Lecture Notes Week 11 - THE UNIVERSITY OF NEW SOUTH WALES...

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THE UNIVERSITY OF NEW SOUTH WALES School of Accounting ACCT 1501: Accounting and Financial Management 1A Weeks 11 Accounting for Liabilities Student Handout Lecturer: Andrew Jackson School of Accounting UNSW Course website: http://www.elearning.unsw.edu.au/
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Table of Contents Sections 1. Introduction to Weeks 11 Lectures 2. Learning Outcomes for Weeks 11 3. Required Readings for Weeks 11 4. Tutorial questions – Week 12 4.1 Preparation questions 4.2 Tutorial questions 5. Learning checklist for Weeks 11 6. Supplemental Readings – Weeks 11 7. Lecture slides Week 11 - Liabilities 8. Lecture 11 – Liabilities worksheet 1. Introduction For the last two weeks we have been discussing the investment side of the balance sheet. Now our attention turns towards discussing the “financing” side of the balance sheet. We begin by focusing our understanding on what is a liability; how a provision differs from other liabilities; what we mean when we say a “ contingent liability ”; the financial statement presentation of liabilities; and how to prepare accounting entries for current liabilities including accounts payable, short-term accruals, employee deductions and notes payable. We will not discuss the concept of GST. Given that accounting for GST is pretty straightforward, we encourage you to study this topic independently. GST will not be examinable. However, if you plan to pursue a career in Australia or in any country that has a similar type of value added tax, it would be prudent to understand the discussion in the textbook. After discussing current liabilities, we will focus on accounting for long-term debt , in particular, accounting for non-current interest bearing liabilities . This discussion leads into our study of another form of financing called “ equity ”, you should appreciate that debt and equity are at either end of a continuum of financial instruments. Sometimes financial instruments exhibit both debt and equity like qualities and that some financing arrangements do not appear in the balance sheet at all! In our study of equity financing, we discuss the option of using equity as a source of financing. Shareholders are a key source of initial finance for a company. While traditionally regarded as the owners of a company’s assets, contemporary thinking suggests that the shareholder exchanges their investment in a company for a right to the residual cash flows of the firm. In contrast to finance theory, accounting for owners’ equity concerns itself largely with recording the initial investment in a company and its’ cumulative performance since formation. Session 1, 2009 AFM1A 2
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2. Learning Outcomes for Weeks 11 At the end of this topic, you should be able to: Define a liability and outline the essential characteristics of liabilities Explain the basic measurement principles for liabilities Outline the financial statement presentation for liabilities Prepare accounting entries for current liabilities including accounts payable,
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This note was uploaded on 01/22/2011 for the course ACCT 1501 taught by Professor Helen during the Three '09 term at University of New South Wales.

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Lecture Notes Week 11 - THE UNIVERSITY OF NEW SOUTH WALES...

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