Accounting Principles: Financial Data, Analysis, and Reporting 2022-23

This report provides a comprehensive overview of accounting principles, covering both management and financial accounting. It details the role of accounting in gathering, processing, and presenting financial data for internal and external users. Management accounting is explained as a tool for decision-making, planning, and analyzing financial data, while financial accounting focuses on creating financial statements like income statements, balance sheets, and cash flow statements. The report also discusses budgeting, accounts receivable, and accounts payable, highlighting their purpose in financial management. Furthermore, the skills and competencies required for accounting roles are explored, using JPMorgan Chase & Co. as an example. The report includes practical examples with trading, profit and loss accounting, and balance sheets for sole proprietorships, partnerships, and not-for-profit organizations, illustrating the application of accounting principles in various business contexts. Desklib provides this document and many more to aid students in their studies.

Student Name/ID Number
Unit Number and Title 05: Accounting Principles
Academic Year 2022-23
Unit Tutor
Assignment Title Understanding aspects of Accounting Principles
Issue Date
Submission Date

LO1
ACCOUNTING
Accounting is the orderly gathering, processing, interpreting, and presenting of
financial data. One person in a small business or various teams in a large corporation can
handle bookkeeping. A firm keeps track of its operations through accounting.
Business accounting's objectives include giving you a thorough view of the dynamics
of the organization's operations and information on the state of its assets. Due to their
potential for use in making future projections, these data are required for more than just
factual reporting and tax preparation.
Calculating the reserves of the company's various property assets to preserve its sound
financial state;
Presentation of objective, systematic, and in-person economic data to management on
a regular and up-to-date basis;
Reduction of dangers that can have a bad impact on business operations;
Putting the controlling function into practice (both on the part of the state and on the
part of other external counterparties).
Accounting for internal users is done to provide management with a complete picture
that will aid them in making the best decisions possible. Additionally, the organization's
administration is really interested in sharing information with outside users for monitoring,
analysis, and effective planning. In other words, information for internal users on the
organization's financial performance, financial position, and changes to that position is used
to produce information for external users.
MANAGEMENT ACCOUNTING
The process of maintaining, extracting reporting, and analyzing an organization's
financial data for decision-making is known as management accounting. Based on the study
and interpretation of financial information pertaining to the internal operations of the
organization, management accounting aids managers in developing plans, changing course,
and making knowledgeable decisions. A virtual tool called management accounting assists an
organization's leaders in directing it toward accomplishing its objectives. Accounting for
management involves analyzing, interpreting, and providing management with information. It
aids non-accounting employees in comprehending and comprehending financial information
within an organization.

Business decisions ought to be supported by data and facts. A lot of the day-to-day
transaction information for a business is too little and intricate to be understood at a glance.
In order to provide critical answers, management accounting derives reports and insights
from actual data. Therefore, managerial accounting facilitates decision-making based on
actual accounting facts. Examining historical patterns and the effects of prior choices is also
beneficial.
Management accounting allows you to:
Set and achieve your business goals, see what real results the company has achieved
Predict company profits, prevent cash gaps, plan payments
Find growth points for the company, detail profit and loss and find out where you can
save
Save time getting financial data in any context with automation
Get convenient and understandable business reporting in real time
MANAGEMENT ACCOUNTING SYSTEM:
Cost system. It is used by manufacturers to record production activities and track
inventory movements before it can be used to produce finished goods.
The main purpose of such systems is to use them within the company to make
decisions to reduce costs, compare actual costs with planned ones in order to control, create
strategic and tactical plans for the future, and work in such a way as to get higher profits. . .
An inventory management system is the process of tracking items from purchase to
final sale, and how you approach inventory management for your business.
The main purpose of this system is to ensure sufficient demand for goods or materials
without excess inventory and save money for the business.
Job system is a process of obtaining information about the costs associated with a
particular production or service, which includes an analysis of direct and indirect costs and is
further broken down into labor and overhead costs.
The main goal is to establish the profit and loss incurred on each job and find out
which jobs are more profitable and which are less, controls the actual costs with the estimated
costs to ensure that the costs are not excessive or incorrect.

FINANCIAL ACCOUNTING:
Journal and its purpose. A journal is a diary in which the financial transactions
associated with the records are recorded to create the financial statements of the business. It
includes all kinds of registries.
The goal is to track transactions and maintain them on a regular basis in the general
ledger, which then feeds the information into financial statements on which business decision
makers depend.
Ledger and its purpose. A general ledger is a book or collection in which account
transactions are recorded as balance sheet and income statement entries that include assets,
liabilities, capital, income, and expenses.
The goal is to record all the transactions of the company and keep track of all
individual events, recording the credits and debits of the accounts and systematizing the data
so that you know the end of the balance sheet after the end of each accounting year.
Trial balance and its purpose. The trial balance is a list of all registers created for
debit and credit accounts so that the total amounts are equal, which ensures the mathematical
correctness of entries in the accounting system.
The purpose of the trial balance is to assist in compiling the balance sheet at the end of
the year, accurately accounting for all transactions at the end of the reporting year, and
identifying errors made when posting the relevant entries.
FINANCIAL STATEMENT AND ITS PURPORSE
Income statement and its purpose. An income statement, also known as a profit and
loss statement, is a financial statement that shows a company's income and expenses for a
period and how the income is converted into net income or net income.
The purpose of preparing an income statement is to show the financial results of a
company for a period.
Balance sheet and its purpose. This is a statement of the assets, liabilities and equity
of an enterprise that details the balance of income and expenses for a period and provides a
brief overview of the company's finances.
The purpose of a balance sheet is to provide business owners with the financial
position of their company and how much assets the business owns, how many liabilities it
owes, and how much capital is invested in the business.
Cash flow statements and their purpose. This is a financial statement that shows how
changes in balance sheets and earnings affect cash and breaks down the analysis into

operating, investing and financing activities. Particular attention is paid to the flow of cash in
and out of the business.
The main goal is to provide a detailed picture of what happened to the cash flow of
businesses during the reporting period and the ability of the organization to operate in the
short or long term depending on how much cash flows in or out of the business.
Budgeting and its purpose. Budgeting is the process of developing, implementing and
implementing budgets. Which determines the current available capital, provides cost
estimates, and forecasts revenue streams. With a budget in mind, businesses can measure
efficiency against costs and ensure that resources are available for initiatives that support
business and growth.
Accounts receivable and its purpose. These are the funds that customers owe your
company for invoiced products or services. The total value of all receivables is shown on the
balance sheet as working capital and includes invoices due from buyers for goods or work
performed for them on credit.
Accounts payable and its purpose. The accounts payable department is responsible
for keeping track of exactly what is owned by vendors, ensuring that payments are properly
approved, and processing payments. Accurate accounts payable information is essential for
an accurate balance sheet.
SKILLS AND COMPETENCIENCES OF ACCOUNTING ROLE

JPMorgan Chase & Co. is the name of the holding company, and the firm serves its
customers and clients under the Chase and JPMorgan brands.
JPMorgan Chase (NYSE: JPM) is one of the oldest US financial institutions. With a history
spanning over 200 years, here is where they are today:
Their influence: We combine our business and policy expertise, sustainable business
practices, data, capital and global presence to advance solutions that drive inclusive economic
growth.
What they do: They are committed to working for the benefit of all communities.
Through continuous investment, business initiatives and philanthropic commitments, we are
committed to helping employees, customers, customers and communities grow and prosper
sustainably – with opportunities for all. Through investments and initiatives to support and
advance the Black, Hispanic, and Latino communities, we make economic opportunity more
equitable and affordable.
Their ideas: They invest in research and ideas that help inform and advance political
solutions that support the path to racial justice.

 P3 (SOLE TRADER)
Peter Traders
Trading, Accounting
For the year ended 31st March, 2021
Particulars Amount
(AED)
Particulars Amount (AED)
Opening stock 20 000 Sales 250 000
Less: Sales return (8 000) 242 000
Purchases 75 000 Closing Stock 25 000
Less: Purchases Return 3 000 72 000
Wages 36 500
To Gross Profit
total 128 000 128 000
267 000 Total 267 000
Profit And Loss Accounting
Particulars Amount (AED) Particulars Amount (AED)
By gross profit b/d 267 000
Interest on bank
deposit
2 000
To fight and carriage 7 500
To salaries 12 000
To repairs 1 200
To trade expenses 4 000
To rent and taxes 24 000
To commission 3 300
To net profit 217 000
269 000 269 000

Peter Trades
Balance sheet
As on 31th March, 2021
Particulars Amount (AED) Particulars Amount (AED)
Bills Payable 6 200 Cash in Hand 5 700
Sundry Creditors 15 000 Bills Receivable 4 000
Capital 170 500 Debtors 55 000
Add: Net Profit
95 100
Plant and Machinery 160 000
Closing Stock 25 000
Less: Drawings
(16 600)
Bank Deposit 20 500
270 200 270 200

 P3 (PARTNERSHIP)
M/S Ajay and Vijay
Trading account
For the year ended March 31 2020
Particulars (Dr) Amount (AED) Particulars (Cr) Amount (AED)
Opening Stock 18 000 Sales 85 000
Purchases 46 700 Closing Stock 31 100
Carriage 3 200
Wages 9 900
11 300Add: Outstanding
Wages 1 400
Gross Profit c/d 36 800
116 000 116 000
Profit and loss accounting
For the year ended March, 2020
Particulars (Dr) Amount (AED) Particulars (Cr) Amount (AED)
Commission 4 600 Gross Profit b/d 36 800
Salaries 10 500
11 300
Commission received
1 800
Add: Outstanding
salaries 800
Add: Accrued
Commission 1 200
3 000
Postage and telegram 3 600
Insurance 1 200
700Less: Prepaid
Insurance (500)
Depreciation on Plant
Machinery
4 070
Bad – Debts 400

1 900Add: Further Bad –
Debts 1 500
Net Profit
Ajay (50%) 13 630
Vijay (50%)
39 800 39 800
Balance Sheet
As on March 31 2020
Particulars Amount (AED) Particulars Amount (AED)
Capital Accounting Investment 13 500
Ajay 60 000
66 815
Furniture 18 000
Add: Net Profit 6 815 Plan and Machinery
40 700
36 630Vijay 35 000
41 815
Less: Depreciation
(4 070)
Add: Net Profit 6 815 Closing Stock 31 000
Debtors 28 000
26 500Sundry Creditors 25 000 Less: Further Bad-
Debts (1 500)
Bills Payable 6 000 Bills Receivable 5 000
Outstanding Expenses 1 400 Prepaid Rent 7 000
Outstanding Wages 800 Accrued Commission 1 200
Prepaid Insurance 500
Cash in Hand 2 500
141 830 141 830
 P3 (NOT-FOR-PROFIT)

Youngsters Health Club
Income and Expenditure Account
For the year ending 31th December, 2020
Particulars Amount (AED) Particulars Amount (AED)
Subscription 16 000 Rent 3 600
Entrance fee 200 Stationary 450
Donation 2 500 Loss of almirah 1 000
Salary 4 800
Expenses on
competition
2 800
Miscellaneous
expense
650
Excess income over
expenditure
5 400
18 700 18 700
 M2 (PARTNERSHIP)

M/S ROMA & MONA
Trading Account
For the year ended 31th March, 2019
Particular Dr Amount (AED) Particular Cr Amount (AED)
Opening stock 52 000 Sales 320 000
326 000Purchases 176 000 Add: Additional
Sales 6 000
Wages 22 000 Closing Stock 80 000
Add: Outstanding
Wages 4 000
Gross Profit
(Balancing Figure)
152 000
406 000 406 000
Profit and Loss Account
For the year ended 31th March, 2019
Particulars (Dr) Amount (AED) Particulars (Cr) Amount (AED)
Bad-Debts 3 000
9 300
Gross Profit 152 000
Add: Further Bad-Debts
4 000
Rent Received 9 600
Add: New Reserve for
Doubtful Debts 4 300
Discount Received 3 600
Less: Old Reserve for
Doubtful Debts (2 000)
Reserve for Discount
on Creditors
2 520
Reserve for Discount on
Debtors
1 634
Salaries 28 000
31 066Add: Outstanding Salaries
3 066