Financial Accounting Project Report: Clients, Concepts, and Analysis

This project report delves into the realm of financial accounting, encompassing a comprehensive overview of its principles and practical applications. The report begins with an introduction to financial accounting, emphasizing its role in recording, analyzing, and producing financial statements to assess a company's performance and inform decision-making. The project includes a business report that defines financial accounting, outlines its purpose, and identifies various stakeholders, both internal (employees, managers) and external (suppliers, investors, customers, government). Part B of the report presents detailed analyses of multiple clients, including ledger accounts, trial balances, and financial statements (profit and loss account, statement of financial position). Furthermore, the project addresses crucial accounting concepts such as consistency and prudence, and explains depreciation methods like the straight-line and diminishing balance methods. The project utilizes a small-sized accounting firm, Brooks City, to illustrate the practical application of these concepts and methods.

FINANCIAL
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
PART (A).........................................................................................................................................3
Business report ................................................................................................................................3
PART (B).........................................................................................................................................6
Client 1. ......................................................................................................................................6
Client 2......................................................................................................................................19
Client 3......................................................................................................................................23
Client 4......................................................................................................................................26
Client 5......................................................................................................................................28
CONCLUSION..............................................................................................................................30
REFERENCES..............................................................................................................................31

INTRODUCTION
The financial accounting is an accounting process in which all type of financial
transactions are recorded and analysed with an objective to produce financial statements (Moya,
Prior and Rodríguez-Pérez, 2015). With the use of this type of accounting, companies can
evaluate the financial performance and can take corrective steps as per need. In today's time, this
accounting is becoming an essential part because as the rules and regulations companies are
needed to implement it. Along with, this accounting is needed for effective decision making in
by organisations. In the project report, this accounting is described in broad sense as well as
various kind of stakeholders are also mentioned. Further, in the report double entry book keeping
system is applied as per the given data and trial balance is prepared. Along with final accounts
for sole traders, partnerships and limited companies are included. In addition, bank reconciliation
account is also prepared and in the end of project report control and suspense accounts are
explained.
For better understanding of it, a small sized accounting firm is chosen which is Brooks
city. This company is located in the London (United Kingdom). As well as provides advisory
services to their client companies.
PART (A)
Business report
1. Financial accounting- It can be defined as a field of accounting that is related with the
preparation of various kind of financial statements by help of analysis of financial transactions of
companies (Filzen and Peterson, 2015). Under this part of accounting, managers of companies
take decisions on the basis of it and make futuristic plans and strategies. By considering
importance of this accounting, herein below purpose of this accounting is mentioned such as:
 Beneficial in assessing the outcome of various activities- The financial accounting is
useful in aspect of evaluation of outcome of different kind of operations and activities. It
becomes possible because, the financial accounting consists preparation of different
financial statements and on the basis of this, organisations can assess the overall result of
all business activities and operations. Such as in the aspect of above Brooks city

accountancy firm, their financial manager evaluates the outcome of their all transaction
and take corrective action further.
 Important in making an estimation of cash- Additionally, the budgets are important for
making projection of future need of cash by help of the financial accounting (Arnaboldi,
Busco and Cuganesan, 2017). This can be done on the basis of analysis of cash position
under cash flow statement. Eventually, it is very significance for companies to assess the
futuristic need of cash so that they can make plan for other activities. Herein, the aspect
of above accountancy firm they manage the their cash in an effective manner by
projection of cash need and this is done by help of financial accounting.
 Important for calculation of tax rate- In addition, the financial reporting is crucial for
computation of tax rate. This is so because with the help of various kind of financial
statements, tax agencies can evaluate the total profit amount and on the basis of it they
compute the rate of tax.
 Maintains a control over assets- Another purpose of financial accounting is to keep an
effective control on the total assets of companies so that balance between assets and
liabilities can be managed. This can be done with the help of analysis of statement of
change in equity of company. For example in the Brooks city limited company, they are
able to control their assets by help of financial accounting.
 Important in proper evaluation of financial position of companies- As well as financial
accounting is useful in the aspect of evaluation of financial condition of companies. It is
so because with the help of various kind of financial statements, business ventures can
determine about changes which they need to do for improving financial position. Like in
the above accountancy firm their managers assess the financial condition by help of this
accounting.
So these are the main purpose of financial accounting which helps to the companies in their
various kind of activities.
2. Description of various kind of stakeholders.
Stakeholder- It can be defined as an individual or group of individuals who have their
interests in the activities and operations of business. The objective of stakeholders is to get

higher amount of profit by observing all the activities. There are two kind of stakeholders which
are internal and external. Below both kind of stakeholders are described that are as follows:
 Internal stakeholders- These stakeholders can be defined as those who make their
presence on a daily basis in the activities and operations of companies (Mastracchio
Jiménez-Angueira and Toth, 2015). As well as these stakeholders are very important for
companies in the context of increasing profitability. This is so because under internal
stakeholders employees, board of director, managers etc. are included. If they will not
perform their roles and responsibilities effectively then it will hamper companies'
financial position. Below description of these internal stakeholders is mentioned that is as
follows:
* Employees- These are one of the important internal stakeholders in companies because they
take responsibility to perform all kind of activities and functions that is linked with the financial
performance of companies. For example in a manufacturing entity, employees are too crucial in
the aspect of completing activities regarding to production. If employees will not perform well
then it can lead to lower production and higher loss. The reason for which they show interest in
financial information of companies is to assessing own performance as well as to make
improvement as per the analysis of financial position.
* Manager- The term manager may be defined as a kind of internal stakeholder who manage all
the human and financial resources of companies effectively (Deegan, 2017). Their role is very
crucial for companies because they are the only who are responsible for controlling the entire
functions. The managers show interest in financial information of companies for preparation of
strategies, plans and policies. With the help of available financial information, they evaluate
areas of improvement which becomes a framework to prepare plans and policies.
 External stakeholders- These are the stakeholders who do not take part into business
activities and operations. They observe companies' financial activities in order to take
investment decisions. There are various kind of external stakeholders and some of them
are mentioned below:
* Suppliers- The suppliers are those who sell the goods to companies on cash basis and credit
basis. When they sell goods on credit then it becomes necessary for them to evaluate financial
information of companies. This is so because if companies' financial position will be good then

suppliers will not hesitate to offer goods on credit. Hence, this is the main reason for which
suppliers show interest in the financial position of companies.
* Investors- These stakeholders are those who invest their capital in the companies operations
with an objective to earn higher revenue in form of return ( Thompson and Washington, 2015).
They select the organisation for investment as per financial position. This is being done by
analysis of financial information. Hence, it is the main reason for which investors show their
interest in financial information of companies.
* Customers- The customers are king of market because profitability of companies depend on
number of customers who make purchase. These are very important external stakeholders
because all companies try to maximise number of customers as much as possible. The customers
show interest in financial position of companies because on the basis of it, they can take their
purchasing decisions. In broad sense, customers usually prefer those companies whose financial
condition is strong and it can be assessed by analysis of financial information. Hence, it is the
main reason for which customers show interest in financial position of companies.
* Government- Government is a type of external stakeholder which takes taxation amount from
companies (Zhang and Zhang, 2017). In this process, financial information plays an important
role because with the help of financial performance, government measures the rate of tax. Along
with, this is essential for companies to pay the amount of taxation to government. Hence, it is
the main reason for which government shows interest in financial performance of companies.
So these are the main internal and external stakeholders who have various kind of reasons to
show interest in the financial informations of companies.
PART (B)
Client 1.
(i)

Ledger accounts: