Financial Accounting coursework Essay Example | Topics and Well Written Essays - 1250 words - 1

Financial Accounting coursework - bear witness ExampleReferences..7 1. Executive Summary This report includes some of the basic principles and conventions that must be adhered to while preparing the m whiztary statements. It includes analysis and evaluation of some of the accounting practices and conventions. This report similarly analyses and evaluates some of the accounting practices in label & Spencer Plc. 2.1 Accrual Accounting Accrual concept includes recognition of revenue when earned while expenses atomic number 18 provided acknowledged when they are suffered or incurred. This accounting concept needs creation of an extra account that memorialises the difference obtained from the difference between revenue and expenses recognized as well as reception or payments of cash. Accounts receivable is normally used in preserve accrued incomes while deferred revenue account is used to record revenue not earned (Banerjee 2005, p. 4-5). On the other hand, accrued expense account is used in recording expenses before payment of cash while deferred expense account is used in recording expenses after paying cash. This type of accounting concept is actually expensive and that it is possible for the account to owe taxes on their income even before the cash is received. In marks & Spencer income is recognized when the products are sent to the customers and master(prenominal) risks and title incentives are shifted to the client. The deferred tax is accounted for after calculating it based on anticipated way of realization. The fraternity also has trade receivables account and trade payables (Banerjee 2005, p. 4-5). 2.2 Going Concern Going concern is regarded as one of the most important assumptions in accounting used in preparation of final accounts with an assumption that the headache will continue to operate in the next foreseeable prospective. The company is expected to successfully steady down their liabilities after realizing their assets. It is always u pon the management of the company to check on the ability of the organization to continue doing business sector in the coming future. The accounts of Marks & Spencer are prepared in the basis of going concern and the directors are convinced that the company will be able to operate in the next future. The directors are very much concerned that there are no uncertainties that may interfere with the companys trading operations in their future (Gibson 2012, p.11-12). The company managed to make a profit of $458 as at March 2013 and official cash and cash equivalents. The companys current assets also exceed the current liabilities thus screening an element of going concern. The company is also in a position of paying out her dividends and finance The company will not likely to fail in its operations in the near future considering her statement of financial position and the consolidated income statement (Marks & Spencer 2013, p. 1-3). There are a number of indications of a going conc ern business which are not reflected in the financial statement of Marks & Spencer. approximately of the dangerous signs indicating challenges of going concern are poor liquidity positions, high financial risk and insure in payments as well as serious litigations affecting the company. Marks & Spencer do not also have any indication of defaulting by one of their chief customers that may eventually affect her operations (Gibson