GAC4008 Financial Accounting - Gulf College
Learning outcome 1: Demonstrate, apply and explain basic accounting methods, accounting conventions and concepts;
Learning outcome 2: Demonstrate and explain the uses of key accounting systems and the recording of accounting event;
Learning outcome 3: Explain the various types of institution and prepare basic accounting statements for each.
Seven Seas Co. LLC was established as a Limited Liability Company (LLC) on 1st January 2020 and became a registered dealer under the Securities Exchange Act. The company objectives include financial activities, activities of financial holding companies, financial and management consulting. The management is responsible for the preparation and fair presentation of financial statements under IFRS. It is necessary to ensure that the financial statements are free from material error, fraud and misstatement. You have been hired as an accountant for the preparation of the financial statements for the company. You need to prepare a report of 2,800 words addressed to the Senior Executives of Seven Seas Co. LLC. The structure of the report should be as follows:
I. Introduction (500 words)
a. Accounting is based on various concepts and conventions known as accounting principles that have developed over time. These accounting principles have evolved to deal with practical problems experienced by preparers and users. Explain with example the following principles:
i. Full Disclosure principle
ii. Matching concept
iii. Going concern principle
iv. Materiality Principle
v. Cost principle
II. Discussion (1800 words)
The Seven Seas Co. LLC deals with a set of basic business transactions and they run through all of the financial statements such as trial balance, income statement and balance sheet. Each transaction is recorded based on how it effects different parts of financial statements. On this topic, you are required to answer the following tasks:
a. Explain the meaning and purposes of the trial balance, comprehensive income statement and Balance Sheet of Seven Seas Co. LLC.
b. Explain the elements of financial statements with examples.
c. As an accountant of the Seven Seas Co. LLC, prepare the Pro-forma template of trial balance with all financial statement elements as at 31st December 2020.
d. Prepare the Income Statement of Seven Seas Co. LLC for the year ended 31st December 2020.
e. Prepare the Balance Sheet of Seven Seas Co. LLC as at 31st December 2020.
f. "Once the value of an asset to be depreciated, the business must select a method of allocating this depreciable amount over the useful life of the asset." You are required to discuss the most common methods used by Seven Seas Co. LLC to allocate depreciation on its assets? Explain your understanding with examples.
III. Recommendation (500 words)
a. Explain the importance and method of calculation of following ratios for Seven Seas Co. LLC.
i. Liquid Ratio
ii. Return on net assets
iii. Debtors collection Period
b. Based on the above calculations, analyse and interpret the financial performance of the company.
• There should be a minimum of eight (8) references. Use the Harvard Referencing style.
Attachment:- Financial Accounting.rar