TABLE OF CONTENTNO.TOPICPAGES

1.0INTRODUCTION FINANCIAL ACCOUNTING2

2.0TASK 14

3.0 TASK 26

4.0TASK 38

5.0TASK 411

6.0CONCLUSION12

7.0REFERENCES14

8.0COURSE WORK15

1.0 IntroductionFinancial accounting is a specific type of accounting that is used by businesses to prepare reports on the finances of a firm for people outside of the organization, such as stockholders or government agencies. It is governed by specific accounting standards to indemnifystandardization in reporting.The function of financial accounting is to prepare trustworthy reports on a business's financial state at any given time. Corporations and other large businesses characteristically prepare reports on a regular schedule; at a minimum, yearly. A financial accounting report does not read between the lines, or provide advice on, the financial health of a company. Slightly it reports objective financial information in a specific format for the viewer to interpret.Financial accounting generates a public record of a company's historical financial performance, which agrees to stockholders and other stakeholders outside of the organization to get a clear picture of a business's financial health. Because financial accountants essentialkeep an eye on a strict set of accounting principles, stakeholders can be guaranteed that the information they are receiving is accurate and objective. They can then make prognosticassumptions on performance and base yet to come financial decisions on these assumptions.There are two primary types of business accounting: managerial and financial accounting. Managerial accounting focuses on read between the lines financial information for use surrounded by the company to assist managers in making decisions. Managerial accounting reports can be presented in any format, and do not have to adhere to specific accounting principles, with the exception of insofar as good practice and ethical standards are followed. Financial accounting keeps an eye on generally accepted accounting principles (GAAP) and is not used for internal decision-making. One very important distinction between managerial and financial accounting is that a managerial accounting report is future-oriented and addresses the financial needs of the company, while a financial accounting report is based stringently on historical, past financial performance.As financial accounting statements are used by many different people outside of an organization, financial accounting follows a set of standards that take account of what are called 'generally accepted accounting principles' (GAAP). The Financial Accounting Standards Board (FASB) is a U.S. - based organization that matures these standards. While financial accounting professionals are, CPAs (Certified Public Accountants), many organizations prefer to hire CMAs (Certified Management Accountants) to take care of internal financial records, as they are in detailaccomplished in preparing reports on the subject of internal cost measures and accounting for managerial review.In order to track a career in financial accounting, one must wide-ranging an appropriate program of study to become a CPA, certified public accountant. There are a number of schools that offer Associate degrees in accounting; on the other hand, some employers have a preference to hire accounts who have finished a Bachelors degree in Accounting with additional coursework in business. All CPAs must pass a licensure exam to qualify to practice as a CPA. The U.S. Bureau of Labor Statistics states that the job outlook for CPAs is excellent, with above-average job growth, in arrears to aggregate numbers of businesses and "greater scrutiny of company finances."2.0 Task 11.1CalculateFormulaAB Engineering Supplies Ltd

Gross profit as a percentage of the salesx 100%Sales (turnover)Gross profit

40x 100% = 25%160

Rate of stock turnoverAverage stockCost of sales

= 1210120

Net profit as a percentage of salesNet profitx 100%Sales (turnover)

32x 100% = 20%160

Net profit as a percentage of total capital employed (fixed assets plus current assets)Net profitCapital employed (fixed assets plus current assets)x 100%

32x 100% = 25%128

Current ratioCurrent assetsCurrent liabilities

1020= 2:1

Quick assets (acid test) ratioAccount receivable (debtors) & bank

Account payable (creditors)

1010 = 1:1

1.2In my opinion, I think AB Engineering Supplies Ltd was the more successful business during 2012. First of all, the gross profit as a percentage of the sales of AB Engineering Supplies is 25% and CD Engineering Supplies also is 25%. That means the gross profit as a percentage of the sales between two businesses is the same.Besides, the rate of stock turnover of AB Engineering Supplies is 12 days and CD Engineering Supplies is 9 days only. From this point of view, the stock management of AB Engineering Supplies is more efficient than CD Engineering Supplies.In addition, the net profit as a percentage of sales of AB Engineering Supplies is 20% and CD Engineering Supplies is 10%. This means that the net profit of AB Engineering Supplies is higher than CD Engineering Supplies. Furthermore, the net profit as a percentage of total capital employed (fixed assets plus current assets) of AB Engineering Supplies is 25% and CD Engineering Supplies is 12.5%. The net profit as a percentage of total capital employed (fixed assets plus current assets) of AB Engineering Supplies is the twice of CD Engineering Supplies. That means AB Engineering Suppliesnet profit to capital invested is higher than CD Engineering Supplies.Moreover, the current ration of AB Engineering Supplies is 2:1 and CD Engineering Supplies is 1:1. So the ability of AB Engineering Supplies to pay the debt is better than CD Engineering Supplies. Last of all, the quick asset (acid test) ratio of AB Engineering Supplies is 1:1 and CD Engineering Supplies is 0.5:1. Consequently the ability of AB Engineering Supplies to pay the debt immediately is better than CD Engineering Supplies.

3.0 Task 2When companies release financial information for the quarter or year, it leans towards to make impressions on Wall Street. That's because a company's accounting, once you push your way through the financial intricacies, can help everyone from investors to a firm's managers regulate the company's value and future prospects. Anyone within a company who uses accounting information to shed light on the firm's financial picture is called an internal user. Those outside the firm who use that same information are called external users, and there are four main types of them.First and foremost, investors are the first type of external user in the field of accounting. An investor is anyone who buys stock in a company or funds a company's operations. Accounting is critical for investors because a company's balance sheet can give evidences as to the firm's financial health. Knowing the firm's financial health, or at least having a good ballpark figure of it, is how investors decide what actions to take with existing stock in a company or whether or not they should invest in the first place.Besides, creditors are the second type of accounting external user. A creditor is any individual or institution that has lent firm money. Usually, creditors are banks. Banks use the accounting statements put out by a company to assess the company's lending risk. If creditors find too many liabilities or debts on a firm's balance sheet, they may be less prone to lending large sums of money to the firm.Furthermore, tax authorities are any organization measuring a firm's tax liability. In the United States, an example of a tax authority would be the IRS. A country's tax authority uses a firm's accounting to determine how much money the firm owes based on the corporate tax rate and other tax principles. A tax authority may also use accountants and accounting to decide a firm's assets and tax obligations if the firm has disastrous to pay the appropriate amount of taxes in the past.Last of all, the fourth type of external user is the customer. Customers need accounting information to determine a company's financial health and to project its future financial creditworthiness. While the individual consumer may not be looking often at a company's accounting methods and results, other firms that do business with a company do.

4.0 Task 33.1RatioFormula

Current ratioCurrent assetsCurrent liabilities

Quick assets (acid test) ratioAccount receivable (debtors) & bank

Account payable (creditors)

Return on capital employed (ROCE)Earnings before income and tax (EBIT)

Capital employed

Return on shareholders funds (ROSF)Shareholder's equityNet Income

Debtors turnoverAverage trade debtorsNet credit sales

Creditors turnoverAverage trade creditorsTotal supplier purchases

Gross profit percentageSales (turnover)Gross profitx 100%

Net profit percentageSales (turnover)x 100%Net profit

Stock turnoverAverage stockCost of sales

3.2As an assumption, we do not know the scale size of the business, we will assume that they are almost the same. First and foremost,the current ratio between the two businesses is only a difference of0.5, but from theperspective of quick assets ratio difference is significant. Business B to be low because buy goods may be required, thus owes creditors (account receivable divide account payable), it will lead to quick assets ratio lower than Business A.Based on ROCE, Business A is for higher than Business B, but not by a considerable amount. Because there is not that different from 20% and 17%. In addition, ROSF is higher for Business A than for Business B.This means that the Business A actually has a lot of long-term debt.Very exaggerated is, the gross profit percentage of Business A is much higher than the Business B.But think about it, their net profitunexpectedly is the same, other wordsBusiness A operating expenses are too high.Learn from the last data observation, stock turnover for Business A relatively time-consuming, almost twice the time of Business B. Expected also from the debtors over, Business A is the Business B's triple, this shows that this company has a lot of current assets.In conclusion, Business A has lower stock and greater debtors. Besides that, the sale of Business A is at slower rate and ithas high operating expenses. These evidence points to Business A personal service to its customers. On the contrary, Business B has greater stock and lower debtors. In addition, the sale of Business B is at quicker rate and it has lower operating expenses. As shown by greater profit being on the other hand emphasis cheap price and high turnover with not as much concentration on personal service.

5.0 Task 4J. HillBalance Sheet as at 31 July 2018$$

Non-current Assets

Equipment6310

Car7300

13610

Current Assets

Inventory (stock)8480

Accounts receivables (debtors)3320

Bank9510

Cash485

21795

Less Current Liabilities

Trade payables (creditors)176020035

33645

Capital33645

6.0 ConclusionIn a nutshell, financial accounting, which some call "the language of business," is essential to corporations of any size. For small-business owners, the importance of financial accounting on occasion is passed over. By considerate how useful financial accounting can be to the success of a small business, you can emphasis on the wherewithal that can take your business the furthest away.A most important use of financial accounting is for the recording of transactions. This function of accounting is also known as bookkeeping. Small-business owners use financial accounting to record business activity in the company's ledger. Because financial accounting uses the double-entry system, each transaction affects two accounts, instead of the two sides to a transaction. For example, if a business owner purchases land for cash, he would record a debit to the land account to represent the receipt of land, and a credit to the cash account to represent the outflow of cash. This use of accounting is important to small-business owners because it make available a methodological line of attack to describing the activities of business.Small-business owners use financial accounting to communicate information to external parties. People and organizations that use the financial information of a company, but are not part of the company, are known as external users of financial statements. Owners communicate the financial health and well-being of a company to external users through the financial statements, which are the end result of recording financial accounting transactions. External users will examine the financial statements and compare the results to their own expectations, forming an assessment of the company. Common external users include banks, suppliers and leasing companies.While managerial accounting is more geared headed for internal users, financial accounting is also used for internal information communication. Internal users of financial accounting information include the finance team and employees who may be attentive in profit-sharing or stock-based compensation agreements. Small-business owners can use financial accounting information to share company strengths and feebleness with employees. For small public companies, a common metric is the company's share price. Owners may tie bonus and compensation amounts to share price and raise your spirits employee productivity accordingly.Small-business owners may use financial accounting information to analyse competitors and evaluate investment opportunities. Because financial accounting is governed by and large accepted accounting principles, the financial statements of different companies are as good as to one another. This basis for comparability provides a standard method of analysis. Small-business owners can work out financial ratios using the company's financial statements, and compare the ratios to benchmarks or other competitors. While financial statements are comparable, small-business owners should exercise some risk avoidance, as non-financial measures can provide discernment into a company's health as well.

7.0 References1. http://www.google.com.my/2. http://en.wikipedia.org/wiki/3. Financial Accounting text book

8.0 Course Work8.1 Types of OwnershipAlthough most accounting processes are the same for all types of companies, a few different arise, especially in accounting for owners equity, because of the legal structure of the company. Therefore, you will find it useful to know something about the three basic forms of ownership structures for business entities: sole proprietorships, partnerships, and corporations.1) Sole ProprietorshipsA Sole Proprietorship is a business with a single owner. Most often, the owner is also the manager. Therefore, sole proprietorship tend to be small retail establishments and individual professional business, such as neighborhood restaurants and dentists or attorneys who operated alone. Biwheels started out as a sole proprietorship owned and operated by Hector Lopez. From an accounting viewpoint, each sole proprietorship is a separate entity that is distinct from the proprietor. Thus, the cash in a dentists business account is an asset of the dental practice, whereas the cash in the dentists personal account is not. Similarly, Lopezs remodeling of his home was a personal transaction, not a business transaction.2) PartnershipsA partnership is an organization that joins two or more individuals who act as co-owners. Many auto dealerships are partnerships, as are groups of physicians or accountants who group together to provide services. Partnerships can be gigantic. The largest international accounting firms have thousands of partners. Again, from an accounting viewpoint, each partnership is an individual entity that is separate from the personal activities of each partner.3) Corporations Most large businesses, including all 30 Dow companies listed in Figure 1.1, are corporations. Corporations are business organizations created under state laws in the United States. The owners of the corporation have limited liability, which means that corporate creditors (such as banks or suppliers) ordinarily have claims against the corporate assets only, not against the personal assets of the owners. In contrast, owners in sole proprietorships and partnerships are usually personally liable for any obligations of the business. (An exception is limited liability partnerships, which limit the liability of partners.) Another difference is that the owners of proprietorships and partnerships are typically active managers of the business, whereas large corporations generally hire professional managers.Most large corporations are publicly owned. This means that the company sells shares in its ownership to the public. Purchasers of the shares become shareholders (or stockholders). Large publicly owned corporations often have thousands of shareholders. In contrast, some corporations are privately owned by families, small groups of shareholders, or a single individual, with shares of ownership not publicly sold. Corporations in the United States often use one of the abbreviations Co., Corp., or Inc. in their names.Internationally, organizational forms similar to corporation are common. In the United Kingdom, such companies frequently use the word limited (Ltd.) in their names. In many countries whose laws trace back to Spain, they use the initials S.A., which refer to Spanish words that we translate as society anonymous, meaning that multiple unidentified owners stand behind the company. Not surprisingly, countries in the former Soviet Union have now created legal systems that permit corporate-style companies. They are also creating markets where the owners of these companies can buy and sell their ownership interests. 8.2 The Recording ProcessIn the preceding section, we entered Biwheels transactions 1, 2, and 3directly in the ledger. In actual practice, the recording process does not start with the ledger. Ti sequence of five steps in recording and reporting transactions is as follow:

TrialBalanceFinancialStatementLedgerJournalTransactionDocumentation

54321

STEP 1: The recording process begins with source documents. These are the original records of any transaction. Examples of source documents include sales slips or invoices, check stubs, purchases orders, receiving reports cash receipt slips, and minutes of the board of direction. As soon as a transaction occurs, it generates a source document. For example, when a company sells product to a customer, it makes a receipt for the sale. Companies keep source documents on file so they can use them to verify the details of a transaction and the accuracy of subsequent records, if necessary.STEP 2: In the second step of the recording process, we place an analysis of the transaction, based on the source documents, in a book of original entry called the general journal. The general journal is a formal chronological listing of each transaction and how it affects the balances in particular accounts. It is basically a dairy of all events (transactions) in an entitys life.STEP 3: The third step is to enter transactions into the ledger. As we have seen, we enter each component into the left side or the right side of the appreciate accounts.STEP 4: The fourth step is the preparation of the trial balance, which is a simple listing of the accounts in the general ledger together with their balances. This listing aids in verifying clerical accuracy and in preparing financial statements. Thus, we prepare it as needed, perhaps each month or each quarter as the firm prepares its financial statements. The timing of the first four steps varies. Transactions occur constantly so companies prepare source documents continuously. Depending on the size and nature of the organization, transaction analysis may occur continuously, weekly, or monthly. Basically, the timing of the steps in the recording process must conform to the needs of the users of the data.STEP 5: The final step, the preparation of financial statements, occurs at least once a quarter, every 3 months, for publicly traded companies in the United States. Although companies must produce financial statements only once a quarter for external reporting, some companies prepare financial statements more frequently for managements benefit. For example, Springfield Remanufacturing Corporation in the Ozark Mountain of southern Missouri prepares monthly financial statement. Springfield is a leader in open book management, in which the company opens its accounting results to everyone in the firm. Management and all employees meet monthly to examine the results in detail. The company provides extensive training to employees on how the accounting process works and what the numbers mean. This new management process has focused the attention of every employees and increased efficiency and profitability at Springfield.Page 5 of 19