• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Financial Accounting.

Extracts from this document...


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. ...read more.


Business Documents Different business documents are used throughout accounting and each has its own relevance and importance. The invoice is what is received when a good or service is bought, on the invoice it should state the amount owing to the company the service or good was bought from, when the amount should be paid and the details of the good or service which has been provided. Invoices are prepared for two types of sales: Cash sales- where payment is immediate, whether it is cash, cheque, debit card or credit card. Credit sales- this is when payment is to be made at a later date usually within 30 days. As well as credit sales there are credit purchase when your company buys something on credit you become a creditor. Also the customers buying on credit from you become debtors. Credit notes- these are sent out to customers when they have bought from the company. ...read more.


Purchases returns day book- this is a list of all goods, which the company has returned to the suppliers, and this list is compiled from all the credit notes, which have been received from suppliers. Accounting concepts There are a number of basic concepts which when preparing accounts are followed: Business entity - this refers to the fact that assets and liabilities of which plays a part in owning or running the business are not include with the owner's personal assets and liabilities. The only links between the owner's personal funds and the business are capital and drawings. Money measurement- this means that all items is expressed in the common denominator of money. That is the only way items can be added together to achieve a net profit or balance sheet total. The only disadvantage is that certain items such as an efficient management and good labour force cannot be expressed in money terms. Historical cost concept- ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. theory of banking

    Who will do it? A major theory of the banking is that banks have advantages in this area. Diamond (1984) points out that to some extent monitoring is a public goods that no one have the incentive to provide, banks can be the most efficient way to conduct this task for two reasons: (1)

  2. Unit 5 Introduction to Accounting

    are a form of tax paid to the local authority and which contribute to the services provided by that authority. * Heating and lightning - the gas and electricity bills must be paid to the company supplying the service. * Insurance - Insurance is a legal requirement.

  1. International Accounting Standarts

    While German commercial law asks for security in evaluation and prefers an under-evaluation, instead of over-evaluation, the IAS is more value oriented. The IAS is also more short term oriented in terms of actuality. An imaginable reason might be the financial short time investment (speculation), shareholders keep themselves busy with.

  2. Complete Report on Askari Commercial Bank

    Electronic Technology Division The electronic technology division (ETD) is responsible for managing the bank's technology needs. This includes not just establishing and maintaining technology infrastructure for providing operational support to all units of h bank, but also encompasses introducing latest state-of-the-art technology-driven products and service delivery systems.

  1. Accountancy Notes

    sales, purchases, expenses and real accounts for items owned by the business AS SPECIFICATION FOR ACCOUNTING ASSESSMENT OBJECTIVES These are common to both AS and A2 level and will assess candidates' ability to: a)

  2. Mr Carter has requested that I research the financial needs of potential and current ...

    can transfer money direct into your account > Direct debits - payments made on a regular basis (for example, for your gas and electricity) can be taken directly from your account each month > Standing orders - you can arrange for a payment to someone to be made direct from

  1. The concept of financial statement

    There are certain conditions when going concern concept cannot be justified or valid. For e.g. if there is a strong possibility that lack of finance will result in the sale of significant part of the business. But in most cases financial statements are prepared on the basis of this concept

  2. Financial Services

    It means spending only what you have and saving up to buy items that you can't currently afford. It means relying on loans only to pay large ticket items, such as a house or a car like Martin, or the Reynolds family that want to redecorate the house.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work