Financial Accounting Principles: Regulations, Rules, and Statements

This assignment provides a detailed overview of financial accounting principles, regulations, rules, and concepts. It begins by defining financial accounting and its role in reporting and analyzing financial transactions, emphasizing the importance of GAAP and IFRS. The assignment then explores various regulations, including the Accounting Standard Board and Statements of Principles, highlighting their impact on financial reporting. It describes fundamental accounting rules and principles like the Full Disclosure Principle, Going Concern Principle, Matching Principle, and Cost Principle. Additionally, the assignment discusses key accounting conventions such as consistency and materiality disclosure. Task B includes practical examples of prime entry bookkeeping and double-entry recording with relevant ledgers for multiple clients, demonstrating the application of these principles in real-world scenarios. Desklib offers a wealth of similar solved assignments and past papers for students seeking further assistance.

Financial Accounting Principles
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Contents
Introduction.................................................................................................................................................3
PART A.......................................................................................................................................................4
Introduction.............................................................................................................................................4
1. Financial accounting Meaning.........................................................................................................5
2. Regulations related to Financial Accounting...................................................................................5
3. Description about accounting rules and principles...........................................................................6
4. Conventions and Concepts...............................................................................................................7
Conclusion...............................................................................................................................................8
TASK B.......................................................................................................................................................9
Client 1....................................................................................................................................................9
Client 2..................................................................................................................................................17
Client 3..................................................................................................................................................19
Client 4..................................................................................................................................................21
Client 5..................................................................................................................................................23
Client 6..................................................................................................................................................24
Conclusion.................................................................................................................................................26
Bibliography...............................................................................................................................................27
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Introduction
The main aim of the report is to understand about the various management accounting principles
with the explanation about the financial accounting, and the rules as well as principles of
financial management. The profit and loss statements are also prepared so that the understanding
of the financial accounts can be gained in the better way. These are the accounts which will help
the manager for the strategic decision making and in turn the profitability will be attained.
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PART A
Introduction
This part of the report deals with the understanding about the financial accounting and what are
the rules and regulations which are used in the financial accounting by the organization. With
this the concepts and the conventions are also heighted which are related to materiality disclosure
and consistency.
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1. Financial accounting Meaning
Financial accounting can be defined as one of the field of accounting which can be used for the
reporting and the analysis of the financial transactions. It is also used in the preparation of the
financial accounts (Onuoha, 2012). The various statements are prepared and then summarization
is done according to that which can be done in balance sheets, profit and loss accounts/income
statement or the cash flow statement. These statements are used to evaluate the performance of
the business operations within the organization. It is governed with the International Financial
Reporting Standards as well as the local standards which are used in the country. But the main
standard which is given in the jurisdiction is the Generally Accepted accounting Principles
(GAAP). These are the standards which define the rules as well as regulations which should be
considered by the organization so that the financial statements can be prepared in accordance
with those standards. These financial statements should be prepared accordingly as they helps to
take the strategic decisions for the long term objectives of the organization (Ramamoorti, 2017).
The statements available in the financial accounts are recorded so that the outsiders can get the
information related to the organization so that they can take decisions related to the investment
purposes. The main objective of the financial accounting is to maintain the capital of the various
objectives of the financial reporting.
2. Regulations related to Financial Accounting
There are various regulations which are related to the financial accounting so that the reporting
of the financial accounting can provide the clear and fair view of the financial statements of the
organization (Tool, 2018). But the main of the regulations which are used by most of the
organizations are:
Accounting Standard Board
The accounting standard board was taken in 1990 from the Accounting Standard Committee. The
main aim of the accounting standard board was to solve the problem of the financial reporting
and corporate accounting by providing the accurate framework (Ramamoorti, 2017). The
accounting standards determines that how the particular transaction should be reported in the
financial statements so that the true and the fair view of the financial accounts can be provided.
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These standards can be applied to all kinds of the organization irrespective of their nature. But
the initial aim of developing the accounting standards was to properly define the practices of
accounting so that better understanding can be created between the users and the managers of the
organization who are involved in the preparation of financial accounts (Onuoha, 2012).
Statement of Principles
The statement of principle for the financial reporting was published by the accounting standards
board in 1999. It was believed that the statement of the principle helps in assisting the areas of
issues and rethinking on them so that the judgment regarding sufficiency of the disclosures can
be facilitated (Onuoha, 2012). These statements describe the setters of standards on the view that
the activities should be reported and highlighted in the financial statements. The main motive of
these are to provide the framework which will helps in resolving the issues which are faced by
the accountants (Jones, 2012).
3. Description about accounting rules and principles
The accounting rules and the principles are the basic mechanism through which the financial
transactions are recorded in the financial accounts (Jones, 2012). The set of rules are established
so that the recording can be done according to the set rules and the principles are the common set
of the principles which are to be followed so as to comply with financial statements. There are
basically three rules which are:
Type Debit Credit
Personal The receiver The giver
Real What comes in What goes out
Nominal All expenses and losses All income and gains
The principles of accounting are as follows:
Full Disclosure Principle: It states that all the information should be disclosed by the
organization in their financial statements as all the information is important to the investor and
any other lender and the explanation about each entity should also be provided (Jones, 2012).
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Going Concern Principle: It believes that the organization will continue to operate in the long run
and will not liquidate in any of the unforeseen situations (Jones, 2012). It defers some its prepaid
expenses until the accounting period in future.
Matching Principle: The matching principle says that the expenses of the company should match
its revenues. It is done so that the misreporting of the earnings for the particular period can be
avoided.
Cost Principle: It is the principle which states that the all the assets are to be recorded in the cash
amount when they are acquired not when the settlement is made. This principle is also known as
the historic cost principle (Onuoha, 2012).
4. Conventions and Concepts
The conventions and the concepts are recorded so as to ensure that information related to
accounting in presented in the accurate and the consistent manner (Onuoha, 2012). The
materiality disclosure and the consistency are majorly explained:
Consistency Concept: The consistency concept states that once the accounting principles are
adopted that should be consistency followed in the future accounting periods (Adkins, 2018).
The change can only be made if that changes in leading to the improvement in the financial
results.
Convention of Materiality Disclosure: It is the convention which states that all the materials in
the financial statements should be recorded in proper manner. This will help the investors and the
shareholders to take the decisions accordingly by actually analyzing the financial performance
(Onuoha, 2012).
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Conclusion
It can be concluded that the proper rules and regulations should be followed by the organization
so that transparency can be maintained in the financial accounts and the investment decisions can
be taken accordingly. The financial accounting provides the accurate framework so that the
compliance can be reduced.
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TASK B
Client 1
I) The book of prime entry
In the books of Alexandra
For the year ended January 2018
Date Particulars Debit Credit
1-Jan-
18 Storage Expenses A/C Dr. 400
To Bank A/C 400
(Being Storage Cost paid by Cheque)
2-Jan-
18 Purchases A/C Dr. 6080
To S. Hood 1450
To D. Main 2060
To W. Tone 960
To R. Foot 1610
(Being goods purchased on credit)
3-Jan-
18 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. Whilte A/C Dr. 2420
F. Lane A/C Dr. 770
To Sales 8940
(Being goods sold on credit)
4-Jan-
18 Motor Expenses A/C Dr. 470
To Cash 470
(Being motor expenses paid)
7-Jan-
18 Drawings A/C Dr. 1500
To Cash 1500
Being cash withdrawal for personal use)
9-Jan-
18 T. Cole A/C Dr. 680
J. Fox A/C Dr. 1310
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To Sales 1990
(Being goods sold on credit to both)
11-Jan-
18 Sales Return A/c Dr. 680
To J. Wilson 270
To F. Syme 410
(Being sold goods returned)
14-Jan-
18 Van A/C Dr. 28500
To Abel Motors Limited 28500
(For purchased Van on credit)
16-Jan-
18 Bank A/C Dr. 7020
Discount allowed A/C Dr. 511
To P. Mullen 1400
To F. Lane 3100
To J. Wilson 850
To F. Syme 1670
To Receivables 511
(Being discount given and receivables paid)
19-Jan-
18 R. Foot A/C Dr. 50
To Purchase Return 50
(Being goods returned to R. Foot)
22-Jan-
18 Purchases A/C Dr. 3740
To L. Mole 1830
To W. Wright 1910
(Being goods purchased on credit)
24-Jan-
18 J. Brown A/C Dr. 4600
S. Hood A/C Dr. 3600
R. Foot A/C Dr. 1400
Payables A/C Dr. 976
To Bank A/C 9600
To Discount received 976
(Being discount received on purchases)
27-Jan Salaries A/C Dr. 4800
To Bank A/C 4800
(Being salaries paid by cheque)
30-Jan-
18 Business Rates A/C Dr. 1320
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To Bank A/C 1320
(Being business rates paid)
31-Jan-
18 Abel Motors Ltd. A/C Dr. 20500
To Bank A/C 20500
(Being paid to Abel Motors)
Owner’s Capital at January 1, 2018
Owner's Capital
Particulars Amount
Assets:
Premises 340000
Van 51250
Fixture 8100
Receivables 4500
Inventory 63900
Cash at Bank 62400
Cash in Hand 5600
Total Assets 535750
Liabilities:
Payables 6750
Total Liabilities 6750
Owner's Equity 529000
II) Double entry recording with relevant ledgers
Storage Expenses A/C
Date Particulars Debit Date Particulars Credit
1-Jan-18 To Bank A/C 400 31-Jan-18 By Balance c/d 400
Total 400 Total 400
1-Feb-18 To balance b/d 400
Purchases A/C
Date Particulars Debit Date Particulars Credit
2-Jan-18 To payables 6080 31-Jan-18 By Balance c/d 9820
22-Jan-18 To payables 3740
Total 9820 Total 9820
1-Feb-18 To balance b/d 9820
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Sales A/C
Date Particulars Debit Date Particulars Credit
31-Jan-18 To Balance c/d
1093
0 3-Jan-18 By Receivables 8940
9-Jan-18 By Receivables 1990
Total
1093
0 Total 10930
1-Feb-18 By balance b/d 10930
Motor Expenses A/C
Date Particulars Debit Date Particulars Credit
4-Jan-18 To cash 470 31-Jan-18 By Balance c/d 470
Total 470 Total 470
1-Feb-18 To balance b/d 470
Van A/C
Date Particulars Debit Date Particulars Credit
14-Jan-
18
To Abel Motors
Limited
2850
0
31-Jan-
18
By Balance
c/d 79750
1-Feb-
18 To balance b/d
5125
0
Total
7975
0 Total 79750
Drawings A/C
Date Particulars Debit Date Particulars Credit
7-Jan-18 To Cash 1500 31-Jan-18 By Balance c/d 1500
Total 1500 Total 1500
1-Feb-18 To balance b/d 1500
Abel Motors Ltd A/C
Date Particulars Debit Date Particulars Credit
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