Paxora Ltd’s trail balances mention that there is a total balance valuation amounting to 18825 pounds at the end of the financial year. This assessment has shown that the company has a total cash proportion of 11455 pounds. The total capital is amounting to 10000 pounds and it has been charged to the credit side of the statement. However, the sale proportional valuation mentioned 2985 pounds after adjusting the credit and cash sales of the company. In this aspect, it has been referred to that there are total purchase valuations amounting to 615 pounds. The creditors' valuation of the company is mentioned as 249 and 325 pounds charged on the credit side of the company. On the other hand, it has been reported that there is a rent valuation charged on the debit side of the company's financial statement evaluation amounting to 175 pounds. Based on this evaluation, it has been referred that there are fixtures mentioned as 1150 pounds’ valuation changed in the debit side of the financial statement evaluation of the company (Robinson, 2020). Additionally, it has been also considered as the assets valuation of the company. In this aspect, it has been referred to that there are bank valuations noted in the credit side of the financial statement determination amounting to 5225 pounds.
The stationary proportion mentioned as 45 pounds along the van charges valuation of amounting 4100 pounds. Based on this determination, it has been mentioned that the debits valuation is considered as amounting to 845 pounds. The purchase return valuation indicated as amounting to 41 pounds. The owner of the company has been withdrawing the proportional amount of 80 pounds and the wages valuation mentioned as 360 pounds noted on the debit side of the company. In this aspect, it has been referred to that there is various evolutional situations that is considered within the justification of the financial statement preparation. This entire determination has been evaluated from the primary accounting formulation. The trial balance is prepared based on the journal accounts and ledger formation. In this assessment of preparation of the trial balance 15 accounting heads consisting of the financial entries of the company for January 2023. 15 ledger accounts have been prepared by considering the journal entries of the primary accounting transactions. Journal, ledger, and trial balance are linked with each other in showing the company's total financial balances. This financial is considered only for the one-month data and provides there are total accounting balances of 18825 pounds for January 2023. Hence, as these primary financial accounting adjustments, Paxora Ltd.’s liquidity strength is mentioned as 18825 pounds for this month.
Part 2: Bank Reconciliation Statement
Bank reconciliation statement evaluation
Review of bank reconciliation statement
Paxora Ltd's Cash book maintenance has a total balance of 267 pounds at the end of the 31st January 2023. However, the company's bank balance shows the amount of 204 Pounds at the end of the same period. It has been reported that the company's cash balance and bank balance not being same at the end of that period and it requires the transaction reconciliation and removal of all the emissions. Involvement in the bank reconciliation statement going to help the company to include the ignored amount and reduce the extra added within the statement. In this aspect, it has been mentioned that the company has not considered within its cash book the bank credit accounting for 24 pounds. However, this valuation has been added to the cash book and the amount of the cash balances. On the other hand, the company included the extra Bank charges that have been mentioned to deduct from the cash balance of the company accounting for 40 pounds. After considering all these transactional evaluations, it has been mentioned that there are adjusted balances of the cash book of the company mentioned as 251 pounds after the financial year of 31st January 2023. However, the bank balance of the company shows that 204-pound valuation at the end of 31st January 2023. However, it has been noted that some value has not been included in the bank statement but it occurred in the company's financial transactions.
In this aspect, it has been mentioned that the company's S Aisbitt 72-pound valuation not being included in the banking transaction and it has been reconciled in this bank reconciliation statement. On the other hand, D Barnes amounting to 25 pounds that have been required to be removed from the banking statement as it is an error from the bank side that does not then exist in the accounting transaction of the company (Wahlen et al. 2022). Hence it has been addressed to remove from the banking statement. This entire determination has been mentioned that after considering this accounting edition and deduction the adjusted balances of the bank statement of Paxora Ltd mentioned as 251 pounds for the financial year 31st January 2023. This determination referred to the company's total accounting balances of cash on bank account aspects amounting to 251 pounds for January 2023.
Paxora Ltd
Bank Reconciliation
For the year ended: 31.1.2023
Particulars
Amount
Bank Balance as per cash book
£ 267.00
Add:
Bank credit
£ 24.00
Less:
bank charges
£ 40.00
Adjusted Balance as per Depositor
£ 251.00
Bank Balance as per Bank Statement
£ 204.00
Add:
S Aisbitt
£ 72.00
£ -
Less:
D Barnes
£ 25.00
Adjusted Balance as per Bank Statement
£ 251.00
Table 4: Bank reconciliation
Evaluation of bank reconciliation statement
The bank reconciliation statement has been prepared for reviewing the cash book balances along with the bank statement of the business. In this aspect, the bank reconciliation statement provides the determination of removing all the errors within the account and justifies the financial entries. The bank accounts statement has been prepared for the company to show the accounting records matching the company’s balance and the bank balance. In this aspect, this statement provides the withdrawal and deposit of both transactions of the company for a proper period. Four types of bank reconciliation statements have been considered by the company for maintaining their accounting transaction along with the bank transactions (Raju, 2022). There are business-specific reconciliation, intercompany reconciliation, customer reconciliation vendor reconciliation. This statement has been providing the link between accounting transactions including outflows with the company and customer-vendor business and intercompany aspects. In simple words, a bank reconciliation statement is an important transactional statement determination that helps to keep the business transaction record and have a track record regarding banking transactions and the general ledgers of the company. The concept regarding bank reconciliation has been mentioned as there is a cash account balance as per the record of the company added or less with the bank statement balances of the specific company. It is the process of mitigating the omissions and further transaction avoidance by the company and the bank. The reconciliation provides missed-out transaction mitigation from both sides company and the Bank. However, it has been mentioned that banks account provides a process regarding correctly mentioning the financial entries of the company.
It has been said that this statement helps the company to mitigate the differences between the cash account and the bank account (Mbona and Yusheng, 2019). A Bank reconciliation statement signifies the transaction regulation and helps to create efficient financial statements and financial reporting of the company. It helps to remove all the double entry errors and provides an accurate situation of the company at the end of the financial year. It is the process of identifying the transactions individually and finding the proper match with the financial statement. A bank reconciliation statement helps with the documentation of the company balance sheet and the preparation of the income statement. The bank reconciliation statement has been prepared for the transaction generation from accounting journals and helps to provide accurate posting of the ledger entries. It has helped to detect and prevent fraud and provides the cross-checking evaluation scope to the business owner. As it has helped to track down all the potential balances of the company and eliminate possible financial irregularities on a daily basis (Maisharoh and Riyanto, 2020). A Bank reconciliation statement provides financial accuracy and creates a relationship between the passbook and the cash book of the company. It is a photograph of a significant bank statement and has some proper liquidity aspects. Bank reconciliation statements are required to complete daily, to maintain a track record of the daily basis financial transactions.
Part 3: Control and Suspense Accounts
a: Role of control account and suspense account
Control account
The control accounts provide the company to maintain clear and clean details regarding the general ledger of the company. Contains the accurate balances of the company after the preparation of the financial statement. It helps to mitigate accounting errors and clarify a path to maintain and track down the accounting transaction. It has been referred that it also helps to provide a connection regarding the general ledger and subsidiary ledger for maintenance of further accounting details. It has been referring to control account contents that account for the receivable increase of the company and it has been categorized based on the current assets aspects of the financial statement. There are some benefits regarding maintaining and creating the control accounts of the company. It has helped to reallocate the financial errors and mitigate the lakh points of the subsidiary ledger and general ledger (Jackson, 2022). It has been having to eliminate the clutter in the accounting statement and helps to create a proper balanced track record for the company. It has been referred that the control account provides proper support towards accounting fraud and transactional errors. There are various types of control accounts such as creditor control accounts, debtor control accounts, and stock control accounts. All these transactional control accounts are involved in the company’s accounting maintenance aspects. Summarization of the control accounts has impacted positively on the general desert preparation and the financial statement preparation aspects. There are various usability of the control accounts such as tracking down the exact date and general account balances by considering all the primary transactions and the effect of ledger transactions of the company. It has helped to detect accounting errors in individual accounting aspects and personal accounting aspects. This methodology provides complete correctness of the available financial entries and helps to place the correct ledger posting in the account (Fridson and Alvarez, 2022). Hence, the main role of preparing the control account refers to the summarization of the general ledger, and journal accounts of the company, that have been noted within the subsidiary account. The control account provides a perfect resume for all individual accounts in between the purchase and sales ledger of the company.
Suspense account
The suspense account is an important element of maintaining the accounting balances of the company. As it has helped to remove all the accounting transactional errors and filter the Essential elements of the book of accounts of the company. The usability of a suspense account has been referred to that there should be a Book of Records within the accounting transactions that should be free and clean from any financial errors and frauds. The suspense account signifies the difference between accounting transactions and it helps to signify the unidentified accounting from correction. The usability of suspense accounts within the trial balances helps the company to find the error that has occurred in the general ledger posting or might occurred due to having the general transactions entries. In this reference, the suspense account helps to discover the error within the general ledger, journal posting, and the preparation of the trial balances of the company. It has been referring that there are three types of systems accounts such as real nominal and personal. The significance of creating a substance account is to have the debit or credit balances within the company’s financial statement. The place of suspense account requires determination regarding the transactional error and short of trial balances side. If the company’s trial balance is shown short of the debit portion, it might be mentioned that there should be a suspense account in the debit portion of the company (Davidson, 2020). However, if the company's trial balance shows the short valuation proportion on the credit side then its debit side signifies that the company’s suspense account should be created in the credit proportion to maintain the accounting balance of the company. The suspense account of the company is important as it has helped to filter out all the accounting-safe transactions that cannot be signified at the time of the transactional recording in the accounting statement. Hence, it has been referred that the benefits of using a suspense account help to remove all the bookkeeping and transactional errors from the preparation of accounting transactions.
Differences between control and suspense account
The control account provides the total summarization of the subsidiary and main accounting proportion of the company. However, a suspense account provides an existing free to remove the financial errors and provides the balances regarding debit and credit proportion of the bookkeeping entry. Based on that, the control account mostly signifies the errors that occurred within the sales and purchase-related transactions and effects on the debtors, creditors, and stock proportional aspects. It has been said that the control account and suspense account are not the same but both accounting entries help to remove the financial errors from the statement (Benrqya and Jabbouri, 2021). The account cannot only justify a sales purchase transaction, but it has also considered all the accounting transactions and found the lack of points in between ledger entries, journal entries, and trial balances. A control account is a statement that has been provided the summarisation results from all three accounting aspects of the company such as ledger, journal, and trial balances. However, the suspense account has considered all three accounting aspects and found the error proportion by using trial balance aspects. The suspense account does not create a summarisation of these accounting entries, as it has been posted on the short side of the trial balances.
c: Sales and purchase ledger control account reconciliations
The control account has been consisting of sales account adjustment, and purchase account adjustment along with the effects of the debtors account and creditors account. The company has a total sales balance of 6340 pounds for the month of 1st January. On the other hand, the total purchase account has been mentioned as amounting to 13960 pounds. Based on this determination, it has been referred to that the control account of purchase has the addition of amounting to 64120 pounds as the credit purchase with a considerable discount. On the other hand, it has been also considered the receivable from the sales accounts amounting to 440 pounds and goods outwards pf 600 pounds. Based on that, the purchase-adjusted account balances show amounting 16090 pounds. Based on that, the sales adjusted account has been considered as amounting to 4820 pounds after adjusting the credit sales proportion after considering the discounting aspects and goods inwards valuation (Amel-Zadeh et al. 2020). The effects of credit sales and the entire sales adjustment have been involved with the letters accounts, as the status account balance is mentioned as 1080 pounds. On the other hand, the creditor's account adjustment has been involved in the purchase adjustment accounts entries. Hence, the credited adjustment account mentions 1690 pounds after considering the credit purchase goods outwards and the purchase payment valuation. This determination valuation of the control account has been mentioned that the company's sales control valuation is lower than the purchase account. However, after adjusting the sales and purchase determination of the company, it has been mentioned that the debtor’s adjustment valuation account is lower than the creditors' account of the company.
References:
Amel-Zadeh, A., Calliess, J.P., Kaiser, D. and Roberts, S., 2020. Machine learning-based financial statement analysis. Available at SSRN 3520684.
Benrqya, Y. and Jabbouri, I., 2021. Performance evaluation of European grocery retailers: a financial statement analysis. International Journal of Logistics Economics and Globalisation, 9(1), pp.24-39.
Davidson III, W., 2020. Financial statement analysis: Basis for management advice. John Wiley & Sons.
Fridson, M.S. and Alvarez, F., 2022. Financial statement analysis: a practitioner's guide. John Wiley & Sons.
Jackson, A.B., 2022. Financial statement analysis: a review and current issues. China Finance Review International, 12(1), pp.1-19.
Maisharoh, T. and Riyanto, S., 2020. Financial Statements Analysis in Measuring Financial Performance of the PT. Mayora Indah Tbk, Period 2014-2018. Journal of Contemporary Information Technology, Management, and Accounting, 1(2), pp.63-71.
Mbona, R.M. and Yusheng, K., 2019. Financial statement analysis: Principal component analysis (PCA) approach case study on China telecoms industry. Asian Journal of Accounting Research, 4(2), pp.233-245.
