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A/508/0496 | Financial Accounting | Proper Guidelines and Procedures

University: UNIVERSITY CENTRE COLCHESTER

  • Unit No: 10
  • Level: High school
  • Pages: 37 / Words 9360
  • Paper Type: Assignment
  • Course Code: A/508/0496
  • Downloads: 73
Question :

This assessment will provide certain questions which are like:

  • What are the differences between financial position statement and income statement.
  • What are the methods for reconciliation of suspense and control accounts.
Answer :

INTRODUCTION

Financial Accounting is a branch which is used to put a complete track about the transactions of a company. Under this, proper guidelines and procedures are used to prepare the final accounts of the organization. The transactions are recorded in a perfect sequence so that companies can know that what are the expenses, income and position of the company at the end of the year. The main aim of financial accounting is to summarize everything related to financial transactions going in the business so that it can be useful for taking important decision by all the stakeholders. Financial statements have to be compulsorily disclosed by the companies whose stocks are listed on stock exchange (ScottO'Brien, 2013). In this report, income statement and balance sheet will be prepared for both sole proprietorship and limited company and then a glimpse on the differences between both income statement and balance sheet will be discussed. The report will also include an example of bank reconciliation and the reconciliation of control and suspense accounts.

FINAL ACCOUNTS OF GREG PALMER

Statement of P&L A/c of Greg Palmer

Dr.

 

 

Cr.

 

Particulars

Amount (£)

Particulars

Amount (£)

 

To Opening Stock

190000

By Sales

1301500

 

To Purchases

960000

By Closing Stock

120000

 

To Wages

330000

By Gross Loss

58500

 

 

 

 

 

 

 

1480000

 

1480000

 

 

 

 

 

 

 

 

 

 

 

To Gross Loss

58500

By Net Loss

388000

 

To Outstanding Wages

30000

 

 

 

To Sundry Expenses

165000

 

 

 

Prepaid rent

-35000

 

 

 

Outstanding Gas Payment

7500

 

 

 

To Heat & Light

92000

 

 

 

To Depreciation: Furniture & Fittings -                  

70000

 

 

 

 

 

 

 

 

 

388000

 

388000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance Sheet for Greg Palmer as on..

Liabilities

Amount (£)

Assets

 

Amount (£)

 

 

 

 

 

Capital

960500

Account Receivables

 

120000

Net Loss

-388000

Prepaid Rent

 

35000

Drawings

-105000

Closing Stock

 

120000

Bank Overdraft

50000

Fixtures and fittings

350000

 

Outstanding Gas Payment

7500

- Depreciation

-70000

280000

Outstanding Wages

30000

 

 

 

 

 

 

 

 

555000

 

 

555000

FINAL ACCOUNTS OF KENNY PATON LTD.

Statement of P&L A/c of Kenny Paton Ltd.

Dr.

 

 

Cr.

 

Particulars

Amount (£)

Particulars

Amount (£)

 

To Opening Stock

86000

By Sales

2068000

 

To Purchases

1054000

By Closing Stock

78000

 

To Gross Profit

1006000

 

 

 

 

 

 

 

 

 

2146000

 

2146000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

To Distribution Costs

367000

By Gross Profit

1006000

 

To Administration Costs

287000

 

 

 

To Outstanding Interest

14274

 

 

 

To Outstanding Dividend

152000

 

 

 

To Depreciation:

 

 

 

 

On Plant & Machinery

119700

 

 

 

On Office Equipment

26400

 

 

 

To Outstanding Corporation Tax

30000

 

 

 

To Net Profit

9626

 

 

 

 

1006000

 

1006000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet for Kenny Paton as on..

Liabilities

Amount (£)

Assets

 

Amount (£)

 

 

 

 

 

£1 ordinary shares fully paid

1520000

Account Receivables

 

619000

Net Profit

9626

Bank

 

45000

Dividend declared

152000

Closing Stock

 

78000

Bank Loan

549000

Premises

 

1345000

Outstanding Interest

14274

Plant & Equipment

798000

 

Trade Payables

640000

- Depreciation

119700

678300

Outstanding Corporation Tax

30000

Office Equipment

176000

 

 

 

-Depreciation

26400

149600

 

2914900

 

 

2914900

 DIFFERENCES BETWEEN AN INCOME STATEMENT AND STATEMENT OF FINANCIAL POSITION

Basis

Income Statement

Balance Sheet

Meaning

It is also called profit and loss account and it include all the expenses and revenues that are indirect in nature for that particular period.

This is the final statement prepared which includes liabilities or capital and assets of the organization to reveal the position at the end of the financial year. 

Motive of Preparation

This account is made to find out the net loss or net profit of the company which has occurred during the period (Edwards, 2013).

This statement is made to reveal the true position of the organization and to find out that actually where the business is standing.

Kind of Accounts Incorporated

It only consist single account i.e. Nominal

It has two kinds of accounts included i.e. Personal and Real

Order and dependency

It is made before the balance sheet and hence it is not independent of balance sheet.

It is made after the profit and loss account is made and hence it is dependent on income statement as the figures of net loss or net profit is taken from there (Warren and Jones, 2018).

Balance

If there is a balance amount on debit side, then it is Net Loss and if there is a balance on credit side, then it is Net Profit.

Both liabilities and assets side should come equal as it shows the accuracy of the final

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