Financial Accounting Report: Alexandra Study and Munteanu Ltd Analysis

This financial accounting report provides a comprehensive overview of financial accounting principles and their application through the analysis of several clients. It begins with an introduction to financial accounting, its purposes, and the types of internal and external stakeholders involved. The main body delves into specific client data, including journal entries, trial balances, profit and loss statements, and balance sheets. The report also examines key accounting concepts such as consistency and prudence, and it includes a discussion on bank reconciliation. Through case studies and practical examples, the report aims to demonstrate the practical application of financial accounting in real-world scenarios, providing valuable insights for students and professionals alike. The assignment showcases various financial statements and their importance in assessing a company's financial health and making informed decisions. The report concludes with a summary of the key findings and references used.

Financial
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Part (a)....................................................................................................................................1
CLIENT 1........................................................................................................................................4
1. Journal Entries and ledger in the book of Alexandra Study...............................................4
2. Trial Balance as at 31st January 2019 in the books of Alexandra Study.........................16
CLIENT 2......................................................................................................................................17
1. Statement of Profit and Loss of Munteanu Ltd. For the year ended 31st December 201817
2. Statement of Financial Position of Munteanu Ltd. As at 31st December 2018...............18
3. Accounting Concepts – Consistency and Prudency.........................................................18
CLIENT 3......................................................................................................................................21
1. Purpose of preparation of bank reconciliation accounts ..................................................21
2. Reason for difference between balance of bank column of cash book and bank statements22
3. Imprest..............................................................................................................................23
4. Bank Reconciliation Statement as at 30 September 2018................................................23
CLIENT 4......................................................................................................................................24
a) (1) Sales Ledger Control Account....................................................................................24
a) (2) Purchase Ledger Control Account..............................................................................24
b) Control Account...............................................................................................................25
CLIENT 5......................................................................................................................................25
a) Suspense account and features.........................................................................................25
b) Trial Balance....................................................................................................................26
c) Journal Entries..................................................................................................................26
CONCLUSION..............................................................................................................................27
REFERENCES..............................................................................................................................28

INTRODUCTION
Financial accounting can be described as the procedure of executing final accounts like
balance sheet, trading and profit and loss account. The main reason of this accounting to provide
internal and external shareholders to determine right position of a business and form strategic
decision (Dichev, 2017). In the reference for observing the activity of all company operations in
terms of revenue or loss, together with this management system performs a significant part.
Therefore, it includes different kinds of financial statements as well as reports such as profit and
loss account, balance sheet and cash flow. To better understand the report selected a small
consultancy firm which is Brooks city consultancy. It is a private incorporated on 13 July 2007
and provides different types of accounting services at a small level. This company has been
situated in London. The project report consist of financial accounting and their purposes and in a
broad manner defined role of the companies. In order to assess their involvement in economic
data, inner and outward investors are referenced.
MAIN BODY
Part (a)
1. Financial accounting and its purposes
In particular, the term financial accounting is a type of accounting that is linked to the
provision of financial data in the form of financial reports to external and internal stakeholders.
The aim of financial accounting is to present an actual position in front of top management as
well as to outsiders. Finally, financial accounting prepares financial reports that are present at the
end of financial accounting period. Without this system, a company cannot proper analysis every
business activities which is become reason for different types of issues. The selected accounting
firm, Brooks city consultancy produces various types of financial statements like income
statement, balance sheet, cash flow, etc. Through these accounting reports, they are getting detail
information as well as analysis the situation of company for their external stakeholders to make
investments (Duff, 2016).
Herein, it is essential to understand financial accounting principles as well as regulations that
can help to produce financial reports. Without these principles to make chances of error and
financial statements will be reasoned invalid. Most common principle of financial accounting is
GAAP that is known as generally accepted accounting principle. On the basis of these principles,
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an accountant produces reports and statements inaccurate way. There are defined purpose to
apply financial accounting in any organisation such as -
 Preparation of financial reports - This is the primary objective of financial accounting
where the financial statements are produced by businesses. With the help of these
reports, company makes important decisions for their operations.
 The purpose of financial accounting is to record every transaction systematically and
provide reliable data in the reports (Caskey and Laux, 2016).
 Cash Flow Analysis – Through financial accounting analysis different business activities
which is consisting of cash flow such as operating, financing and investing. It helps
investors to analysis of liquid position of company. Creditors sure about the ability of an
organisation to repay them at any day.
 Helpful in decision making – It helps in decision-making process to take effective
decision. For instance, if any company decide for further investment so firstly they are
analysing reports which is based on financial accounting than take appropriate decision
to generate more profit.
 Beneficial in making a comparison – It is one of the major purposes of financial
accounting because it can help to make comparison their past year profits and
expenditure with current year. On the basis of this comparison, a company can make
changes in its strategies and objectives which is based on the business policy.
2. Types of internal and external stakeholders
Stakeholders – A stakeholder is a group of people who take interest in business activities
and affect by objectives, actions, and policies. Most of the stakeholders connect with companies
to generate profit. There are two types of stakeholders which are as follows -
 Internal Stakeholders
 External Stakeholders
These two stakeholders are beneficial for every organisation because they have interest in
business activities and always want to success of business. So they are providing good
suggestions and ideas for the development of company (Sunder, 2016). Below these stakeholders
are described in broad sense -
Internal Stakeholders – All consumers of financial reports are regarded as inner
stakeholders within the organization. Every business prepares its policies and plans which can
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directly affect to internal stakeholders. In the internal stakeholder consist of board of directors
(BOD), employees, managers etc. Thus, mention about the stakeholders in broad way -
 Board of directors – The board of directors of any company is a panel of group who deals
in preparing rules and policies (Trigo, Belfo and Estébanez, 2016). After preparation in
effective manner apply in company and monitor activities regarding rules. Mainly, group
of people belongs from higher-level section and they are taking interest in financial
information. With the help of these financial data produce other strategies as well as
plans. The management take interest to know net profit of the company.
 Employees – The employees are part of company who is considering as important assets
and help to fulfil the requirement of a company. Staff members complete several tasks
and operations with an expectation to get the wages or salary. They are using financial
data to determine whether or not the business in which they work has a healthy position.
External Stakeholders – These types of stakeholders do not take interest in daily
activities of an organisation but show interest in every operation. They are investing in the
company to get long term return from company on their invested money. Some common
example of these stakeholders are customers, suppliers, creditors etc. There are mentioned about
external below:
 Suppliers – Based on their economic situation, the providers create loan transactions
with businesses. Eventually, providers provide credit-based content to businesses on the
basis of goodwill. The vendors are basically interested in the economic situation so that
they can sell the material. It is a reason of company that their financial condition is not
good then they will not sale out the raw material on credit (Nigrini, 2016).
 Investors – These types of people invest their money into organisation to achieve
benefits in set percentage. Before investment, they determine the financial position of
different companies where they can get more benefit. So financial accounting is
important to present financial information in efficient manner and investor analysis their
future return on the invested amount by them.
 Creditors - These are types of shareholders that provides help to conduct business
activities, when required. On the basis of financial help, they get sufficient amount on
borrowed amount. Thus, it is beneficial for the creditors to analysis the position of the
company in financial activities before providing financial services. When they assure
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about any specific company who is provide good interest on their borrowed money than
invest in (Marra, 2016).
 Government – It is a type of stakeholder and consider as essential external stakeholders.
To operate different types of business they are establishing different rules and regulations
that is required to follow by the organisations. Furthermore, the government have their
interest into financial information of different companies as a reason of analysing about
how much tax should be taken from them.
CLIENT 1
1. Journal Entries and ledger in the book of Alexandra Study
Double entry system – The particular system defines that each business transaction must
be recorded in a minimum of two accounts. For this system required to record every transactions
and records into debit and credit section. These amounts show double effects because every
financial transaction has equal and opposite effects in at least two different accounts. For satisfy
the stakeholders apply this equation -
Assets = Liabilities + Equity
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Ledgers
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