Financial Accounting Homework: Stakeholders and Statements

This financial accounting assignment solution covers various aspects of financial accounting, including the definition and purpose of financial accounting, internal and external stakeholders, and the preparation of financial statements. The assignment delves into journal entries and ledgers for different clients, demonstrating the application of accounting concepts such as consistency and prudence. It also explains depreciation methods (straight-line and reducing balance), differences between sole traders and limited companies' financial statements, bank reconciliation statements, control accounts, and suspense accounts. The solution provides detailed examples and calculations to illustrate these concepts, making it a comprehensive resource for understanding financial accounting principles and practices. The assignment also provides a practical understanding of how financial accounting is applied in real-world scenarios, such as in the context of a financial marketing consultancy company.

FINANCIAL
ACCOUNTING

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Part (a)..........................................................................................................................................3
Part (b).........................................................................................................................................6
CONCLUSION..............................................................................................................................25
REFRENCES.................................................................................................................................26

INTRODUCTION
Financial accounting is a kind of accounting system which is associated with the
preparation of different kind of financial statements by using financial information (Nikolaou
and Evangelinos, 2012). In other words, this accounting system is a an accounting that consists
collecting and analysing the financial transactions of the organisations. This accounting system is
useful for both to the internal and external stakeholders. In the project report, financial
accounting is defined as well as its purpose for internal and stakeholders are mentioned.
Additionally, different types of tasks are completed according to the given data about clients. In
the project report, Alpha financial marketing consultancy company is selected that is operated in
the field of providing the financial services such as tax advice, auditing etc.
MAIN BODY
Part (a)
1. Meaning of financial accounting and purpose.
Financial accounting- It is a kind of accounting system which is associated to the
management of financial information and transactions which are presented in the form of
financial statements (Hiebl, 2014). As well as these financial statements play a significant role in
the context of both to the internal and external parties. So basically, the financial statements are
very crucial for internal stakeholders in taking important decisions as well as external parties can
evaluate about the financial situation of company. The concept of financial accounting can be
understood by example of an organisation which prepares different kind of financial statements.
On the basis of these financial statements, they take their future policies and plans. Same as in
the aspect of external parties they analyse the financial condition of the companies and take
decisions regarding to the investment.
So overall financial accounting system plays an important role in the organisations. Apart
from it, this is mandatory for the companies to implement the GAAP (general accepted
accounting principles). Basically, in the absence of these accounting principles the financial
statements can not be considered accurate and reliable. So it is required by an accountant to
adopt these principles. The main purpose of financial accounting are mentioned as below:

 Provide accurate information- If financial statements are prepared by use of accounting
principles then companies can get the accurate financial informations.
 Provide basis of decision-making- Apart from it, the financial accounting is also
beneficial in taking many important decisions. This is why because by financial
statements companies can derive needed information.
 Beneficial in making comparison- The financial accounting system is also useful in
making comparison of current financial information with the previous year's information.
Due to this companies can analyse the actual reason of deficits as well as can analyse
which year's activities was profitable or non profitable.
 Useful in making taxation decisions- The financial accounting system plays an important
role in taking the taxation decisions (Adler, 2013). Like on the basis of income of a
particular year organisation can evaluate about tax payment.
 Useful in making future plans and strategies- Additionally, the financial accounting
system is also useful in preparation of the future plans and policies. This is why because
on the basis of different kind of financial statements companies can make their plans
accordingly which can help in achieving the competitive advantages.
 Beneficial in attracting investors- Another purpose of the financial accounting system is
that it is useful in attracting the attention of customers towards the company. This is why
because investors invest in the companies on the basis of financial condition and it is
presented by the financial accounting system. So basically, financial accounting system is
beneficial for the organisations in getting more investment by the investors.
So these are the purpose of financial accounting system. These purpose defines that financial
accounting system has equal benefit for both to the internal and external stakeholders.
2. Internal and external stakeholders.
Stakeholders- The stakeholders are those who have their interest in the activities and
operations of any company (Lanen, Anderson and Maher, 2015). This is why because they want
to invest money in the companies for the purpose of earning return on the invested money.
Basically, the stakeholders are categorised into two parts which are such as: internal and external
stakeholders. Both the stakeholders are very important for the companies. Herein, different types
of internal and external stakeholders are mentioned below:

Internal stakeholder- The internal stakeholders are those stakeholders who are the
internal part of the organisation and participate into day to day activities. These stakeholders are
employees, board of director, managers etc. As well as these stakeholders are get effected due to
organisational policies and plans. The types of internal stakeholders are mentioned below:
 Employees- The employees are those who work for the companies on the basis of their
skills and capabilities (Kotas,2014). They are hired to perform any particular task or
activities and get salary or wages in return. The employees show their interest into the
financial position of the companies because they are the main source of raising the
financial conditions. If they will perform well then automatically financial position will
raise. So this is why they show their interest.
 Board of director- The board of director is a kind of group of person who prepares rules,
regulations which are required to be followed by other members. Eventually, for them the
financial information is very crucial because on the basis of it they make their plans and
policies. So that's why they show their interest in the financial information.
External stakeholders- The external stakeholders are those who do not participate in the day to
day activities of the company. They just invest their fund in the expectation of earning profits.
These stakeholders are such as customers, investors, suppliers etc. Some types of external
stakeholders are mentioned below:
 Government- The government is a kind of stakeholder who establish certain rules, laws
and regulations that are required to be followed by all the organisations. They show their
interest in the financial information of the companies because on the basis of it, they
determine the taxation. If company is earning good revenue then the tax rate will be high.
 Creditors- The creditors provide financial services to the companies on the basis of their
financial position. If financial condition is weak then they will not offer the financial
services. They might be interested in the financial condition of the company so that they
can provide fund on credit accordingly.
 Investors- The investors are the group of person or individual who expand their money in
the shares of companies with an expectation of earning higher return. This return depends
on the financial position of the company. If financial condition is good then investors will

invest. So they show their interest in the financial position of the company to check the
share value.
 Suppliers- The suppliers are those who sell raw material, goods and other required things
to the companies on the credit or cash (Deegan, 2013). If they sell these materials on the
credit then they evaluate the financila posituion of the company. So the suppliers are
interested in the financial position of the organisations so that they can provide the
material on credit.
Part (b)
Client 1.
(a) Journal Entries and Ledgers in the book of Alexandra Study