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    Financial accounting (Project 1)

    Introduction

    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.

    TASK 1

    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 org

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