Financial Accounting Report: Regulations and Client Account Analysis

This financial accounting report begins with an introduction to financial accounting, emphasizing its role in building strong capital structures and managing financial operations. It then delves into accounting regulations, principles, and frameworks, including GAAP, IFRS, and IASB. The report presents several client case studies, each involving the preparation of various financial statements such as journal entries, ledger accounts, trial balances, balance sheets, and bank reconciliation statements. It covers topics like income statements, financial position statements, and the purpose of depreciation. The report also addresses concepts like material disclosure, consistency, and the preparation of control accounts and suspense accounts. The report concludes with a discussion on different types of accounts used for framing reconciliation and methods of accounting. The report aims to provide a comprehensive understanding of financial accounting practices and their applications in real-world scenarios, offering valuable insights into financial analysis and reporting.

FINANCIAL
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
A. Ascertaining the regulations relevant with accounting as discussed in report..................1
1 Financial accounting............................................................................................................2
2.Regulations relevant with financial accounting..................................................................2
3. Rule and regulations of accounting....................................................................................4
4. Concepts of material disclosure and consistency...............................................................5
b. Accounting measurements for portfolio clients.................................................................6
CLIENT 1........................................................................................................................................6
1. Preparing the book of prime entries for Alexandra Study..................................................6
2. Computing double entry recording with the help of ledger accounts................................9
3. Completion of each accounts with a contrast of drawing trial balance for 31st January 2018
..............................................................................................................................................17
M1 Ascertainment of several transactions compiled in Trial balance.................................18
D1 Records of all transactions in Trial balance....................................................................18
CLIENT 2......................................................................................................................................18
A. Drafting income statement for Peter Piper 31st December 2017....................................18
B. Preparing financial position statements for Peter Piper as on 31st December 2017.......19
CLIENT 3......................................................................................................................................20
A. Preparation of income statement for Raintree Ltd...........................................................20
B. Preparing balance sheet for Raintree Ltd as on 31st December 2017.............................21
C. Discussion over accounting concepts such as prudency and consistency.......................25
D. Purpose of formulating depreciation in accounting statements as well as calculating it with
various methods....................................................................................................................26
M2 Evaluating the P&L account, cash flow statement as well as balance sheet of firm.....26
D2 Construction of final accounts based on accurate information.......................................26
CLIENT 4......................................................................................................................................27
A. Ascertaining purpose and reasons behind preparing Bank Reconciliation Statement for
Kendal Ltd............................................................................................................................27

B. Explaining and listing various areas which causes verification of records in bank statement
..............................................................................................................................................27
C. Referencing the cash book with preparation of various accounts...................................27
M3 Not sufficient funds and process of preparing deposits in transit..................................28
D3 Drafting accurate BRS....................................................................................................28
CLIENT 5......................................................................................................................................29
A. Balancing and preparing books of accounts for Henderson as on January 2018............29
B. Explaining terms of preparing Control accounts.............................................................29
CLIENT 6......................................................................................................................................29
A. Explaining terms and features of preparing suspense accounts......................................29
B. Preparation of Trial balance on contrast with balance of control account.......................30
C. Preparation of Journal entries with contrast of trial balance failure................................30
D. Analysing the differences between Suspense account and Clearing account.................31
M4 Types of accounts for framing reconciliation................................................................31
D4 Providing appropriate methods of accounting................................................................31
CONCLUSION .............................................................................................................................31
REFERENCES..............................................................................................................................33

INTRODUCTION
Financial accounting is the technique which will be assistive and helpful to the firm in
terms of building the strong capital structure as well as suggesting suitable way to manage
financial operations in firm. In the present report there will be discussion based on various
accounting principles and regulatory framework of financial institutions which are facilitating
appropriate accounting methods. There will be preparation of various financial accounts which
will be prepared to resolve financial issues of all clients which are here for operative decision. It
comprises with several accounts such as journal entries, ledger accounts, trial balance accounts,
balance sheet, bank reconciliation statement and suspense accounts. Therefore, such preparation
of these accounts will have positive influences as per analysing financial issues and management
of operations.
A. Ascertaining the regulations relevant with accounting as discussed in report
1

From: Junior Accountant
To: Line manager
Subject: Accounting regulations, rules and principles for better financial control in business
Sir,
On contrary with analysing the operational activities of entity. Therefore, in relation
with operating accounts in premises will need a proper framework and adequate techniques in
preparing them. Discussion will be based on various accounting principles as well as
operational tools which will help in improving business efficiencies. Ascertaining appropriate
rules and regulations will be assistive in building suitable financial environment. It highlights
the methods of preparing financial statements which brings the suitable information among the
users of such accounts (Singleton-Green, 2016).
The managerial professionals as well as accounting personnel will have an appropriate
knowledge relevant with expenditures and revenues in due period. It benefits the external users
such as shareholders which seek for the appropriate disclosure of the accounts and financial
statements. They are mainly attracted towards profitability of firm as well as capital structure in
terms of making capital payments. There is a need to have an appropriate disclosure for
Achieving suitable market value for better operational practices of accounts. This will be an
assistive tool which brings control over operations.
1 Financial accounting
These are the accounts which keep records of all transactions that will be helpful and
assistive to unit in terms of making suitable strategies for operational activities as well as
suggests techniques to reduce costs implied in such activities. Administration of all financial
transactions will be collected, analysed and summarised into final accounts. It enables
accounting personnel to have the most appropriate information relevant with accounting control
and management of operations (Pawlowski, Nalbantis and Coates, 2018).
Usefulness of these accounts is that it brings information relevant with financial
operations as well as uplifts business efficiency in due course. Require information by users
such as consumers, competitors, investors as well as legal authorities which in turn analyse
operational activities of firm and make necessary operational practices in due period.
2.Regulations relevant with financial accounting
2

It comprises with various legal regulations which in turn approaches towards
preparation of financial accounts for better operational management. Demonstrating the
requirement of preparing the financial accounts in relation with communicating the information
among external users (Samreen, 2018). Therefore, influences of various legal authorities will
have effective control over operational practices as well as management of activities.
Main motive of implicating regulations in financial operation is that the accounting
professionals are bound to prepare statements which will be prepared with considering all legal
and authentic frameworks (Regulations in Financial Accounting, 2017). It consists all details
such as recording of transactions as well as reporting the same among users. It communicates
the financial health of a business among note only domestic but also gathers international
investors for capital funding. Moreover, there are some regulatory authorities which enforces a
business in preparation of fruitful financials disclosures such as:
Generally Accepted Accounting Principles (GAAP): This organisation developed the
principles and rules of recoding accounting transactions for the specific period. Preparation of
all rules and principles will be effective and adequate as per managing operational activities of a
firm. Concepts and principles used here are the best for funnelling accounting professionals in
terms of better financial control in organisation as well as management of operational activities
(Kouki, 2018). It ascertains proper recording of all transactions in various accounts with their
appropriate methods of recoding transactions.
International Financial Reporting Standards (IFRS): These are the standards which
consists of all information that will be useful to firm in terms of preparation of statements and
accounts that will be useful and appropriate in terms of communicating financial health of entity
among external users (Bloomfield and et.al, 2017). It enables the professionals in making
appropriate decision as well as developing plans and policies as per guiding the accounting
professionals or auditors to control operational activities in business. These are international
standards which comprises with all information and techniques to prepare financial statements
for business.
International Accounting Standard Board (IASB): In accordance with operational
activities and the operational framework of IASB are based providing the accounting standard
among all the organisation. Th motive is for upgrading the accounting and book-keeping in the
3

operational predicates with proper considerations of all the relevant information (Busco and
Quattrone, 2018). There are rules and principle relevant with each statement and transaction to
be recorded in the authentic manner. It brings the uniformity in financial disclosure as well as
helps in making proper records of all transactions.
Financial Reporting Council (FRC): This is UK's personal financial reporting council
which insists that perpetration of financial statements as well as operational regulations
(Financial Reporting Council, 2018). Accessibility of this organisation is in UK and Ireland.
Therefore, it approaches that the financial disclosure in both translocations needed to be
authenticate and appropriate.
Financial Accounting Standard Board (FASB): The purpose of implicating this board
is for monitoring and managing the operational activities which will be effective and helpful as
per managing business operations (Constable and Kuasirikun, 2018). It improves the already
existed accounting standards which were being formulated by GAAP.
3. Rule and regulations of accounting
To manage transactions in various books and accounts which have an appropriate
records of all transactions. Regulations and rules incorporated with recording transactions in
various accounts will have effective control over operations of firm (Damodaran, 2016). These
are the principles which are generally offered by GAAP which insists that the all the
transactions are needed to be recorded properly in the books and have satisfactory analysis over
it. Moreover, there will be record of all transactions in accordance with accounting principles
such as:
Going concern principle: These principles comprised with the rule that the firm is
operating the current period or they have initiate business will have long-term operations.
Therefore, it will be treated as the continuously operating entity in world. Thus, the firm will
being never liquidate it will continue to have trade practices in environment.
Separate legal entity: This principle comprised with the statements and rule that a firm
will be treat as a separate individual other that its owners. Therefore, itself has the operational
activities. Revenue, expenditures apart from the personal capital and costs incurred by its
owners (Robson, Young and Power, 2017). Therefore, this principle authorities does not have
4

any rights to use the revenue generated by firm in their personal use as they have to make
payment to the dividend holders and settlement of all accounts in right time.
Monetary unit: This concept insists rules that all disclosure of financial statements and
the amount listed in the final accounts needed to be converted into US dollars. Therefore, it will
be profitable and helpful as per communicating financial details of firm among international
user of such accounts (Beatty and Liao, 2014). Therefore, there will e rise in the capital revenue
of a business. This technique will have positive impacts among the investors in terms with
analysing financial health various businesses as per a uniform disclosure of accounts.
Time period: This rule insists that disclosure as well as financial audit of the business
will be based on periodical presentations (Accounting Principles, 2018). Moreover, it bounds
the accounting professionals and auditors of unit in terms of making periodical disclosure in
considerations with a financial year of a firm.
Cost Principles: Accounting is records of all financial transactions on which it can be
said that there will be use of various spendings such as cash or other cash equivalents.
Moreover, it can be said that all transactions are needed to be recorded in proper amounts over
such transactions.
Full Disclosure: This principle comprised with the preparation of financial statements
based on full disclosure of accountants. Therefore, it comprised with framework of accounting
disclosure is that all accounts are needed to be prepared properly and have records in all the
accounts (Bushman, 2014). Therefore, in relation with same it can be said that companies are
bound to make disclosure of accounts such as income statement, balance sheet, statement of
change in equity and cash flow statement.
4. Concepts of material disclosure and consistency
Material Disclosure: It considered that the all the materialistic informations are to be
added by the professional in the financial disclosure as well as preparation of accounts. Thus,
the unrealistic and immaterialist things are not needed to be added in the financial disclosure of
firm (Materiality Concept in Accounting, 2018). It is essential that business have implication of
all financial details and disclosure of accounts.
Consistency: Similarly, with the going concern concept of business it can be said that
5

the firm is needed to have fruitful discoloured of accounts in consistent manner. Thus, it can be
said that there is needed to have records of transactions of regular basis and monthly at the time
of activity took place. It created\s the proper recoding of all transaction held in a period and
does not have any burden over professionals. In relation with auditing of accounts there will be
investigation over all accounts in periodical basis such as daily, weekly, monthly, quarterly and
yearly.
b. Accounting measurements for portfolio clients
CLIENT 1
1. Preparing the book of prime entries for Alexandra Study
There will be use of several accounting records and transactions which are needed to be
add in an initial account. Therefore, there will be preparation of all the transactional entries in
different books. All inflows and outflows in an accounting period will have fruitful records of
transactions (Macve, 2015). It consists of all entries such as Adjusting retirers, Compound
entries, Reversing entries etc. Thus, such records will be helpful to the professionals in terms of
developing suitable operational records which are later adjusted in various other accounts.
6

7

8

2. Computing double entry recording with the help of ledger accounts
By considering operational activities of Sole proprietor Alexandra study as recorded in
trial balance of the firm. Therefore, there has been preparations of all various necessary accounts.
Thus, after preparation of journal entries in of the proposed company it can e said that there will
be use of such transactions in severely ledgers of the accounts (Singleton-Green, 2016).
Similarly, ledgers are being prepared by an organisation which is in turn will have effective
control over the operational practices as well as revenue generation of the firm. According to
journal entries in the books there will be preparation of ledger of all the nominal and real
accounts such as cash receivable, sales, purchase, creditors, debtors etc.
9

10

11

Sales Ledge accounts
12

13

Nominal Ledger:
14

15

Real Ledge accounts:
16

3. Completion of each accounts with a contrast of drawing trial balance for 31st January 2018
By contrast with the above listed measurement of the journal entries and ledger accounts
of the business there will be preparation of summarized trial balance. This statement is consists
of all debits and credits in double entry book of accounts. It brings details relevant with the errors
or any adjustments which are needed to be implicated by the professionals as per having the
suitable control over financial operations. Similarly, based on the above analysis in various
accounts there will be preparation of all other accounts that will be effective and helpful as per
measuring ability of firm in meeting operational requirements.
Particulars Debit Credit
Furniture and fixtures 8100
Stock 63900
Capital of firm 529000
Van 51250
Office Premises 340000
Purchases 38320
purchase returns 50
Sales 10930
sale returns 680
17

Stock storage cost account 400
Owner's Drawings 1500
Bank 36700
Cash 3630
F. lane A/c 770
Motor Costs 470
Discount received 960
Discount allowed 352
Miscellaneous gains 5132
Total 546072 546072
M1 Ascertainment of several transactions compiled in Trial balance
By considering compiled trail balance of firm it can e said that there has been preparation
summarized records of all accounts. Therefore, extracting sales from records it can be said that
sales made by firm in the due period is of 10930 and purchases are of 38320. Thus, sales of
business are comparatively lower than its purchases.
D1 Records of all transactions in Trial balance
In proposed scenario that has been preparation of various accounts such as journal
entries, ledger entries and summarized trial balance. Thus, records of all the transactions in te
books ahas been made winch brings suitable analysis over issues.
CLIENT 2
A. Drafting income statement for Peter Piper 31st December 2017
An income statement is consisted of various costs or expense incurred in the due period
which were analysed as per revenue gains by firm in due period. Therefore, sales revenue
generated by firm will be considered as the main sources of income on which various costs such
as direct labour, material and costs will be deducted as per analysing the gross profit margin of
firm. Similarly, there will be records of all the operational expenditures which are making
effective control over operational practices such over spending in a particular activity as well as
managing the operational activities in the due period. However, below listed income statement
determined the operational activities of firm in relevant terms.
18

Particulars Details Amount
Net sales Revenue 1215000
(-) Cost of goods sold -759360
Gross margin 455640
motor expenses -87400
Advertising -13280
Heating and Lighting -4950
(-) Prepaid 8470
Salaries and wages 177500
O/S wages and salaries 1220
Administration expense -17650
premises depreciation -5400
motor vehicle depreciation -2800
Depreciation on Equipments -17250
Total indirect expenses -318980
Net profit 136660
B. Preparing financial position statements for Peter Piper as on 31st December 2017
Financial position is the sum of all the accounts which were transacted during the period.
Therefore, they will be categories in the two field such as assets and liabilities. Ascertaining
operational requirements of the business there is need to have suitable operational balance in
various activities. Moreover, disclosure of this statement will be helpful in terms of attracting
large number of investors for capital funding in the business. Similarly, below listed analysis of
balance sheet explains all the relevant operational practices as well as revenue generation of the
firm as per enhancing the operational motives of firm.
19

20

CLIENT 3
A. Preparation of income statement for Raintree Ltd
Records of all the expenses and revenue retained by a firm in period will be analysed in a
statement which brings the suitable information related with profitability of entity. Thus, in
accordance with such analysis it can be said that the business will have suitable data set on which
they will generate new ideas and make effective planning to improve the efficiency of the firm in
the due period (Pawlowski, Nalbantis and Coates, 2018). Moreover, the below listed analysis is
based on preparing the income statement for Raintree Ltd such as:
Particulars Details Amount
Net sales Revenue 107000
(-) S/R 2000
CL. stock 18000
Op. stock 17000
purchases 32000
GP 74000
(-) Indirect costs
An Additional dep. 36000
distribution costs 22000
administrative costs 28000
(-) Rent paid in advance 3000
(+) Outstanding wages 2000
Corporate tax applicable 4000
(-) Interest paid 11000
Net profit 18000
B. Preparing balance sheet for Raintree Ltd as on 31st December 2017.
Balances of all accounts will be record in summarized form in two categories such as sets
and Liabilities. Moreover, of preparing a financial positing statement is for communicating
summarized data set among professionals or other users to analyse efficiency and liquidity of
21

firm. Similarly, below listed statement comprises various operational transactions which will be
recorded in the balance sheet such as:
22

23

24

25

C. Discussion over accounting concepts such as prudency and consistency
Implication of various concepts and principles will have effective administration of
various rules and methods that will funnel operational practices as well as brings the suitable
control over operations. Moreover, concepts enables accounting professionals in recording the
transactions in the required manner as well as for users it will be easily understand. Thus, there
are two concepts of accounting which are needed to be ascertained by professionals such as:
Prudence: These are the concepts which assists business professionals in counting all
losses instead of its gains. Therefore, all losses have been ignored by the professionals only gain
will be considered in terms of planning and forecasting.
26

Consistency: In relation with the consistency concept it can be said that operational
practices of firm has been determined as ongoing process. Similarly, there will be consistent
changes into operations which in turn will have effective control over all transactions in regular
terms. The business will have ongoing trade practices in the market as well as which required the
preparation of books, accounts on the regular terms as well as requires consistent auditing of
operations.
D. Purpose of formulating depreciation in accounting statements as well as calculating it with
various methods
Analysing the real values of assets which depreciating them on the timely basis. Thus,
such determination will have effective control over operational gains in due course. Therefore,
these are the losses on fixed assets as per their useful life. The purpose of analysing depreciation
is basically for demonstrating the operational activities in firm. It includes two methods such as:
Straight-line method:
The fixed amount of reduction made over the fixed assets till its value become zero.
Therefore, analysing straight line depreciation is the most easy and reliable technique in
depreciating the assets.
Written down method:
A proportionate reduction in the value of fixed assets over the period which will have
suitable outcomes in due period. Moreover, it does not lead the reduction over the values to
become zero.
M2 Evaluating the P&L account, cash flow statement as well as balance sheet of firm
The preparation of various accounts which have been later summarized into final
accounts of the firm. Therefore, there will be impacts of accounts which in turn will be records in
the financial statements such as income statements, cash flows as well as balance sheet. All the
accounts have their own purpose and operational practices which will be effective and helpful as
on financial analysis of such accounts.
D2 Construction of final accounts based on accurate information
In order to prepare the final accounts of business such as income statement, cash flows as
well as balance sheet there has been use of all the accurate details and information. Moreover, on
27

the basis of such analysis it can be said the authentic information will have positive imp[acts
over revenue generation as well as management of operations.
CLIENT 4
A. Ascertaining purpose and reasons behind preparing Bank Reconciliation Statement for Kendal
Ltd
To monitor the operational activities as well as financial transactions of the firm in right
manner which required preparation of bank reconciliation statements. Moreover, preparation of
such statements will have effective control over financial efficiencies. It ensures managerial
professionals in terms of having proper records based on financial activities. Therefore, keeping
a bank reconciliation statements will have positive impacts in the revenue generations as well as
gains of firm in due period.
B. Explaining and listing various areas which causes verification of records in bank statement
The manipulation of various financial transaction made by managerial or accounting
professional will be traced. The errors incurred in transactional activities will have positive
impact over financial statement of the firm.
C. Referencing the cash book with preparation of various accounts
BRS as on 1st December 2017:
Cash Book:
28

BRS as on 31st December 2017:
M3 Not sufficient funds and process of preparing deposits in transit
Outstanding cheques: These are the cheques which were being presented in the banks
and remain uncleared while it the respective amount has been deducted from lender's account.
Deposits in transit: The balances made in banks are not same as transaction re\corded in
books of accounts. Therefore, it will be relevant with the currencies and coins (Kouki, 2018).
Not sufficient Funds: The dishonour of the bank's cheque which is due to insufficient
funds in accounts. Similarly, there has been higher differences in the balances.
D3 Drafting accurate BRS
The preparation of BRS insists that there will be proper records of all financial data set. It
is the cross check implication of various activities which per being performed by professionals.
29

CLIENT 5
A. Balancing and preparing books of accounts for Henderson as on January 2018
Sales Ledger Control Account:
Purchase ledger control account:
B. Explaining terms of preparing Control accounts
In accordance with the name of these accounts which are basically formed by the
professionals in relation with measuring the transactional activities in each units of a business
(Constable and Kuasirikun, 2018). Therefore, it brings managers and accounting professionals
the ability to execute and administered all the accounts in organisation.
CLIENT 6
A. Explaining terms and features of preparing suspense accounts
In the process of preparing the final account of business there are huge variation in the
balances and funds of the operations. Therefore, these can be denoted as the variations in amount
or value of the particular transactions. To overcome with such variations there have been
preparation of suspense accounts. Moreover, it can be said that all the suspense accounts are
30

needed to be sort out and cleared by then professionals before making final submission of
transactions.
B. Preparation of Trial balance on contrast with balance of control account
C. Preparation of Journal entries with contrast of trial balance failure
31

D. Analysing the differences between Suspense account and Clearing account
M4 Types of accounts for framing reconciliation
There are basic functions and role in context of organization which has to be prepared
with some specific and relevant techniques of accounting and it will be enhancing appropriate
fund management of every fund and there operations related to business (Robson, Young and
Power, 2017). All revenue and expenses are presented in framing profit and loss account of
given duration. Balance sheet will be reflecting assets and liabilities and it will be enhancing the
performance of organization and it will attain all debts and shareholder will be paid accurately.
D4 Providing appropriate methods of accounting
With the context of various accounting methods and techniques will be applied and for
proper audit of these accounts these methods are applied. The business transactions in context of
business will be providing sufficient returns and balances as well which will be not against users
of such financial data sets.
CONCLUSION
From the above report it has been concluded that financial accounting is very essential for
every organization. All the transactions are directly recorded in journal account with proper debit
or credit side. It has been summarized that all financial statements helps in evaluating financial
32

performance, stability and position in the market. Further it can be summed up various variations
between clearing and suspense account in which the most essential one is about tracking ongoing
transactions in clearing and errors or problems has been traced by suspense account.
33

REFERENCES
Books and Journals
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.
Bloomfield and et.al, 2017. The Effect of Regulatory Harmonization on Cross‐Border Labor
Migration: Evidence from the Accounting Profession. Journal of Accounting
Research. 55(1). pp.35-78.
Busco, C. and Quattrone, P., 2018. Performing business and social innovation through
accounting inscriptions: An introduction. Accounting, Organizations and Society.
Bushman, R. M., 2014. Thoughts on financial accounting and the banking industry. Journal of
Accounting and Economics. 58(2-3). pp.384-395.
Constable, P. and Kuasirikun, N., 2018. Gifting, Exchange and Reciprocity in Thai Annual
Reports: Towards a Buddhist Relational Theory of Thai Accounting Practice. Critical
Perspectives On Accounting.
Damodaran, A., 2016. Damodaran on valuation: security analysis for investment and corporate
finance (Vol. 324). John Wiley & Sons.
Kouki, A., 2018. IFRS and value relevance: a comparison approach before and after IFRS
conversion in the European countries. Journal of Applied Accounting Research, (just-
accepted), pp.00-00.
Macve, R., 2015. A Conceptual Framework for Financial Accounting and Reporting: Vision,
Tool, Or Threat?. Routledge.
Pawlowski, T., Nalbantis, G. and Coates, D., 2018. Perceived game uncertainty, suspense and
the demand for sport. Economic Inquiry. 56(1). pp.173-192.
Robson, K., Young, J. and Power, M., 2017. Themed section on financial accounting as social
and organizational practice: exploring the work of financial reporting. Accounting,
Organizations and Society. 56. pp.35-37.
Samreen, S., 2018. Book Review: Stig Jarle Hansen (Ed.), Al-Shabaab in Somalia: The History
and Ideology of a Militant Islamist Group.
34