Financial Accounting Report: Business Transactions and Final Accounts

This report serves as a comprehensive guide to financial accounting, tailored for junior accountants. It delves into the core principles of double-entry bookkeeping, detailing how to record business transactions, create trial balances, and identify and rectify errors. The report further explores the preparation of final accounts for various business structures, including sole-traders, partnerships, and limited companies, in accordance with established accounting standards and conventions. It provides insights into bank reconciliation processes, explaining their importance in ensuring the accuracy of company and bank records, and the identification of variances. Moreover, the report covers the utilization of control and suspense accounts, elucidating their roles in effective financial management and the reconciliation procedures required to maintain accurate financial records. Throughout the report, real-world scenarios and practical examples are used to illustrate the application of these concepts. The aim is to equip junior accountants with the knowledge and skills needed to contribute effectively to the accounting function within an organization and to understand the regulations that apply to financial accounting.

SCHOOL OF BUSINESS & MANAGEMENT
Assignment Brief (RQF)
ASSIGNMENT BRIEF (RQF)
Higher National Certificate/Diploma in Business
Student Name/ID Number:
Unit Number and Title: Unit 10: Financial Accounting
Unit Assessor:
Assignment Title: Financial Accounting
Issue Date:
Submission Date:
Internal Verifier Name:
Date:
SUBMISSION FORMAT:
The submission of assignment is in the form of an individual written report. This should be written in a
concise, formal business style using font style "Time New Roman", font size "12" and single spacing. It
is required to make use of headings, paragraphs and subsections as appropriate, and all work should be
research-oriented and also required proper citations with references/bibliography using the Harvard
referencing system. The recommended minimum word count is at least 4,000 words, although you will
not be penalised for exceeding the total word limit.
Purpose and Introduction of the Assignment:
Balancing the books is at the heart of all business management. The overall aim of this unit is to
introduce students to essential financial accounting principles and techniques which will enable them to
record and prepare basic final accounts.
Students will learn how to prepare accounts for sole-traders and partnerships as well as limited
companies. On successful completion of this unit students will be able to contribute effectively to the
accounting function of an organisation, or to understand how to record and prepare basic financial
accounts for their own business. They will have the knowledge and skills required to progress to a
higher level of study.
Scenario:
Unit 10: Financial Accounting
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SCHOOL OF BUSINESS & MANAGEMENT
Assignment Brief (RQF)
You are a Junior Accountant in a small accountancy firm and you have been asked by your line
manager to prepare a report as evidence that your firm is aware of regulations relating to the
accountancy, as well as the rules, principles and conventions relating to the accountancy.
ASSIGNMENT BRIEF AND GUIDANCE
Learning Outcomes:
By the end of this unit a student will be able to:
LO1 Record business transactions using double entry book-keeping, and be able to extract a trial
balance;
LO2 Prepare final accounts for sole-traders, partnerships or limited companies in accordance with
appropriate principles, conventions and standards;
LO3 Perform bank reconciliations to ensure company and bank records are correct;
LO4 Reconcile control accounts and shift recorded transactions from the suspense accounts to the right
accounts.
Assessment Criteria:
AC.1.1. Business transactions:
1.1.1. Giving consideration to the types of business transactions (sales, purchases, receipts and
payments) and the regulations which apply to financial accounting;
AC.1.2. Double entry book-keeping:
1.2.1. Double entry recording in sales, purchases and cash book before posting to the ledger accounts.
1.2.2. Manual and electronic systems will be introduced and how, why and when these are used.
1.2.3. Effectively recording debits and credits; regulations that apply to financial accounting.
AC.1.3. Trial balance:
1.3.1. Understanding how the trial balance is produced and its role in the identification and rectification
of errors; the components of a trial balance and their importance will be considered.
AC.2.1. Financial reports and financial statements:
2.1.1. What is the difference between the two?
2.1.2. How, why and when are each one produced?
2.1.3. Different types of financial statements and what they cover.
2.1.4. Adjustments required for accruals, prepayments, bad debts, etc.
Unit 10: Financial Accounting
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SCHOOL OF BUSINESS & MANAGEMENT
Assignment Brief (RQF)
AC.2.2. Types of accounts:
2.2.1. Preparing final accounts (e.g. for sole-traders, partnerships or limited companies).
AC.2.3. Principles and conventions:
2.3.1. Understanding accounting rules and principles.
2.3.2. Understanding the concepts and conventions of consistency, materiality and full disclosure.
AC.3.1. Bank reconciliation:
3.1.1. What is meant by bank reconciliation and why is it required? How is this achieved? Why is this
necessary?
3.1.2. Who would be interested in the outcome of a reconciliation?
AC.3.2. The process of reconciliation:
3.2.1. Ensuring that all entries relating to a particular period are correctly entered in the ledger system
to support the preparation of the profit and loss account and balance sheet.
3.2.2. Using tools and techniques to check the general ledger accounts and balances against liquid
holdings and cash reserves.
AC.3.3. Variances:
3.3.1. Identifying variances through a bank reconciliation.
3.3.2. Dealing with negative and positive variances When is a negative variance a positive and vice
versa?
3.3.3. Ensuring the same entry for every debit and credit entry, and that the balance for each account is
calculated and entered correctly.
AC.4.1. Control accounts:
4.1.1. What are they?
4.1.2. How and why are they used?
4.1.3. How do they support effective financial management?
AC.4.2. Suspense accounts:
4.2.1. How do they differ from control accounts?
4.2.2. Why are they required?
Unit 10: Financial Accounting
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SCHOOL OF BUSINESS & MANAGEMENT
Assignment Brief (RQF)
AC.4.3. Reconciling these accounts:
4.3.1. Why is reconciliation required?
4.3.2. How is this conducted?
4.3.3. The role of debtors and creditors accounts.
Assessment Criteria
LO PASS MERIT DISTINCTION
LO1 Record business
transactions using double
entry book-keeping, and be
able to extract a trial
balance
P1 Apply the double
entry book-keeping
system of debits and
credits. Record sales
and purchases
transactions in a
general ledger.
P2 Produce a trial
balance applying the
use of the balance
off rule to complete
the ledger.
M1 Analyse sales and
purchase transactions
to compile a trial
balance using double
entry bookkeeping
appropriately and
effectively.
LO1:
D1 Record correctly
transactions and produce
an accurate trial balance
by completing the balance
off of ledger accounts,
checking that each
transaction is recorded in
line with accepted
accounting principles.
LO2:
D2 Apply appropriate and
accurate calculations for
the constructing of the
final accounts.
LO3:
D3 Prepare accurate bank
reconciliations that apply
appropriate tools and
techniques to check
general accounts and
balance sheets.
LO4:
D4 Produce accurate
accounts that have been
reconciled applying the
appropriate methods.
LO2 Prepare final
accounts for sole-traders,
partnerships and limited
companies in accordance
with appropriate principles,
conventions and standards
P3 Prepare final
accounts from given
trial balance figures
adjusting for
accruals,
depreciation and
prepayments.
P4 Produce final
accounts for a range
of examples that
include sole-traders,
partnerships or
limited companies.
M2 Analyse profit
and loss accounts,
balance sheet and cash
flow statements
appropriate for the
given examples.
LO3 Perform bank
reconciliations to ensure
company and bank records
are correct
P5 Apply the bank
reconciliation
process to prepare a
number of bank
reconciliations.
M3 Apply the
reconciliation process
demonstrating the use
of deposit in transit,
outstanding checks
and Not Sufficient
Funds (NSF) check.
LO4 Reconcile control
accounts and shift recorded
transactions from the
suspense accounts to the
right accounts
P6 Explain the
process taken to
reconcile control
accounts and clear
suspense accounts
using given account
examples.
M4 Demonstrate
understanding of the
different types of
accounts and how and
why they are
reconciled.
Unit 10: Financial Accounting
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SCHOOL OF BUSINESS & MANAGEMENT
Assignment Brief (RQF)
Recommended Resources
ATRILL, P. and McLANEY, E. (2012) Accounting and Finance for Non-Accounting Specialists.
8th Ed. Harlow: Pearson.
DYSON, J. R, (2010) Accounting for Non-Accounting Students. 8th Ed. London: Prentice Hall.
GLAUTIER, M. (2010) Accounting Theory and Practice. Harlow: Prentice Hall.
LOUGHRAN, M. (2011) Financial Accounting for Dummies. New Jersey: Wiley Publishing.
MCLANEY, E. and ATRILL, P. (2012) Accounting: An introduction. 6th Ed Harlow: Pearson.
Journal
Journal of Accounting, Auditing and Finance
Journal of Business Finance and Accounting
International Journal of Managerial and Financial Accounting
Links
This unit links to the following related units:
Unit 5: Management Accounting
Unit 13: Financial Reporting
Unit 14: Advanced Management Accounting
Unit 15: Financial Management
Unit 29: Managing and Running a Small Business
Unit 10: Financial Accounting
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