Financial Accounting Principles: A Comprehensive Report

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Financial Accounting Principles
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Table of Contents
Introduction:.............................................................................................................................3
A.................................................................................................................................................4
1..............................................................................................................................................4
2..............................................................................................................................................5
B.................................................................................................................................................9
1..............................................................................................................................................9
2............................................................................................................................................27
3............................................................................................................................................32
4............................................................................................................................................34
5............................................................................................................................................36
References:..............................................................................................................................41
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Introduction:
This report shows the knowledge of an accountant about the several characteristics of
accountancy. This report shows the several characteristics of accountancy which is
conventions, various guidelines, and basic principles. In order to show these characteristics,
several methods are used in this report. These methods are standards, variety of accounting
principles, bookkeeping method, and conventions. This report consists of a suspense account,
trial balance, Journal entries, rectification entries, and ledgers, loss and profit account,
balance sheet, statement of bank reconciliation. In this report, there is an explanation of the
method of depreciation and the concept of accounting. To prepare the statement of financial
condition of the company, several rules of accounting, guidelines and their principles are
used in this report.
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A.
Introduction
This report shows the importance of financial accounting in the association. In this report,
there is an explanation of accounting of financial position of the organization and the role of
financial accounting in the association. This reports also explain the term Stakeholders and
the role of the stakeholders in the association. Stakeholders are of two types which are
external stakeholders and internal stakeholders. In order to understand the importance of
stakeholders and the role of stakeholders in the association, there is an explanation of
stakeholders by providing several examples. This report also explains the various aspects of
accounting of financial position of the organization and information about the users of
accounting of financial accounts.
Structure of the Report:
1.
In the world of business, financial accounting plays an important role. It is made up of
combining two significant terms which are accounting and finance. The term finance can be
explained as the monetary concern or economic concern of the organization. The term
accounting can be explained as the tracking of several transactions which take place in the
organization between the people. The transaction takes place on a daily basis and it is
important to record all the transactions. By the explanation of both, it can understand that
accounting of financial transactions is the systematic procedure of tracking all the documents
related to pecuniary and economic transactions of any organization (Dumitru and Cotoc,
2013). This shows the information related to finance to the people of the organization. This
method can be used by the organization in order to track all the transactions related to money
in the most systematic manner. This method can be implement to deliver various material
related to financial reporting to the operators.
The main persistence of fiscal accounting is to deliver all the material connected to the
financial condition of the organization to the pioneers and employees of the firm. There are
many other purposes of preparing statements of financial accounting, these purposes are
mention below:
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 With the help of fiscal accounting, all the investors of the organization will get to
recognise about the details of the financial position of the association. This will assess
them in order to make any decisions related to any other investment in the
organization (Primasari, et. al., 2013).
 This also assesses the company in order to accomplish the various necessities of
statues and law which are applicable in the organization.
 Financial accounting also assesses the organization in order to equate the recital of
their own in the last few years.
 With the help of financial accounting, an organization can be able to compare their
business with the other business in the market (Ahmed and Manab, 2016).
 This will also assess the company to share the monetary condition of the firm to their
users so that the users of the company can make appropriate decisions to develop the
business of the company more.
 It also assesses the companies in order to make various strategies and also planning
for the development of the business.
2.
All the person who is the user of the financial statement of the organization known to be a
stakeholder of the company. Stakeholders are the one who works in the organization in order
to improve the financial condition of the association. Stakeholders can be formed by various
people which includes investors, creditors, consumers, government, shareholders, tax
authorities, banks, debenture holders and the financial institution of the company are all
combine to form stakeholders of the organization (Mouna and Anis, 2013). Stakeholders are
those people as well who work in the company in order to improve the monetary economy of
the association.
In respect to the relationship with the association, stakeholders can be of two types which are
internal and external. Internal stakeholders are the people who are related directly with the
association, these people are the one who is working in the corporation. External stakeholders
are the people who are not related to the organization but they are showing interest in the
corporation.
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 External Stakeholders- All those individuals who are not a part of the association
but are linked with the organization and gets affected with the financial position of the
association in the market are known as external stakeholders of the organization. As
clear by the name itself, external stakeholders are the one who is outsiders but they
show curiosity in the monetary structure of the organization. Their point of interest
with the business gets affected by the losses, profits and any fluctuations which take
place in the financial position of the organization in the market (Ionescu, 2016).
 Consumers- In the success of any business, consumers play an important role. They
are the one who purchases products or services of the organization, the Company's
growth mostly depends on the consumption rate of the organization. The financial
condition of the enterprise mostly depends on the response they got from the
consumers in the market. Consumer rate of the company also depicts the social
responsibilities of the enterprise. It is necessary for the company to provide all the
information about the product and services to the customers so that more customers
will purchase their products.
 Suppliers- Suppliers are the one from which any organization purchases their raw
materials. They are also known as the business dealers of the company. Company's
production mainly depends on their suppliers and the profit of the organization also
depends on the suppliers. There are various business transactions which take place
between the suppliers and the organization. Suppliers are also stakeholders of the
company and they always concern about the fiscal situation of the company in the
market.
 Lenders/ Creditors- Creditors are those which assess the company to improve the
fiscal condition of the association. These are the people who supported the company
in their bad phase and help the company financially. These people get affected with
any fluctuation in the fiscal situation of the corporation in the marketplace as they
want full assurance in order to get their amount of money back. The company has to
make sure to improve the financial condition in the market in order to return the
money to its creditors.
 Assessing Authorities- Whenever any organization make profits, them some part of
their profits gets charged by the government in the form of taxes. Tax authorities are
the o e who charge some amount from the organization (DARMA, et. al., 2018).
These people track all the record of the company regarding their profits and losses in
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order to collect taxes from the organization. Most of the time, they track the financial
data of the corporation to identify the consistency of the business in paying the taxes.
 Internal stakeholders- They are the one who is directly linked with the association,
these people are actually a part of the organization and working in the company.
Internal stakeholders can be the shareholders of the company, employees, managers,
pioneers, and board of directors of the organization. All these are known to be the
internal stakeholders of the association. Their personal growth is directly linked with
the growth of the company due to which they put extra efforts in order to expand the
growth of the association. They analyze the financial information of the organization
and work according to that in order to develop the company more (Adejumo, 2015).
 Workers/ Employees- Employees are the one who is working in the association and
do lots of hard work in order to assess the company in accomplishing the goals of the
organization. Employees are the most important aspect of the organization as the
company's success mostly depends on the performance of their employees. They are
the biggest contributors to the company in their financial position and growth of the
company mainly depends on them. Employees are also known to be the internal
stakeholders of the organization and which aims to assess the organization in
accomplishing their goals and objectives (Sicherman, et. al., 2015).
 Board of directors- They are the one who is responsible for taking various decisions
in order to develop the business more. They are also known to be the top management
of the organization. Board of director's form various strategies by analyzing the fiscal
material of the association to enhance the revenue of the corporation. The income of
the board of directors mostly depends on the growth of the company. Due to which
they take effective decisions in order to enhance the growth of the company.
Conclusion:
In this segment, various characteristics of financial accounting have been identified.
Importance of fiscal accounting and the role of fiscal accounting in the growth of the
company has been concluded in this report. This report concludes with the various
stakeholders of the company and there is an explanation of stakeholders with the examples.
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There are various investors of the company like internal and external stakeholders and the
importance of those stakeholders are concluded in this report. Overall the report showed the
prominence of fiscal accounting and the role of stakeholders in the business.
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B.
1
(i)
Journal entry
Date Particular LF Amount Amount
Jan-19
1 Storage Expenses A/c dr. 450
To Bank A/c 450
(Being amount paid by cheque)
2 Purchases A/c dr. 6080
To S. Hood's A/c 1450
To D. Main's A/c 2060
To W. Tone's A/c 960
To R. Foot's A/c 1610
(Being goods purchased on credit)
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3 J. Wilson's A/c Dr. 1200
T. Cole's A/c dr. 1650
F. Syme's A/c dr. 2100
J. Allen's A/c dr. 1020
P. White's A/c Dr. 2520
F. Lane's A/c dr. 980
To Sales A/c dr. 9470
(Being goods sold on credit)
4 Motor Expenses A/c dr. 470
To Cash A/c 470
(Being expense paid in cash)
7 Capital A/c dr. 1500
To Drawings A/c 1500
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(Being cash withdraw for personal use)
9 T. Cole's A/c dr. 680
J. Fox's A/c 1310
To Sales A/c 1990
(Being goods sold on credit)
11 Sales Return A/c dr. 680
To J. Wilson's A/c 270
To F. Syme's A/c 410
(Being goods returned and received)
16 Cash A/c dr. 7020
To P. Mullen's A/c 1400
To F. Lane's A/c 3100
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To J. Wilson's A/c 850
To F. Syme's A/c 1670
(Being cash received from the debtors)
19 R. Foot's A/c Dr. 50
To Purchase Return A/c 50
(Being purchased goods return)
22 Purchases A/c dr. 3740
To L. Mole's A/c 1830
To W. Wright's A/c 1910
(Being goods purchases on credit)
24 S. Hood's A/c Dr. 3600
J. Brown's A/c Dr. 4600
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