Financial Accounting Principles Report for Financial Accounting Module

This report provides a comprehensive overview of financial accounting principles, examining various aspects of financial record-keeping and reporting. The report begins with an introduction to financial accounting and its purposes, followed by a discussion of internal and external stakeholders. It then delves into practical applications, including journal entries, ledgers, trial balances, and the preparation of financial statements for different clients. The report also covers bank reconciliation, control accounts, and the use of suspense accounts. Additionally, it addresses key accounting concepts such as consistency and prudence, as well as the purpose of depreciation. The report concludes with a summary of the key findings and a list of references.

FINANCIAL
ACCOUNTING
PRINCIPLES

Table of Contents
INTRODUCTION...........................................................................................................................3
BUSINESS REPORT......................................................................................................................3
(a) Financial Accounting and its purposes.............................................................................3
(b) Internal and external stakeholders....................................................................................4
CLIENT 1........................................................................................................................................6
1. Journal Entries and Ledger in the book of Alexandra Study..............................................6
Ledgers...................................................................................................................................7
..............................................................................................................................................12
2. Trial Balance as at 31st January 2019 in the books of Alexandra Study:........................12
2. Trial Balance as at 31st January in the books of Alexandra study...................................13
CLIENT 2......................................................................................................................................14
1. Statement of Profit and Loss of Munteanu Ltd. For the year ended 31st December 201814
2. Statement of Financial Position of Munteanu Ltd. As at 31st December 2018...............15
3. Accounting Concepts – Consistency and Prudency.........................................................15
4. Purpose of depreciation in formulating accounting Statement.........................................16
CLIENT 3......................................................................................................................................17
1. Purpose of preparing Bank Reconciliation Statement......................................................17
2. Reason for difference between balance of bank column of cash book and bank statements17
3. Imprest..............................................................................................................................18
4. Bank Reconciliation Statement as at 30 September 2018................................................18
CLIENT 4......................................................................................................................................19
1. Sales Ledger Control Account in the book of January 2018............................................19
2. Purchase Ledger Control Account in the books of January 2018....................................19
3. Control Account...............................................................................................................20
CLIENT 5......................................................................................................................................20
1. Suspense Account and its main features..........................................................................20
2. Trial Balance using a control account as balancing figure...............................................20
3. Journal Entries for corrections..........................................................................................21
CONCLUSION..............................................................................................................................21

REFERENCES..............................................................................................................................22
INTRODUCTION
Financial Accounting is a specialized branch of accounting that keep records of
company's financial transactions (Tinoco and Wilson, 2013). It is the process of prepare financial
reports to present performance of a company. These reports are applying standardized guidelines
for record the transactions and present in summarized way. The main purpose of the accounting
to provide financial information for sound economic decision making. It can prepare financial
report shows performance company to external parties like investors, creditors and tax
authorities. In the present report selected company Airdri limited, which is dealing in electronic
components, net contacts in WITNEY in United Kingdom. In particular report focused on record
business transactions using double entry book keeping after then produce trial balance. In
addition, Prepare final accounts for sole traders, partnership and limited companies in the
reference of accounting principles, convections and standards. Apart from, there is performing
bank reconciliation for ensure bank records are correct or not and adjust control accounts
according to requirements and recorded transactions from the suspense accounts to right
accounts.
BUSINESS REPORT
(a) Financial Accounting and its purposes
Financial accounting refers to recording, summarizing, classifying and analysing the
transactions recorded in the company books of accounts. It represents the actual picture of
financial position of business. It is a systematic process and classification of financial and non
financial information after then record according to their nature. The financial transactions are
presented in financial reports like income statement, cash flow statement and balance sheet.
These reports are part of formal report and provide to external and internal stakeholders. It will
show operating performance of the company related to accounting time period (Anandarajan,
Anandarajan and Srinivasan, 2012). The transactions are recorded on the basis of accounting
principles, convections, policies, rules and regulations. The main purpose of preparing this
statement are as follows :-

 The recording activity of financial accounting every transaction in the books of accounts
is recorded, that helps to keep a track of all the information. The book consist of cash as
well as credit transactions.
 Analysing the purpose for the evaluation of various alternatives and selection of best
alternatives.
 It assist in projecting anticipated earnings and performance of business organization.
(b) Internal and external stakeholders
Stakeholder is either an individual, group or organization who is impacted by the success
or failure of a business. Stakeholders can have a significant effect on decision regarding the
operations and finances of an organization (Chiang, Nouri and Samanta, 2014). The primary
stakeholders of regular organizations are investors, suppliers, employees and customers.
Stakeholders are categorised into two parts who is directly and indirectly related to the large
organisation -
Internal Stakeholders –
Internal stakeholders are people who are already related to company as volunteers, board
of directors and donors. In a large business organization, internal stakeholders are management,
owners, employees and shareholders. According to brief discussion there is including major
internal stakeholders and they are directly related to the company and interested in outcomes
which is related to financial situation, as follows - Owners and Shareholders – They are a subset of the stakeholder category where all
shareholders have invested funds in the business and they become automatically
stakeholders. Shareholders and owners are the most likely to lose their money at the time
of shut down of business. They become last priority to be paid from any left over funds.
They are interested into financial information because they wants to survive company for
long time and it helps in decision making process.
 Employees – They are local community and most considerable resources of a business
organisation. They always wants to achieve growth with in a business to acquire
sustainability growth. Employees are interested into financial information because their
salary and career are dependant on organisation's performance and growth.
External Stakeholders -

External stakeholders are those people who are impacted by work as community partners,
clients, constituents and others (Lawrence, 2013). In the case of large organisation in external
stakeholders including customers, creditors, suppliers and government etc. As a brief description
key external stakeholders are those person, group who are interested in financial information of
company. Government – Government can play role as stakeholder because it collect several taxes
on incomes and on other resources. Government can collect taxes and compliance with
proper rules and regulations in business organisation. Government charges tax on income
so for this there is need financial information. Suppliers – They are stakeholder because they are supplied raw materials and other
things on time for fulfil requirement of company. If they provide on time so they try to
receive payments on time and they can also provide liquidity position due to credibility.
So suppliers having stake in business organisation in form of their payments and sales.
They need financial information in order to get their money on schedule time. Customers – Customers are important part an organisation who can decide growth and
revenues of an organisation. They are purchasing products of company and recommended
to other for product. They can buy products and services of company after using
determine their popularity, growth, quality, beliefs and performance therefore customers
are holding performance and sustainability of business organisation. They can buy
products of Investors – These are most significant part of an organisation because they are providing
money on time and they can help to increase and growth of a company after investing
money and other financial asset. Investors are actual stakeholders of company because
they always try to get maximum return from investment made by in business
organisation. They are investing money in company on the basis of financial position.
(Zadek, Evans and Pruzan, 2013) .
 Creditors – The company can borrow money from creditors and provide secure interest
in the company's assets. Creditors are ranked as stockholders to paid in the event of a
business shutdown. In the terms of creditors there is including bond holders, suppliers
and banks. They are interested in financial information because they invest in company.

CLIENT 1
1. Journal Entries and Ledger in the book of Alexandra Study
SALES DAY BOOK
DATE DETAILS £
2018
03 January
2018 J Wilson 1,200
T Cole 1,650
F Syma 2,100
J Allen 1,020
P White 2,520
F Lane 980
09 January
2018 T Cole 680
J FOX 1,310
Credit in sales account in Nominal Ledger 11,460
PURCHASES DAY BOOK
DATE DETAILS £
2018
02 January 2018 S.Hood 1,450
D Main 2,060
W.Tone 960
R Foot 1,610
22 January 2018 L Mole 1,830
W Wright 1,910
Debit Purchases account in Nominal Ledger 9,820
PURCHASES RETURNS DAY BOOK
DATE DETAILS £
2018
19 January 2018 R Foot 50
Credit purchases returns account
in Nominal Ledger 50

SALES RETURNS DAY BOOK
DATE DETAILS £
2018
11 January 2018 J Wilson 270
F Syma 410
Debit sales returns account
in Nominal Ledger 680
Ledgers
Purchases A/c
Date Particulars Amount Date Particulars Amount
02/01/19 To S Hood A/c 1450 31/01/19 By Trading and P&L
A/c
9820
To D Main A/c 2060
To W Tone A/c 960
To R Foot A/c 1610
22/01/19 To L Mole A/c 1830
To W Wright
A/c
1910
Total 9820 Total 9820
Bank A/c
Date Particulars Amount Date Particulars Amount
01/01/19 To Opening
Balance (B/f)
68400 01/01/19 By Storage cost A/c 450
16/01/19 To P Mullen A/c 1400 24/01/19 By S Hood A/c 3600
To F Lane A/c 3100 By J Brown A/c 4600

To J Wilson A/c 850 By R Foot A/c 1400
To F Syme A/c 1670 27/01/19 By Salaries A/c 4800
30/01/19 By Business Rates A/c 1320
31/01/19 By Closing Balance
C/d
59250
Total 75420 Total 75420
D Main A/c
Date Particulars Amount Date Particulars Amount
31/01/19 To Closing
Balance A/c
2060 02/01/19 By purchases A/c 2060
Total 2060 Total 2060
By Purchases Return A/c
Date Particulars Amount Date Particulars Amount
31/01/18 To Trading and
P&L A/c
50 19/01/18 By R foot A/c 50
50 50
R Foot A/c
Date Particulars Amount Date Particulars Amount
19/01/18 To Purchase
Return A/c
50 02/01/19 By purchases A/c 1610
24/01/19 To Bank A/c 1400
31/01/19 By Closing
Balance C/d
160
Total 1450 Total 1610
T Cole A/c
Date Particulars Amount Date Particulars Amount
03/01/19 To Sales A/c 1650 31/01/19 By Closing Balance 2330

C/d
09/01/19 To Sales A/c 680
Total 2330 Total 2330
J Allen A/c
Date Particulars Amount Date Particulars Amount
03/01/19 To Sales A/c 1020 31/01/19 By Closing Balance
C/d
1020
Total 1020 Total 1020
F Lane A/c
Date Particulars Amount Date Particulars Amount
01/01/18 To Opening
Balance (B/f)
6100 16/01/19 By Bank A/c 3100
03/01/18 To Sales A/c 980 31/01/18 To Closing Balance C/d 3980
Total 7080 Total 7080
Cash A/c
Date Particulars Amount Date Particulars Amount
01/01/19 To Opening
Balance (B/f)
15600 04/01/18 By Motor Expenses A/c 470
07/01/19 By Capital A/c 1500
31/01/19 By Closing Balance
C/d
13630
Total 15600 Total 15600
Sales Return A/c
Date Particulars Amount Date Particulars Amount
11/01/19 To J Wilson A/c 270 31/01/19 By Trading and P&L
A/c
680

To F Syme A/c 410
Total 680 Total 680
L Mole A/c
Date Particulars Amount Date Particulars Amount
31/01/19 To Closing
Balance C/d
1830 22/01/19 By Purchases A/c 1830
Total 1830 Total 1830
W Wright A/c
Date Particulars Amount Date Particulars Amount
31/01/19 To Closing
Balance C/d
1910 22/01/19 By Purchases A/c 1910
Total 1910 Total 1910
J Brown A/c
Date Particulars Amount Date Particulars Amount
01/01/19 By Opening Balance
b/f
16600
24/01/19 To Bank A/c 4600 31/01/19 By Closing Balance
C/d
31/01/19 To Closing
Balance C/d
12000
Total 16600 Total 16600
Business Rates A/c
Date Particulars Amount Date Particulars Amount
30/01/19 To Bank A/c 1320 31/01/19 By Trading and P&L
A/c
1320
Total 1320 Total 1320

Storage Cost A/c
Date Particulars Amount Date Particulars Amount
01/07/19 To Bank A/c 450 31/07/19 By Profit & Loss A/c 450
Total 450 Total 450
Sales A/c
Date Particulars Amount Date Particulars Amount
31/01/19 To Trading and
P&L A/c
11460 03/01/19 By J Wilson A/c 1200
By T. Cole A/c 1650
By F. Syme A/c 2100
By J .Allen A/c 1020
By P .White A/c 2520
By F .Lane A/c 980
09/01/19 By T .Cole A/c 680
By J fox A/c 1310
Total 11460 Total 11460
S Hood A/c
Date Particulars Amount Date Particulars Amount
24/01/19 To Bank A/c 3600 01/01/19 By Opening Balance
(B/f)
12150
02/01/19 By purchases A/c 1450
31/01/19 To Closing
Balance C/d
10000
Total 13600 Total 13600
W Tone A/c
Date Particulars Amount Date Particulars Amount
31/01/19 To Closing 960 02/01/19 By purchases A/c 960

Balance C/d
Total 960 Total 960
J Wilson A/c
Date Particulars Amount Date Particulars Amount
03/01/19 To Sales A/c 1200 11/01/19 By Sales Return A/c 270
16/01/19 By Bank A/c 850
31/01/19 By Closing Balance
c/d
80
Total 1200 Total 1200
F Syme A/c
Date Particulars Amount Date Particulars Amount
03/01/18 To Sales A/c 2100 11/01/19 By Sales Return A/c 410
16/01/19 By Bank A/c 1670
31/01/19 By Closing Balance
c/d
20
Total 2100 Total 2100
P White A/c
Date Particulars Amount Date Particulars Amount
03/01/19 To Sales A/c 2520 31/01/19 By Closing Balance
c/d
2520
Total 2520 Total 2520
P Mullen A/c
Date Particulars Amount Date Particulars Amount
01/01/19 To Opening 4400 16/01/19 By Bank A/c 1600