Financial Accounting Report: BRS, Direct Debit, and Bank Charges

This financial accounting report provides a comprehensive overview of key concepts and practical applications. It begins with an introduction to financial accounting, emphasizing its significance in business operations. The report delves into project-based exercises, starting with the double-entry bookkeeping system and journal entries, illustrating how financial transactions are recorded. It then proceeds to the preparation of final accounts, including profitability statements and balance sheets, crucial for assessing a company's financial performance and position. The report also covers bank reconciliation statements (BRS), explaining the process of reconciling company records with bank statements and highlighting the differences between direct debit and standing orders, along with bank charges and dishonored checks. The report concludes with a discussion on suspense accounts and the importance of accurate financial record-keeping. The report offers a detailed analysis of accounting principles and practices, making it a valuable resource for students studying financial accounting.

Financial Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
PROJECT 1......................................................................................................................................3
QUESTION 1...................................................................................................................................3
A) Presenting double entry book keeping system with journal entries.......................................3
Question 2........................................................................................................................................5
a) Presenting Final account.........................................................................................................5
PROJECT 2......................................................................................................................................7
QUESTION 1...................................................................................................................................7
A) Presenting BRS......................................................................................................................7
B) Presenting difference between direct debit and standing order, bank charges, dis houner
Check...........................................................................................................................................8
Question2.......................................................................................................................................10
a) Preparing Journal entries.......................................................................................................10
B) preparing Suspense Account................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Financial accounting plays a significant role in business. The present report mainly
focuses to understand the meaning of accounting and its importance. It deals with various
scenario which help to describe different accounts which are prepared at the end of accounting
period such journal, ledger, trail balance, balance sheet (B/S) etc. The report also helps to
understand the meaning of profitability statement and prepare all the final accounts for
partnership and limited companies with appropriate principle and conventions. The report also
performs bank reconciliations to ensure that company and bank records are correct or not. It
explains the process taken to reconcile control accounts and shift recorded transaction from
suspense accounts.
PROJECT 1
QUESTION 1
A) Presenting double entry book keeping system with journal entries
Journal entries: it is a simplest method that are used to record all financial data by a
company into journal form i.e. debit and credit. Journal entries are help to give an audit trail and
identify the transaction on the organization's financial status. It is the first step of accounting
cycle and foundation of whole accounting data. All accounting transaction are recorded by using
only journal entries which show account names, amount and all credit and debit side of the
accounts (Zhu, 2018).
Date
(Year
2016)
Particulars Debit Credit
1 June Cash a/c dr.
to Capital a\c
65000
65000
2 June Purchase a\c dr.
to creditors a\c
8000
8000
07 June Cash a\c dr.
to sales a\c
4000
4000
08 June Creditors a\c dr. 5000

to bank a\c 5000
14 June Insurance a\c dr.
to bank a\c
75
75
15 June Debtors a\c dr.
to sales a\c
1200
1200
16 June Purchase a\c dr.
to creditors a\c
10000
10000
18 June Computer a\c dr.
to cash a\c
3000
3000
20 June Rent a\c dr.
to bank a\c
150
150
21 June Cash a\c dr.
to sales a\c
10000
10000
21 June Cash a\c dr.
to bank a\c
100
100
30 June Expense a\c dr.
to cash
30
30
Ledger Accounts: it is an account which is used to sort and store balance sheet and profit
& loss statement. They are the summary records which are also known as control account. As,
Journal only provide complete information of daily transaction of a business but it does not
provide particular information related to specific account and to avoid this difficulty the debit &
credit of journals are transferred in Ledger accounts (Elliott, 2017). This is known as destination
of entries but the transaction are not directly entered in ledger.
Trial Balance: Trial balance is the most important informal accounting statement that
includes all ledger balance but is complied into debit and credit account that are equal. It is
prepared by a company at the end of accounting period and the main purpose of preparing trail
balance is to ensure that all the entries are correct or not which are recorded in books. It also

helps to provide the information which are use in preparing final accounts and overall, books
record are varied by preparing trail balance (Trail Balance, 2018).
Question 2
a) Presenting Final account
Profitability statement: the income statement is a final statement which presents the
company's performance during a particular accounting period. Company's financial position is
assessed by analyzing business's revenue and expenses as it help to show its net profit as well as
net loss incurred in that financial period. If in the profit and loss account, the revenue is greater
than expenses then it shows that the company has net profit for that accounting period and if the
revenue is less than expenses, company suffer from net loss at that accounting period. In income
statement one section of this is reflect income and revenue and other half shows the expenses of
the same period (Ryan, 2017). The differences between them help to determine whether the
company was profitable or not. The main purpose behind this income statement is to evaluate the
present situation and can make changes if needed.
Profitability statement
Particulars Figures Figures
Beginning inventory 9500
Purchases 75000
Less: purchase returns 1500 73500
Revenue 125000
Less: sales returns 1000 124000
Ending stock 1000
GP 42000
Depreciation 5000
Wages & Salaries 13200
Rent and Rates 1500
add: outstanding rates 340 1840
bad debts 1200
less: old provision 934
add: new bad debts 650 916
Postage expenses 900
Insurance expenditure 7500

less: prepaid insurance 411 7089
interest received 1000
Rent received 4850
Less: Unearned rent 490 4360
Total expenditure 34305
Net profit (NP) 7695
Balance sheet: it is also known as the statement of financial position. It is used to
determine what a company owns and what it borrows by using financial statement. It is
completely based upon accounting standard model. Balance sheet is a condensed statement
which shows asset, equity and liability and it determine business's net worth. It is very important
to use balance sheet in a business because it will help current investor to understand in better
where business's fund will go and the company earn exact the same amount which they except to
receive in the future (Narayanaswamy, 2017). On the other side balance sheet gives proper
warning signs so owner can solve the problem before it destroy whole business. In this statement
when company's liabilities are subtract from asset the remaining amount is called stockholder's
equity. It can be prepared in quarterly, within 6 months or at the end of accounting period.
Balance sheet
Particulars Figures Figures
Assets
Current assets
Cash at Bank 10594
Cash in hand 340
Bills receivables 12500
Less: bad debts 650 11850
closing inventory 1000
Prepaid insurance 411
24195
Motor van 25000
less: depreciation 5000 20000
loan given to others 100000
Total assets 144195
Capital 120800
less: Drawing 5150

Add: NP 7695 123345
Creditors 3900
Unearned rent 490
Outstanding rates 340 4730
accumulated depreciation 5400
5400
Total liabilities or obligations 144195
PROJECT 2
QUESTION 1
A) Presenting BRS
Bank Reconciliation Statement: A bank reconciliation is a simple managing finance process
which is used to match the balance in a company's accounting records with the bank statement.
The main purpose of using this into a business is to determine the difference between both books
and it must be completed at regular interval for accounts books of bank to ensure that cash
books are correct or not. If it is not maintained properly then it may find cash balance is lower
than expected which result in overdraft fees (Zhu, 2018). BRS contain complete explanation of
different existed between cash and pass books balance, on the other side it is the most important
tool which control cash receipt and payment. It is needed by all categories of industries who
maintain accounting in their business.
Bank reconciliation statement help to detect fraud because this statement help to design
better controls on the receipt and payment and on the other side it should be maintain properly
(day to day) because owner of a business can easily identify the error and can correct them as
early as possible. Reconciliation helps to identifies the account management issues that are need
to give attention (Narayanaswamy, 2017). This help to know how much cash is available in a
account and help to avoid check bounce as well as bank fees when having insufficient funds.
This statement keeps track all outstanding checks and ensures that every transaction that are
entered should be proper or not. By making BRS, the company can find the bank errors and can

rectify those through calculations. It also identify an undue delay in the collections as well as
clearance of few checks. Bank reconciliation will help to find out mistakes committed in cash
books and pass books and it also maintain good and healthy relationship between customers and
banks.
Particulars
Figures (in
£) Figures (in £)
Balance as per cash book (Dr) 1760
add:
Cheque not presented for the payment 270
Payment transferred 1070
Drawings 105
Dividend collected by the bank 325 1770
3530
Less:
Insurance paid 170
Payment of Monthly talk talk bill 56
Cheque is not credited in the bank statement 186
Bank charges 25
437
Balance as per pass book (Cr) 3093
B) Presenting difference between direct debit and standing order, bank charges, dis houner
Check
Basis of difference Direct Debit Standing order
Meaning It is a process where the bank
account holder withdraw the
due amount directly without
asking to anyone from a bank
(Difference between direct
debit and standing order,
2018).
Under this, an instruction are
given to a bank by bank
account holder to pay
particular amount in periodic
intervals.

Customer protection No refunds given by the bank Immediate refunds are paid at
every incorrect payment.
Control Payee controls over the
payment
Payer controls over the
payments.
Nature The whole process is too
complex to understand.
It is the most simple process
(Penman, 2016).
Advantages  It saves a lot of time
and efforts and there is
no need to remember to
pay bill on time.
 Also help to saves
money.
 Quite safe and secure
because bank will pay
incorrect payment.
 It is only useful when
the company is not
using direct debit.
 Help to transact money
between between own
accounts.
 Banks do not charge
any amount for setting
up standing order.
Disadvantages  Keep tracking
company's direct debit.
 It is helpful for a user
when having online
mode of payment.
 It has very low failure
rates and notification
(Khan, 2015).
 This method is not
suitable for payment
using different amounts
in irregular interval.
 Bank may charges
some amounts when
there account holder
mistakes at the time of
payment.
Performance speed It is so fast to use as compared
to others
The process of standing order
is comparatively slow as
compared to others.
Bank Charges: it is a penalty that charged by bank to a customers. It is normally done
when the account holder does not maintain minimum balance for overdrafts then bank deduct

charges and it is called bank fees. It is also done when the check is bounce or dishonor then bank
deduct some amount from the holder's account (Warren and Jones, 2018).
Dishonor check: it is also known as return check when having not sufficient funds.
When a check is dishonored, bank charged some amount to that person who wrote the check.
There are various reason by which the check is returned back so it is necessary for the customers
to carefully keep track of their bank balance and makes sure that it possess sufficient fund in
their account (Henderson and et.al., 2015).
Question2
a) Preparing Journal entries
Rectification of errors:
Date Particular L.F. Debit Credit
1. Purchase
To musa
2000
2000
2. Cash
To bank
To suspense
1340
670
670
3. G Tahir
To suspense
650
650
4. Electricity bill expense
To suspense
790
790
5. Motor vehicle expense account
To cash
500
500
Cash
To motor vehicle account
500
500
6. Sales
To suspense
270
270
7. L Samantha
To cash
190
190

8. Suspense
To D John
384
384
B) preparing Suspense Account
Suspense account
To D Jhon 384 To cash 670
To bal c/f 1976 To sales 650
To electricity bill 790
To sales 270
2380 2380
CONCLUSION
By summing up above report it has been concluded that financial accounts are most
important parameters of a business. It help to determine the actual financial position of a
company and the report help to record business transaction by using double entry book keeping
system and explain the meaning of all final accounts with journal entries. The report also prepare
final accounts by using proper principle and conventions. It also presents bank reconciliation
statements that help to detect fraud and mistakes of both books. The report also help to
understand different types of accounts and presents the process to taken reconcile control
accounts.

REFERENCES
Books and Journals
Elliott, B., 2017. Financial Accounting and Reporting 18th Edition. Pearson Higher Ed.
Henderson, S. and et.al., 2015. Issues in financial accounting. Pearson Higher Education AU.
Hoskin, R. E., Fizzell, M. R. and Cherry, D. C., 2014. Financial Accounting: a user perspective.
Wiley Global Education.
Khan, M., 2015. Accounting: Financial. In Encyclopedia of Public Administration and Public
Policy, Third Edition-5 Volume Set (pp. 1-6). Routledge.
Narayanaswamy, R., 2017. Financial Accounting: A Managerial Perspective. PHI Learning Pvt.
Ltd..
Penman, S. H., 2016. The design of financial statements.
Ryan, S., 2017. Is Banks’ Current Regulatory Capital Adequacy the Mechanism by which their
Accounting Requirements Affect Financial Stability?. Annual Review of Financial
Economics. 9. pp.1-20.
Warren, C. S. and Jones, J., 2018. Corporate financial accounting. Cengage Learning.
Zhu, Q., 2018. Impact of Enterprise Investment Efficiency Based on the Quality of Financial
Accounting Data. JOURNAL OF ADVANCED OXIDATION TECHNOLOGIES. 21(2).
Online
Trail Balance.. 2018. [Online] Available
through:<http://www.accountingexplanation.com/trial_balance.html>
Difference between direct debit and standing order. 2018. [Online] Available through:
<https://keydifferences.com/difference-between-direct-debit-and-standing-order.html>