Financial Accounts on Frenza Trading Ltd

Question :

This unit of accounting is based on journal records to carry out business activities and record them into ledger for checking accounts.

• Describe ethics, identification of stakeholders and ethical issues of Frenza Trading Ltd
• Prepare income statement to be presented to Bank Manager.
• Record and report accounting transaction.

Answer :

INTRODUCTION

Accounting is the process of recording, classifying and creating financial accounts such as General journal, general ledger, trial balance, statement of profit and loss, cash flow statement and balance sheet. Accounting is done to keep the records of the business and showing the financial position of business to the stakeholders. The general journal records the day to day business activities of the business, and then recording those in the ledger and by using ledger the trial balance is prepared for checking the debit and credit balances. The profit and loss account is prepared to ascertain the profitability of the business by finding out net income. Cash flow statement finds out the inflows and outflows of cash. And finally balance sheet is prepared to find out the financial position of business.

QUESTION 1

1.1 What is meant by ethics

Ethics can be defined as moral principles that governs the activities of the employees working in the organisation. Ethics defines that what is good, acceptable or lets say obligations for the behaviour and what is bad, not acceptable or forbidden for the people who work in the business. They effect in the decision making and workings of the employees. Ethics are the form of guidance for the behaviour of employees who work in the investment and other industries. An ethical conduct of an employee can affect the company in which the employee is working and its stakeholders, a good conduct can have positive impact while a bad conduct can have negative consequences on the related parties.

1.2 Identify who are the stakeholders involved in this situation:

The stakeholders that are involved in the decisions of board of directors of Frenza Trading Ltd. Are as follows:

Shareholders: The major stakeholders that are involved in the decisions of board of directors are shareholders as they are the one who will be affected by the decision made by them on showing his personal asset in the financials of busines

UPTO56%

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