Lecture 2 - 1 ACCT1001 Accounting 1A Lecture 2 Business...

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Unformatted text preview: 1 ACCT1001: Accounting 1A Lecture 2: Business Reporting Lecturer: Sharron O’Neill Text reference: Chapter 1, Kimmel, Carlon, Loftus, Mladenovic, Kieso & Weygandt 2 Learning Objectives ¾ Identify the different types of business forms ¾ Sole Traders ¾ Partnerships ¾ Companies ¾ Appreciate the role of financial statements ¾ Balance Sheet ¾ Income Statement ¾ Cashflow Statement ¾ Prepare financial statements ¾ Identify which of the five types of accounts belong in which report and explain why 3 How many accounting speations can you identify? ¾ Financial accounting ¾ Management accounting ¾ Auditing ¾ Tax accounting ¾ Insolvency and reconstruction ¾ Environmental accounting ¾ Corporate social responsibility accounting etc Review – from last week 4 Describe the financial accounting process Transactions (business events) involving exchange of economic resources Transactions (business events) involving exchange of economic resources Identify Quantify in dollar terms Quantify in dollar terms Measure • Analyse • Report • Interpret • Analyse • Report • Interpret Communicate • Classify • Record • Summarise • Classify • Record • Summarise Record Economic information is recorded in the Accounting Information System (AIS) 5 Review continued What is an account? ¾ The basic building block of accounting ¾ A summary of all changes in an item What are the five types of accounts? ¾ Assets ¾ Liabilities ¾ Owners equity ¾ Revenues ¾ Expenses 6 Assets : Future economic benefits, controlled by an entity as a result of past transactions eg car, house Liabilities : Future sacrifices of economic benefits that a company is presently obliged to make based on past transactions eg bank loan Owner’s Equity : The residual interests in the assets of an entity after deduction of liabilities (ie the owner’s share of the assets) eg. capital Revenues : Inflows (or savings in outflows) of future economic benefits eg sales revenue, interest revenue Expenses : Consumptions (or losses) of future economic benefits eg wages expense, petrol expense Position Performance 7 What is the accounting equation? The basic accounting equation is: Assets = Liabilities + Owners Equity This can be extended by recognising the following relationships: * Share * Retained Capital Earnings Assets = Liabilities + Owners Equity Dividends Revenue Expenses 8 GAAP – assumptions & principles ¾ Qualitative characteristics of accounting information ¾ Accounting entity assumption ¾ Monetary assumption ¾ Period assumption ¾ Historical cost assumption ¾ Going concern assumption ¾ Full disclosure principle These assumptions and principles reflect normative theories of accounting – they prescribe how accounting should be practiced !...
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This note was uploaded on 08/22/2011 for the course FINC 2011 taught by Professor Craigmellare during the Three '10 term at University of Sydney.

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Lecture 2 - 1 ACCT1001 Accounting 1A Lecture 2 Business...

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