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The Financial Concepts in the Business Report

University : UK College of Business and Computing

  • Unit No : 8
  • Level : Undergraduate/College
  • Pages 28 / Words 3500
  • Paper Type : Assignment
  • Course Code : M/508/9862
  • Downloads : 3563

INTRODUCTION

Financial accounting is considered as a method, process, procedure subject to analyse the context in terms of presenting financial information and data in specific manner. There are type of accounting rules and the principles defined in this context to elaborate the financial accounting. This report is bifurcated into two parts, first part covers the financial concepts in the business report and second part contains six sections. In first section the double entry system are illustrated with practical examples. Second section defined the rules related and theories to assist the ledger posting procedure (Narayanaswamy, 2017).

Third section covers the rules related to trial balance adjustments in terms of depreciation and prepaid expenses. Section four contains the preparing and forming of final accounts to get effective management and services in terms of making the statements. Section fifth defines the concept of bank reconciliation statement and the factors affecting bank reconciliation statement. Section sixth contains the process to be taken to reconcile control accounts and clear suspense accounts using accou

Business Report

(a): Meaning of financial accounting

Financial accounting encounters the important aspect which remain associated with the accounting standards and the managing the accounting information and the detail in organisational context. Organisations are adapting the financial accounting rules and principles in terms of getting the core effectiveness within financial operations and management. There are some specific guidelines made subject to retaining the financial information and making the financial plans are defined in this context. Financial accounting principles and the concepts helps to define the financial position and the financial stability of organisation. Financial accounting provides a horizontal structure for presenting and keeping the financial records and the transaction well-structured form. Financial information is provided in various formats as per their nature and theme. There are some financial statements defined below subject to present the financial statement (Lundberg and Sundbaum, 2016).

Income statements: there are some transactions happens in respect of revenues and the expenditure. Income statement provides a path to record the information in organised manner such as in debit side and credit side. All the revenue related transactions are recorded in credit side and all the expenses related transactions are recorded in debit side. It assists the managers and the accountants whether the organisation is gaining profit or loss.  

Balance sheet: Money related association and other partner decide their monetary articulations for giving adequate credits and putting resources into the organizations (Cernusca,and Balaciu, 2015).  This is by all accounts one of the vital explanations of the organization which used to give particular data about all detail parts of advantages and obligation an organization is having with them. By utilizing this announcements, money related position and security in regard to different organizations positions are considered.

Cash flow statements: This is by all accounts one of the pivotal articulations which will be utilized to decide inflows and outpourings from different exercises of an association that are gathered from different working exercises, contributing and financing exercises. This announcement empowers directors to recognize the general changes of money amid bookkeeping time frame.

Changes in statement of equity:  It records every fundamental change that are done in capital adjust of an association over a given time frame. It is known as more comparative proclamations of adjustment of every single vital change in accomplice’s value for a different citizen’s value for a legislature money related reports (Romolini, Fissi and Gori, 2017).

(b): Regulation associated with financial accounting

Budgetary bookkeeping guidelines is worry with private, non-benefit association those are setting bodies. Current announcing and practices are having just more association with general manageability of an association. Be that as it may, UK framework gives an account of advances towards endeavour to consolidate general needs of manageability into the monetary general existence of reports. Their part is to set up and make adjustment in GAAP according to the enthusiasm of open. Controllers used to apply those two viable framework for overseeing and controlling about administrators report their budgetary results amid a bookkeeping time frame. There are no any current lawful needs that an organizations used to write about degree to which their exercises are agreement with fundamental request or supportability advancement. To keep up all principles and controls, different administrative bodies are made by following IASB and so forth. The ASB is another vital bookkeeping standards which are utilized by the organization amid definition of budgetary reports. The money related information clients are wide and differentiated range according to the monetary bookkeeping. In light of such change the information expected to each individual is required for a lot of ways.  These standard used to give bookkeeping control that can help supervisors and bookkeeper in defining monetary records through utilizing money related information of the organization

(c): Accounting principles and regulations

Cost accounting principles are made in terms of different type of accounting tools adopted by organisation in terms of managing the cost principles. In each business association, it depends on different basic tenets and directions that are being received or proposed by utilizing certain rules those are should have been taken amid definition of fitting explanations. There are different tenets and ideas that are oversee fitting bookkeeping (Warren and Jones, 2018). It each industry circulates their money related proclamations to open, it is expected to execute GAAP standards amid detailing of different explanations. It comprises of real three decides that essential bookkeeping standards and directions, the point by point tenets and strategies those are being issued by FASB and their ancestor the bookkeeping standards board. Further, in the event that organization general stock is traded on an open market and required money related records be inspected by a gifted bookkeeper. Underneath specified d

  •  Matching principles: This bookkeeping standards requirement for organizations to make utilization of gathering premise of information. It can't be measure the future monetary advantages of everything like notice the bookkeeper charges. This specific standards require that all costs to be coordinated with add up to profit of the organization (Henderson and et. al., 2015).  
  •  Going concern principles: This sorts of bookkeeping angles expect that an organization will keeps on existing for longer time frame so as to accomplish their points and goals into the assigned time allotment. In the event that bookkeeper trust that, the state of organization isn't so viable then the bookkeeping books of that specific organizations bookkeeping books are shut for next coming time.  
  • Full disclosure principles: there are sure data which is to be made by speculators through utilizing budgetary explanations that information would be revelation inside arranged proclamations.  It is prerequisites that are connected with openly broker organizations those are discharging and give free trade of realities that are pertinent to their proceeding with business tasks. It is connected with fundamental bookkeeping perspectives that taken concerning achieving more reasonable outcomes in coming time frame.
  • Cost standards: According to as bookkeeper is concern, they used to consider cost as those sum which is spent amid a things was initially gotten. Thus, a benefits sum does not mirror the aggregate sum of wage an organization which will be get on the off chance that it is offer the advantage at current time frame. For this specific reason, the aggregate esteem show on money related proclamations those are alluded to be recorded on verifiable cost premise.

Regulations and rules: 

There are sure bookkeeping rules which will be consider for compelling chronicle of money related exchanges those are done inside a bookkeeping system. Some of them are specified as follows:

  • Real account: According to this standards, charge what comes in and credit all qualities those are goes out amid the time of business tasks. Such sort of record is connected with nature of advantages those are utilized by an association.
  • Personal account: The bookkeeping decides says that charge the collectors and credit all add up to suppliers. It is known as one of the powerful record which is being utilized by a person for that people that are possess prerequisites.  Some vital illustrations, capital and illustrations.
  • Nominal account: The guidelines give data about charges all costs and misfortunes and credit all livelihoods and benefit. This is by all accounts most extreme essential money related exchanges that are done at the season of each monetary period.

(d): Accounting convention and concept of consistency and materiality

There are conventions are made which are followed from generation and time to time. it is known as basic parts of bookkeeping that are utilized for the chronicle of a business exchanges. It is useful in those circumstances which isn't having any sort set rules in bookkeeping guidelines that are represent amid to particular time duration. There are different compelling sorts of bookkeeping traditions that are considered in charge of improvement the development and benefit for an association. Some of them are:

Consistency: Modification must be done in which new strategies it embraced by the organization. It is required to choose most suitable bookkeeping instruments and methods that are made for the alterations on customary premise (May, 2013). There are sure illustrations that are being consider for look at general quality and monetary position of the organization.

Materiality: This idea is all around feasible that every single material perspective are to be uncovered by the organization. This would be connected through the connected inspectors in arranging and assessment the review and in breaking down impact for deciding misquotes on report of the announcements. This is by all accounts one of the viable bookkeeping traditions which are consider for settling on impacted the financial choice of clients.

Concepts:

concepts help to sort the essential needs and requirement with in organisation related to financial factors and elements. In terms of managing the operations and this mainly helps to define the essential aspects in terms of managing the financial.  Some of them are defined as follows:

  • Money measurement: It alludes as cash estimation ideas that used to control business just to record bookkeeping exchanges in the event that it can be specified in regard to general capital. On the off chance that items are can't be recorded as bookkeeping exchanges since they can't have the capacity to expressed in regard to cash.
  • Conservatism: In bookkeeping, the tradition of conservatism is related with the arrangement of envisioning most ideal misfortunes amid the eventual fate of points. This conservatism idea is essentially related with that ideas in more typical viewpoint for perceiving costs and obligations that are conceivable in vulnerability in regards to different outcomes that are accomplish amid the time frame (Mulford and Comiskey, 2011).

CLIENT 1: Journal Entries

P1 Application of double bookkeeping system

In bookkeeping terms twofold passage arrangement of bookkeeping implies that each business information. It implies that each exchange will be related with no less than two record impacts. On the off chance that organization used to gets cash from the banks, they general resource increment add up to risk as net payables is expanded adequately (Henderson, Peirson, Herbohn and Howieson, 2015). A central viewpoint for basic impact in everyday accounting and bookkeeping subtle element angles those are connected with money related exchange has inverse impacts in no less than two different record. Each exchange need to fulfil in following condition:

Asset= Liabilities + Equity

Date

Particular

 

Debit (Amount)

Credit (Amount)

01/05/16

 Store expenditure A/c............... Dr

          To Bank A/c......................CR

(Being payment is made through using cheques)

400

 

400

02/05/16

Purchase Account ….....................Dr

   To Creditor.........................Cr

(Goods purchase on credit)

6080

 

 6080

 

03/05/16

T. Cole A/c...............................Dr

J. Allen A/c................................Dr

F. lane A/c.................................Dr

J. Wilson A/c.............................Dr

F. Syme A/c................................Dr

P. white A/c................................Dr

              To Sales account.............................Cr

(Being goods sold on credit)

1640

910

770

1120

2080

2420

 

 

 

 

 

 

8940

 

04/05/16

Motor expenses A/c.......................................DR

               To cash A/c........................Cr

(Being payment is made through cash)

470

 

470

 

07/05/16

Drawings Account.........................................Dr

          To cash account.............................................Cr

(As cash goes out from business in related to make payment for personal use)

1500

 

1500

 

09/05/16

J. Fox A/c.....................................Dr

T. Cole A/c...................................Dr

            To Sales A/c...................................Cr

(Selling of products on credit)

1310

680

 

 

 

1990

11/05/16

Sales outward A/c.........................Dr

             To F. Syme A/c........................Cr

              To J. Wilson A/c.......................Cr

(Being Creditor return their merchandise)

680

 

410

270

 

14/05/16

Van A/c.............................Dr

        To Able motor Ltd A/c..................Cr

(As products are brought on credit)

28500

 

28500

 

16/05/16

Bank  A/c.............................Dr

       To F. Lane A/c.............................Cr

       To P. Mullen A/c.........................Cr

       To J. Wilson A/c..........................Cr

       To F. Syme A/c.............................Cr

Discount allowed A/c..............Dr

        To J. Wilson.............................. Cr

             F. Syne.,,................................Cr

             F. Lane...................................Cr

            P. Mullen.................................Cr

 (Being deduction allowed to the creditors)

6670

 

 

 

 

352

 

2945

1330

808

1587

 

44

84

155

70

19/05/16

   R. Foot A/c.............................Dr

           To   Purchase outward account............................Cr

(Being return goods to R. foot)

50

 

50

 

22/05/16

Purchase A/c.................................Dr

         To W. Wright.................................Cr

               L. Mole......................................Cr

(Goods are brought on credit)

3740

 

1910

1830

24/05/16

J. Brown A/c.....................................Dr

S. Hood A/c.......................................Dr

R. Foot A/c........................................Dr

            To Bank A/c.....................................Cr

R. Foot A/c...................................Dr

S. Hood A/c..................................Dr

J. Brown A/c.................................Dr

            To Discount receive A/c................Cr

(Being certain amount of discount is received and payment made with 10 %)

4140

3240

1260

 

140

360

460

 

 

 

8640

 

 

 

960

 

27/05/16

Salary A/c.....................Dr

           To Bank A/c..................Cr

(Being commerce of salaries is successful by the usage of cash)

4800

 

4800

 

30/05/16

Business Rate A/c..........................Dr

            To bank A/c...................................Cr

(Being enterprise rates are cashed through cheques)

1320

 

1320

 

31/05/16

Able motors A/c......................Dr

            To Bank A/c.........................Cr

(Motor expenditure paying through cheque)

20500

 

20500

 P2 Framing of trial balance applying the use of the balance off rule to complete ledger

 It is by all accounts more compelling articulation of all charge and acknowledge explanations for any contradiction which would show general blunders those are examine amid setting of diary sections. It is basic for each association to set up all such budgetary records with a target of distinguishing the mistakes that may happened while recording exchanges into general records proclamations. In the event that the standards of twofold passage utilized as a part of association which is accurately included to record business exchanges in record accounts. It is considered as a powerful rundown of all record accounts which contains all pivotal data which should be consider while recording exchanges. After diary passages, preliminary adjust ought to be set up for a specific period which are think about chronicle of business exchanges (Horngren and et. al., 2012).

The obligations and credit segment of trail adjust must be equivalent. It happens to be essential base of planning of money related articulations toward the finish of bookkeeping timeframe. The tasks of preliminary adjusts are required to first investigate the blunders which are made amid recording of monetary exchanges with an intention of looking at charge and credit side. Bookkeepers and accountants are obligated to plan such money related records keeping in mind the end goal to discover genuine and reasonable monetary position of organization.

CLIENT 2

P3 Make final accounts form given trial balance and adjustment of accruals

(b): Financial statements of Peter piper

Particulars

Amount (figures in ï¿¡)

Current assets

 

Trade receivables

106960

Inventory

101640

Cash in bank

2440

Advertisement cost expenses

8470

Total current assets

219510

Vehicle charges

28000

Free Hold Premises

270000

Equipment cost expenses

172500

Total non-current assets

470500

Total assets

690010

Liabilities and equities:

 

Current liabilities

 

Trade payable

76910

Outstanding salary expenses

1220

Bank overdraft

11290

Accumulated depreciation

163950

Total current liabilities

253370

 

 

Capital                               332120

 

Add: Gains                         147160

 

Less :- Drawings                 (42640)

436640

Total equities and liabilities

690010

CLIENT 3

P4 final accounts form range of examples contains sole traders, partnerships or limited company

a) Income statement of Raintree Ltd for the year ended 31 December 2017

Particulars

Amount

Particulars

Amount (Figures in £)

To Stock at the beginning

17000

By sales a/c

107000

To Purchases a/c

32000

 

 

To return Inwards

2000

 

 

 

 

 

 

To Gross Profit c/d

74000

By Stock at closing year

18000

 

125000

 

125000

To Operating expenses

30000

By Gross  profit c/f

74000

To office Expenses

4000

 

 

To Depreciation charged

15000

 

 

To Allocation costs

19000

 

 

To net profit

6000

 

 

 

74000

 

74000

(b):  Balance sheet of Raintree Ltd for the year ended 31 December 2017

Particulars

Amount (Figures in £)

ASSETS:

 

C.A.

 

Trade receivables

24000

Rent expenses paid in advance

3000

Inventories

18000

Cash at bank

-15000

Total current assets

30000

Non-Current Assets:

 

Land and Building

60000

Machinery and plant

65000

Total non- current assets

125000

T.A

155000

Shareholder's equity and Liabilities:

 

C.L

 

Office
Tax

4000

Outstanding operating cost

2000

Tax provision

37000

Trade credit payable

14000

T.L

57000

Shareholder's Equity

 

Equity premium reserve

20000

Equity stock issues at 1 per share

50000

Net profit

6000

Retained Profit

22000

Total equity

98000

Total equities and liabilities

155000

(c):  Different types of accounting concepts

Consistency: Under this bookkeeping idea all the detail data are should have been considered. This idea of budgetary articulations recommend that general organization would be at risk to stay away from different alteration with respect to strategies and standards there are think about more sensible stage for the adjustment or receiving different controls (McCarthy and et. al., 2012). This is by all accounts more solid angles expresses that information can't be composed that will be disregard into the bookkeeping rules for substantial information. In the event that specific exchange that strikes endeavours to decide conflicting information to be whole into exchanges to be moved back amid the timeframe.  There are different criticalness parts of bookkeeping standards of consistency keeping in mind the end goal to make guarantee that general similarity of the budgetary of the organizations with different speculators and shareholder's.

Prudence concept: A bookkeeping rules that need to record all costs and liabilities yet the procuring must be acknowledged or guaranteed in right way. The essential parts of utilizing this bookkeeping viewpoint that would be moderate in detailing the winning other related matter of the organization. According to this bookkeeping suggests that general budgetary proclamations that are made by bookkeeper that would not overestimate the procuring, benefit and different additions of the organization. It is key bookkeeping viewpoint which used to ensure that advantages and salary are specified appropriately under this idea. The misfortunes and obligation commitment will be recorded in budgetary explanations of the organization which are happened amid the timeframe. The arrangement for awful obligations can't be show that account holders are having reasonable measure of restore that are shown for dissecting danger of the organization.

P5 Apply the bank reconciliation process to prepare a number of statements

BRS (Bank Reconciliation Statement): Bank compromise articulation basically arranged to recognize the distinction between the bank book and money book subject. There are some distinction making factors remain related with activity and administration. It is considered as a procedure of recording the exchanges which occur amid the month (Renz and Herman, 2016). Bookkeepers break down the adjust of bank pass book and money account. With the assistance of bank compromise articulation bookkeepers have the capacity to discover the exchanges which makes distinction for a specific span and time. This announcement tracks the fiscal exchanges with more successful and dynamic way so the distinction making exchanges have the capacity to merge in more viable way (Weygand, Kimmel and Kieso, 2015).

Every one of those store that are made to the banks yet couldn't be credited by banks amid the time. For example, this is related with checks those are sent to bank for the goal of information gathering. Certain measure of store put forth to the bank expressions at certain sum from those are said as per organizations general records. Decide records in bank proclamations those are not recorded at each purpose of exchanges.  

CLIENT 4  

P6 Process taken to reconcile control accounts and clear suspense accounts using accounts

Sales ledger account: this is the primary deals accounts combines every one of the points of interest which remain related with exchange indebted individuals control accounts. Deals control account chiefly considered as a business sum signify accommodated. Normally, a bookkeeper is considered as in this setting subject to characterize accounts in the money related records of business (Hyndman and Connolly, 2011). There are some product and control frameworks are likewise considered in deals control accounts as borrower bookkeeping and invoicing and programming. Enlist of instalments and deal with the solicitations in a single place. There is data related all the account holder are characterized in this setting subject to characterize the equalizations and remarkable per client.

Purchase control account: Purchase record control accounts contains the data identified with all the applicable data and subtle elements in such a way thus, to the point that lenders have the capacity to oversee in viable way (Renz and Herman, 2016). There are some product and projects additionally shaped as far as dealing with the records of leasers. There some further developed and predefined data remain related with dealing with the working the buy book and lenders.

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CONCLUSION

This report is set up in regard of money related bookkeeping and cash related articulating. There is a centrality of trade related bookkeeping delineated out this novel condition. Disintegrating structures, get-together and treatment of astounding costs cleared up in solid based decisions and conditions. Bookkeeping procedure and medications are reviewed in regard of sole dealer association together, affiliations and compelled affiliations. Centrality of twofold space accounting structure as charge and credit. Outlines and buy exchanges when all is said in done records, preliminary modify and the direct of progress off used to finish the record posting. Enormity of bank exchange off presentation and techniques are cleared up in this report. Centrality of strain records and oblige structures in regard of record control accounts are portrayed in each segment.

REFERENCES

  • Narayanaswamy, R., 2017. Financial accounting: a managerial perspective. PHI Learning Pvt. Ltd..
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  • Hyndman, N. and Connolly, C., 2011. Accruals accounting in the public sector: A road not always taken. Management Accounting Research. 22(1). pp.36-45.
  • Horngren, C., and et. al.,  2012. Financial accounting. Pearson Higher Education AU.
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  • Cernusca, L. and Balaciu, D.E., 2015. The perception of the accounting students on the image of the accountant and the accounting profession. Journal of Economics and Business Research21(1), pp.7-24.
  • May, G. O., 2013. Financial accounting. Read Books Ltd.
  • McCarthy, J. H., Shelmon, N. E. and Mattie, J. A., 2012. Financial and accounting guide for not-for-profit organizations (Vol. 6). John Wiley & Sons.
  • Romolini, A., Fissi, S. and Gori, E., 2017. Exploring Integrated Reporting Research: Results and Perspectives. International Journal of Accounting and Financial Reporting7(1), pp.32-59.
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  • Renz, D. O. and Herman, R. D. eds., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John Wiley & Sons.
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