Financial Accounting Assignment: Comprehensive Analysis of Accounts

This document presents a detailed solution to a financial accounting assignment, addressing a range of topics including different types of business transactions, single and double-entry bookkeeping, and the preparation of journal entries. The solution includes calculations, the creation of ledger accounts, and the development of a trial balance. It differentiates between financial statements and financial reports, outlines key accounting principles, and provides examples of profit and loss accounts, balance sheets, and cash flow statements. The assignment also covers scenario-based problems such as bank reconciliations, control accounts, suspense accounts, and the preparation of updated cash books and bank reconciliation statements, including associated journal entries. The assignment emphasizes the importance of understanding financial accounting concepts and applying them to solve practical problems, providing a comprehensive overview of accounting practices and financial statement analysis.

Financial Accounting

Contents
INTRODUCTION...........................................................................................................................................3
QUESTION 1.................................................................................................................................................3
Different types of business transaction...................................................................................................3
QUESTION 2.................................................................................................................................................5
Calculation...............................................................................................................................................5
QUESTION 3...............................................................................................................................................10
Different between financial statement and financial report.................................................................10
QUESTION 4...............................................................................................................................................12
Principles of accounting.........................................................................................................................12
QUESTION 5...............................................................................................................................................13
Calculation.............................................................................................................................................13
QUESTION 6...............................................................................................................................................15
Profit and Loss Account.........................................................................................................................15
QUESTION 7...............................................................................................................................................16
Cash flow statement..............................................................................................................................16
SCENARIO 2...............................................................................................................................................18
QUESTION 1...............................................................................................................................................18
Bank Reconciliation...............................................................................................................................18
QUESTION 2...............................................................................................................................................19
Control accounts....................................................................................................................................19
QUESTION 3...............................................................................................................................................20
Suspense Account..................................................................................................................................20
QUESTION 4...............................................................................................................................................21
(a) Required to prepare updated cash book and bank reconciliation statement..................................21
QUESTION 5...............................................................................................................................................23
Journal entries.......................................................................................................................................23
CONCLUSION.............................................................................................................................................25
REFERENCES..............................................................................................................................................26

INTRODUCTION
Financial accounting is the process of recording, summarizing and analyzing a corporation's
money transfer in order to achieve an accurate image of the company's financial condition and
performance. The creation of accounting policies other than an accounting records, cash flow
statement, and profitability statement – which capture their operational efficiency over a certain
period and liquidity statements at a single point in time is the primary goal of financial
accounting. Financial accounting is a branch of accounting that assists businesses in reflecting on
their assets and debts (balance sheet), sales and costs (income statement), and working capital
(operating cash declaration) (cash flow statement). Those spaces can be utilized for both internal
and exterior reasons especially when combined.
The work is split into two categories, one with its own amount of details. Some problems,
such as the types of investments integrating single-entry and double-entry bookkeeping, balance
sheet, and its usefulness, should always be completed well before the portion can be performed.
The second section of this component aims at creating journal entries for each action, and
perhaps even the Documents and a Control Account. The contrast between an accounting records
and a financial results, including the fundamentals of accountants and the net profit margin, are
all provided in the following section.
QUESTION 1
Different types of business transaction
A financial transaction is an operation or occurrence that has an economic or functional
impact on a firm and can be quantified in terms of finances. Accounting systems are any
business activities that have a direct impact on the company's financial condition and income
reports. To guarantee comprehensive and term associated while preparing financial statements, a
bookkeeping system needs to be able to capture all company activities.
Commercial transaction: It involves most operations or exchanges that have been detectable in
cash form and have an immediate impact on employment processes. There are three indicators
on the industrial association's prosperity, liability, operations, and profitability. Business
activities are behaviors some of which are essential to management and are reflected in the firm's

journals. Trades and credit financial transactions are the two kinds of services that are
commonplace.
Cash buyer: Involving the incoming and exterior stream of money. It involves trades,
expenditures, and financial transactions, along with other things.
Credit trade: It is defined as any process in which currency is not demanded at the period of
contract.
Things purchased on credit, equities generated from the sale are just a few instance.
Certain events prompt expanded the union's requirement and have a consequence on future cash
flow, although merchandise supplied on credit strengthens the foundation's assets.
Define single entry book keeping:
All recorded corporate actions must be supported by some type of realistic evidence or
form, according to this notion. It also indicates that accountancy and financial information
should be kept separately, free of any suspicion of impropriety. Monetary accounts receivable
are handled using a single entry bookkeeping system. Only one instruction is executed by the
bookkeeper. Like the double input system, there are no card payment sides.
Define double entry book keeping:
Entrance with two doors Every monetary transaction is handled by two or more accounts in the
accounting system. A individual, for example, sold a piece of wood at a marketplace. As a result,
the monthly payment accounts will grow, but the furniture account will drop by the same
amount. In today's world, it's a key concept that encompasses books of accounts. Each monetary
transaction has an opposite and comparable effect on two separate accounts.
Explain trial balance and its importance:
It is a report that outlines a statement of all information shared all business dealings most of
which are documented in the logbook records. In this circumstance, every company holding
quantities have really been represented on the document's bank transfer section. In other regards,
a trial balance is a marketed at the ending of every accountancy year just to represent the debit

and credit sums of the entities but use a leading. In the framework of trial balance importance are
mentioned below:
 Trial balance is used by employers to determine the debit and credit balances of accounts.
 It is committed to the employees in mitigating risk through record submission.
 It facilitates in the books of accounts by presenting essential data.
QUESTION 2
Calculation
1. Journal entries
Date Particulars CR DR
01/06/16 Cash a/c DR
To capital a/c
65000
65000
02/06/16 Purchase a/c DR
To accounts payable a/c
8000
8000
07/06/2016 Cash a/c DR
To sales a/c
4000
4000
08/06/16 Accounts payable a/c DR
To bank a/c
4000
4000
14/06/2016 Insurance expense a/c DR
To bank a/c
75
75
15/06/16 Accounts receivable a/c DR
To sales a/c
12000
12000
16/06/16 Purchase a/c DR
To accounts payable a/c
10000
10000
18/06/16 Computer equipment a/c DR
To cash a/c
3000
3000
20/06/16 Rent a/c DR
To bank a/c
150
150

21/06/16 Cash a/c DR
To sales a/c
10000
10000
25/06/16 Cash in hand
To bank a/c
100
100
30/06/16 Stationary a/c DR
To cash in hand a/c
30
30
Ledger accounts

Trial Balance

QUESTION 3
Different between financial statement and financial report
The terms "financial statements" and "report" are sometimes used indiscriminately.
However, there are certain differences in the financial information, forecasts, and yearly
declarations. Reports has been used to supplement the knowledge is considered in judgment.
Financial reporting has been more organized. They also utilize declarations to inform 3rd
authorities about their money position. Yearly reports must be filed for each fiscal cycle. The
proportions assessment is included in revenue recognition and it is used to determine the
corporate accounting profitability, stability, and effectiveness. Financial statements, on the other
hand, contain the balance sheet, statement of financial position, working capital, company's
financial report, and so on.
Financial reporting is necessary to provide businesses with in-depth information in order
to analyze company success. The reports aid in the valuation of enterprises, the forecasting of
working capital, and the scheduling of expenditures. The financial repercussions of the

corporation's choices are shown in the accounting in the documents. Some of these documents
are for internal use, while others are utilized by other organizations. Bankers, financiers, and
public officials scrutinize the corporate accounting records. They may also need to impose
adherence limitations on revenue recognition to other authorities in order to assure uniformity.
With each document they prepare, they should take a reasoned approach.
In the perspective of Brightstar Financial Company, there are many examples of financial
accounting, which are addressed elsewhere here:
Leader: Partners and owner make government technology to help them evaluate either to hold,
borrow, or offer so much of their properties.
Owners: Managers may even be calculated and the results. In new enterprises, although, model
is commonly consisted of skilled employees who have also been responsible the administering
the enterprise or an industry sector. They act as a means of platform independent brokers.
Executives: Those other researchers are concerned about either the intermediate and long
existence or viability. They're all over whether or not organisation can paying members' wages
and bring discounts. They may also be participating in the financial condition and outcomes in
addition to assessing client services and profession promotion opportunity.
Buyers: Unless an allowing firms have had a heavier or commitment, shoppers grow committed
in the person's capacity to sustain its appearance and establish overall quality. This necessity is
intensified in conditions at which employee’s consumers depend on something.
Funders: Equity financing is essential with institutional clients in evaluate the manufacturer's
financial performance. Independent big corporations, too, involve public data and evaluate how
well an investment is worthwhile or that it should be completed, altered, or scrapped.
While its percentage of users who’s provided government accounting is minimal, there were
some who could otherwise think critically. Investors and creditors facts would be both direct and
indirect. In almost the same method, Brightstar compiles accounting records for its subscribers.