Financial Accounting Principles: A Comprehensive Report

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Financial Accounting Principles
1

Table of Contents
Introduction:.............................................................................................................................3
A.................................................................................................................................................4
1..............................................................................................................................................4
2..............................................................................................................................................5
B.................................................................................................................................................9
1..............................................................................................................................................9
2............................................................................................................................................23
3............................................................................................................................................26
4............................................................................................................................................28
5............................................................................................................................................30
References:..............................................................................................................................33
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Introduction:
This report suggests the expertise of an accountant for the numerous characteristics of
accountancy. This document indicates the numerous characteristics of accountancy that are
conventions, numerous outlines, and primary standards. So as to reveal these characteristics
in the report, several strategies are used. These techniques include guidelines, a variety of
accounting principles, bookkeeping approach, and conventions. Suspense account, trial
balance, journal entries, rectification entries, and ledgers, loss and income account, stability
sheet, the announcement of bank reconciliation are prepared in this assignment. This report
consists of an explanation of the approach of depreciation and the idea of accounting. To put
together the statement of the financial condition of the entity, numerous regulations of
accounting, recommendations, and their standards are used and explained in this file.
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A.
Introduction
The importance of financial accounting in a company is expressed in this report. There is an
explanation of accounting of the monetary position of the firm and the role of financial
accounting in the association in the document. The report additionally defines the meaning of
Stakeholders and the function of the stakeholders in a company. There are two different
categories of stakeholders which are external/outside stakeholders and internal stakeholders.
On the way to recognize the significance of stakeholders and the function of stakeholders in
the affiliation, the categories of stakeholders are explained with their respective persons
included in a particular category. This report additionally explains the numerous factors of
accounting of the monetary role of the business enterprise and information of the users of
financial accounting records.
Report- Body:
1.
In the market of commercial enterprise, financial accounting performs a vital function. It is
formed by using two important words which might be finance and accounting. The word
finance can be explained in terms of the financial challenge or monetary issue of the entity.
Another word accounting may be understood as the recording of numerous transactions
which occurs in the corporation among different persons (Nobes, 2014). These transactions
occur on a daily basis and it is essential to document all the transactions. With the aid of the
understanding of each individual term, it can remember the fact that recording of economic
exchanges for money is the most organized way of monitoring all of the records related to
pecuniary and monetary transactions of any enterprise. This method can be utilized by the
enterprise so as to identify all the transactions performed in money in the most organized
way. It shows the statistics associated with finance to the management of the organization.
This process may be carried out to supply numerous relevant data associated with financial
reporting to its users (Nobes, 2014).
The major significance of financial accounting is to supply all of the relevant information
linked to the monetary state of the company to the pioneers and personnel of the firm. Apart
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from this, there exist many different reasons for generating statements of financial
accounting. They are pointed out as below:
 With the help of monetary accounting, an organization may be capable of examining
their enterprise with the opposite enterprise inside the marketplace.
 This could additionally examine the agency to proportion the monetary circumstance
of the company to its customers so that the customers of the agency can make
appropriate selections to increase the enterprise of the agency greater (Nobes, 2014).
 It additionally assesses the businesses if you want to make numerous strategies and
also planning for the improvement of the commercial enterprise.
 With the assist of economic accounting, all the traders of the enterprise will get to
apprehend the details of the monetary function of the association which may support
them so one can make any choices related to any other funding in the business.
 It also supports the enterprise with a view to fulfill the diverse requirements of statues
and regulation which are applicable to the enterprise (Nobes, 2014).
 Financial accounting also assesses the agency that allows you to equate the recital in
their personal results in the previous few years.
2.
Every person who is the consumer of the economic assertion of the entity known to be a
stakeholder of the organization. Stakeholders are known as the person who works with the
enterprise for the purpose of enhancing the monetary condition of the affiliation.
Stakeholders are the one who operates inside the business enterprise so as to change the
monetary financial system of the affiliation in a better position. Stakeholders may be defined
as the group of people which includes investors, lenders, customers, government,
shareholders, authorities of taxation, bankers of company, debenture holders and the
monetary organization of the business enterprise are all integrated to form the stakeholders of
the enterprise.
Within the context of stakeholder's relationship with the company, they can be classified into
two categories which might be internal and external stakeholders. External stakeholders are
the individuals who are not associated with the employer however they have a benefit
associated with the company. Internal stakeholders are defined as the persons that are
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associated at once with the affiliation, those persons are the one who is operating in the
company (Beringer, et. al., 2013).
 Internal stakeholders: Internal stakeholders may be the one who is directly
connected to the organization. These are acknowledged to be the internal stakeholders
of the affiliation. Their private progress is at once related to the progress of the entity
due to which they positioned more efforts so as to amplify the progress of the
business. They are clearly a part of the business enterprise and doing work in the
office of the company (Beringer, et. al., 2013). They may be the shareholders of the
company, personnel, managers, pioneers, and board of administrators of the agency.
They examine the financial data of the agency and operate with the motive to grow
the organization.
 Directors of the board- BOD are those who are chargeable for taking various
selections so one can develop the commercial enterprise more. The profits of the
board of directors usually rely upon the growth of the business enterprise. Because of
which they take effective choices and want to enhance the boom of the agency
(Beringer, et. al., 2013). They are also regarded to be the top management of the
business. Board of director's shape various techniques via reading the fiscal
information of the affiliation to enhance the sales of the agency.
 Employees/ workers- Personnel is the one who is operating within the association
and do plenty of tough work in an effort to examine the business enterprise in
conducting the goals of the organization. They are the largest of the contributors to
the company in their monetary role and increase of the organization especially
depends on them Personnel is the maximum critical factor of the employer as the
organization's fulfillment ordinarily depends on the performance of their personnel
(Beringer, et. al., 2013). Personnel is also regarded to be the inner stakeholders of the
company and which targets to assess the enterprise in undertaking their goals and
objectives.
 External Stakeholders: All the ones individuals who are not a part of the affiliation
but are connected with the business enterprise and are tormented by the monetary
position of the association in the marketplace are known as external stakeholders of
the business enterprise (Abidin, 2015). Their point of interest with the business
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receives stricken by the losses, income and any fluctuations which take location in the
monetary function of the agency in the marketplace. As clear by way of the call itself,
outside stakeholders are the only who is outsider however they show curiosity in the
financial structure of the corporation.
 Merchants- Merchants are the one from which any agency purchases their uncooked
materials. They are also referred to as the enterprise sellers of the organization. There
are numerous commercial enterprise transactions which take place between the
providers and the employer. Providers are also stakeholders of the agency and that
they continually difficulty approximately the financial situation of the enterprise
within the market (Abidin, 2015). Company’s manufacturing mainly relies upon on
their suppliers and the profit of the corporation additionally depends on the suppliers.
 Customers- For the success of any enterprise, consumers play a vital role. They are
the only who purchases services or products of the enterprise, the agency's boom
more often than not relies upon at the intake rate of the agency. It is important for the
employer to offer all of the records approximately the product and services to the
customers so that more customers will buy their products (Abidin, 2015). The
economic circumstance of the agency, in general, relies upon the reaction they got
from the purchasers in the market. Customer rate of the corporation also depicts the
social responsibilities of the organization.
 Taxation Establishments- On every occasion any business enterprise makes income,
them some part of their earnings gets charged with the aid of the government in the
form of taxes. Maximum of the time, they tune the economic facts of the corporation
to become aware of the consistency of the business in paying the taxes (Abidin,
2015). Tax authorities are those who price some quantity from the organization.
Those people keep eye on all of the document of the company regarding their
earnings and losses so that it will gather taxes from the company.
 Moneylenders- Moneylenders are the persons who determine the business enterprise
to improve the fiscal circumstance of the affiliation. These are the people who
supported the organization of their terrible section and help the company financially.
The enterprise has to make certain to enhance the financial circumstance inside the
market which will go back the money to its lenders (Abidin, 2015). These persons get
affected with any fluctuation within the fiscal scenario of the company in the
marketplace as they want complete assurance so that it will get their amount of money
again.
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Conclusion:
In this report of the assignment, numerous characteristics of financial accounting had been
identified. This report has defined the significance of financial recording and the role of
financial reporting in the expansion of the corporation. It has defined the meaning of
numerous stakeholders of the company and explanation of the term stakeholders with its
examples. The report has explained the numerous potential investors of the business
enterprise such as internal and external stakeholders and the significance of those persons in
the entity. Typically, the record has shown the relevance of financial recording and the
position of stakeholders within the enterprise.
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B.
1
(a)
Books of Alexandra
Journal Entries
Date Particulars L.F.
Amount
Dr.
Amount
Cr.
2019
Jan-
01 Storage cost a/c Dr. 450
To Bank a/c 450
(Being storage costs paid)
Jan-
02 Purchase a/c Dr. 6080
To S. Hood a/c 1450
To D. Main a/c 2060
To W. Tone a/c 960
To R. Foot a/c 1610
(Being goods purchased on credit)
Jan-
03 J. Wilson a/c Dr. 1200
T. Cole a/c Dr. 1650
F. Syme a/c Dr. 2100
J. Allen a/c Dr. 1020
P. White a/c Dr. 2520
F.Lane a/c Dr. 980
To Sales a/c 9470
(Being goods sold on credit)
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Jan-
04 Motor expense a/c Dr. 470
To cash a/c 470
(Being expenses paid in cash)
Jan-
07 Drawings a/c Dr. 1500
To Cash a/c 1500
(Being cash withdrawn for personal use)
Jan-
09 T. Cole a/c Dr. 680
J. Fox a/c Dr. 1310
To Sales a/c 1990
(Being goods sold on credit)
Jan-
11 Sales return a/c Dr. 680
To J. Wilson a/c 270
To F. Syme a/c 410
(Being goods returned by customers)
Jan-
16 Cash a/c Dr. 7020
To P. Mullen a/c 1400
To F. Lane a/c 3100
To J. Wilson a/c 850
To F. Syme a/c 1670
(Being cash received from debtors)
Jan-
19 R. Foot a/c Dr. 50
To Purchase return a/c 50
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(Being Goods returned to seller)
Jan-
22 Purchase a/c Dr. 3740
To L. Mole a/c 1830
To W. Wright a/c 1910
(Being goods purchased on credit)
Jan-
24 S. Hood a/c Dr. 3600
J. Brown a/c Dr. 4600
R. Foot a/c Dr. 1400
To Bank a/c 9600
(Being payment made to creditors by cheque)
Jan-
27 Salaries a/c Dr. 4800
To Bank a/c 4800
(Being Salaries paid by cheque)
Jan-
30 Business rate a/c Dr. 1320
To bank a/c 1320
(Being business rate paid by cheque)
Total 47170 47170
Nominal Ledgers
Sales Account
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Date Particulars Amount Date Particulars Amount
Jan-03
By J. Wilson
a/c 1200
By T. Cole a/c 1650
By F. Syme a/c 2100
By J. Allen a/c 1020
By P. White a/c 2520
By F. Lane a/c 980
Jan-09 By T. Cole a/c 680
Jan-31 To balance c/d 11460 By J. Fox a/c 1310
11460 11460
Feb-01 By balance b/d 11460
Purchase Account
Date Particulars Amount Date Particulars Amount
Jan-02 To S. Hood a/c 1450
To D. Main a/c 2060
To W. Tone a/c 960
To R. Foot a/c 1610
Jan-22 To L. Mole a/c 1830
To W. Wright a/c 1910 Jan-31 By balance c/d 9820
9820 9820
Feb-01 To balance b/d 9820
Storage cost Account
Date Particulars Amount Date Particulars Amount
Jan-01 To bank a/c 450
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