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Assignment Front Sheet

Qualification Unit number and title

Pearson BTEC Level 4/5 Diploma in Unit 10: Financial Accounting

Business (RQF) Unit Code:

Student name Assessor name

Usman Rafique Kainat Mehdi
Date issued Completion date Submitted on
06 Feb 2019 19-March 2019 20-March-2019

Assignment title Financial Accounting

Word Count 5,164

Hand-in Policy

You must complete this assignment on time. If you experience difficulties, you must inform your tutor
accordingly.

Late Work Policy

Consideration will be given to students who have valid reasons for late submission (e.g. illness)

Plagiarism

In case of plagiarism, college regulations will be applied. You must declare that this work is your own
by signing the following statement:

Learner declaration

I certify that the work submitted for this assignment is my own and research sources are fully
acknowledged.

Student signature: Date:

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Contents Page No.

Task 1.1
Business Transactions ………………………………………………………………03

Task 1.2
Double Entry……………………………………………………………………….05

Task 1.3
Journal Ledger……………………………………………….…………….……….06

Task 2.1.
Financial Report……………………………………………………………….……09

Task 2.2
Final Accounts………………………………………………………………………13

Task 3.1
Bank Reconciliation…………………………………………………………………18

Task 3.2
Tools and Techniques………………………………………………………………21

Task 3.3
Bank Reconciliation………………………………………………………………...22

Task 4.1
Control Accounts……………………………………………………………………23

Task 4.2
Reconciliation of Control
Account………………………………………………………………………….….24

Task 4.3
Difference between control accounts and suspense accounts…………………….…26

Bibiography………………………………………………………………...……….28

Plagirizm Report…………………………………………………………………….30
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Task 1.1

Business Transactions:
A business transaction is an affair concerning an exchange of things, currency or facilities
between two or additional individuals or companies.
(Gleeson, 2019)

Description:
All the businesses will have transactions it can be cash, services, purchases or credit. The
business conducted can be among two persons involved in business and making the transaction
for their common profits or between a business unit like a grocery store and a client. There are
number of examples all around us in our daily life. Every time we step out of our home, we
involve in a business transaction somehow.

Types of Business Transactions

 Buying things and resources. Purchase can be for currency or credit. Cash buying are
paid at the time of purchase and are common in most industries. Credit purchases are paid
afterwards around period.
 Acquiring services. For example, restoration to equipment, publicity and production.
 Sales. Cash sales, for example in shops, are paid at the time of purchase. Credit sales are
paid for after some time.
 Obtaining of non-current Assets
 Rising investment and disbursing rewards to the contractors of business. For example,
proprietors putting in investment or loans being elevated from banks. Proprietors of the
business expect rewards created on a portion of the profit; Banks generally assume interest
to be paid.
 Bookkeeping for and disbursing tax.
 Activities of currency and cash in the bank account. These actions typically arise from
the dealings above
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Regulations to Financial Accounting:

Normal IFRS Necessities:

IFRS covers an extensive choice of accounting actions. There are positive features of professional
exercise for which IFRS set compulsory rules
 Report of Fiscal Place: This is also identified as balance sheet. IFRS impact the ways in
which the mechanisms of a balance sheet are described.
 Declaration of Complete Profits: This can take the form of one report, or it can be parted
into profit and loss report and report of other income, including possessions and
equipment.
 Report of Variations in Equity: Also known as a report of involved incomes, this
documents the company’s change in getting or income for the given fiscal dated.
 Report of Money Stream: This report reviews the company’s economic connections in
the given period, separating cash flow into Processes, financing and sponsoring.

In calculation to this elementary information, a firm must also give a summary of its accounting
strategies. The full report is often seen side by side with the prior story, to show the changes in
profit and loss. A parental corporation essential generate distinct account reports for each of its
secondary businesses.
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Task 1.2:

Double Entry System: A essential idea underlaying current day bookkeeping, states that every
economic operation has equivalent and contradictory properties in at least two different accounts.
It is used to please the accounting equation Assets = Liabilities + Equity. With the double entry
system, credits are offset by debits in a overall record or T-Account.
(HAYES, 2019)
Accounting Equation
The accounting calculation systems the basis of the double entry system and is a brief picture of
an idea that increases into composite, prolonged and multi item display of the balance sheet. The
balance sheet is based on the double entry bookkeeping system where total possessions of
business are equal to the total of accountabilities and investors equity.
Essentially, the representation equates all uses of capital(assets) to all sources of capital (where
debt capital leads to liabilities and equity capital leads share holder equity). Every single
business transaction will be represented in at least of its two accounts.

Debits and Credits

Debits and credits are important to the double entry system. In accounting a debit states to an
entry on the left side of an accounting ledger, and credit states to an entry on the right side of an
account ledger. To be in balance, the total of debits and credits for a transaction must be equal.
Debit do not always equate to growth and credit do not constantly associate to reduction.

Fast facts

 In the double entry system, businesses are noted in standings of debits and credits

 Double entry was established in Europe to help justify marketable connections and make
trade more effective.

Sample of a Double Entry System

To Explain double entry, let’s accept that a company derives $50,000 from its bank. The
Company’s Cash account must be improved by $50,000 and an accountability account must
be enlarged by $50,000. To increase an asset, a debit entry is essential. To increase a liability,
a credit entry is required. Hence, the account cash will be debited for $50,000 and
accountability loans payables will be credited for $50,000.
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Task 1.3:
Journal Ledger and Trial Balance
Journal:
Journal is a volume of bookkeeping where day-to-day histories of professional dealings are
first recorded in a consecutive direction. It is recognized as the main book of bookkeeping
or the book of initial entry. It is organized out of contract evidences such as receipts,
takings, bills, etc.
LEDGER (T ACCOUNTS) Of the Data Given Task 1.3

Journal Entries

Date Account Name Debit Credit

1st January Cash £40,000
Capital £40000
2nd Januray Bank £10,000
Capital £10,000
3rd Januray Furniture £1,500
Cash £1,500
4th January Purchase £500
Cash £500
5th May Purchaces £10,000
London Store £10,000
6th May Cash £10,000
Sales £10,000
7th May William & Sons £1,100
sales £1,100
10th May Drawing £3,000
Cash £3,000
13th May Type writer £1,000
Bank £1,000
15th June Cash £50,000
Sales £50,000
16th June Bank 2,000
Loan $2,000
20th July Advertisment expenses £4,000
legal expenses £2,000
Cash £6,000
20th Sept Building £4,000
Bank £4,000
1st Oct prepaid £600
Bank £600
11th Dec Salaries £1,600
Bank £1,000
Salaries Outstanding £600
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Date £ Cash Date £ Capital Date £ Furniture Date £ Purchase Date £ Wil iam&Sons Date £ Drawings
1st jan capital 40,000 1st jan Cash 40,000 3rd jan cash 1500 4th jan cash 500 7th may Sale 1,100 10th may cash 3,000
3rd jan Furniture 1,500 2nd jan Bank 10,000 5th jan LondonStore 10,000
4th jan Sales 10,000
4th jan Purchase 500
15th jan Sales 50,000
10th may Drawing 3,000

20th july advertise 4,000

20th july Expense 2,000
Balance B/d 89,000 bal b/d 50,000 bal b/d 1,500 bal b/d 10,500 bal b/d 1,100 bal b/d 3,000

Date £ TypeWriter Date £ Loan Date £ Advertisment Date £ Legal Expense Date £ Building Date £ Prepaid
13th may Bank 1,000 16th june Bank 2,000 20th julycash 4,000 20th july Cash 2,000 20th sept Bank 4,000 1st Oct Bank 600

bal b/d 1,000 bal b/d 2,000 bal b/d 4,000 bal b/d 2,000 bal b/d 4,000 bal b/d 600

Date Bank Date Salaries Date £ London Store Date Salaries outstandinDate
g £ Sales
2nd jan Capital 10,000 11th dec Salaries 1,600 5th may Purchase 10,000 11th dec Salaries 600 7th May wil iam&Sons 1,100
13th may typewriter 1,000 15th june Cash 50,000
16th juneLoan 2000 cash 10,000
20th sept building 4,000
1st oct prepaid 600
11th Dec Salaries 1,600
Balance b/d 5400 bal b/d 1,600 Bal b/d 10,000 bal b/d 600 Bal b/d 61,100
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Trial Balance:

A trial balance is a accounting quiz in which the stabilities of all records are assembled into debit
and credit account column sums that are equivalent.

(KENTON, 2018)

A corporation formulates a trial balance prediodcally, typically at the conclusion of every

reportage dated. The universal determination of creating a trial balance is to ensure the entries in
a company’s accounting system are statistically correct.

Decscription Debit Credit

Cash 89,000
Capital 50,000
Furniture 1,500
Purchase 10,500
William &sons 1,100
Drawings 3,000
Typrwritter 1,000
Loan 2,000
Advertisement 4,000
Legal expence 2,000
Building 4,000
Prepaid 600
London store 10,000
Bank 5,400
Sales 61,100
Saliries 1,600
Salries outstanding 600
Total 1,23,700 1,23,700
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Task2.1:

(A) Financial Report & Financial Statement

Financial Report:
An economic statement, also often mentioned to as fiscal reporting or yearly statement, is a large
united article that reviews the fiscal expenditure and incomes of a given business over the period
of a single year.
(Jane, 2017)
Financial Statement:
Financial declarations are inscribed accounts that carry the professional events and the fiscal
presentation of a firm. Fiscal report contains the balance sheet, income report and cash current
report.
(MURPHY, 2019)
Difference:
The term “Financial reporting” and “financial statement” are often exchanged in the office. Both
terms have some resemblances, but fiscal reportage surrounds a much broader and complete
explanation. Both the fiscal statement and statement play a role in creating the annual financial
data report that investors and shareholders read as a part of their financial research. Majority of
financial reports for internal purposes have such format or presentation rules that are set by
management or the user himself and sometimes no particular format is allowed.in addition to that
some financial reports are prepared on consistent basis after equal intermissions and some are
organized only when they are required. Fiscal reports are one of such reports that are organized
on regular basis as precise things are required to do so according to related laws.
In the end, there is no difference between the relationships fiscal statement and fiscal report. But
their typical explanation and meaning in the economic and accountancy world is somewhat
diverse.
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(B) Different types of Fiscal statement and what they cover

Types of financial statement:

1. Report of financial position: it is also recognized as balance sheet, it shows the

economic place of an object on a specific given date. Report of financial position or
balance sheet covers the following:
 Possessions
 Accountabilities
 Equity

2. Revenue statement: it also recognized as income and damage report. It gives the
industry’s report in terms of loss or profit of a particular time.

3. Cash flow report: it shows the cash stream and bank balance during a period in business.

4. Report of variations in equity: it is also known as report of engaged incomes. It shows

the in and out of the investment over a time period.
 Net profit or loss
 Part of investment issued or reimbursed during the period
 Extra payment
 Increases and losses can be found straight in capital
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(C) Adjustments required for Accruals, Prepayment and Bad debts

Accruals:
The archives of income and expenditures in the periods in which they are acquired. They are key
mechanisms of the accrual technique of accounting.
(Webster, n.d.)
Accrual accounting is the contradictory of currency bookkeeping which identifies financial
events only when cash is swapped. The accrual method is more mutual than the cash process.
Although it is more composite, harder to implement and harder to uphold than the cash method
of accounting. Most specialists agree that accrual deliver more precise representation of firm’s
act.
Additionally, accrual let corporations to replicate the fact that sales may have been made and
expenditures acquired even if cash has not changed hands yet. This in turn produces fiscal
reports that are equivalent over time.
However, one of the immense negatives of accruals is that they tendency to obscure the nature of
firm’s real cash situation (e.g. a company may show loads in sale but only have $10 in its cash
account because its clients haven’t paid yet.
Prepayment:
A prepayment is the payment of a debt or portion imbursement before its official due date. A
prepayment can either be made for entire balance of a accountability or for an upcoming
payment that is paid in advance of the date for which the debtor is contractually indebted to pay.
Example of prepayment include rent or early loan repayments.
(KAGAN, 2018)
There are many types of debts and responsibilities that can be established in advance through
prepayment. Companies can prepay rent, wages, rotating line of credit and other short term or
long-term debts. Customers can use prepayments on tax forms to settle future tax
responsibilities, they can prepay credit card charges before they obtain a report.
Bad debts:
Bad debt is a loss that firm experiences when credit that has been prolonged to customers
become useless, either because the debtor is broke, has economic difficulties or because it can
not be collected. It is expensed on the revenue report.
(KENTON, 2018)

Knowing bad debt leads to a compensating decrease to accounts receivable on the balance sheet.
Firms that makes sale on credit often estimate the proportion of sales they imagine to become
bad debt.
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Adjustment examples
Accruals:
T company started its business on 1st of Dec and uses sales rep company for calling on
customers. For this, T agrees to pay commission pf 5% of sales with payment made 10 days after
the month ends. Assuming that December’s sales are $100,000 T company will be incurring
commissions expense of $5,000 and liability of $5,000. The commission expense will be paid in
January. The financial statement for T will be following.
1. Its Dec income statement will report commissions expense $5000 in getting December’s
sales of $ 1,00,000.
2. Its Dec 31 balance will not be reporting its $5,000 liability to sales rep company.

Prepayment:
Let’s suppose on Dec 7 recorded values are service supplies 1500(Dr) and cash 1500(Cr). Let’s
say in the end of month, 60% of supplies have been used. So, out of the $15,00, $900 value of
provisions have been used and $600 remain unused. In preparing the regulating entry, our goals
are to transfer the used part from the asset initially recoded into expense- for us to arrive at the
proper balances. Correcting entry will contain:
1. Acknowledgement of expenditure
2. Reduction in the assets primarily noted
Correcting entry will be Dec 31 service provisions expenditure 900(Dr) and service supplies
900(Cr)
The facility supplies expenditures and expenditure account while “facility provisions” is an asset.
After production the entry, the balance of the vacant facility supplies is now at $600 ($1,500dr
and $900cr). service supplies expenditure now has a steadiness of $900.

Bad debts:
ABC ltd sells goods to XYZ ltd for $500 on credit. ABC ltd then finds out that XYZ ltd is being
settled and therefor the predictions of improving its dues are very low. ABC ltd should write off
receivables from XYZ ltd in view of the conditions. The double entry will be recorded as
follows: Bad debts expenditure $500 Dr and XYZ ltd $500 Cr.
Though, the manager selected to supervise the bankruptcy of XYZ ltd teaches the company to
$300 to ABC ltd in full payment of its dues. As $300 of the bad debts has been improved, it is
compulsory to cancel the effect of before familiar the bad debts expenditure up to this amount.
The accounting entry will be therefor as follows:
Cash/Bank $300 Dr and Bad debt recovered (income) $300Cr.
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Task 2.2:

Final Accounts:
Final accounts are terms that mentions to the concluding trail balance at the end of a period from
which the fiscal reports are resulting.it is a concise report delivered when a corporate deal has
been settled.
(Bragg, 2018)

The preparation of the final account is not the initial stage of an bookkeeping sequence but they
are the final product of the bookkeeping sequence that is why they are called “Final accounts”.
These accounts precise all the accounting info noted in books and ledger contained of hundreds
of thousands of pages.
The final accounts consist of:
1.Income statement: it is arranged to know the profit earned and loss suffered by the business
during specific time.
2.Balance sheet: It is prepared to know the fiscal situation of the business on a specific date.
These two reports or statements are mutually known as “final accounts or financial statements”.
(Kaur, 2018)
Final accounts from the trail balance Task 1.3

Details $ $ $

Sales 61,100

Purchases (10,500)

Gross profit 50,600

Salaries 1,600

Advertisement 4,000

Legal expenses 2,000

Total expenses (7,600)

Net profit 43,000

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Balance sheet:
A balance sheet is report that shows a firm’s assets, accountabilities and share holder’s
impartiality at a precise point in time, and offers a basic for figuring rates of return and assessing
its capital construction.
(HAYES, 2019)
Statement of financial position
As at 31st December

Detail $ $ $

Non-Current Assets
Building 4,000
Furniture 1,500
Type Writer 1,000

Total Non-Current Assets 6,500

Current Assets
Cash 89,000
Bank 5,400
Account Receivable 1,100
Prepaid 600
Total Current Assets 96,100

Total Assets 1,02,600

Non-Current Liabilities
Loan 2,000

Current Liabilities
Accrued Salaries 600
London Store 10,000
Total 12,600

Owner’s Equity
Capital 50,000

Net Profit 43,000

Drawing (3,000)
Total 40,000

Owner’s 1,02,600
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Concept of consistency:

The consistency rule shows that, when you accept a book-keeping code or technique, endure to
shadow it consistently in imminent book-keeping periods. Only change an accounting principle
or method if the new version in some way advances reported fiscal outcomes.
In the event that you make such a modification, completely record its belongings and incorporate
this certification in the records going with fiscal reports.
(Bragg, 2018)
The consistency code does not say that corporate always have to use the same bookkeeping
technique repeatedly. Corporations are permitted to shift to new method if doing so better reflect
account principles or the accounting regulations require to do so. This principle is intending to
keep financial statements similar and comparable.

Convention of consistency:

The convention of consistency means that book-keeping values should be remain un changed for
preparing final statement of different period of time. It allows a comparison in the performance
of different periods.
If changed types of book-keeping actions are used for preparing financial statements of different
years then the result will not be similar since these will be based on unlike procedures.
(Mishra, n.d.)
Example:

Zain’s computers, a computer retailer, has used software A for valuing its inventory. In the last
few years, Zain’s has become quite gainful and Zain’s bookkeeper proposes that Zain switch to
software B inventory system to minimize taxable income.
According to consistency principle Zain can made modification book-keeping method for a
sensible motive.
Assume that Zain’s company Swapped from A to B software in year 2. In year 3, Zain’s income
is tremendously loan and Zain are trying to display a profit to get additional bank loan. Zain
asked the accountant to switch from B to A software.
This is the defilement of consistency principle. Zain can make a justifiable change in book-
keeping method like in first example, but he can’t switch back and 4th year after year.
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Concept of materiality:
In accounting an item is material if its oversight or misstatement affects the decision making of
the users of the financial statements.
The principle of materiality says that an book-keeping average can be overlooked if the net
influence of doing so has a small impact on financial statement that a reader of the statement
would not be missed.
(Bragg, 2018)
The concept is also called the materiality restriction, states the fiscal info is material to be the
fiscal reports if it would alteration the view of a person. In other words, all significant fiscal data
that would sway the opinion of a fiscal report user should be include in the financial statement.

Convention of materiality:
According to this convention only those transactions will be considered which have material
impact on financial status of the company and other contacts which have unimportant effect will
be ignored. The evasion of those things will not materially affect the records of the professional.
According to Newman and Melllman,” The concept of materiality plays a major part in the
application of accounting and in the standards of reporting. It is obvious that accounting would
assume an unnecessary and impossible burden if it failed to distinguish between material and
immaterial matters”.
(Mishra, n.d.)
Example:
A big corporation has a structure in hurricane storm and the building was ruined and after the
lengthy fight with insurance company, the company reports an extra loss $10,000. The company
has net income of $10,000,000. The materiality idea states that this loss is irrelevant because the
regular fiscal report user would not be anxious with approximately that is only 0.1% of the net
income.
Assume the same sample above excluding the company is a minor firm with only $1,00,000 of net
income. Now the loss is 20% of the net income. This is considerable loss for the firm and this
$20,000 would be considered as material.
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Concept of full disclosure

In the book-keeping world, disclosure mentions to the act of freeing all appropriate data on a firm
that may affect an asset conclusion.
It needs administration to report all related data about the firm’s processes to creditors and
investors in the fiscal reports and notes.
In other words, it needs that organization tell exterior users material data about firm that they can
use to base their results on.

(Segal, 2019)
Convention of full disclosure:
The disclosure of all-important data is one of the significant book-keeping conventions. It
suggests that financial records should be organized in such a way that all material data is clearly
disclosed to the reader.
The material should not only contain facts given in the final financial records but also material
which occurs after the preparation of balance sheet but before the performance of fiscal
declarations.
Example:
For instance, we take loan agreement, conferring to the full disclosure rule, administration should
list the advances along with terms, maturity dates, existing shares and guarantee requirements
involved to the loans in the notes of fiscal reports.
With this view of the company’s debt picture, investors and creditors can make their decisions
much more easily.
The persistence of this code is to make firm’s ‘profile clearer that depositors and creditors can
see all the likely features of firm.
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Task 3.1:

Bank Reconsilacation:
The summary of banking and corporate action that settles an entity’s bank account with its fiscal
accounts is bank reconciliation.
(Kagan, 2018)
The report shows the payments, drawings and other movement affecting a bank account for a
specific time. A bank reconciliation is useful tool to control fraud and internal financials. This
statement helps the entity to look over the payments and collections that they have been
deposited into bank. The statement helps us to find differences in bank balance and book
balance.
Reconciling statement and cash book
The balance of the cash account in a company’s fiscal accounts may need regulating as well. For
instance, a bank may charge a fee for having the account open. The bank normally withdraws the
fee from account repeatedly. Therefor, when preparing a ban reconciliation report, any fees taken
from the account must be accounted for by making journal entry. Another item that need
reconciliation is interest. Interest is deposited in account automatically and need to be in journal
entry also. Here we need bank reconciliation statement to adjust our journal.
Features of bank reconciliation statement

 A bank reconciliation statement is only a report.

 It’s not ledger account as prepared on the principles of double entry system.
 Its not a part of books of account.
 It is prepared weekly, monthly or quarterly, depending upon the volume of
banking transaction involved.
 It is prepared only when there is difference between bank and company books
 19

Requirement of reconciliation

For high-volume corporate or conditions with complex risk of scam, corporate may need to
reconcile its bank dealings often. Some businesses reconcile their bank financial records daily.
Bank reconciliation is a necessary part of a successful business. It is used to compare your books
to those of you bank. It is required to see if there is any difference between these two sets of
records for your cash transactions.
It is extremely common to be there variances among your balance and the bank balances, which
you should find out and adjust in your books. If you overlook there will be a difference in
amount you think you have and the one in bank.
The result could be an overspent bank account, bounced cheques and much more. It is also useful
when it comes to the time for yearly review, the accountants will always look into company’s
conclusion settlement as part of their testing actions, so it is additional cause why it is required.
(Bragg, 2018)

Importance of bank reconciliation

Its a significant method by which the correctness of bank balance shown by the cash book is
guaranteed. The position of bank reconciliation can be concise in the following points:
 Bank report guarantees the correctness of the balance by cash book.
 It offers a check on entries made in both the books.
 It helps to detect any error in both the books.
 Its assistances to update the cash book.
 With the help of bank statement, we can discover some entries that may not
recorded yet.
 It shows any unjustifiable delay in the assembly and permission of some cheques.
 It helps in avoiding fraudulent activities in books.
(PRITCHARD, 2018)
 20

How bank reconciliation is used in business management

Bank reconciliations play vital role in business management and accounting. It can avoid
deliberate scam, along with mistakes by bank clerk, auditors, staffs and administration. Even
though bank settlement is a month-end practice but it is required to prevent following actions:

Fraud:
It matches a corporation’s issued cheques with the cleared cheques on the company’s bank
report, a cautious assessment based on controls and actions helps to disclose deceitful activities.
These could include payments for illegal business purposes, payments to unofficial employees or
retailers.

Prevents overdraft:
This is very significant after a corporation is working on very little cash funds. Systematic
settlements can help administration suspend expenditures that would result in company over
drafts, bounced cheques, deficient fund fees and interest.

Recognizes bank errors:

Bank officers make bank errors, they might transfer a wrong entry in their books. Reconciling
the bank account gives the company time to inform the bank of it error, letting the bank to
precise the account.

Recovers collection actions:

It allows corporations to better accomplish their accounts receivable. When a client’s payment
clears the bank, the receivable is no longer unresolved and therefor requires no further action.
But if the client’s cheque doesn’t clear, that alerts administration to be more aggressive in its
gathering energies.
(Helstrom, n.d.)
 21

Task 3.2:

Cash Reserves:
A cash reserve is an emergency fund for your business. You use a cash reserve in case of
unplaned and short term financial needs.
(Cameron, 2016)
Cash reserves for individuals:
Individuals reserves an amount of amount of money for last three to six months to get it later in
emergency. This amount of money hold in banks or it can be short term investments.
(KAGAN, 2018)
Tools and techniques to reconcile general ledger

Reconcile general ledger:

Reconciling general ledger means that reviewing an individual account in the general ledger to
make sure that the transactions are matching the balances in each account.
The reconcile of general ledger consists of following steps:
 Balance investigation: It consist of matching the opening balance in the account with
conculsion settlement details from the prior dated. If it dosen’t match, examine the reason
of it in previous time. If the account didn’t get check before it means there are more
problems like this.
 Current period investigation: Match the dealings stated in the account with in the
period to the underlaying dealings, and adjust as required.
 Adjustment review: Review all regulating journal entries noted in the account within the
period for suitability, an alter as required.
 Reversal Assessment: Guarantee that all journal entries that should have inverted within
the period have been reversed.
 Conclusion Balance Assessment: Authenticate that the ending details for the account
matches the conclusion account balance.
 22

Task 3.3:

Balance as per Bank $ 24,594.72

Unpresented cheques ($ 830.71)

Deposit uncredited $ 400

Total $ 24,164.01

Balance as per cash book $ 23,196.79

NSF cheque ($ 850)

Bank charges ( $ 60)

Interest income $ 1,237.22

Note received $ 550

Error $ 90

Total $ 24,164.01
 23

Task 4.1:

Control accounts:
A control account is an account within the over-all record that sums up balances in subsidiary
accounts. A ledger can hold hundreds of accounts and sub accounts. The control account is also
valuable settlement tool between the comprehensive sales and buying data, and the totals sooner
or later forwarded to general ledger.
(Gibbs, n.d.)
Types of control account

 Debtor’s control account: The debtor’s control account is a version in the general ledger
that displays the total of all dealings with debtors. Entries must be made using the double
entry method.
 Creditors control account: The creditors control account is an account in the general
ledger that shows the total of all dealings with creditors.
 Standard control account: It follows the same rule as the debtor’s and creditors control
account. We don’t need to list every single item from our inventory in the general ledger.
Instead we create a standard control account.

Control account in financial management

Use of control account:

Control account is recognized as a leading account, may be a book account that summarizes
and combines all of the minor account for a particular kind. In other words, it’s an account
that equals the add of subsidiary account and is employed to change and organize the final
ledger. The final ledger will have many accounts from quality and accountability accounts to
financial gain and expenditure financial records. Moreover, every account kind will have
many smaller accounts known as minor accounts. If each single account was enclosed within
the book, it might be terribly massive and un organized.
(Cecilia, 2017)
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Task 4.2:

(a)

Control Account
Sales 3,694

Sales return 310

Cash 1,846

Discount Allowed - 58

Balance b\d 1,596

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(b)

ABLE CHALIE
Sales 846 Cash 500 Sales 840 Sales return 140

Sales 570
Cash 400

Balance b\d 916

Balance b\d 300

DELTA
BAKER
Sales 258 Cash 200
Sales 470 Sales return 170

Sales 600

Balance b\d 58

Balance b\d900
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Task 4.3:

Suspense account:
An account in the record that stores entries for which there is un certainty about the account in
which they should be noted. After the investigation this type of transaction shift out of the
suspense account to precise account, an entry into suspense account can be a debit or credit.
(Bragg, 2018)
Difference among suspense and control account

A control account is a total account and it is normally reorganized by the minor transactions,
e.g. clients, supplies control account.
A suspense account is an account that records unknown transactions which are irreconcilable.
(OKEREKE, 2016)

Date Account Name Debit Credit

Sep. 2018 Purchase return 8980

Sep. 2018 Sale return 8980

Suspense 17960

Suspense 919

Sep. 2018 Discount received 919

Sep. 2018 Discount allowed 836

Suspense 836

30 Sep. 2018 Insurance prepaid 580

Suspense 580

Telephone expense 38,260

Suspense 38,260
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Suspense Account
Balance b/d 57,717

Sales return 8,980

Purchase return 8,980

Discount allowed 836

Discount received 919

Insurance prepaid 580

Total 57,636 Total 57,636

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