Introduction to Financial Accounting: A Comprehensive Case Study

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FINANCIAL ACCOUNTING

Table of Contents
Introduction....................................................................................................................................3
Task 1:.............................................................................................................................................4
Task 2:...........................................................................................................................................10
Task 3............................................................................................................................................18
Task 4............................................................................................................................................22
Conclusion....................................................................................................................................28
Reference List...............................................................................................................................29

Introduction
There are certain processes that are followed during the recording of the “financial statements” in
the “books of accounts”. These are vital for the business entities to perform so as to get proper
utilisation of resources. These help the business entities to record their “transactions related to
the finance” in the “books of accounts”. These are the main things that can be seen from the
“financial statements” of the business entities.
The assignment will provide detailed information about different types of processes through
which the entities record their transactions in the “books of accounts”. These are vital for the
entities to perform so that the workings are done properly. These will help the business entities to
work properly by completing the different areas and aspects of the books. These are very
significant for the business entities to work properly.

Task 1:
Record business transactions using double entry book-keeping, and be able to extract a
trial balance
1.1

Table 1: Trial Balance of Catherine Horton
(Source: Created by learner)
1.2

1.3
“Journal Entries”
Date Particulars L.F. Debit (£) Credit (£)
1st January, 2019 “Storage A/c … Dr” 200
“To Bank A/c” 200
2nd January, 2019 “Purchase A/c …Dr” 6080
“To S. Hood” 1450
“To D. Main” 2060
“ To W. Tone” 960
“ To R. Foot” 1610
3rd January, 2019 “J. Wilson A/c …Dr” 1120
“T. Cole A/c …Dr” 1640
“F. Syme A/c … Dr” 2080

“J. Allen A/c … Dr” 910
“P. White A/c … Dr” 2420
“F. Lane A/c … Dr” 770
“ To Sales A/c” 8940
4th January, 2019 “Motor Expenses A/c … Dr” 470
“To Cash A/c” 470
7th January, 2019 “Drawings A/c … Dr” 1500
“To Cash A/c” 1500
9th January, 2019 “T. Cole A/c …Dr” 680
“J. Fox A/c … Dr” 1310
“To Sales A/c” 1990
11th January, 2019 “Purchase return A/c … Dr” 680
“To J. Wilson” 270
“To F. Syne” 4110
14th January, 2019 “Van A/c … Dr” 28800
“ To Abel Motors” 28800
16th January, 2019 “Bank A/c … Dr” 7020
“To P. Muller” 1400
“To F. Lane” 3100
“To J. Wilson” 850

“To F. Syme” 1670
19th January, 2019 “R. Foot A/c … Dr” 50
“To Purchase Return” 50
22nd January, 2019 “Purchase A/c …Dr” 3740
“To L. Mole A/c” 1830
“To W. Wright A/c” 1910
24th January, 2019 “S. Hood A/c … Dr” 3600
“J. Brown A/c … Dr” 4600
“R. Foot A/c … Dr” 1400
“To Bank A/c” 9600
27th January, 2019 “Salaries A/c … Dr” 4800
“To Bank A/c” 4800
30th January, 2019 “Business Rates A/c … Dr” 1320
“To bank A/c” 1320
31st January, 2019 “Abel Motors A/c …Dr” 20500
“To Bank A/c” 20500
Task 2:
Prepare final accounts for sole-traders, partnerships and limited companies in accordance
with appropriate principles, conventions and standards

2.1
The name “final accounts” suggests to those accounts that are done on the final stage and there
are no other accounts that are produced by the business entities. These are significant for the
business entities to work properly so that they get the “statement of financial position” at the end.
This is vital for them to work according to the structures of the rules and regulations that are
provided. The preparation of the final accounts is very significant for the management of
business entities.
2.2
“Statement of Profit and Loss”
“Fiscal year ends in December. Pounds in millions except per share data.” 2018
“Revenue” 265595
“Cost of revenue” 163756
“Gross profit” 101839
“Operating expenses”
“Research and development” 14236
“Sales, General and administrative” 16705
“Total operating expenses” 30941
“Operating income” 70898
“Interest Expense” 3240
“Other income (expense)” 5245
“Income before taxes” 72903
“Provision for income taxes” 13372
“Net income from continuing operations” 59531

“Net income” 59531
“Net income available to common shareholders” 59531
“Earnings per share”
“Basic” 12.01
“Diluted” 11.91
“Weighted average shares outstanding”
“Basic” 4955
“Diluted” 5000
“EBITDA” 87046
“Statement of Cash Flow”
“Fiscal year ends in December. Pounds in millions except per share data.” 2018
“Cash Flows From Operating Activities”
“Net income” 59531
“Depreciation & amortization” 10903
“Deferred income taxes” -32590
“Stock-based compensation” 5340
“Change in working capital” 34694
“Accounts receivable” -5322
“Inventory” 828