BUSS1030: Accounting - StudentVIP · 2018-02-23 · BUSS1030: Accounting **Sample of pages 21-23...
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BUSS1030: Accounting **Sample of pages 1-3 BUSS1030: Accounting Quick definition • Accounting equations: the basic tool of accounting, stated as Assets = Liabilities + Equity • Assets: An economic resource that is expected to be of benefit in the future • Liability: An economic obligation (debt) payable to an individual or an organisation outside the business • Balance sheet: Report of an entity’s assets, liabilities, and equity as of a specific date • Expenses: Decrease in equity that occurs from using asset or increasing liabilities in the course of delivering goods or services to customer • Income statement: Report of an entity’s revenues, expenses and profit/loss for the period • Net profit: Excess total revenue over total expenses • Net loss: Excess total expenses over revenue • Revenue: Amount earned by delivering goods and services to customer • Cash flow statement: Report of cash receipts and cash payment during a period • Statement of changes in equity: report that shows changes in capital for a period of time LECT 1: Introduction to Accounting Textbook: Chapter 1 pg 1-20 CH1 LO1: Define the main types of accounting • Accounting: information system that communicates financial information • 2 types of accounting; Financial accounting For external decision makers (i.e. shareholders) Managerial accounting For internal decision makers (i.e. managers)
Transcript of BUSS1030: Accounting - StudentVIP · 2018-02-23 · BUSS1030: Accounting **Sample of pages 21-23...
BUSS1030:Accounting
**Sampleofpages1-3
BUSS1030:Accounting
Quickdefinition• Accountingequations:thebasictoolofaccounting,statedasAssets=
Liabilities+Equity• Assets:Aneconomicresourcethatisexpectedtobeofbenefitinthefuture• Liability:Aneconomicobligation(debt)payabletoanindividualoran
organisationoutsidethebusiness• Balancesheet:Reportofanentity’sassets,liabilities,andequityasofa
specificdate• Expenses:Decreaseinequitythatoccursfromusingassetorincreasing
liabilitiesinthecourseofdeliveringgoodsorservicestocustomer• Incomestatement:Reportofanentity’srevenues,expensesandprofit/loss
fortheperiod• Netprofit:Excesstotalrevenueovertotalexpenses• Netloss:Excesstotalexpensesoverrevenue• Revenue:Amountearnedbydeliveringgoodsandservicestocustomer• Cashflowstatement:Reportofcashreceiptsandcashpaymentduringa
period• Statementofchangesinequity:reportthatshowschangesincapitalfora
periodoftime
LECT1:IntroductiontoAccountingTextbook:Chapter1pg1-20CH1LO1:Definethemaintypesofaccounting• Accounting:informationsystemthatcommunicatesfinancialinformation• 2typesofaccounting;
Financialaccounting
Forexternaldecisionmakers(i.e.shareholders)
Managerialaccounting
Forinternaldecisionmakers(i.e.managers)
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CH1L02:Describehowdecisionmakersuseaccountinginformation• Provideusefulinformationformakinginvestmentandlendingdecisions
(basedonthefinancialreport)o i.e.Investors–reviewfinancialstatementstoanalysehowtheir
investmentisperformingo i.e.taxauthorities–businessdeterminetheirgoodsandservicestax
fromaccountingrecordsCH1L03:Describeprofessionalcareeropportunitiesinaccounting• Tobecomeaprofessionallyqualifiedaccount;
o BecomemembersoftheInstituteofCharteredAccountantinAustralia(ICAA),CPAAustralia(CPAA)ortheInstituteofPublicAccountant(IPA)
• TheCharteredInstituteofManagementAccountant(CIMA):professionalorganisationofmanagerialaccountants
o Qualificationsawardedbythesebodiesareinternationallyrecognised• Twomaintypeofwork:
o Workforasinglebusinessi.e.afirmoragovernmentbody[theirworkinvolvepreparingfinancialstatementsforthebusiness,budget,taxreturnsetc..’
o Workinapublicpractise[workincludeauditing,incometaxplanningetc…]
• Accountingservices;o Audit:independentexaminationthatassuresthereliabilityof
accountingreportsthatmanagementprepareso Taxaccounting:complyingwithtaxlawsandminimisingtaxtobe
paido Managementconsulting:advicepublicaccountantprovidetohelp
managersrunabusinesso Insolvency:toensurethatbusinessesthatareinfinancialdistressis
properlyrestructuredorthattheproceedsfromthesaleofthefirmsaredistributedtothefirms’creditorsappropriately
BUSS1030:Accounting
CH1L04:DescribehowaccountingisregulatedinAustralia• AccountingstandardsareformulatedbytheAustralianAccounting
StandardsBoard(AASB)o TheAASBisoverseenbytheFinancialReportingCouncil(FRC)o Relevance=informationmusthavepredictiveorconfirmatoryvalueo Faithfulrepresentation/reliability=freefromerror
• InternationalharmonisationCH1L05:Explaintheroleofethicsandsustainabilityinaccounting• Ethics:standardofmoralbehaviourexpectedofaccountantsi.e.Codesof
Professionalconduct• ICAAandCPAA’sJointCodeofProfessionalConduct
o Integrity(tobehonest,fairandsincere)o Objectivity(toavoidconflictsofselfinterestandbias)o Professionalcompetenceandduecareo Confidentialityo Professionalbehaviour(compliancewiththelaw)
• Sustainability:o Writsmallsustainability:whetherbusinesscancontinuetobe
profitableinthefutureaswellasinthepresento Writlargesustainability:thesocietyandenvironmentwealllivein
(meetstheneedsofthepresentwithoutcompromisingtheabilityoffuturegenerationstomeettheirownneeds)
CH1L06:Identifythethreemaintypesofbusinessorganisations Advantages DisadvantagesSoleproprietors(single
Ø Totalundividedauthority
Ø Norestrictionon
Ø UnlimitedliabilityØ Limitationonsize–
fundraisingpower
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**Sampleofpages21-23LECT7:StatementofFinancialperformanceCH7L01:Purposeofastatementoffinancialperformance• Purpose:tomeasureandreporthowmuchprofit(wealth)thebusinesshas
generatedoveraperiod• Profit(orloss):thedifferencebetweentheincreaseinowners’equity
(capital),knownasincomeorothergains,andthedecreasesinowners’equityknownasexpenseso Income:measureofthetotalinflowofasset(i.e.cashoramounts
ownedtoabusinessbyaccountsreceivable)orthereductioninliabilitiesthatarisefromoperating,tradeingorotheractivities.Itismadeupmadeupof;
§ Revenue(fromoperatingactivities)§ Gains(usuallyfromnon-operatingactivities,eggainonsaleof
non-currentassets)o Revenues:grossinflowsoffutureeconomicbenefitsgainedbythe
differentcategoriesofoperatingactivities(e.g.cashfromsales).o Expensesareoutflowsofassets(orincreaseinliabilities)incurredin
theprocessofcarryingonabusinessbygeneratingincome
CH7L02:Relationshipbetweenthestatementsoffinancialperformanceandposition• Thestatementoffinancialperformancecanbeviewedaslinkingthe
statementoffinancialpositionatthestartofaperiodwiththatattheendoftheperiodo Statementoffinancialposition(balancesheet):reportatasinglepointin
timeandiseffectivelya‘snapshot’ofthestockofwealthheldbythebusiness
o Statementoffinancialperformanceandloss(incomestatement):concernedwiththegenerationofwealthoveraperiodoftime
• Theaccountingequationcanthusbeextendedas:o Assetsend=Liabilitiesend+OEbeg+Profit(or-Loss)+Contributions
–DrawingsorDividendsCH7L03:Formatofastatementoffinancialperformance• Forexternalreporting,thereportingcycleisnormallyoneyear• Forinternalfunctions,itiscommonforprofitfigurestobepreparedona
monthlybasis• Format#1:Simplelistingofaccounts(smallorganisation)orforinternal
purposesforotherorganisationo Listingofincomeandexpensesinalphabeticalorfinancialmagnitude
order
Profit/(loss)fortheperiod=totalincome–totalexpenses
BUSS1030:Accounting
• *Format#2:Classifiedreport(largerorganisations)orforinternalpurposes
o Incomeandexpensesaregroupedintomeaningfulcategoriestoprovidemorerelevantinformation
o Income:(revenueinparticular)isbrokendowntoreflectthenatureofthebusinessandtherelativesignificanceofeachitem)§ sales(cash,credit)§ ‘otherrevenues’(i.e.interestrevenue,commission,rent,
dividends)o Expenses(4categories)
§ Costofsales§ Sellinganddistribution§ Administrationandgeneral§ Financial
CompanyIncomestatementfortheyearendedDMY
$ $Sales xLesscostofsales xGrossprofit xOtherrevenue Interestfrominvestments x Rentfromproperties x X XLessexpenses Sellinganddistribution
BUSS1030:Accounting
Advertising x Commission x Delivery x Display x Salaryandwages(i.e.salesstaff) x XAdministrationandgeneral Salesandwages(i.e.adminstaff) x Rates x Telephoneandpostage x Insurance x Repairsandmaintenance x Depreciationofbuildings x XFinancial Interest x Baddebts x XTotalexpenses XNetprofit X• Format#3:Regulatorypresentation(companies)
o AASB101‘PresentationofFinancialStatements’requiresthattheincomestatementshouldclassifyexpensesaccordingtotheirnatureorfunction(seeparagraph82foralistofrequirements)§ Revenue§ Financecosts§ Shareofprofitsorlossesofassociates/jointventures§ Tax§ Discontinuedoperations
CH7L04/5:Definition,recognition,classificationandmeasurementofincomeandexpenses• Itispossibletorecogniseincomeatdifferentpointsintheproduction/selling
cycleattheparticularpoint• Profitmeasurementandrecognitionofexpenses
