Financial Accounting and Reporting Essay Example | Topics and Well Written Essays - 2500 words

Financial Accounting and Reporting - Essay Example4. Customers Customers use financial information to assess the financial mail of a company and its ability to supply goods or services stably for a long period. 5. Employees Employees need to know the profitability of their company, its ability to remunerate them in the long term and to ensure their job security (Elliott, 2008). LEGAL REQUIREMENTS ON ACCOUNTS PREPARATION The accounts must be submitted to the tax authorities, corporation tax should be on the basis of the companys profits. This is done at the end of the financial year. The companys accounts must be made public by option them in the house of companies (Horngren, 2002). They must be submitted by the company within nine months after the financial year end. The accounts must be accurate and directors arrive at a legal responsibility of ensuring that the accounts are accurate. The use of an accountant does not reduce the responsibility (Webster, 2004). The financial state ments that must be prepared include balance wheel sheet, profit and loss account, notes to the accounts, directors report and auditors report. The balance sheet must be signed by the director, and a printed touch on of the director must be included (Horngren, 2002). The accounts should be prepared in conformity of internationally accepted financial reporting standards. DIFFERENCES BETWEEN PARTNERSHIP AND sole TRADER ACCOUNTS A sole mongers earnings are cause to tax in the self-employment category opus a partnership is subject to corporation tax (Elliott, 2008). The accounts of a sole trader seize to exist upon death of the trader while those of a partnership continue to exist since it is a legal person. A partnerships accounts contain large(p) comprised of shares of stock which are categorized into preference and ordinary shares (Webster, 2004). A sole traders account contains capital raised from other sources like from personal savings or soft loans. The partnership has to f ile its legal accounts with the state while a sole traders account need not to be filed with the state (Horngren, 2004). A sole trader accounts mostly include incomplete financial records while a partnership must prepare financial statements in conformity with the statutory requirements. The accounts of a sole trader are usually voluntarily prepared while those of a partnership are a statutory requirement. ?000 Stock ?000 Balance b/d 4000 Cash balance 250 Balance c/f 4250 4250 4250 hope Balance b/d 3310 Stock 250 Balance c/f 3060 3310 3310 Telephone Balance b/d 580 Accruals 82 Balance c/f 662 662 662 Advertising Balance b/d 3300 Prepaid 337 Balance c/f 2963 3300 3300 Wages Balance b/d 6650 Accrual 123 Balance c/f 6773 6773 6773 Motor Expenses Balance b/d 1460 Prepaid 42 Balance c/f 1418 1460 1460 Accountancy Fee Balance b/d 326 balance c/f 326 326 326 Debtors Balance b/d 4500 depreciation 225 Balance c/f 4275 4500 4500 Dou btful Debts Balance b/d great hundred Debtors 225 Balance c/f 345 345 345 Fixed Assets Balance b/d 24000 Depreciation 7700 Charge 4075 Balance c/d 12225 24000 24000 Depreciation Balance b/d 7700 Charge 4075 Balance c/d 11775 11775 11775 sherwood Trial balance As at 31.1.2013 Dr ?000 Cr ?000 Stock 4250 Sales 43000 Sales returns 980