Financial Accounting Report on Accounting Principles and Practices

This report provides a comprehensive overview of financial accounting, encompassing its definition, regulations, and core principles. It delves into the significance of financial accounting in organizational contexts, emphasizing its role in financial planning, strategy, and decision-making by stakeholders. The report explores accounting rules, including debit and credit principles, and conventions like consistency and material disclosure. It further includes detailed client examples, such as journal entries, ledger postings, and the preparation of financial statements like profit and loss statements and bank reconciliation statements. The report references key accounting standards and boards, such as FASB, IASB, and ASB, and also offers an understanding of financial statements such as income statement, balance sheet, cash flow statement, and statement of changes in equity. Overall, this report provides a valuable resource for understanding financial accounting principles and their application in real-world scenarios.

FINANCIAL ACCOUNTING
PRINCIPLE

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
BUSINESS REPORT......................................................................................................................1
Define financial accounting........................................................................................................1
Regulations related to financial accounting................................................................................3
Describe accounting rules and principles....................................................................................4
Conventions and concepts relating to consistency and material disclosure................................5
PART B............................................................................................................................................6
CLIENT 1........................................................................................................................................6
Journal entries.............................................................................................................................6
Ledger posting.............................................................................................................................8
CLIENT 2......................................................................................................................................10
Profit and loss statement...........................................................................................................10
Financial position statement......................................................................................................11
CLIENT 3......................................................................................................................................11
Statement of profit and loss statement of Raintree Ltd ...........................................................11
CLIENT 4......................................................................................................................................14
Bank reconciliation statement...................................................................................................14
Cash book..................................................................................................................................16
CLIENT 5......................................................................................................................................17
Ledger control accounts............................................................................................................17
CLIENT 6......................................................................................................................................17
Suspense account and reconcile................................................................................................17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Financial accounting is a part of managerial accounting. It not only depends upon
managing the financial accounts and operating the financial activities but also align the
functional department of organisation. There are some financial data and information are defined
in respect of making the financial plans and strategies. with the applicable data in regards to the
monetary position and soundness of the organization by abridging and deciphering the
informations in the money related explanations of the organization, for example, articulation of
benefit and misfortune, asset report, income proclamations and far reaching wage articulation.
This data is then utilized by different partners that are associated with the organization in taking
choices in regards to whether to put resources into the future undertakings of the organization or
not (Wang, 2014). These budgetary explanations likewise helps the providers in choosing
whether or not to give the crude material to the organization by decisions subject to financial
position of organisation.
This report is bifurcated in separate two parts. First part cover the meaning of financial
accounting, accounting principles and rules are defined in this context. Accounting rules and
principles which are used in organisational context are defined in this context. Accounting
conventions and concepts are related to consistency and material disclosure are also defined in
this context.
PART A
BUSINESS REPORT
Define financial accounting
Financial accounting is considered as a format of keeping the financial records and
information in effective manner so that the desired aim and objectives can be achieved in well
organised manner. There are type of rules and principles are made in terms of making the
accounting rules and principles are also defined in this context. It is required to analyse the
essential aspects in terms of measure the financial stability and build up capital base. Financial
accounting is mandatory for organisations in order to manage the functions and the departments
of association on regular basis and daily expenses are utilised as per the availability of financial
sources and management (Vyas, 2011).
There are some responsibility remain associated with finance managers and accountants
for data used in financial accounting and principle. Finance related bookkeeping procedure
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examines about the how budgetary exchanges are overseen and posted in the announcements so
they wind up viable in taking choices. It is introduced in the budgetary proclamations of the
organization speaks to genuine and reasonable perspective of the organization and it is
dependable for the financial specialists of the organization to take choices with respect to
whether to put resources into the organization or not. The different procedure of compromise are
talked about in this reports, for example, accounting framework, record posting framework,
planning of trial adjust and so forth. The standards of bookkeeping , significance of money
related records are additionally talked about in this undertaking report (Objectives of Financial
Accounting. 2017).
Financial accounting also considered as a process of making the financial accounts and
managing the operations and functions of business in well planned structure. The financial
accounting process is finished with utilization of certain pre decided rules which are issued by
the standard setting bodies, for example, FASB, IASB and so forth. The distinctive organizations
picks diverse bookkeeping frameworks that are set up by these standard setting bodies, for
example, US-GAAP, IFRS and so forth (Skogstad and et. al., 2011). Money related bookkeeping
is finished by keeping in see these gauges and it is the obligation of budgetary supervisors to
give the monetary proclamations moral benchmarks with the end goal that they speaks to
organizations genuine financial transactions and events. There are three main statements are
prepared by the organisation which are as follows;
Income statement: Balance sheet is the another name through which organisations are
defined in this context. this is the statement which is considered essential in terms of making the
financial accounts and variability of organisation in effective manner. All the expenses and
income which are revenue nature are considered in this statement. Sales, dividend received,
interest received are the examples of income. Depreciation, administration expenses, selling and
distribution expenses are the examples of income statement.
Financial Position statement: There are type of information remain divided in multiple
parts such as
 Assets: these are considered as owners property such as inventory, plant and machinery,
cash are the main elements considered in financial statements. Liabilities: these are considered as debts which are required to paid by organisation.
There are two type of debts are found in organisational context such as short term debt
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and long term debt. Creditors, bank overdraft, loans and debentures are the examples of
liabilities.
Cash flow statement: with the help of cash flow statements managers and accountants be
able to understand the flow of cash with in the operations and functions effectively. Cash flow is
evaluated in majorly three forms such as cash flow from operating activity, cash flow from
investing activity and cash flow form financing activity.
Change in Equity position Statement: there are changes seen in respect of analysing the
financial position of organisation and helps to determine the financial aspect. Change in equity
statement contains net profit and loss during the year from income statement, share capital issued
or repaid during the year and the dividend payments, gain or losses are also considered in terms
of equity (Scott, 2015).
Regulations related to financial accounting
There are a few standard of measurement and controls are made the degree that dealing
with the money related activities and transactions for better execution of budgetary actions.
Financial Reporting Council (FRC) are made in regard of showing budgetary data particularly
affiliation. Bookkeeping benchmarks and checks which are given by Sound accounting measures
(GAAP). This is on an extremely fundamental level remain related with caused noteworthy harm
standards, going concern, arranging rule, money related segment, importance, insurance and
immovability of money related introduction. ASB (Accounting Standard Board) in like way
gives foundations and benchmarks identified with monetary illuminations are in addition
portrayed in this uncommon condition (P Simnett and et. al., 2011.). It in like manner issues the
group decrees which gives quick bearing on the endorsed treatment of a particular trade where
unanticipated comprehension of a recommended accounting standard and treatment is required
(Biondi, and Zambon, 2013).
These standards overall urges manager and accountants to demonstrate the budgetary
information and accounting revelation of accounting systems. Models which are prepared under
ASB stay related with taking a gander at treatment of utilization and pay structure of coalition.
The main game-plan of standards was enlisted as Uniform Game arrangement of Records
(USOA) and Irish and UK GAAP issues essentials and approvals to the degree making measures
and establishments for keeping up and structure budgetary illuminations (Skogstad and et. al.,
2011). Enormous degree of bookkeeping course a significant part of the time issued to make and
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enlighten bookkeeping traditions by specific endeavor. Specific undertakings, as monetary guide,
annuity, keeping money and affirmation. Elucidations which are set up according to these
controls and principles are called as Statement of Recommended Practice (SORPs).
There are two or three statutes and heading moreover gave by the International
Accounting Standard board of trustees (IASC) as for organizing in 1973 (Scott, 2015). the IASC
produces bookkeeping models which are called as comprehensive bookkeeping measures (IAS).
There is a particular board is made subject to screen the exercises and the endeavor to make new
benchmarks and approvals. It is fundamental for relationship to the degree making the money
related structure in different structures. Chief focal point of legitimate experts and the
administrative bodies is to push the purposeful straightforwardness and consistency with the
money related declarations planned by relationship around the world. There is no any vitality of
law made comparatively as following the across the board cash related and bookkeeping rules for
affiliations working at authoritative level (Openshaw, 2013).
IASB is of the legitimate which issues standards, strategies and benchmarks subject to
cash related bookkeeping and bookkeeping presentation. The structure of IASB of various
sections, for example, Checking board (open capital market pros), IFRS establishment trustees,
by and large bookkeeping rules sheets, IFRS alerted chamber, IFRS understanding board. IFRS
which is known as General Budgetary Showing Models are the measures issues by IASB. GAAP
(Legitimate accounting standard) are taken after at careful level. General connection which
works business sharpens in different nations comprehend the benchmarks and proportions of ISA
and GAAP. There are techniques working party was framed in 1997 and reprimanded for
auditing with terms of structure and process.
Describe accounting rules and principles
There are three major rules are given in respect of accounting rules which are also
considered as golden rules of accounting;
1. Debit the receiver and credit the giver: The person that is suggested in this thought can
be a trademark individual and legal person. This control of accounting is material on all
the individual records with whom the associations deal on ordinary commence. In
addition, if that individual offers anything to the business then the persom is called
provider and his record is credited in the association's records. If such individual gets
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anything in light of a legitimate concern for the association then he charged in the records
of the association (Bhattacharyya, 2012).
2. Debit what comes in, credit what goes out: The veritable records are related to the
advantages of the association which can either come in or go out from the business. This
accounting guideline thinks about all the certifiable records of the association. If any of
the favourable position, for instance, device and stock come into the association then this
record is charged by the lead charge what comes in (Narayanaswamy, 2017). In addition,
if the association discards or offers any advantage then the record of that particular asset
is ascribed by the association as demonstrated by the accounting block credit what goes.
3. Debit all the expenses and losses and credit all income and gains: The apparent
records are those which considers the expenses and jobs of the association. This
accounting standard ponders all the apparent records. The utilizations and adversities are
charged by the administer and the wage and grabs are credited in the association account.
Conventions and concepts relating to consistency and material disclosure
Accounting conventions are considered as uniformity subject to maintenance of accounts
and records in terms of making the plans and structure of organisation in effective manner.
Conventions indicates towards the dimensions of customs or traditions usage which are followed
from long duration.
Material disclosure: This accounting convention communicates that the budgetary
explanations of the association and the accounting trade and balances are having botches in them
(Mulford and Comiskey, 2011). Cash related clarifications are orchestrated so the customers of
them can settle on correlated decisions by using them. Thusly it is basic that the information that
is contained in the financials of the association should be done in all the material edges with the
objective that they can address the certified and sensible point of view of the budgetary
soundness of the association. In any case, is the information communicated in those declarations
are avoided or misquoted then it could affect the decisions of the customers. Materiality is
related to the size and particular conditions of the affiliations.
Consistency convention: This accounting convention communicates that the measures
and plans that are gotten by the affiliation should be unfaltering for a more drawn out period and
traverse. For example if the association is unsurprising with its gauges, and it uses FIFO stock
organization system then it will end up being straightforward for the association in
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differentiating the inventories of prior years and the present year rather by then if the association
was clashing with its guidelines (Beatty and Liao, 2014). This must be reviewed that the whether
the connection is staying obvious with the benchmarks and models later on. Right when the
relentless accounting procedures are used by the associations in its fiscal announcements then it
winds up less requesting for the examiners and managers in differentiating it and another
associations and besides the associations financials clarifications with the prior years (Kirsch,
2012).
PART B
CLIENT 1
Journal entries
Date Particular Debit Credit
31/05/16 Able motors A/c......................Dr
To Bank A/c.........................Cr
(Motor expenses paid through cheque)
20500
20500
30/05/16 Business Rate A/c..........................Dr
To bank A/c...................................Cr
(Rate paid through cheques)
1320
1320
27/05/16 Salary A/c.....................Dr
To Bank A/c..................Cr
(Being Salary made through cheque)
4800
4800
24/05/16 J. Brown A/c.....................................Dr
S. Hood A/c.......................................Dr
R. Foot A/c........................................Dr
To Bank A/c.....................................Cr
(Being Discount allowed at 10%)
R. Foot A/c...................................Dr
S. Hood A/c..................................Dr
J. Brown A/c.................................Dr
4140
3240
1260
140
360
460
8640
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To Discount receive A/c................Cr
(Discount received and payment made)
960
22/05/16 Purchase A/c.................................Dr
To W. Wright.................................Cr
L. Mole......................................Cr
(Being good brought on credit)
3740
1910
1830
19/05/16 R. Foot A/c.............................Dr
To Purchase Return A/c............................Cr
(Goods return to R. foot)
50
50
16/05/16 Bank A/c.............................Dr
To F. Lane A/c.............................Cr
To P. Mullen A/c.........................Cr
To J. Wilson A/c..........................Cr
To F. Syme A/c.............................Cr
(Being discount is allowed to the creditors)
Discount allowed A/c..............Dr
To J. Wilson.............................. Cr
F. Syne.,,................................Cr
F. Lane...................................Cr
P. Mullen.................................Cr
(Being discount allowed to the creditors)
6670
352
2945
1330
808
1587
44
84
155
70
14/05/16 Van A/c.............................Dr
To Able motor Ltd A/c..................Cr
(Good brought on credit)
28500
28500
11/05/16 Sales return A/c.........................Dr
To F. Syme A/c........................Cr
To J. Wilson A/c.......................Cr
(Being goods return to creditors)
680
410
270
09/05/16 J. Fox A/c.....................................Dr 1310
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T. Cole A/c...................................Dr
To Sales A/c...................................Cr
(Good sold on credit)
680
1990
07/05/16 Drawings A/c.........................................Dr
To cash A/c.............................................Cr
(Being cash use for personal purpose)
1500
1500
04/05/16 Motor A/c.......................................DR
To cash A/c........................Cr
(Being expenses made in cash)
470
470
03/05/16 T. Cole A/c...............................Dr
J. Allen A/c................................Dr
F. lane A/c.................................Dr
J. Wilson A/c.............................Dr
F. Syme A/c................................Dr
P. white A/c................................Dr
To Sales A/c.............................Cr
(Being goods sale to the creditors)
1640
910
770
1120
2080
2420
8940
02/05/16 Purchase A/c ….....................Dr
To Creditor(S. Hood, D. Main, W. Tone and R.
foot).........................Cr
(Good purchase on credit)
6080 1450+2060
+960+1610
= 6080
01/05/16 Storage cost A/c............... Dr
To Bank A/c......................CR
(Being paid made through cheque)
400
400
Ledger posting
Trail Balance in the books of Alexandra fro the 01 may 2017 (Figures in £)
Particulars Debit amount Credit amount
W. Wright Nil 1910
W. Tone Nil 960
Van account a/c 51250 Nil
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T. Cole 2320 Nil
Suspense a/c Nil 2300
Storage cost 400 Nil
Sales Return 680 Nil
Sales a/c Nil 14670
Purchase a/c 9820 Nil
Purchase Return Nil 50
R. Foot Nil 1560
S. Hood Nil 2150
Salaries 4800 Nil
Premises a/c 340000 Nil
P. White 2420 Nil
J. Brown Nil 4600
J. Fox 1310 Nil
L. Mole Nil 1830
Motor expenses 470 Nil
Owner's Capital Nil 520500
P. Mullen 1400 Nil
J. Allen 910 Nil
Inventory a/c 63900 Nil
Fixtures a/c 8100 Nil
F. Lane 3100 Nil
Drawing account 1500 Nil
Discount Received Nil 960
Discount Allowed 352 Nil
D. Main Nil 2060
Cash in hand 5600 Nil
Abel motors a/c Nil 8500
Business rates 1320 Nil
Cash at bank 62400 Nil
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562052 562052
CLIENT 2
Profit and loss statement
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Financial position statement
CLIENT 3
Statement of profit and loss statement of Raintree Ltd
For the year ended 30th September 2017
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(b) Statement of financial statement of Rraintree Ltd
c) Accounting concepts
Prudence: The guideline reason behind this accounting thought is that the clerk should
be preservationist in chronicle the income and increments of the business and should not be
moderate in chronicle the expense and incidents (Amoako, 2013). This accounting thought
proposes that the directors and clerks of the association should not overestimate the earnings,
advantages and gets of the association until the point that it has gotten it. Likewise, the
liabilities , expenses and incidents of the affiliation should not be had a poor opinion of, they
should be considered as and when they are happened paying little respect to the cash of the
association has gone out or not.
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Consistency: This assist the directors and furthermore customers of the associations in
making examination with the other association's financial clarifications. This thought moreover
communicates that the association should not change the methodologies of the organisation
except if it ends up being outstandingly fundamental it has specific grounds to change it
(Edwards and et. al., 2013). This accounting thought communicates that the accounting gauges
and techniques gotten by the association should be contain in the association for a more
expanded navigate after it is grasped. Also, in circumstances where the association needs to
change the benchmarks and plans then it should authentically ensure that it is passed on to all of
the customers of the budgetary information. It should in like manner influence certain steps in
instructing as for how to the movements courses of action will impact the workings and
productivity of the association.
d) Objectivity of depreciation in framing financial statement
Depreciation is considered as the deduction of amount in fixed assets in terms of effective
and systematic manner. The amount is considered as a charge that is a consideration of getting
the amount of replacement of existing machinery to new machinery. Depreciation is charged on
following fixed assets such as building, machinery, office equipment. The devaluation helps in
diminishing the consumptions of the organization over some stretch of time instead of in a
solitary year (Arvidsson, 2011). The devaluation measure of these settled resources are
incorporated into the costs in the announcement of benefit and misfortune account. These costs
are important to record as this costs diminishes the benefits of the organization and therefore
helps in sparing the charges for the organization. The devaluation in the organizations are
finished by utilizing techniques, for example, straight line deterioration strategy, recorded
technique or lessening esteem technique.
WDV method: In this technique for deterioration the sum is figured as taking the
opening parity of hardware of consistently and partitioning it by the quantity of valuable years
staying of the apparatus. The devaluation measure of every year is deducted from the estimation
of apparatus until the point that it winds up zero. This method is widely used in large
manufacturing and production organisations. The value of imaginary do not get zero by
implementing this method in the organisation.
Straight line method: This strategy for deterioration is utilized as a part of most the
organizations as it is exceptionally straightforward and effortlessly justifiable for the clients. In
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this strategy the first estimation of hardware is utilized and after that its piece esteem is deducted
and it is isolated by the valuable existence of the apparatus that is chosen by the organization.
That sum is deducted each year from the first cost of hardware.
CLIENT 4
Bank reconciliation statement
A bank reconciliation statement is a format which is prepared by the accountants to verify
the bank statement and the pass book. Bank reconciliation statement mainly helps to define the
essential aspects in terms of managing the financial accounts and variability of financial
transactions and the statements (Choi, 2013). There are some transaction create differences
which create the difference between the cash book and bank pass book. Some difference creating
transactions are defined as follows;
 Cheque sent for collections but not collected by bank.
 Amount deposited by customers and clients directly in bank
 Interest received and charged without informing owner
 Amount wrongly recorded records or omitted by accountants while recording
Cash book and Bank reconciliation statement
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CLIENT 5
Ledger control accounts
Purchase ledger control account
Sales ledger control account
CLIENT 6
Suspense account and reconcile
Trial balance (£)
Particular Debit amount Credit amount
Purchase 700
Receivables 320
Rent paid 250
Sales 1100
Suspense a/c 110
Capital 710
Cash at bank 840
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Payables 350
Travel Expenses 160
Total 2270 2270
(c) suspense account
Suspense account
Particulars Amount Particulars Amount
To White's personal account 750 By balance b/d 330
By John's personal account 420
750 750
CONCLUSION
This report is prepared to analyse in terms of finance related accounting and money
related infrastructure. There is a centrality of trade related bookkeeping portrayed out this novel
circumstance. Centrality of twofold district accounting structure as charge and credit. Courses of
action and buy exchanges when all is said in done records, preliminary change and the direct of
development off used to finish the record posting. Debilitating systems, get-together and
treatment of unprecedented costs cleared up in solid based decisions and conditions.
Bookkeeping strategy and structures are investigated in regard of sole trader association,
affiliations and obliged affiliations. Mass of bank exchange off calling and strategies are
illuminated in this report. Centrality of strain records and oblige frameworks in regard of record
control accounts are portrayed in every significant sense.
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REFERENCES
Books and Journals:
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