Balancing the books is at the heart of all business management. The overall aim of this unit is to introduce students to essential financial accounting principles and techniques which will enable them to record and prepare basic final accounts. Students will learn how to prepare accounts for sole traders and partnerships as well as limited companies. On successful completion of this unit students will be able to contribute effectively to the accounting function of an organisation, or to understand how to record and prepare basic financial accounts for their own business. They will have the knowledge and skills required to progress to a higher level of study.
By the end of this unit students will be able to:
LO1. Record business transactions using double entry book-keeping, and be able to extract a trial balance.
LO2. Prepare final accounts for sole-traders, partnerships or limited companies in accordance with appropriate principles, conventions and standards.
LO3. Perform bank reconciliations to ensure company and bank records are correct.
LO4. Reconcile control accounts and shift recorded transactions from the suspense accounts to the right accounts.
Formal report - LO1, LO2, LO3 &LO4: (Task 1)
The submission is in the form of an individual written report. The Report should be covering LO1, LO2, LO3& LO4 (Task 1). This should be written in a concise, formal business style using single spacing and font
size 12. You are required to make use of table of content; headings, paragraphs and subsections as appropriate, and all work must be supported with research and referenced using the Harvard referencing system. Please also provide a bibliography using the Harvard referencing system. A brief Harvard reference guide is attached in the end of this assignment for you to use. The recommended word limit is 2,500–3,000 words, although you will not be penalised for exceeding the total word limit.
Specification of Assessment
LO1, LO2, LO3 & LO4 (Task 1)
(You are a Junior Financial Accountant for a medium-sized enterprise company. You have been asked to record the financial transaction of the company in the orderly manner. You will be applying double entry
The following are the transactions of Kristine’s business during her first month of trading.
(a) Kristine starts a business and pays in £5,000 as capital
(b) The business buys a car for £1,000 cash
(c) They buy goods for resale for £500 cash
(d) They buy more goods for resale for £600 on credit from Mr A
(e) They pay rent of £200 cash
(f) They sell half the goods for £800 cash
(g) They sell the remaining goods on credit for £900 to Mrs X
(h) They pay £400 cash on account of the amount owing to Mr A
(i) They receive £500 from Mrs X
(j) Kristine withdraws £100 cash from the business
Record each transaction in t-accounts and balance off the accounts in double entry system.
Prepare a Trial Balance
P1: Apply the double entry book-keeping system of debits and credits. Record sales and purchases transactions in a general ledger from Case 1 part 1
Expected Answer Guide:
[Business transactions: Giving consideration to the types of business transactions (sales, purchases, receipts and payments) and the regulations which apply to financial accounting.
Double entry book-keeping: Double entry recording in sales, purchases, cash disbursement and cash receipt journals before posting to the ledger accounts.
Manual and electronic systems will be introduced and how, why and when these are used. Effectively recording debits and credits; regulations that apply to financial accounting.]
BTEC Higher National Diploma (HND)/Unit 10: Financial Accounting/April 2018
P2:Produce a trial balance applying the use of the balance off rule to complete the ledger from Case 1 part 2
M1: Analyse sales and purchase transactions to compile a trial balance using double entry book- keeping appropriately and effectively from Case 1 part 1 & 2
D1: Record correctly transactions and produce an accurate trial balance by completing the balance off of ledger accounts, checking that each transaction is recorded in line with accepted accounting principles from Case 1 part 1 & 2
Expected Answer Guide:
[Trial balance: Understanding how the trial balance is produced and its role in the identification and rectification of errors; the components of a trial balance and their importance will be considered.]
Rimel has a year end of 31 December each year.
On 1 April 2002 he purchases a car for £12,000. The car is expected to last for 5 years and to have a scrap value at the end of 5 years of £2,000.
You are required to calculate the depreciation charge for each of the first three accounting periods, and to show extracts from the Statement of Financial Position and Statement of Profit or Loss for each of the three accounting periods.
P3: Prepare final accounts from given trial balancefigures adjusting for accruals, depreciation and prepayments from Case 2
P4: Produce final accounts for a range of examplesthat include sole-traders, partnerships or limited companies.
M2: Analyse profit and loss accounts, balance sheet and cash flow statements appropriate for the given examples from Case 2
D2: Apply appropriate and accurate calculations for the constructing of the final accounts in Case 2.
Expected answer guide:
[Financial reports and financial statements:
What is the difference between the two? How, why and when are each one produced?
Different types of financial statements and what they cover.
Adjustments required for accruals, prepayments, bad debts, etc.
Types of accounts: Preparing final accounts (e.g. for sole-traders, partnerships or limited companies). Principles and conventions: Understanding accounting rules and principles. Understanding the concepts and conventions of consistency and material disclosure.]
At 31 December 2007, the balance on the cash account was £11,820 (DR), but the balance appearing on the bank statement was £15,000 (CR). The reasons for the difference were as follows:
(1) Bank charges of £20
(2) A payment of £1,200 had been entered in the cash account as £2,100
(3) A cheque for £200 had been dishonoured
(4) There were un-presented cheques totalling £6,500
(5) Rent of £4,000 had not yet appeared on the bank statement
Calculate the correct balance on the cash account and prepare a bank reconciliation statement.
P5: Apply the bank reconciliation process to prepare a number of bank reconciliations from Case 3
M3: Apply the reconciliation process demonstrating the knowledge of deposit in transit, outstanding checks and Not Sufficient Funds (NSF) check.
D3: Prepare accurate bank reconciliations that apply appropriate tools and techniques to check general accounts and balance sheets from Case 3 and explain each process.
Expected answer guide:
What is meant by bank reconciliation and why is it required? How is this achieved? Why is this necessary?
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