MSIN0004 AFB Lecture 3 core deck for moodle (1).pptx - UCL SCHOOL OF MANAGEMENT MSIN0004 Accounting For Business Week 3 Lecture 3 Financial Frameworks

MSIN0004 AFB Lecture 3 core deck for moodle (1).pptx - UCL...

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UCL SCHOOL OF MANAGEMENT MSIN0004 Accounting For Business Week 3: Lecture 3 Financial Frameworks II This Lecture draws upon Moodle Tab Week 3 for chapter 3 reading BUT … It of course builds upon the content of Weeks 1 & 2 including chapters 1 & 2…Accounting is a cumulative subject!
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By the end of this Lecture you will…: 2 Understand even more about the application of core accounting principles when recording and constructing financial statements Understand even more about the operation of the systematic approach to recording transactions, embracing the notion of duality. Be even more aware of the principles and conventions underpinning the financial frameworks used in constructing financial statements.
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Revisiting Lecture 2 and Seminar 1 Duality within systematic accounting We moved from a very informal approach to a more systematic approach. The systematic approach applies the idea of duality A short way of explaining this is that for a new business the balance sheet starts in balance ( zero assets = zero liabilities) and the recording of transactions should ensure that the balance sheet stays in balance. 3 ASSET - + + + ASSET ASSET LIABILITY
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4 Duality with JJ Limited: Day 1 On Moodle Week 2 Tab 2… is a ‘duality’ spreadsheet with all of the entries for JJ Ltd to go through. Revisited
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Sub-divide each column/Account into two halves: one to record the +’s and the other to record the –’s. Being positive people let’s start with Asset Accounts : Put the + on the left-hand side and Put the – on the right hand side. Now let’s do the Liability Accounts and Equity Accounts EXCEPT we’ll: Put the – on the left hand side and Put the + on the right hand side. And we created a mirror image of the entries 5 + - + - So let’s get Smooth and a little bit Sexy…
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Always and Forever we will: INCREASE an Asset Account by placing the figure on the left DECREASE an Asset Account by placing the figure on the right INCREASE a LIABILITY or EQUITY Account by placing the figure on the right DECREASE a LIABILITY or EQUITY by placing the figure on the left AND WE ALWAYS ADHERE TO THIS APPROACH 6 And Now that we Are Smooth and Sexy…
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