Ray Finance Limited: Financial Accounting Report and Analysis Overview

This financial accounting report provides a comprehensive overview of financial accounting principles and practices, using Ray Finance Limited as a case study. It delves into the different types of business transactions, differentiating between cash and credit transactions, and internal and external dealings. The report highlights the importance of trial balances, ledger accounts, and the distinctions between financial statements and financial reports. It also explores key accounting principles like economic entity, conservatism, and revenue recognition. The report includes calculations, profit and loss accounts, balance sheets, and cash flow statements, providing a practical understanding of financial analysis. Furthermore, it addresses bank reconciliation, control accounts, and suspense accounts, offering a complete guide to financial accounting concepts.

Financial Accounting

Contents
INTRODUCTION...........................................................................................................................................3
QUESTION 1.................................................................................................................................................3
Different types of business transaction...................................................................................................3
QUESTION 2.................................................................................................................................................5
Calculation...............................................................................................................................................5
QUESTION 3...............................................................................................................................................10
Different between financial statement and financial report.................................................................10
QUESTION 4...............................................................................................................................................12
Principles of accounting.........................................................................................................................12
QUESTION 5...............................................................................................................................................14
Calculation.............................................................................................................................................14
QUESTION 6...............................................................................................................................................15
QUESTION 7...............................................................................................................................................17
Cash flow statement..............................................................................................................................17
SCENARIO 2...............................................................................................................................................19
QUESTION 1...............................................................................................................................................19
Bank Reconciliation...............................................................................................................................19
QUESTION 2...............................................................................................................................................20
Control accounts....................................................................................................................................20
QUESTION 3...............................................................................................................................................20
Suspense Account..................................................................................................................................20
QUESTION 4...............................................................................................................................................21
(a) Required to prepare updated cash book and bank reconciliation statement..................................21
(b) Explain the following terms..............................................................................................................22
QUESTION 5...............................................................................................................................................23
Journal entries.......................................................................................................................................23
CONCLUSION.............................................................................................................................................25
REFERENCES..............................................................................................................................................26

INTRODUCTION
Financial accountancy is a collection of diverse accounts and financial details connected to
the establishment of a centralized schedule by the associated enterprise skills and methodologies
connected to economics and finance recordkeeping for understanding and analyzing knowledge
and apply it for future advantage (Ahmed, 2019). Ray finance limited is the name of the
company in this report. The purpose of this study is to look at the meaning and idea of journal
entries, as well as how they are used in the organisation to create trial balances and income
reports. This document summarizes their conversation on the relevance of the trial balance and
numerous categories that the business utilizes to monitor its cash flow and bank reconciliation
statement. There's also talk on how well the accounts payable report is generated by the company
and how this might be used during the company's week and operational processes.
QUESTION 1
Different types of business transaction
Commercial transaction: This word refers to actions or deals that are economic in nature and
have an unintended impact on company operations. There are negative affects on the corporate
organization's resources, obligations, expenses, and revenue. Financial transactions are activities
that are linked to business and are recorded in the organization's journals. Money transfers and
credit commercial activities are the two types of accounts that are common.
Cash transaction: Activities involving the internal and external stream of funds. It covers sales,
purchases, and investment purchases, among other things.
Credit deal: It refers to transactions that do not need cash payment only at beginning of each
month. Goods purchased on credit, shares generated from the sale are just a few instances. Such
transactions increase overall the firm's duty and have an impact on investment property, whereas
goods supplied on debt increases the institution's holdings (Nam and et.al, 2020).
Internal and External deals: Theses deal has separate part.
External deal: This is a term that refers to actions that include external stakeholders. Business
transactions, asset purchases, stock issuance, input materials purchases, and so on.

Internal transactions: Those are all exchanges that aren't enhanced in any way. Usually internal
management stakeholders play an important role in internal transactions. It does not include
transactions involving the exchange of goods. There are several options. Internally transactions
are taken into account, as well as a depreciation penalty on a secured item and the return of an
asset that has been lost massive fire.
Single entry bookkeeping: Underneath a single entry accounting system, an entity must
document any as well as every activity in accordance with accurate financial records. This is how
a trade is logged through one side, and how unfinished entries are generated. When a business is
run by a lone owner, the bookkeeping system is utilized since the company has no legal power to
do so. is not the same as a double entry system, in which the cycle it of the transaction is
documented about each and every one (Al-Dhaimesh, 2019).
Double entry bookkeeping: Transactions or company operations are recorded on both sides in
this accounting system, it is referred to as a double entry bookkeeping system. Each financial
transaction, based on the current regulations, has two-sided consequences, affecting both assets
and liabilities. Each balance is calculated on either the debit or credit side of the ledger. This
really is the authorized and authorized style of documenting entries that is used across the world
since it is the foundation for preparing financial statements and the whole cost accounting is
founded on accountancy. It is the starting point for documenting all company transactions.
Trial balance and its importance
Trial balance: It is a document that presents a summary of all accounts associated with
business activities that are contained in the accounting records. In this case, any institutions with
balances have been displayed on the comment's debit or credit side. In many other respects, a
trial balance is a format that is created at the conclusion of each accounting year to indicate the
debit and credit balances of the accounts using the leader Imports in trial balance.
 Trial balance is used by managers to determine the debit and credit balances of accounts.
 It is beneficial to the organisation in detecting errors throughout journal input.
 It aids in the preparation of financial statements by supplying fundamental information.

 Accountants utilise it as the foundation for their records.
 The trail balance aids in the deification of the final balance (Yohn, 2020).
 It gives a number of statistical neutralities related to the debit and credit sides of balances.
 It is utilised to identify the missing amount as well as to decrease the differences between
asset and liability sides.
QUESTION 2
Calculation

Ledger accounts

Trail balance

QUESTION 3
Different between financial statement and financial report
Ray finance limited employed financial accounting methods to participants stated in
connection to the firm, and they generated financial reports and statements for this reason. Both
of these are aspects of financial accounting, but there are certain distinctions to be noted.
Particular Financial report Financial statement
Definition Financial reports are
documents that are written to
represent a company's
financial condition to its
customers.
These statements are made to
determine the worth of profit,
as well as the institution's
strength and commitments.
Aim Its purpose is to assist
consumers in obtaining data
To make a choice, use
financial facts to analyse past

on a range of items. results and potential future
appearance.
Tools It encompasses cash flow,
money mobility, and
company's financial
components (Walton, 2020).
It takes into account the profit
and loss statement as well as
the balance sheet.
Range Financial report is a broad
term that includes financial
statements.
In comparison to financial
statements, the income report
has a smaller space.
Requirement of financial report: It may be defined as the firm's established processes for
providing right information to the corporation's customers. The requirements for a financial
statement are as follows.
 Financial reports are used to back up the claims made in the article.
 It is helpful in analyzing the financial position of a company.
 It aids in the tracking of time and responsibility administration.
 Managers utilize financial reports to make decisions about future corporate policy.
 Back and other financial institutions provide loans to businesses after reviewing their
financial statements.
 It aids in the identification of real-time cash influx and outflow operations.
 Financial reports are used by two categories of people.
 Ray finance limited will be easy to correlate their success to that of competitors by using
financial reports.
 It assists in the division of a specified reward for a long term business Endeavour.
Internal users: Those were members who are an important for any organisation and assist in the
operation of the company.