Financial Accounting Assignment: Principles, Statements, and Analysis

This document provides a comprehensive solution to a financial accounting assignment, encompassing various key aspects of the field. It begins with an introduction to financial accounting, its purpose, and the regulations that govern it. The assignment delves into accounting principles such as separate legal entity, ongoing process, and the historical cost principle, among others. It also covers the concepts of consistency and material disclosure, providing practical examples. The solution includes journal entries, trial balances, income statements, and statements of financial position for multiple clients. It explains the accounting concepts of consistency and prudence, along with the purpose of depreciation and the widely used straight-line method. Additionally, the assignment addresses bank reconciliation statements, cash books, control accounts, and suspense accounts, including their features and differences. Overall, the document offers a detailed analysis of financial accounting practices, making it a valuable resource for students seeking to understand and apply these concepts.

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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
(1) Financial accounting and its purpose....................................................................................4
(2) Regulations relating to financial accounting........................................................................5
(3)Accounting rules and principles.............................................................................................6
Following are the accounting rules and principles-....................................................................6
(4)The conventions and concepts relating to consistency and material disclosure....................7
Client 1.............................................................................................................................................8
A Journal entries.........................................................................................................................8
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C trial balance ..........................................................................................................................23
CLIENT 2......................................................................................................................................24
A. Drafting an income statement..............................................................................................24
B. Preparing a statement of financial position..........................................................................25

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CLIENT 3......................................................................................................................................26
A. Preparing and Income statement..........................................................................................26
B. Presenting a statement of financial position.........................................................................27
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(c)Explain the following accounting concepts: ‘consistency’ and ‘Prudence’.........................27
(d)Purpose of depreciation in formulating accounting statements with the widely used
method. .....................................................................................................................................28
(a)purpose of preparing the Bank Reconciliation Statement ...................................................29
(b)Following are the areas where the difference between company accounts to bank accounts
occurs. ......................................................................................................................................30
C. Preparing the cash book (bank only) for Kedal Ltd.............................................................30
CLIENT 5......................................................................................................................................32
A. Drafting and balancing the accounts....................................................................................32
(b) Explain the term control account.........................................................................................34
CLIENT 6......................................................................................................................................35
(a)Explain the suspense account and its features with examples. ............................................35
B. & C. Drafting the trial balance with consideration of suspense accounts............................36
(d)Difference between suspense account and clearing account................................................36
CONCLUSION .............................................................................................................................37
REFERENCES..............................................................................................................................38

INTRODUCTION
Financial accounting is the field of accounting which deals with the financial information
of the company. This reports provide the information about the financial accounting , accounting
regulations, accounting principles and the convention concepts. This report consist of journal,
ledgers and trial balance of the given records. The report also provides the profit and loss
account and balance of ask data . The assignment has given the deeper insight of the consistency
, prudence concept and the purpose of depreciation, bank reconciliation statements suspense
account and its features, this assignment presents the bank reconciliation statements and the cash
books of Kendall ltd. The report provides the information about the sales ledger control account
and purchase ledger control account of the company. Report has discussed about the difference
between clearing and suspense account.
(1) Financial accounting and its purpose.
Financial accounting is the field of accounting which deals with the financial tracks of
monetary transaction. It is that field of accounting which examines all the working of financial
transactions in an accounting (Hatfield, 2014). The branch of accounting which concern with the

analysis , summary and reporting of financial statements . A financial statement on a routine
schedule are issued by the company. Every organization has a department named finance ,
which is critical part of the organization and every employee cannot handle it, only the finance
executives , or finance manager has right to take care of it , the working of these departments is
controlled and performed by the financial accounting.
The purpose of financial accounting is to give the data that is required for efficient
decision making. Another essential purpose of financial accounting is to prepare the report and
analyse it so that the position of the company can be determined. It also helps to identify the
firms' performance to outsiders such as creditors , tax authority and the investors(Macve, 2015. ).
The financial accounting emphasize all the cash flows in order check the stability of the
company . It accumulates and informs the financial information for the purpose to determine the
performance financial position of the business. This all information later, used to take the
decision about how to manage the working of the business or invest in it .
(2) Regulations relating to financial accounting.
The organizations' success is dependent upon the financial accounting. There are
numerous regulatory bodies that direct the accounting. They consist of certain norms which an
organization has to be follow. There are the set standards which need to be follow by the
organization at the time of decision making of financial activity. The regulatory bodies consist of
various association, commission, boards etc. they include the predefined working which need to
be follow. Some governing bodies of accounting are discussed under-
Security and exchange commission
The objective of the US. Securities and exchange commission is to save investors , and
maintain the fair market and ease the formation of capital. The main mission of SEC's is to
expound the law that are passes by the congress and guide the organization to implement these
laws.
The Financial Accounting Standards Boards (FASB)
The financial accounting standard boards were propounded on 1973 by the security
exchange commission. The main aim of the FASB is to create the financial accounting and
reporting standards for the public(Ruppel, , 2017.). FASB works on to modify the standards of
FA for the public. Another important mission of financial accounting standard accounting board
is that to protect the public from fraudulent and deceptive information from the organization.

International financial reporting system
International financial reporting system is taken out by IFRS foundation. Its main
objective is to provide the common language of accounting so it can be understand by the every
organisation across the country.
(3)Accounting rules and principles
Following are the accounting rules and principles-
(i) separate legal entity
An organization is separate from its owner in the eye of law. This accounting rule
signifies that the identity of the business is separate from its owner. All the workings are
undertaken separately from that of its owner.
(ii) Ongoing process
Ongoing process identifies that business keeps ongoing until it cannot be wind-up as per
accounting standards. In other words you cannot wind up or close the working with mutual
discussion. Any death of insolvency cannot stop the working of business or close the business.
(iii)The specific time period participles
Financial statements are always concern to a specific time. Accounting statement have
beginning date and closing date for the reporting of balance sheet. That helps the reader to
identify that when the transactions were conducted.
(iv) The Historical Cost Principle
For the valuation of the items historical cost is used. The amount at which item are
purchased and sale is use d for the valuation. The value of price due change due to recession ,
inflation, but these are not taken for the reporting purposes.
(v) The Full Disclosure Principle
These principles always signifies or keep strict focus on the scandals related to the
accounting in the news now a days (Maynard, 2017.). It needs all the information from the
company about their functioning in their financial statements.
(vi) The Recognition Principle
This principle of accounting states that company should recognize its income and expenses at the
time whey are accrued.
(vii) The Matching Principle

These principles work on the rule that for every transaction the accrual system of
accounting is used that means for every debit there should be the credit also and vice versa.
(viii )Money measurement principle
This accounting rules identifies that all the transactions , events and happenings are
recorded in terms of money.
(ix) The principles of materiality
The principle of materiality arises when the bookkeepers have to use their judgement.
This principle helps to correct the inaccuracies in all accounting records.
(x) The Principle of Conservative Accounting
The conservative accounting principles is adopted for the betterment for the company.
When the expenses takes place they are to be record immediately, but the income are to be
record when the cash is actually received.
(4)The conventions and concepts relating to consistency and material disclosure.
Convention of consistency
This convention of consistency focus that the accounting practices which are running
should remain same during over the year to year. The valuation methods were treated same as
period to period. For example , while the valuation of stock, it is taken that stock is valued at cost
or market price which ever is less , then this should be followed year after year. Consistency
doest not mean the inflexibility , if the necessity of change arises, it should be done and its effect
should be stated clearly.
Convention of material disclosure
The convention of material disclosure states that, at the time of disclosing the account all
the transaction recorded must have valid proof that from where they have arrived and recorded.

Client 1
A Journal entries