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

Financial Accounting coursework - Essay ExampleReferences..7 1. Executive Summary This report includes some of the underlying principles and conventions that must be adhered to while preparing the financial 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 Marks & Spencer Plc. 2.1 assemblage Accounting Accrual concept includes recognition of revenue when earned while expenses are only acknowledged when they are suffered or incurred. This accounting concept needfully creation of an extra account that records the variance obtained from the difference between revenue and expenses recognized as well as reception or payments of cash. Accounts receivable is ordinarily used in recording 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 by and by paying cash. This type of accounting concept is very expensive and that it is possible for the account to owe taxes on their income even before the cash is received. In label & Spencer income is recognized when the products are sent to the customers and important risks and title incentives are shifted to the client. The deferred tax is accounted for afterward calculating it based on anticipated way of realization. The company 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 business will continue to operate in the next foreseeable future. The company is expected to successfully settle their liabilities after realizing their assets. It is always upon the management of the company to chec k on the ability of the organization to continue doing business in the coming future. The accounts of Marks & Spencer are prepared in the basis of passing play concern and the directors are convinced that the company will be able to operate in the next future. The directors are very ofttimes concerned that there are no uncertainties that may interfere with the companys operations in their future (Gibson 2012, p.11-12). The company managed to make a loot of $458 as at March 2013 and positive cash and cash equivalents. The companys current assets also exceed the current liabilities thus showing an grammatical constituent of going concern. The company is also in a position of paying out her dividends and financing 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 concern business which are not refle cted in the financial statement of Marks & Spencer. Some of the dangerous signs indicating challenges of going concern are poor liquid positions, high financial risk and delay in payments as well as serious litigations affecting the company. Marks & Spencer do not also strike any indication of defaulting by one of their chief customers that may eventually affect her operations (Gibson