Financial Accounting Principles: Business Report, Journal Entries

This business report delves into the core principles of financial accounting, providing a comprehensive overview of essential concepts and practices. It begins by defining financial accounting and its importance in business, followed by an exploration of relevant regulations and accounting principles. The report then examines key conventions such as materiality and consistency, which are crucial for accurate financial reporting. Practical applications are demonstrated through the analysis of journal entries for multiple clients, including double-entry bookkeeping, trial balances, and the preparation of financial statements. The report also covers bank reconciliation processes and reconciliation of control accounts, providing a detailed understanding of these critical accounting procedures. Furthermore, the report includes an analysis of suspense accounts and concludes with a summary of the key findings and insights.

Financial Accounting
Principles

TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
BUSINESS REPORT......................................................................................................................1
(a): Concept of Financial accounting.....................................................................................1
(b): Regulation related with financial accounting..................................................................2
C): Principles and regulations used in accounting.................................................................3
(d): Various convention and concept of materiality and consistency.....................................4
CLIENT 1: Journal Entries..............................................................................................................5
P1: Information regarding double entry bookkeeping............................................................5
P2: Concept of trail balance and its balancing measure.......................................................14
CLIENT 2......................................................................................................................................15
P3: (a): Formulation of financial account and related trail balance.....................................15
(b): Financial statements of peter piper................................................................................15
CLIENT 3......................................................................................................................................16
P4: Formulation of financial statements and wide number of examples..............................16
P5: Bank Reconciliation process..........................................................................................19
CLIENT 4......................................................................................................................................20
BRS statements as one 1st December, 2017..........................................................................20
CLIENT 5......................................................................................................................................20
P6: Procedure of Reconcile control account........................................................................20
CLIENT 6......................................................................................................................................22
(a): Main feature of suspense account..................................................................................22
b) Trial balance (£)...............................................................................................................22
(c) suspense account.............................................................................................................22
(d): Comparison....................................................................................................................22
CONCLUSION..............................................................................................................................23

REFERENCES..............................................................................................................................24

INTRODUCTION
Finance is considering as life blood of business. The company used to collect funds from
various sources in order to manage and operate their everyday transactions that are done within
an accounting period of time. Financial accounting is one of the appropriate process that will be
helpful for the owner as well as accountant in order to record all the essential transactions those
are incurred during the time. These entries are posted into their respective statements as per their
data of occurrence. This project module aims as analyzing financial condition and health of the
company (Ward, 2012). For this purpose, regular recording of business transactions is being
done. On the basis of collected records, its legers posting, trail balance and other crucial
statements is being prepared under this report. In order to keep accuracy of the data, every
records must be recorded as per the accounting principle as well as other specific standards.
Evaluation of bank reconciliation is prepared in reliable order to examine total cash amount
balance available to the company during the end of accounting period.
BUSINESS REPORT
(a): Concept of Financial accounting
In every organization, it is necessary for them are organize sufficient amount of capital
for the purpose of planning their future projects in effective manner. In this process, managers
need to organize capital from various sources. Financial accounting is said to be appropriate art
of recording, dividing and evaluating in important way in respect to capital, transaction and
activity that are done within an organization. It is also considering as reliable branch of
accounting that used to provide right direction to a company’s financial transaction by recording,
summarizing and present in financial report. Some of them are profit and loss statements,
balance sheet and cash flow statements (Francis, Hasan and Wu, 2013). Most of the company
used to release its financial statements on continuous basis.
The statements are taken into consideration as external because they used to provide
specific information to the people from outside the company. It is necessary to point out the
valuable purpose of financial accounting that is not reported as value of the company. In-spite of
their objective which is provided for other to assess the interest of an organization. These
financial report is being done with the aim of attaining specific aims that are set by the company.
there are some crucial firms those are using various accounting systems by using IFRS standards.
Financial accounting is considering as one of the effective aspects which will be considered for
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attaining maximum return in near future. Financial report are being taken into account in order to
keep all the standard and responsibility of manager and accountant. Some of the vital statement
those are used in financial accounting purpose are mentioned underneath:
Profit and loss statements: It is known as one of the effective report that is being
prepared by the accountant by summarizing the revenue, cost and expenditure of the company
incurred during the time. It would indicate total earning and expenses in the mentioned period of
time, usually a fiscal year. It will assist companies in analyzing, whether the company is making
appropriate revenue, income statements of an organization (Edwards, 2013).
Balance sheet: It would be happening as one of the crucial statements that is being used
as particular data those are done by the company during the time. It is considering as company’s
main statements which would provide overall health position as well as liquidity state. Financial
firms and other stakeholder used to present specific data about assets and liability of the
company. This seems to be effective financial statements for delivery available loans and
investment done in an accounting period.
Cash flow statement: It seems to taken into account valuable information about all cash
inflows and outflows that are incurred during the time. These amounts are collected from various
activity such as operating, investing and financing. These are prepared to make evaluation of
whether company is having sufficient amount of capital to make future investment in near
project.
(b): Regulation related with financial accounting
Financial accounting board is considering as one of the private, non-private business
standard imposing bodies that primary aim is to establish better outcomes to the company. The
required needs rules and regulations which would assist in formulating financial statements in
essential manner for various reasons. Such as to ensure that requirement of users of financial
records must be met with at least a simple data that are prepare by the company within an
accounting period of time (Beatty and Liao, 2014). There are not any other issues required by the
company in order to report various activities that are necessary for making sustainable demand of
the company. present reporting and practices are having more link with future growth and
financial balance of an organization. Although, financial reports are reliable for making
comparison of company’s performance on the basis of last year condition. The financial
information parties are large enough and having diversified impacts as per the financial
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accounting. In case of any modification change in the data those are required as an individual for
plenty of ways. In order to maintain appropriate rules and regulation that are based on certain
norms such as IASB. The main motive of IASC which was used to promote global consistency
among financial statements which would prepared through company at national level. It does not
have to force by law because, every information that are mentioned under the report are based on
certain polices and rules. These standard are considered while recording of various transaction
into different statements.
C): Principles and regulations used in accounting
In accordance with various transactions that are done within an accounting period of time,
accounts are using various rules and regulations that are utilized or proposed through using
various guidelines that are required to be taken into account while recording of data into the
statements. It has been observed that there are various types of rules and concept which will be
use by manger while recording or posting of any kind of financial transactions. In case of using
accounting records, detailed regulations and laws that are being use by FASB (Barron, Chung
and Yong, 2016). It has been found that some of the effective distributes its financial records to
public and required to make impacts on GAAP principles during the time of developing their
reports. Likewise, in accordance with company’s overall inventory which is public traded and
need as financial record through audited through an appropriate accounting skills. Some of the
valuable principles are mentioned underneath:
 Cost principles: According to this accounting norms, it has been known as that cost
which would be based on historical cost aspects. It required that all assets must be
recorded only at cash basis during the time of acquisition.
 Going concern principle: The seems to be assumptions that every entity would remain
as effective business for specific aspects for foreseeable future. As business would
continuous for longer period of time.
 Full disclosure principle: It is said to be vital information that would be made by
stakeholders by using financial report which data will be disclosure during prepared data.
This seems to be primary aim of manager to provide all essential data which are
mentioned under different reports. It is needed for every organization to make future
planning by using various data of the company in reliable and accurate manner.
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Rules and regulations: There are various types of accounting rules which will be taken into
consideration while recording of essential transactions. Some of them are discussed underneath:
 Personal account: It is said to be one of the reliable account that will be taken into
account as an individual as per the demand of the company. The accounting rules said
that Debit all receivers and credit the giver. Few examples are, drawings and capital etc.
 Real account: Under this account that is related with the nature of assets which will be
used by the firms (Weygandt, Kimmel and Kieso, 2015). According to this rules, debit all
the amount which is coming inside the company, while credit all of them that are goes
outside. Like cash.
 Nominal account: It seems to be essential financial transactions those are done during
the period of time. In this rules, debit all expenses or losses and credit all the income and
gains.
(d): Various convention and concept of materiality and consistency
In finance term, accounting conventions would be considering as one of the common
aspects that would be considers with the recording of every business entry. It would be
considered as one of the effective norms which will be not a definitive guideline in overall
accounting rules that are govern as one of the specific condition. Convention in accounting that
has been associated with bring regarding uniformity in the overall maintenances of accounts
statements. This would be consider as commonly accepted convention which would be customs
and framed to assist accountants to reduce practical issues those are arises out of preparation of
financial records. This would be reliable in case of any critical situation that is not related with
any kind of rules and standard which are governed during an accounting period. There are
different types of profitable aspects which will be considered by an organization. Some of them
are discussed below:
Consistency: In financial accounting, convention of regularity principles which would be
same accounting that should be considered for formulating financial transaction over the period
of time (Hillier, Grinblatt and Titman, 2011). Any modification can be considering as valuable
examples which will be taken into account for evaluating strength and weakness of the company.
Materiality: It would be considered as effective convention that can be considered for
making analyzing of impacts that are used by users in proper decision making. Financial account
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items are taken into account as material if they would influence economic decision in proper
ways.
Concept: Accounting managers need to follow certain amount of concept which would
be helpful while recording of various transactions into the books of account. Some of them vital
concepts are explained below:
 Money measurement: It is said to be one of the effective and easy concept which will be
taken as guide for business by the managers. Every recording of events or transactions
can be analyses in terms of money. It is mainly measures in terms of local currency.
 Conservatism: As per this principle which is helpful for the company in recognizing
expenses and debts as early as possible in case of uncertainty regarding the results. It is
also said be prudence which is a policy use for anticipating best possible outcomes in
near future period of time. The policy tends to understands various aspects of net assets
and incomes incurred by the company.
CLIENT 1: Journal Entries
P1: Information regarding double entry bookkeeping
Financial accounting is considered as one of the primary aspects for the company. Each
financial or non-financial transactions those are done by the company will be recorded with the
help of using double entry bookkeeping. It is said to be crucial term that means that all
transaction affects mainly two books of account of an organization. Double entry is said to be
one of the reliable accounts that must have entered as debit balance and another one is recorded
with credit (Christensen and Nikolaev, 2013). The major benefit of using this statements is that
company overall assets will be equal to debt balance. The Fundamental reason for underlying
effects need to be recorded as day to day bookkeeping and other detail related with accounting
transaction in two different accounts.
Asset= Liabilities + Equity.
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Ledger positing
This seems to be more vital process which will be done in order to record every effective
financial transaction into different statements. It is known as second step after the recording of
journal entries. It is considering as primary sources of data keeping by the internal manager of an
organization. These are done to separately analyze all implication as well as division of amount
in various reports. A ledger is main accounting areas that is held responsible for measuring total
amount which is available with the company to make future planning in coming projects. After
completing all the vital analysis, investors or other shareholder would be able to make their
valuable capital investment decision. On the basis of this, company can easy examine total
reaction or current position of an organization to make future planning of growth.
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P2: Concept of trail balance and its balancing measure
Trail balance is one of the effective accounting workbook statement in which every
balancing amount recorded into ledger are used for the purpose of preparing other crucial
statements. By designing such kind of ledger account, manager would be able to determine that
debits and credit column must be equal to them. A company used to formulate a trail balance that
is periodically considered at the closing of every accounting period of time. It means that trail
balance will be not important for recording of transaction for bookkeeping (Chen, Li and Wang,
2011). It is prepared after preparation of various entries those are recorded into journal books and
ledger. This seems to be valuable for profitable company to formulate such financial accounts
that is related with the purpose of determine all errors those are occurs in the transaction.
Recording of financial transaction is said to be common statements that can assist them to attain
more reliable outcomes in coming period of time. The transaction of trail balance needed to
initially determine errors that are made while recording of financial data with the aim of make
comparison of debit and credit column.
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CLIENT 2
P3: (a): Formulation of financial account and related trail balance
(b): Financial statements of peter piper
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CLIENT 3
P4: Formulation of financial statements and wide number of examples
(a): Different types of accounting statements such as income statements by Rain-tree Ltd for the
year ended as one 31st March, 2017
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(b): Balance sheet
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(c: Various types of accounting concepts
It has been found that financial manager would be able to make use of various accounting
concepts which will be helpful for recording of various types of accounting transactions. It is
basically known as accounting rules that would be taken into account for preparing the financial
statements in effective manner. Some of them are discussed underneath:
Consistency concept: It is known as appropriate concept that is being taken into account
as one of the appropriate accounting method that has been selected by the company. It is done so
because they think that business would be not operate for short time period, it is continuous
process. This means that recording of financial transaction must be recorded in effective or
accurate manner unless, managers do have sold reason to go for specific modification. In case
few financial transactions those are occurred will be recorded by using correct standards and
rules that attempt to examine inconsistent information those are collected by the managers during
the period of time (Nobes, 2014).
Prudency concept: According to this particular concept, all the revenue and profits must
be recorded in the main account such as balance sheet only in case they are realized at that time.
A company must be conservative while recording of assets amounts and does not underestimate
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debts. The outcomes would be conservatively related with the financial statements of the
company. It is said to be conservatism aspects in which an accounting principles those are
needed by an accountant to keep all liabilities and expenditure at the time they occurred. In case
of any losses or liabilities those are recorded into financial records of an organization must
occurred during the period of time.
P5: Bank Reconciliation process
BRS is considered as one of the effective statements which will be prepared by every
account keeper on specific date to reconcile the bank balance as per the cash book to that with
bank statements. In case any difference indicating in them would be making huge impacts on
those two balances. Formulation of bank reconciliation statements that is not considered as
effective part of double entry book keeping. It is an appropriate method to make reconcile bank
balance in cash book with the overall balance as per the provided bank statement or pass books.
A Bank reconciliation is used to make comparison among the cash position records an overall
change to the book balance to account for financial transaction that are mentioned on the banks
records. There is certain accounting transaction that are examine with the motive of using Bank
reconciliation statements (Bhattacharyya, 2012). Some vital matter that are expressed in terms of
account are taken into account such as:
 Every deposit done into the bank and cannot be credited from bank side. Like, as this is
associated with cheques which is sent to the bank for the purpose of raising capital.
 Evaluate various records those are mentioned into the bank statements, while recording at
any point of transaction.
Issues related with the bank reconciliation:
There is various vital reason for analyzing difference in bank account balance that is
being revealed through cash books and pass book. It can be considered that nothing would be
more to do with other aspects that are used by managers. In different organization, it would be
reconciling by an individual that are not related with cash payment or other operations.
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CLIENT 4
BRS statements as one 1st December, 2017
CLIENT 5
P6: Procedure of Reconcile control account
(a): Sales ledger control account (Sales Ledger Control Account, 2018).
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(b): Control account
This seems to be one of the effective account that is summarise all account that is
consider for general ledger. The detail must be supported as appropriate balance in entire
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evaluation of account that consists of subsidiary ledger description. Every account must be used
to record all the business statements as per the balance on total number of statements and used to
provide a cross-check on continuous basis (Gassen, 2015).
CLIENT 6
(a): Main feature of suspense account
It has been seen that few of the primary aspect that is being recorded into the account like
suspense accounts (Ryder, Elaine G. Ryder, 2012). To determine various transactions that used
to correct as appropriate balance and incorrect recording of statements. It is utilising because of
proper account that should not be analyse at the time when those transactions are arises.
b) Trial balance (£)
Particular Debit amount Credit amount
Suspense a/c 110
Sales 1100
Rent paid 250
Receivables 320
Travel Expenses 160
Purchase 700
Payables 350
Cash at bank 840
Capital 710
Total 2270 2270
(c) suspense account
Suspense account
Particulars Amount Particulars Amount
To White's personal account 750 By balance b/d 330
By John's personal account 420
750 750
(d): Comparison
Suspense account Clearing account
It is taken into account in case company
found any kind of problem while recording
It is common account, but it does not used
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of transactions. for posting of financial statements.
It is said to be cleared once errors are
detected in the statements.
This seems to provide clear picture of lying
unreconciled amount in the business.
CONCLUSION
From the above project report, it has been concluded that financial accounting is one of
the reliable aspects which will assist organisation to manager their resources in effective manner.
For this purpose, various types of rules and regulations those are useful for them are taken into
consideration. All conventions and concept of accounting that utilise for recording of various
financial transaction are used positively in the above journal entries and ledger posting
statements. Further, this report guides the manager about various accounting statements those are
providing reliable outcomes to the company in near future time.
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REFERENCES
Books and Journal:
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Accounting Standards No. 157 Fair Value Measurements on analysts’ information
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Beatty, A. and Liao, S., 2014. Financial accounting in the banking industry: A review of the
empirical literature. Journal of Accounting and Economics. 58(2-3). pp.339-383.
Bhattacharyya, A. K., 2012. Financial accounting for business managers. PHI Learning Pvt.
Ltd..
Chen, F., Hope, O.K., Li, Q. and Wang, X., 2011. Financial reporting quality and investment
efficiency of private firms in emerging markets. The accounting review. 86(4). pp.1255-
1288.
Christensen, H. B. and Nikolaev, V. V., 2013. Does fair value accounting for non-financial assets
pass the market test?. Review of Accounting Studies. 18(3). pp.734-775.
Edwards, J. R., 2013. A History of Financial Accounting (RLE Accounting). Routledge.
Francis, B., Hasan, I. and Wu, Q., 2013. The benefits of conservative accounting to shareholders:
Evidence from the financial crisis. Accounting Horizons. 27(2). pp.319-346.
Gassen, J., 2014. Causal inference in empirical archival financial accounting
research. Accounting, Organizations and Society. 39(7). pp.535-544.
Hillier, D., Grinblatt, M. and Titman, S., 2011. Financial markets and corporate strategy (No.
2nd Eu). McGraw Hill.
Nobes, C., 2014. International classification of financial reporting. Routledge.
Ryder, L., Elaine G. Ryder, 2012. Personal or family financial accounting and management
system. U.S. Patent 8,099,350.
Ward, K., 2012. Strategic management accounting. Routledge.
Weygandt, J. J., Kimmel, P. D. and Kieso, D. E., 2015. Financial & managerial accounting.
John Wiley & Sons.
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Sales Ledger Control Account. 2018.[Online]. Available through:
<https://webcache.googleusercontent.com/search?q=cache:1dMgaqbaAc4J:https://
www.accounting-daddy.com/sales-ledger-control-
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