that enables a corporation to provide a completed report. At the conclusion of
the annual year, the concluding statements will be prepared by recognizing the individual's
financial status, employee development, and actual ability.

QUESTION 2
Calculation

Ledger accounts

Trail balance

QUESTION 3
Different between financial statement and financial report
A monetary statement is a summary that contain details on a company's financial activities.
The main goal of this kind of statement is to detail all of a company’s financial activities in order
to analyze their impact on organizational performance. There isn't actually a set time restriction
for preparing such a document. Income accounts, on the other hand, are not the same as the
earnings statement stated above. Because an income report is a required document, every firm
must begin preparing in order to effectively convey its earnings and expenditures to its
stakeholders (Loft, 2020). The second clear contrast between the two here is that every
administrative accounting is a statement, but just not each economic report is an individual's
profitability ratio. With the use of many points, the complete amount of disparity between them
is stated below