Financial Accounting Principles: Semester 1 Assignment

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Assignment Title: Financial Accounting Principles
Student name:
Student number:
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Table of Contents
a........................................................................................................................................................4
1. Define financial Accounting and its purpose........................................................................4
2. Name two internal stakeholders and four external stakeholders of a large business
organization. For the internal and external stakeholders, comment briefly why each of them
might be interested in the financial information of the organisation...........................................4
External stakeholders...............................................................................................................5
Internal stakeholders................................................................................................................5
b.......................................................................................................................................................6
Client 1.........................................................................................................................................6
Purchase Ledger...........................................................................................................................7
General Ledger.............................................................................................................................8
Cash Accounts..............................................................................................................................9
Sales Ledger.................................................................................................................................9
Nominal ledgers.........................................................................................................................10
Client 2...........................................................................................................................................12
(a) Prepare the statement of Profit and loss statement for Munteanu Ltd., for year ended 31st
December 2018..........................................................................................................................12
(b) The statement of financial position of Munteanu Ltd., as at 31st December 2018...............12
(c) Explanation of the accounting concepts ‘Consistency’ and ‘Prudence’...............................12
d) Briefly describe the purpose of depreciation in formulating accounting statement, and
illustrate two widely used methods of calculating it, together with the circumstances in which
each might be appropriate..........................................................................................................13
(e) Critically evaluate the difference between the financial statements prepared by Sole Trader
and Limited Companies.............................................................................................................13
Client 3...........................................................................................................................................14
A) Explain the purpose of preparing .........................................................................................14

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B) List and explain some of ......................................................................................................14
C) Explain the term “imprest” in petty cash system..................................................................14
D) Reconciliation for Burcu Ltd................................................................................................14
Updated cash book for Burcu Ltd:.........................................................................................14
Banking Reconciliation statement at 30th September 2018...................................................16
Client 4...........................................................................................................................................16
a).................................................................................................................................................16
i) Sales ledger control Account for Hilly...............................................................................16
ii) Purchase ledger Control Account for Hilly.......................................................................16
b) Explanation of the term “Control Accounts”.........................................................................17
Client 5...........................................................................................................................................17
(a) Define with example, the Suspense account and its main features......................................17
b) Drafting the Trial Balance by using the control accounts.....................................................17
(c) Suspense account..............................................................................................................18
Clearing of suspense account.................................................................................................18
References......................................................................................................................................19

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a.
1. Define financial Accounting and its purpose
Financial accounting is accounting by which classification, analysis, summarising and recording
of the financial transactions of the organisation takes place. The key goal of financial accounting
is to present with fair and true reflection of financial affairs of the organisation. For
understanding the basic idea of financial accounting, there has to be understanding of the double
entry method and debit and credit and finally one understands ledgers, journals, trial balances
and the four kinds of financial statements.
The purpose of financial accounting is to provide five kinds of financial data which are
expenditures, revenues, liabilities, assets and equities (Drachal, 2014). All these are segregated
into income statement, balance sheet, cash flow statement, statement of changes in shareholder’s
equity.
So, the financial statements give the details regarding the financial situation, performance and
amendments in the financial position of the business which is valuable for various users so that
they can make it normal decisions in an effective manner.
2. Name two internal stakeholders .........
Source: M-Guider, (2017)

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Each project has stakeholders who get impacted in a positive or a negative way. The success or
failure of the project is dependent on handling those stakeholders by knowing and understanding
their requirements, and mapping their capacities of influencing the project results.
The stakeholders can be widely categorised into external as well as internal stakeholders. The
internal stakeholders are individuals who you are within the funny and at various levels. They
might be holding various authority levels like staff members, management, sponsors etc.
The external stakeholders are the individuals who will show interest in the business, and can
influence business decisions with their involvement in various proportions. The recognition of
each stakeholder and evaluation of their influence and interest in the business can assist the
project team to improve the support and mitigate the possible negative effects.
External stakeholders
 Customers: These are the main stakeholders for any business or any project and it is
important to know the customer requirements and demands for making the project
successful. This recognition of demands can be done by assessment and feedback method so
that the product features can be enhanced and there can be avoidance of creation of a wrong
product.
 Competition: These also need careful assessment. It is not necessary that the organisation
does the same thing like the competitor however research has to be carried out for
understanding how to stack up against the competition (Phillips and Freeman, 2011). It is
important to understand how the goods and services are unique and different from the
competitors. The assessment of the preferences and dislikes of the goods and services can
assist in getting a clear picture of the way in which the business can differentiate itself.
 Suppliers: In case of the purchasing businesses, there has to be focus on making the suppliers
as the key element of the operations as the providers can contribute to the value added
services. Suppliers can be useful in the effective planning procedure of the purchase
department. There is a need for well arranged management with the suppliers so that huge
profits can be generated for the buying organisations as well as the suppliers.
 Government: The government might have interest in the technological growth and innovation
however it will also less stress on protection of the nationwide security and freedom of
people. These can be insured by implementation of the regulations and laws. The business
has to make sure that all of the projects are in alignment to the regulations. Government gets

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paid in terms of taxation, and therefore it also requires knowing about the organisational
growth, its financial details, and revenues from expenses and how the business abides by the
law. All these details are available in the annual statements of financial statements of the
organisations.
 Society: Sometimes the goals of the organisation or its projects can have effect on society,
people and environment. So it is important for the business to crackdown and limits the
negative impacts of its operations and enhances the positive ones. The business has to make
interactions with people in the society for understanding their requirements, ideas, problems
and appropriate solutions have to be found along with gaining the acceptance.
Internal stakeholders
 Employees: These are the significant stakeholders for a huge organisation because the great
outcomes can be achieved by engagement of workers towards the goals of the projects. The
decisions of the management which have impact on the matters connected with salaries, job
security are highly significant for the stakeholders (Miller and Reason, 2013). The workers
are highly satisfied when they see that they are considered as the part of the bigger and
highly significant am of the business, which they share with other staff members.
 Sponsors: They are biased for supporting the project and they will get some advantage from
the smooth implementation of the project. They are concerned about the maximization of the
maximisation of the gains of the business.

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b.
Client 1
Particulars Dr (£) Cr (£)
1. Storage cost Dr 450
To bank A/c 450
2. purchase A/c Dr 4,630
To S Hood A/c 1,450
To D Maine 2,060
To W Tone A/c 960
To R Foot A/c 1,610
3. J Wilson A/c Dr 1,200
T Cole A/c Dr 1,650
F Syme A/c Dr 2,100
J Allen A/c Dr 1,020
P. White A/c Dr 2,520
F. Lane A/c Dr 9,80
To sales A/c 9,470
4. Motor expenses A/c Dr 470
To cash A/c 470
7. Drawings A/c Dr 1,500
To cash A/c 1,500
9. T Cole A/c Dr 680
J Fox A/c Dr 1,310
To sales A/c 1,990
11. Sales returns A/c Dr 680
To J Wilson A/c 270
To F Syme A/c 410
16. Cash A/c Dr 7,020
To P. Mullen A/c 1,400

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To F. Lane A/c 3,100
To J. Wilson A/c 850
To F. Syme A/c 1,670
19. R. Foot A/c Dr 50
To purchase return A/c 50
22. Purchase A/c Dr 3,740
To L. Mole A/c 1,830
To W. Wright A/c 1,910
24. S. Hood A/c Dr 3,600
J. Brown A/c Dr 4,600
R. Foot A/c Dr 1,400
To Bank A/c 9,600
27. Salary A/c Dr 4,800
To bank A/c 4,800
30. Business rates A/c Dr 1,320
To bank A/c 1,320
Purchase Ledger
Hood A/c
Particulars Dr (£) Particulars Cr (£)
To Cash At bank 3,600 By balance b/d 12,150
To Balance c/d 10,000 By Purchase A/c 1,450
13,600 13,600
Maine A/c
Particulars Dr (£) Particulars Cr (£)
To Balance c/d 2,060 By Purchase A/c 2,060
2,060 2,060
Foot A/c
Particulars Dr (£) Particulars Cr (£)
To Purchase return 50 By Purchase A/c 1,610
To Cash at bank 1,400

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To balance c/d 160
1,610 1,610
Wright A/c
Particulars Dr (£) Particulars Cr (£)
To balance c/d 1,910 Purchase A/c 1,910
1,910 1,910
Brown A/c
Particulars Dr (£) Particulars Cr (£)
To Cash at bank 4,600 By Balance b/d 16,600
To balance c/d 12,000
16,600 16,600
Tone A/c
Particulars Dr (£) Particulars Cr (£)
To balance c/d 960 Purchases 960
960 960
Mole A/c
Particulars Dr (£) Particulars Cr (£)
To balance c/d 1,830 Purchases 1,830
1,830 1,830
Cash Accounts
Cash At Bank A/c
Particulars Dr (£) Particulars Cr (£)
to bal b/d 68,400 Storage costs 450
To Mullen 1,400 By Hood 3,600
To Lane 3,100 By Brown 4,600
To Wilson 850 By Foot 1,400
To Syne 1,670 By Salaries 4,800
By business rates 1,320
By bal c/d 59,250

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75,420 75,420
Cash in Hand A/c
Particulars Dr (£) Particulars Cr (£)
to bal b/d 15,600 By motor expenses 470
By Drawings 1,500
By bal c/d 13,630
15,600 15,600
General Ledger
Premises A/c
Particulars Dr (£) Particulars Cr (£)
To balance b/d 240,000 By bal c/d 240,000
240,000 240,000
Fixtures A/c
Particulars Dr (£) Particulars Cr (£)
To balance b/d 8,100 By bal c/d 8,100
8,100 8,100
Capital A/c
Particulars Dr (£) Particulars Cr (£)
By bal. c/d 389,000 To bal b/d 389,000
389,000 389,000
Van A/c
Particulars Dr (£) Particulars Cr (£)
To balance b/d 51,250 By bal c/d 51,250
51,250 51,250
Inventory A/c
Particulars Dr (£) Particulars Cr (£)
To balance b/d 23,900 By bal c/d 23,900
23,900 23,900
Drawings A/c
Particulars Dr (£) Particulars Cr (£)

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To cash in hand 1,500 By bal c/d 1,500
1,500 1,500
Sales Ledger
Lane A/c
Particulars Dr (£) Particulars Cr (£)
to bal b/d 980 By cash in bank 3,100
To Sales 6,100 By bal c/d 3,980
7,080 7,080
Wilson A/c
Particulars Dr (£) Particulars Cr (£)
To Sales 1,200 Sales Return 270
Cash at bank 850
By bal c/d 80
1,200 1,200
Mullen A/c
Particulars Dr (£) Particulars Cr (£)
to bal b/d 4,400 By cash in bank 1,400
By bal c/d 3,000
4,400 4,400
White A/c
Particulars Dr (£) Particulars Cr (£)
To Sales 2,520 By bal c/d 2,520
2,520 2,520
Cole A/c
Particulars Dr (£) Particulars Cr (£)
To Sales 1,650 By bal c/d 2,330
To Sales 680
2,330 2,330
Syne A/c

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Particulars Dr (£) Particulars Cr (£)
To Sales 2,100 Cash at bank 1,670
Sales return 410
By bal c/d 20
2,100 2,100
Allen A/c
Particulars Dr (£) Particulars Cr (£)
To bal b/d 6,100 By bal c/d 7,120
To Sales a/c 1,020
7,120 7,120
Fox A/c
Particulars Dr (£) Particulars Cr (£)
To Sales a/c 1,310 By Sales Return 1,310
1,310 1,310
Nominal ledgers
Sales A/c
Particulars Dr (£) Particulars Cr (£)
to bal b/d 11,460 To debtors 9,470
To debtors 1,990
11,460 11,460
Storage cost A/c
Particulars Dr (£) Particulars Cr (£)
To Cash at bank 450 By bal c/d 450
450 450
Salaries A/c
Particulars Dr (£) Particulars Cr (£)
Cash at bank 4,800 By bal c/d 4,800
4,800 4,800