Financial Accounting Report: Clients, Statements, and Analysis

This report provides a detailed analysis of financial accounting principles, regulations, and their practical application through various client case studies. It begins with an introduction to financial accounting, emphasizing its importance in organizational cost control and financial statement preparation. The report then delves into specific accounting principles, including conservatism, going concern, cost principles, monetary unit, and time period principles. It also covers financial accounting regulations set by the Financial Regulation Council and the International Accounting Standards Board. The report presents practical examples, including the representation of prime entries, double-entry recording, and the identification of trial balance accuracy. Client case studies illustrate the disclosure of profit and loss statements, balance sheets, and the calculation of depreciation using different methods. Furthermore, it addresses bank reconciliation statements, control accounts, and suspense accounts, concluding with a comparison between clearing and suspense accounts.

FINANCIAL ACCOUNTING
PRINCIPLES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
A. Report to Line Manager with brief explanation of accounting principles, regulations and
rules.............................................................................................................................................1
CLIENT 1........................................................................................................................................4
1. Representing prime entries......................................................................................................4
2. Double entry recording in ledger account ..............................................................................7
3. Identifying accuracy of trial balance with context of Trial balance......................................15
CLIENT 2......................................................................................................................................15
A. Disclosing profit and loss statement of Peter Piper as per year ending 31st December 2017
...................................................................................................................................................15
B. Disclosing financial position via balance sheet as on 31st December 2017........................16
CLIENT 3......................................................................................................................................18
A. Disclosing profit and loss statement of Raintree Ltd as on 30 September 2017..................18
...................................................................................................................................................19
B. Disclosing Financial performance of Client 3......................................................................19
C. Elaborating concept of prudence and consistency in accounting.........................................24
D. Depreciation and its importance using both method............................................................25
CLIENT 4......................................................................................................................................26
A. Identifying objective of framing bank statement for Kendal...............................................26
B. Factors influencing reasons of tracing transaction of bank statements................................26
C. Disclosing Bank Reconciliation statement ..........................................................................26
CLIENT 5......................................................................................................................................28
A. Framing purchase ledger control account and sales ledger control account........................28
B. Justifying need of framing control account..........................................................................29
CLIENT 6......................................................................................................................................30
A. Defining Suspense account with characteristics..................................................................30
B. Preparing trial balance in context of specific elements........................................................30
C. Framing journal entries in context of adjustments of trial balance......................................31
D. Comparison between clearing account and suspense account.............................................31

CONCLUSION..............................................................................................................................32
REFERENCES..............................................................................................................................33

INTRODUCTION
The current scenario reflects that financial accounting is very important concept
in each and every organization as it helps in estimating expenses of future and for appropriate
control over cost for specific operation which are held in premises as there is requirement of
appropriate financial control. The present report is giving brief discussion different accounting
rule, regulations and its principles. As they are followed every industry and in this report all
clients are using these regulations for preparing financial statements. Further there is
representation of financial statements such as balance sheet, profit and loss statement and trial
balance. The report consists of elaboration of control account with its kinds that is sales ledger
control account and purchase ledger control account. In the same series journal entries with
appropriate ledger account has been signified. It has enlightened balance sheet of organization by
calculating depreciation of both methods. The report has addressed Bank reconciliation statement
and cash book with their purpose in organization. In last part it has given brief discussion about
suspense account along with its characteristics and extracted similarities and differences from
clearing account.
A. Report to Line Manager with brief explanation of accounting principles, regulations and rules
To: Line Manager
From : Junior Accountant
Subject: Information in context of accounting principles, regulations and rules which are
required for financial growth of company
Respected Sir,
The profitability and operational functioning can be enhanced of any firm by performing
analysis of all expenses, cost and financial level of spending of every task in specific premises.
It has huge contribution in disclosure of data set which has followed all regulations and rules
according to accounting standards and boards. These tools provide efficient accuracy in
financial decision making like:
1. Identifying Financial Accounts
It is replicated as specialized branch of accounting which traces financial transactions of
an organization. Standard guidelines are used where each and every transaction are
summarized, recorded and represented in financial statement or report such as profit and loss
statement or balance sheet (Ombati and Shukla, 2018). This information are used by accounting
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professionals, investors and owners. Basically there are four types of financial statements such
as:
 Balance Sheet
 Statement of Cash Flow
 Statement of Change in Equity
 Notes to Financial Statement
2. Financial Accounting Regulations
The financial disclosure has been represented as it is very mandatory for every company
as it should follow the basic framework of accounting operations. There are various principles
which are accepted by every individual and corporation universally. The main objective of these
financial accounting regulations is that organization must be capable for facilitating profit and
growth of business for taking decisions about investment. It will be giving advantage to
organization with context of acquiring the specific capital funds for the operation in the future.
Some accounting standards are as follows :
Financial Regulation Council
It is constituted by UK and Ireland for their personal regulatory with perspective of trade
practices and financial disclosure between nations. The board comprises with relevant
operational bodies like accounting standards board, accountancy and actuarial discipline board,
financial reporting review panel, auditing practices board, professional oversight board and
board for actuarial standards.
International Accounting Standards Board
All accounting standards are set by board which helps in framing favourable reports of
all financial transactions. It is giving advantage for providing adequate information and it
guides professionals of accounting for following specific rules and preparing for disclosure.
International Financial Regulations Standard
It provides information which is relevant for financial disclosure about organization.
The principles and norms which are set according to financial standards as their objectives are
to specify basic framework of representation of data set. It consists of different financial
statements like income statement, changes in cash flow, and changes in equity and Balance
sheet (Li, Sougiannis and Wang, 2017).
By following these standards, business will be gaining great advantage in context of attaining
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specific goals such as attracting investors and it will be directly increasing capital generation of
organization.
3. Rules and Principles of Accounting
The business performance must be analysed and for strong financial decisions, there is
presence of different rules and principles of financial accounting which are provided by GAAP
and Accounting Boards. The main aim of representing board is to give information in very
accurate manner and all methods and techniques for disclosing financial data set by various
professionals. In this context, different principles and rules of accounts are elaborated below :
Conservatism: The transactions are recorded in context of reliability and surety. It can
be applied that all transactions must be relevant with expenses and liabilities of organization
which are traced immediately when they are incurred. On its contrary, transactions should be
recorded which are relevant to assets and revenues has been generated by organization as there
is requirement of sufficient research over sources from where they are originated. At the
primary level, losses are recognised by following this principle and it will be giving decision in
very accurate manner with perspective of overcoming financial deficits.
Going concern: In this principle, if business has started operating in intial time it will
be directly estimated and in coming time also it will be operated with appropiate revenue
structure. It gives assumption that if operations are continued then it will be providing brief
analysis of value of depreciation and expenses will be estimated along with future investment of
organization.
Cost principles: It records transactions according to requirement such as sale of
different products and services in context of fair value. It will be creating help for analysing all
income and expenses which are obtained by organization while commodity dealing. As it will
be identifying cost of all activities which will be directly considered and strong decision will be
lowering expenses.
Monetary unit: It represents recording of business transactions which are stated in
terms of money. The organization cannot record non-quantifiable items like skills of employee,
customer service and quality (Monetary unit principle, 2018). It has also assumption that value
of currency in which transactions are recorded remains stable so financial statement will be
giving exact analysis of organization.
Time period principles: The technique consists of different time boundedness from
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financial disclosure of data set. It will be giving advantage to organization in context of
preparing financial statement even on periodic basis like monthly, quarterly, half yearly or
yearly. This time limit influences various professionals of organisation and different external
will be directly analysing performance and growth of specific duration (McLaren, 2018).
4. Conventions and Concepts of material disclosure and consistency
Material disclosure: All data must be recorded and transited for having material fact
and authenticated. The activity of purchase and sale of any services or products must be
relevant with appropriate sources like requirement of recording date, time which is beneficial
for development of operations.
Consistency: In this concept, it has clearly identified that financial disclosure should be
on daily basis as presenting data set will be in such form as it is prepared for next presentation.
Generally it builds the operation of organization in continuity aspect. There is presence of
collecting revenue in context of appropriate business execution.
CLIENT 1
1. Representing prime entries
All the relevant journal entries which are on basis of given transactions which are
incurred via Alexandra. It will be on basis of different adjusting entries which are relevant for
purchase and sales of business like :
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2. Double entry recording in ledger account
According to above journal entries, there is representation of all transactions and account
holders in specific ledger account below:
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