Financial Accounting Report: Stakeholders, Statements, and Concepts

This report provides a comprehensive overview of financial accounting principles and their application within Expert Wealth Management, a financial consultancy firm. It begins by defining financial accounting and its purpose, emphasizing its role in recording, analyzing, and presenting financial data through various reports like balance sheets and profit and loss accounts. The report then delves into the interests of both internal stakeholders (employees and owners) and external stakeholders (creditors, customers, suppliers, and competitors) in financial information. It further explores key accounting concepts, including consistency and prudency, and explains different depreciation methods. The report also covers financial statements used by sole traders and limited companies, the purpose of bank reconciliation accounts, and the requirements for control and suspense accounts within trial balances. Overall, the report aims to illustrate how financial accounting supports decision-making and performance measurement within the company.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................4
A.......................................................................................................................................................4
1. Financial accounting and its purpose......................................................................................4
2. Internal and external stakeholders in the organization............................................................5
B.......................................................................................................................................................9
Client 1........................................................................................................................................9
A. Double entry system...............................................................................................................9
...................................................................................................................................................10
...................................................................................................................................................13
...................................................................................................................................................14
...................................................................................................................................................15
...................................................................................................................................................16
Trial balance..............................................................................................................................18
...................................................................................................................................................18
Client 2......................................................................................................................................19
A. profit and loss account..........................................................................................................19
B. Statements of financial position...........................................................................................19
C. Accounting concept..............................................................................................................20
D. Purpose of depreciation with different methods..................................................................20
E Sole traders and limited companies financial statements......................................................21
Client 3 .....................................................................................................................................21
A. Purpose of preparing bank reconciliation account...............................................................21
B. Reason behind the variation of the company financial record from the bank record...........21
C. Imprest system......................................................................................................................22
D. Bank reconciliation statements.............................................................................................22
...................................................................................................................................................23
Client 4......................................................................................................................................23
A Sales ledger and purchase ledger control account.................................................................23
B. Need to prepare the control account.....................................................................................24

Client 5......................................................................................................................................24
A. Suspense account and its features........................................................................................24
B. Trial balance.........................................................................................................................25
CONCLUSION..............................................................................................................................26
REFERENCES..............................................................................................................................27

INTRODUCTION
Financial accounting is used to present the financial data in more understandable manner with
different accounting reports like balance sheet, cash flow statement and profit and loss account.
Financial accounting is used to provide the information to the internal and external record and
record the monetary transaction. Expert wealth management company service based company
and situated in UK. It is a financial consultancy company which provides its innovative ideas and
suggestions to their clients to improve their wealth and profit by investing in different securities
and portfolio. The report highlights the purpose of financial accounting in the company and how
the internal and external stakeholders are interested in financial information. It explains the
accounting concept like consistency and prudency in the company. It also explains the different
method used by the company like the straight line method and written down value method. The
report also highlights the various financial statements used by the sole traders and company. It
helps to understand the requirement of control account in the company and the role of suspense
account in trail balance.
A
1. Financial accounting and its purpose
Financial accounting : it refers to the branch of accounting system which keep records
of the financial transaction of the organization and maintain the financial records for the further
use by the organization. The transaction are summarized, analyse, recorded and evaluate in a
standard guideline (Henderson, and et.al., 2015). It presents the data in various financial reports
like income statement, profit ans loss account, balance sheet and trading account and cash flow
account. The information presented in the financial statement are mainly used by the external
user of the company. They evaluate t eh data to gain the share in the profit and capture the large
share of market.
Purpose of financial accounting
Recording : It helps the organization to prepare the data in systematic manner by
recording them in the various statement. The aim of financial accounting is to record the data to
get t eh useful information and make the decision on the basis of the data. Expert wealth
management consultancy firm record the financial data to get the financial position of the
company in the market and evaluate performance in respect of tits competitor performance
(Parson, and et.al., 2015).
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Decision : The purpose of the financial accounting is to present the data in that manner
that a firm can take the decision on the basis of the data. They present the data to the
stakeholders, suppliers, shareholder., customer etc. to evaluate the performance and take the
decision of investing the amount in the company. Expert wealth management use the financial
data of their clients to take the decision regarding maximize the wealth of the customer by
different investment decisions.
Accuracy : Accuracy used to determine the reliability of the data. Financial accounting
purpose is to provide the accurate data to the stakeholders by evaluating and measuring the data
in different formats. Expert wealth management company provide the accurate data to its
suppliers, customer, so they can reliable on the performance of the company. It also helps to
encourage them to invest in the company assets (Schaltegger, and Burritt, 2017).
Measuring performance : the purpose of financial accounting is to measure the
performance of the organization via comparing its data with the past information or performance.
Every organization need the reliable sources to evaluate the performance via the accounting tools
like key performance indicators, balance score card and benchmarking. Expert wealth
management company measure the performance by analyse their clients performance and the
financial data like the sales of the organization, changes in the profit and gaining the market
share.
Prepare financial report : Financial report of the company are used to maintain the data
in different accounts like profit and loss account, cash flow and balance sheet account. The
financial reports help the company to measure their performance and evaluate the trend of the
variances by comparing it to the last year performance (Drake, Hales, and Rees, 2017). Expert
wealth management company prepare the balance sheet, cash flow and trading and profit and
loss account to measure weather the company is grown in favourable manner or not.
2. Internal and external stakeholders in the organization
Internal stakeholder : Internal stakeholders are the person which work within the
organization and have interest in the financial and management information of the company.
Internal stakeholder of the company are its employees, manager and owner. The demand of
employee is to earn more money from the performance of the company. Owner are interested in
rising the profit of the company (Farooq, Rupp, and Farooq, 2017).
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1. Employees : Employee are the persons who work for the organization to earn the money as
salary and incentives. They get remuneration from the management team on services provided by
them to the organization.
Interest of employees in the financial information
Employees are more interested in the financial performance of the company because the
increment of the salary is based on the growth of the organization. The employees monitor the
accounts of the company to get the information that whether the company id perform better in
the market or not. It also helps them to aware about the various transaction of the company like
the expenses, profit and loss and source of income (Hameed, and et.al., 2016). The financial
information of the company encourage and motivate them to provide their valuable suggestion,
participate in the company activities and work toward the common goal of the organization like
to provide the better plan to the customer to increase their wealth and get the higher profit from
the different portfolio with minimum risk.
2. Owner : Owner are the person who have the highest interest in the performance and profit id
the company because they are the real stakeholders. The profit of the company are belongs to
them, and they take the important decisions for the organization. The term owner is used for the
individual and group of people who have invested in the capital of the company.
Interest of owner in the financial information
The owner of the company are interested in the financial information because they have
to take the important decision regarding the policies, procedure and methods for improving the
financial position and have to monitor and control the internal management. The financial
information like profit, revenue, expenses help them to take the important decisions like
distribute the profit as dividend or retain in the organization as capital reserve (Leonidou, and
et.al., 2017). It also helps them to take the decision whether they have to continue the business
with the present method or change the method to get Higher profit. The large organization uses
the Financial information like the total cash inflow and outflow and provide the information to
the owner to control the expenses and encourage the investor to invest more in the company.
External stakeholder : They are the individual and group of the individual which are not
the part of the organization, but they are interested in the organization activity and indirectly
affect the business of the company. There are different kind of external stakeholder like
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suppliers, government, creditors, customer, intermediary and competitors (Business
Stakeholders: Internal and External, 2019).
1. Creditors : Creditors are the individual, bank and financial institute which provide finance to
the company for the efficient running of the business (Ramus, and Vaccaro, 2017). Bank
provide finance to the Expert wealth management company against some security. They regulate
the performance of the company via the financial statement and may also conduct the internal
audit to check the accuracy if the data.
Interest of creditor in the financial information
Creditors are interested in the financial information of the organization like the
profitability, productivity and performance to regulate the growth profit and loss of the company.
They use the financial information to know that whether the company is able to pay the debt in
future or not (Subrahmanyam, Tang, and Wang, 2017). They also conduct the internal or external
audit of the company before providing fund to run the business of organization. Company can
borrow the money from the bank and from various financial institute to run the business
effectively and efficiently.
2. Customer : Customer are the end user of the product and services of the organization. They
consume or purchase the services to satisfy their demand and needs (Hirshleifer, amd et.al.,
2018). They influence the company to improve their services according to the taste and
preferences of the customer. The satisfaction of the customer with the product and services are
more important for the company. Customer is the valuable person of the company because they
purchase the product and services.
Interest of customer in the financial information
Customer have interest in the financial information of the company like the product and
services offered by the company and their growth trend. They regulate the financial account to
measure the performance of the company and make the decision that whether they have to
purchase the services or not. Customer gets the financial information from the various report
published in newspaper and websites which help them to analyse the performance of the
company (Rikhardsson, 2017). The accuracy of the data make the customer more reliable upon
the company. The growth and profit of the company attract their client and customer to involve
in the financial information.
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3. Suppliers : suppliers are the person who supply the raw material to the company and
negotiate with them regarding the price of the product and services. Supplier play and important
role in the growth and development of organization. The problems in supply of the product affect
the productivity and profitability of the company.
Interest of suppliers in the financial information
Suppliers need the financial information to know the accuracy of the data and
performance of the company in market, so they can set the price of their product and services and
also negotiate with the current price (Maas, Schaltegger, and Crutzen, 2016). Suppliers provide
the raw material to the company. The financial information regarding the sales and revenue and
profit of the company help them to get the price of their product in compare to the competitors in
the market. They also use the financial information to make the decision regarding the safety of
the credit provided by them to the company.
4. Competitors : Competitors are the person who do the same business or deal in same product
line in market. They compete in the market with the price of the product or the customer share in
the market. The number of competitors in the market affect the price of the product and services.
If there are large number of competitors then the profit of the firm will reduce.
Interest of competitors in the financial information
Competitors in the market are more interested in the financial information of the
company because the information regarding the price of product, method of pricing and
depreciation help the competitors to increases or decrease the price of the product and services
and get the higher profit from their competitors (Sethi, Martell, and Demir, 2017). The
information regarding the investor of the company their advertising strategy and investment
strategy influence the company to change their strategy and adopt the new strategy which help
them to get higher market share.
B
Client 1
A. Double entry system
Journal entries in the books of Alexandra for January 2019 are as follows
Date particulars Debit Credit
1st jan 2019 Storage exp.A/c Dr 450
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To bank A/c
2nd jan 2019 Purchase A/c Dr 6080
To S. hood A/c 1450
To D main A/c 2060
To W Tone A/c 960
To R foot A/c 1610
3rd jan 2019 J Wilson A/c Dr 1200
T . Cole A/c dr 1650
F. Syme A/c Dr 2100
J . Allen A/c Dr 1020
P. white A/c Dr F. Lane A/c Dr 2520
F. lane A/c Dr 980
To sales A/c 9470
4th jan 2019 Motor Exp. A/c Dr 470
To cash A/c 470
7th jan 2019 Drawing A/c Dr 1500
To cash A/c 1500
9th jan 2019 T. cole A/c Dr 680
J. Fox A/c Dr 1310
To sales A/c 1990
11th jan 2019 Sales return A/c Dr 680
To J. wilson 270
F.syme 410
16th jan 2019 Cash A/c Dr 7020
To P. Mullen A/c 1400
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To F. Lane A/c 3100
To J. Wilson 850
To F. Shyme 1670
19th jan 2019 R. foot A/c Dr 50
To Purchase return A/c 50
22st 2019 Purchase A/c Dr 3740
To L.Mole A/C 1830
To W. Wright 1910
24th jan 2019 S. Hood A/c DR 3600
J. Brown A/c Dr 4600
R. Foot A/c Dr 1400
To Bank A/c 9600
27th jan 2019 Salary A/c Dr 4800
To bank A/c 4800
30th jan 2019 Business rates A/c Dr 1320
To bank A/c 1320
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