Financial Accounting.

The first 200 words of this essay...

Financial Accounting Task 1

The purpose of a business keeping accounts is to record the financial transactions because the business needs to quantify items such as sales, expenses and profit. They then need to present the figures in a meaningful way to check the success of the business.

How the accounting system works

First of all the accountant collects all the prime documents together such as invoices, credit notes, bank paying in slips, cheques, BACS. Once the accountant has gathered all the sources they summarise the information into daybooks, journals and cashbooks. The accountant then has to make double entries for each transaction in the above books. Double entries must be made in the sales ledger, purchase ledger, nominal ledger (which are used for petty cash and bank and cash transactions). From these double entries a trial balance is compiled which checks all the figures and calculations. After both credit and debit figures match a statement of profit (or loss) is made these are called final accounts and include trading, profit and loss account and balance sheet.

Accounting records

Records of account are kept in two forms handwritten and computerised. Written accounts and is the