Financial accounting (Project 1)


Finance can be defined as the element which is required to operate a business successfully. If the organisations are not having sufficient financial resources than it can affect their profitability and productivity. For all the accountants of a company it is very important to record financial information appropriately so that organisation's actual financial status can be determined by all its stakeholders (Hodder, Hopkins and Schipper, 2014). In financial accounting different types of accounts and statements are generated by the accounts department of an organisation.

It includes formulation of journals, creation of ledger accounts, forming profits and and loss accounts and balance sheet. For all the companies it is very important to conduct financial accounting so that company's actual position can be determined. In this project a junior accountant of a small accountancy firm is going to perform various tasks that includes preparation of primary books, general ledger accounts etc.Apart from this various types of financial statements are also going to be discussed under this report.


Double entry book-keeping system

Double entry system:

In this bookkeeping system all the business transactions are related to two different accounts and also recorded in two accounts. For all the business entities it is very important to keep appropriate accounts so that it can be analysed that organisation is generating profits or bearing losses. All the transactions that are done in a specific time period are recorded in the accounts that are generated in the same accounting period. All types of proceedings that are made by a company will affect two different accounts and a single error can affect all the recorded information (Nobes, 2014). Hence it its very important to record each transaction carefully so that actual financial strength of the company can be examined. In double entry system four different types of stages are followed by every accounts in which firstly journals are prepared and than ledger accounts are created on the basis of journals. All the closing balance of ledger accounts are transferred in trial balance and than final accounts are formulated on the basis of trial balance.

If accountants of a company fails to follow all the steps than it can affect the accuracy of all the accounts and stakeholders wont be able to analyse actual position of that organisation.


These are used to record all the transactions that are made by an organisation is a specific time period (Alver, Alver and Talpas, 2013). In journals proceedings are recorded as debit and credit. All the information which is recorded in journal is based on three golden rules of accounting. These rules are:

  • Debit what comes in, credit what goes out.
  • Debit the receiver and credit the giver.
  • Debit all expenses and losses credit all incomes and gains.

If the recorder make any mistake in the recording system of accounting than it will result in error in journals and the transparency will also be affected due to this. For Mr. Muhammad journal entries are as follows:


 When all transactions are recorded in journals than ledger accounts for each transaction is recorded to calculate closing balances of accounts. Ledgers are very important to formulate to analyse that all the recorded amount in journal is appropriate or not (Brown and Jones, 2015).

In ledgers there are two different sides that are credit and debit sides. Various ledger accounts for the above journal are as follows:

All the above mentioned ledgers are based upon the journals and shows closing balance for each account. When an organisation is willing to analyse accuracy of all the transactions than ledgers can help for the same. Trail balance is formulated with the help of closing balances of all the ledger accounts.

Preparing trial balance

Trial balance: It is based on ledger account. Those accounts who are not having any closing balance are not recorded in trial balance nut those who have closing balance are recorded in it. If some errors cannot be analysed by ledger accounts than those can be determined with the help of trial balance. In trial trial amount is recorded in credit and debit column (Trial balance, 2018). A trial balance for Mr Muhammad which is based upon different ledger accounts is as follows:




Cash account



Bank account



Capital account



Purchases account



Bills payable account



Bills receivable account



Sales account



Equipment account



Prepaid Insurance account



Rent account



Stationary account






From the above formulated trial balance it has been analysed that all the ledgers are formulated accurately because the balance of debit and credit side have been matched. All type of expenses are recorded in the credit column of trial balance and all the incomes are recorded in the debit side of trial balance.

Task 2

Formulation of final accounts

Final accounts or financial statements:

 it is essential for an organisation to formulate final accounts every year so that financial status can be analysed. Aim for generating final accounts is to analyse financial performance of the organisation. There are two different types of statements that are the part of final accounts. All of them are discussed below:

  • Profit and loss account:All type of revenues, incomes and expenses are recorded in profit and loss account. Main purpose of this account is to analyse that company is generating profits or bearing losses. When all the incomes and expenses are recorded than it shows net profit or net loss for a specific time period (Ward, 2012).
  • Balance sheet:All types of assets, liabilities and equities related items are recorded in balance sheet. It is also known as statement of financial performance. It helps the stakeholders to analyse organisation's actual position.

Profit and loss account and balance sheet for Mr. Carol Andrew who owns a retail business are as follows:

Profit and loss account as on 31 December 2017





less:  sales returns


Total Revenue


Less: Cost of goods sold


Discount received  


Rent received in advance


Gross profit




Rent & rates expenditure


Telephone expenses


Insurance expenses


Bad debts




Wages and salaries


Provision for bad-debts  (934)


Less: Bad debts written off (650)


Outstanding expenditure


Net profit


 Balance sheet as on 31 December, 2017

 From both the above formulate statements it has been analysed that Mr. Carol Andrew  is attaining a net profit of 15926. total assets and liabilities for the business are 143455.

Formulation of financial statements for sole trader and limited companies

All the organisations use different types of statements to record important information of the business on regularly basis. In sole trader and limited companies these statements are prepared to analyse organisational performance in the market. In partnership firms and sole  proprietorship final accounts are generated to analyse organisation's actual position (Anandarajan, Anandarajan and Srinivasan, 2012). In Sole proprietorship whole business is operated by a single business and partnership firm two or more persons operate business in partnership and are responsible for all the activities of the organisation. Profit and loss account and balance sheet for sole trader and partnership firm are as follows:

Profit and loss account of a sole trader:


Balance sheet of a sale trader:

Income statement of a partnership company




From the above project report it has been concluded that for all the organisations it is very important to formulate journal, ledger, profit and loss account and balance sheet so that organisation's actual position can be determined. All of them can guide to analyse that company is generating profit or bearing losses.


  • Hodder, L., Hopkins, P. and Schipper, K., 2014. Fair value measurement in financial reporting. Foundations and Trends® in Accounting. 8(3-4). pp.143-270.
  • Nobes, C., 2014. International classification of financial reporting. Routledge.
  • Alver, L., Alver, J. and Talpas, L., 2013. Institutional pressures and the role of the state in designing the financial accounting and reporting model in Estonia. In Accounting in Central and Eastern Europe (pp. 91-120). Emerald Group Publishing Limited.
  • Brown, R. and Jones, M., 2015. Mapping and exploring the topography of contemporary financial accounting research. The British Accounting Review. 47(3). pp.237-261.
  • Ward, K., 2012. Strategic management accounting. Routledge.
  • Anandarajan, M., Anandarajan, A. and Srinivasan, C. A. eds., 2012. Business intelligence techniques: a perspective from accounting and finance. Springer Science & Business Media.
Download Full Sample
Cite This Work To export references to this sample, select the desired referencing style below:
Copy to Clipboard
Copy to Clipboard
Global Assignment Help (2020) [Online]. Retrieved from:
Copy to Clipboard
Global Assignment Help. ' ' (Global Assignment Help, 2020)
Copy to Clipboard
Global Assignment Help. [Internet]. Global Assignment Help.(2020), Retrieved from:
Copy to Clipboard
Often times, students feel unable to work on assignments and think, “Who will do my assignment?” By providing samples on various subjects, we are trying to help them understand all the intricacies of writing. We have the most qualified and skilled assignment writers who can provide the best assignment writing services, essay writing services, dissertation writing services, and more at the most affordable rates. Place your order now for surprising discounts.
Boost Grades & Leave Stress

Share Your Requirements Now for Customized Solutions.

Lowest Price

Delivered on-time or your money back

100+ Qualified Writers

For Best Finance Assignment Help

View All Writers
FREE Tools

To Make Your Work Original

  • Plagiarism Checker

    Check your work against plagiarism & get a free Turnitin report!

    Check Plagiarism
  • Reference Generator

    Get citations & references in your document in the desired style!

    Generate References
Back To Top
Exciting Deals & offers on our AppInstall Now
Request Call Back
Request Call Back