Application of Financial Accounting - Aridri Limited
University: UK College of Business and Computing
Question :
Financial accounting involve recording, analysing and reporting of transactional data of Airdri Limited. Application of financial accounting tools like Balance sheet, cash flow and income statement assure effective management of financial data.
- Present business transactions with the use of double entry book keeping.
- Preparation of final accounts according to proper standards and principles.
- Underline bank reconciliation to assure bank records accuracy.
- Accommodate shift recorded transactions and control accounts from suspense accounts.
Answer :
INTRODUCTION
Financial accounting is the field of bookkeeping worried about the deprived, examination and announcing of monetary exchanges relating to a business (Arvidsson, 2011). All enterprises need to plan fiscal reports for a particular timeframe and money related reports have present before partners. It is useful for the association to take viable choices seeing speculation just as extension. Fiscal reports demonstrates the money related position of the company. To more readily comprehend this idea Airdri Limited has been chosen which bargains in electronic segments and it has a place with United Kingdom. In this report, there are following subjects are secured, for example, budgetary bookkeeping and its motivations, examination of inward and outside partners, trail balance , asset report, last records for sole dealers, bookkeeping ideas identified with consistency and prudency. Aside from this it also talk about reasons for getting ready bank compromise articulations and deals and buy control record.
FINANCIAL ACCOUNTING
Financial accounting is a part of accounting which helps in tracking the financial transactions of any organisation for operating and managing its operations in a systematic manner. It helps in recording, summarizing and presenting all the transactions to prepare the financial statements. The purpose of preparing such statement is to provide information related to the operations, performance and cash flows to the managers for taking effective decisions (Edwards and et. al., 2013). All the organisations are required to maintain their financial transactions in effective manner so that information be able to usable for stakeholders and owners. This report includes book keeping system, ledger posting system and the reconciliation statements. Accounting rules, principles, consistency and importance of financial accounts are also defined in this context.
a. BUSINESS REPORT
1. Financial Accounting: Financial accounting is a process recording financial transactions to provide information related to financial performance and position of the organization. All the financial statements are prepared by considering the local as well as international standards prescribed. Such accounting helps in collecting and summarizing financial data for the preparation of statements, such as, income statement, cash flow statement and financial position statements. All such statements are described below:
Income Statement: Income statements also known as profit & loss statements are prepared to show the profits and losses of an organization over a period. Such statements are used to display the organizational revenues, selling and administrative expenses, incomes and expenses, costs, taxes paid, gross profit, net profit in a systematic and logical manner. With the help of such statements owners, directors and stakeholders are able to determine the profitability of the organisation.
Cash flow statement: Cash flow statements are those statements includes transactions related to the inflows and outflows of an organization during an accounting period. Such statements provides important information related to the cash requirements and needs for execution of the functions and operations of business in smooth manner. It reflects the liquidity position of any organisation.
Financial position statement: Financial position statements are the written records which conveys the activities and financial performance of any organization. These statements are inspected by the government agencies, accountants to ensure accuracy in the operation.
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