Financial Accounting Project: Analysis and Reconciliation

Desklib offers past papers and solved assignments; this project covers financial accounting comprehensively.

FINANCIAL ACCOUNTING
1

Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
Task 2.............................................................................................................................................11
Task 3.............................................................................................................................................19
Task 4.............................................................................................................................................25
Conclusion.....................................................................................................................................30
Bibliography..................................................................................................................................31
2

Introduction
Financial Accounting is very much important for the organisations that are used by them for one
year. All the information is being written in the company books to keep a record of all the
transactions that are being done over a period. These are very much important for the
organisation as because the use of the books of accounts shows the “cash flow statement”,
“financial statement” and “income statement” of the organisation. These are very much
important for the organisations and business enterprises to follow and work accordingly.
Different necessary performance of the financial statement will be performed in this project such
as the “journal, ledger, trial balance, statement of the position of finance, statement of cash flow,
income statement and the bank reconciliation statement”. These are required by the organisations
to keep a track of all the incomes and the expenses that are related to the workings of the
organisation. The project will give a clear idea of the ‘financial statements’ that are required,
which will give all the necessary information that is required for the management of the different
companies and the business entities.
3

Task 1
Record business transactions using double entry book-keeping, and be able to extract a
trial balance.
Introduction
The journal entries are the first step that is followed by the business entities to post the daily
expenses and incomes in the double entry book keeping. Journal Entries are then followed by the
ledger accounts, where the information from the journals is posted in the respective ledger
accounts to get balances that are left in the entity for that period. The balances are then posted to
the trial balance to check the accurateness of the financial situation in the organisation. Key
important thing for the management of the company is to start the double entry book keeping
from the journals that are provided (Christensen et al., 2016). This part of the report will consist
of the trial balance that is being prepared from the balances that are provided. All the information
will be used to produce the ledger accounts of the organisation, and finally, the new trial balance
will be produced from the ledger accounts that are produced (Williams and Dobelman, 2017).
Balance as on
31st December, 2018
Assets Amount (£)
Premises 340000
Van 51250
Fixtures 8100
Inventory 63900
Receivables
P Mullen 1400
F Lane 3100
4

Cash at Bank 62400
Cash in Hand 5600
Liabilities Amount (£)
Payables
S. Hood 2150
J. Brown 4600
1.1. Prepare a trial balance at 31st December 2018 and calculate the Owner’s Capital at
31st December 2018 using the balancing figure.
Trial Balance
As on 31st December, 2018
Particulars Amount (£) Amount (£)
Premises 340000
Van 51250
Fixtures 8100
Inventory 63900
P Mullen 1400
F Lane 3100
Cash At Bank 62400
Cash in Hand 5600
5

S. Hood 2150
J. Brown 4600
Capital 529000
535750 535750
Table 1: Trial Balance of Catherine Horton
(Source: Created by learner)
1.2. Continuing from information provided in the Trial Balance, you should record the
following business transactions for January 2019.
Fixed Assets A/c
Dat
e Particulars
J.F
. Amount (£)
Dat
e Particulars
J.F
. Amount (£)
To Bank A/c 340000
To Bank A/c 51250
To Cash A/c 8100
To Balance
B/d 463250 To Bank A/c 63900
463250 463250
Debtors A/c
Dat
e Particulars
J.F
. Amount (£)
Dat
e Particulars
J.F
. Amount (£)
To Sales A/c 4500
By Balance B/d 4500
4500 4500
Cash in Hand A/c
Dat
e Particulars
J.F
. Amount (£)
Dat
e Particulars
J.F
. Amount (£)
6

By Opening Balance 5600
To Balance
B/d 5600
5600 5600
Creditors A/c
Dat
e Particulars
J.F
. Amount (£)
Dat
e Particulars
J.F
. Amount (£)
By Purchase A/c 6750
To Balance
B/d 6750
6750 6750
Capital A/c
Dat
e Particulars
J.F
. Amount (£)
Dat
e Particulars
J.F
. Amount (£)
To Opening Balance 529000
By Balance
B/d 529000
529000 529000
Cash at bank A/c
Dat
e Particulars
J.F
. Amount (£)
Dat
e Particulars
J.F
. Amount (£)
By Opening Balance 62400
To Balance
B/d 62400
62400 62400
Trial Balance
7

As on 31st December, 2018
Particulars Amount (£) Amount (£)
Fixed Assets A/c 463250
Debtors A/c 4500
Cash in Hand A/c 5600
Creditors A/c 6750
Capital A/c 529000
Cash at bank A/c 62400
535750 535750
1.3. Apply the trial balance figures and show in which statement of financial accounts.
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
8

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
9

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
Conclusion
The report is very much important for the company as this part consists of the different types of
basic calculation that are vital for the company (Crowther, 2018). It is seen that there are a
number of balances, which are being presented in the report and the trial balance is produced to
get the capital invested by the owners of the company. The ledger accounts are prepared from the
trial balance, and the company to get new balances, which will be used by them to perform the
10

new trial balance that is necessary for the company to follow, uses the additional information.
The process is very much important for the company to work accordingly so that the company
reduces the issues and the company in the books of accounts followed by them maintains the
different types of things Henderson et al., 2015).
11

Task 2
Prepare final accounts for sole-traders, partnerships and limited companies in accordance
with appropriate principles, conventions and standards.
2.1. Describe the financial accounting statements prepared by a business entity. Discuss the
type of information presented through each statement.
The “financial statements” that are necessary in the companies are very vital for them to follow
and work accordingly. The reason behind this is that with the use of the final accounts the
company gets to know about the position of the finance of the company (Libby et al., 2017).
There are three parts of the final accounts that are prepared by the partnership firms, sole traders,
and the limited companies to check the standing of the finance of the companies. These are the
“balance sheet, the income statement and the cash flow statement”. The explanations of the
terms are as follows:
Balance Sheet
The “balance sheet” is recognized as the financial position statement of the organisation. These
are very much important for the company as because it helps the company to understand the
position of the financial statement (Dye et al., 2017). The balance sheet is done to check the
number of assets and liabilities that are present in the organisation. This also helps to check the
financial accuracy of the company, which is very much important for the company to perform.
This helps them in figuring out the assets that are available with the company and as well as the
number of liabilities that are present in the company. This is done for a period of one year if
nothing is mentioned in the agreements mentioned by the company.
Statement of Profit and Loss
The losses or profits that are acquired by the company are found in this part of the final accounts.
These are very vital for the company, which helps them to understand the amount of profit or
loss that is incurred by them (Zeff, 2018). This is also prepared for a period of one year if
nothing is mentioned in the agreements done by the organisation.
Statement of Cash Flow
12