Financial Accounting Analysis: Trial Balance, Statements, and Ratios

This financial accounting assignment provides a comprehensive analysis of key accounting principles and practices. It begins with a trial balance, demonstrating the application of the double-entry system to record business transactions. The assignment includes journal entries, ledger accounts, and a revised trial balance. It then delves into the different types of financial accounting statements, including income statements, balance sheets, and cash flow statements, with examples and explanations of their purpose and content. The report includes a detailed statement of financial position and concludes with a ratio analysis, evaluating the company's financial health and performance. The assignment covers topics such as financial accounting, trial balance, double entry system, financial statements, and ratio analysis.

Financial Accounting

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1................................................................................................................................................1
1.2................................................................................................................................................2
1.3..............................................................................................................................................11
TASK 2..........................................................................................................................................12
2.1..............................................................................................................................................12
2.2..............................................................................................................................................13
2.3..............................................................................................................................................14
2.4..............................................................................................................................................16
TASK 3..........................................................................................................................................17
3.1..............................................................................................................................................17
3.2..............................................................................................................................................18
3.3..............................................................................................................................................19
3.4..............................................................................................................................................19
TASK 4..........................................................................................................................................21
4.1..............................................................................................................................................21
4.2..............................................................................................................................................21
4.3..............................................................................................................................................22
4.4..............................................................................................................................................23
CONCLUSIONS...........................................................................................................................24
REFERENCES..............................................................................................................................25

INTRODUCTION
Financial accounting is the process that is used by the company for managing its business
operations effectively and appropriately. Financial accounting refers to the specialised
accounting branch that is used for keeping track over the financial transactions. It uses
specialised accounting guidelines and standards for recording summarising and presenting the
financial report or the financial statements like income statement, balance sheet (Schroeder,
Clark and Cathey, 2019). Present report will provide about the concepts of financial accounting
and their application for recording the business transactions. It will be providing about the
different ratios used for analysing the financial statements of company using ratio analysis
stating the financial health and position. It will provide understanding of reconciling bank and
cash balances. Report will provide how transactions are recorded, posted and balanced using trial
balance.
TASK 1
1.1
Trial Balance as on 31st March
Trial Balance at 31/3/2020
Account Debit Credit
Premises 340000
Van 51250
Fixtures 8100
Inventory 63900
P Mullen 1400
F Lane 3100
Cash at bank 62400
Cash in Hand 5600
S. Hood 2150
J. Brown 4600
Capital Account 529000
Total 535750 535750
1

1.2
i) Application of double entry system to record business transactions.
Journal Entries
Date Particulars Debit Credit
01-Apr Storage Expense 400
To Bank 400
02-Apr Purchases 5000
To S. Hood 1400
To D. Main 2000
To R. Foot 1600
03-Apr T. Cole 1650
F. Syme 2000
J. Allen 900
F. Lane 750
To Sales 5300
04-Apr Motor Expenses 470
To Cash 470
07-Apr Drawings 1500
To Cash 1500
09-Apr T. Cole 650
J. Allen 1300
To Sales 1950
14-Apr Van 28500
To Abel Motors 28500
16-Apr Bank Ac 6500
To P. Mullen 1400
To F. Lane 3100
To F. Syme 2000
2

22-Apr Purchases 1800
To D. Main 1800
24-Apr S. Hood 2150
J. Brown 4600
R. Foot 1400
To Bank 8150
27-Apr Salaries 4800
To Bank 4800
30-Apr Business Rates 1320
To Bank 1320
30-Apr Abel Motors 28500
To Bank 28500
Total 94190 94190
LEDGER ACCOUNTS
Bank a/c
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 62400 01-04-2020 Storage 400
16-04-2020 P. Mullen 1400 24-04-2020 S. Hood 2150
16-04-2020 F. Lane 3100 24-04-2020 J. Brown 4600
16-04-2020 F. Syme 2000 24-04-2020 R. Foot 1400
27-04-2020 Salaries 4800
30-04-2020
Business
Rates 1320
30-04-2020
Abel
Motors 28500
30-04-2020 By Bal c/d 25730
68900 68900
3

Cash a/c
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 5600 04-04-2020
Motor
Expenses 470
07-04-2020 Drawings 1500
30-04-2020 By Bal c/d 3630
5600 5600
Van a/c
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 51250
14-04-2020 To Abel Motors 28500
30-04-2020 By Bal c/d 79750
79750 79750
Fixtures
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 8100
30-04-2020 By Bal c/d 8100
8100 8100
Capital a/c
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 529000
4

30-04-2020 By Bal c/d 529000
529000 529000
Purchase a/c
Date Particulars DR(£) Date Particulars CR(£)
02-04-2020 To S. Hood 1400
To D Main 2000
To R. Foot 1600
To D. Main 1800
30-04-2020 By Bal c/d 6800
6800 6800
P. Mullen
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 1400 16-04-2020 To bank 1400
30-04-2020 By Bal c/d 0
1400 1400
Sales a/c
Date Particulars DR(£) Date Particulars CR(£)
03-04-2020 T. Cole 1650
03-04-2020 F. Syme 2000
03-04-2020 J. Allen 900
03-04-2020 F. Lane 750
09-04-2020 T. Cole 650
5

30-04-2020 To bal c/d 7250 09-04-2020 J. Allen 1300
7250 7250
F. Lane
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bal b/d 3100 16-04-2020 Bank 3100
30-04-2020 By Bal c/d 0
3100 3100
S. Hood
Date Particulars DR(£) Date Particulars CR(£)
24-04-2020 To bank 2150 01-04-2020 Bal b/d 2150
02-04-2020 Purchases 1400
30-04-2020 To bal c/d 1400
3550 3550
J. Brown
Date Particulars DR(£) Date Particulars CR(£)
24-04-2020 To bank 4600 01-04-2020 Bal b/d 4600
4600 4600
D. Main
Date Particulars DR(£) Date Particulars CR(£)
6

02-04-2020 To Purchases 2000
30-04-2020 By Bal c/d 2000
2000 2000
R. Foot
Date Particulars DR(£) Date Particulars CR(£)
24-04-2020 To Bank 1400 02-04-2020 Purchases 1600
30-04-2020 To Bal c/d 200
1600 1600
Storage
Date Particulars DR(£) Date Particulars CR(£)
01-04-2020 To bank 400
30-04-2020 By Bal c/d 400
400 400
Salaries
Date Particulars DR(£) Date Particulars CR(£)
27-04-2020 To bank 4800
30-04-2020 By Bal c/d 4800
4800 4800
Motor Expenses
Date Particulars DR(£) Date Particulars CR(£)
04-04-2020 To Cash 470
30-04-2020 By Bal c/d 470
7

470 470
Business Rates
Date Particulars DR(£) Date Particulars CR(£)
30-04-2020 To Bank 1320
30-04-2020 By Bal c/d 1320
1320 1320
T, Cole
Date Particulars DR(£) Date Particulars CR(£)
03-04-2020 To Sales 1650
09-04-2020 To Sales 650
30-04-2020 By Bal c/d 2300
2300 2300
J. Allen
Date Particulars DR(£) Date Particulars CR(£)
03-04-2020 To Sales 900
09-04-2020 To Sales 1300
30-04-2020 By Bal c/d 2200
2200 2200
F. Syme
Date Particulars DR(£) Date Particulars CR(£)
03-04-2020 To Sales 2000 16-04-2020 To bank 2000
2000 2000
Drawings
8

Date Particulars DR(£) Date Particulars CR(£)
07-04-2020 To Cash 1500
30-04-2020 By Bal c/d 1500
1500 1500
Abel Motors
Date Particulars DR(£) Date Particulars CR(£)
30-04-2020 To Bank 28500 14-04-2020 Van 28500
28500 28500
Premises
Date Particulars DR(£) Date Particulars CR(£)
30-04-2020 To bal b/d 340000
30-04-2020 By Bal c/d 340000
340000 340000
ii) Trial Balance as on April 30th, 2020.
Trial balance as at 31/4/2020
Accounts Debit Credit
Premises 340000
Van 79750
Fixtures 8100
Inventory 63900
Cash at Bank 25730
Cash in hand 3630
9

Receivables
D. Main 2000
T. Cole 2300
J. Allen 2200
Payables
S. Hood 1400
R. Foot 200
Purchases 6800
Sales 7250
Storage 400
Business Rates 1320
Motor Expenses 470
Salaries 4800
Drawings 1500
Capital 529000
Suspense account 5050
Total 542900 542900
iii) Analysing transactions showing progression in trial balance.
Companies are required to record the transactions as per double entry book keeping
system. Progression in trial balance are seen when the transactions are carried out further by the
firm. Companies carry out different types of transactions during the month that are used for
preparing general ledger accounts and preparing trial balances. Transactions of income,
expenditures, sales and purchases made during the year (No, 2018). Payments related to the
accounts payables and collection from the accounts receivables are also recorded in the trial
balances. Financial statements are prepared on the basis of trial balance prepared by the
company.
1.3
Allocation of trial balance accounts to respective financial statements.
10