Bu227 Exam Slides
BU227 – Financial Accounting
Module 1
Provided by: Laurier SOS
Things to Cover
The Accounting Environment IFRS and GAAPs Accounting’s Conceptual Framework Financial Statements Overview Recording Transactions Accrual Accounting Account’s Receivable Amortization Inventory
The Accounting System
Financial Accounting System (preparation of four basic financial statements).
Managerial Accounting System (preparation of detailed plans, forecasts and reports).
External Decision Makers (investors, creditors, suppliers, customers, etc.).
Internal Decision Makers (managers throughout the organization).
IFRS
• A common Global set of Accounting Standards • IFRS applies to:
– Publically accountable enterprises – Public sector – Private enterprise and others can choose to adopt or not
Dates to Know
Opening Balance Sheet January 1, 2010
January 1, 2011 Date of Adoption
First Reporting December 31, 2011
Financial Statements
IFRS Statement of Financial Position Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flow GAAP Balance Sheet Income Statement
Statement of Shareholder Equity Statement of Cash Flow
Auditor Responsibilities
• Auditor’s have a responsibility to general public to assess the fairness of financial statements - Ensure compliance with GAAP - Examining financial statements and transactions - Expressing an opinion as to the fairness
Generally Accepted Accounting Principles (GAAP)
• Separate entity: Transactions of the business entity are separate from transactions of owners. • Continuity (Going Concern): The entity is expected to continue its operations into the near future (>= 1year). • Unit-of-measure: Accounting figures are reported in the national monetary unit ($). • Periodicity: The long life of a company can be reported over a series of short time periods. • The historical-cost principle requires an asset to be recorded at the historical cash-equivalent cost • The
Module 1
Provided by: Laurier SOS
Things to Cover
The Accounting Environment IFRS and GAAPs Accounting’s Conceptual Framework Financial Statements Overview Recording Transactions Accrual Accounting Account’s Receivable Amortization Inventory
The Accounting System
Financial Accounting System (preparation of four basic financial statements).
Managerial Accounting System (preparation of detailed plans, forecasts and reports).
External Decision Makers (investors, creditors, suppliers, customers, etc.).
Internal Decision Makers (managers throughout the organization).
IFRS
• A common Global set of Accounting Standards • IFRS applies to:
– Publically accountable enterprises – Public sector – Private enterprise and others can choose to adopt or not
Dates to Know
Opening Balance Sheet January 1, 2010
January 1, 2011 Date of Adoption
First Reporting December 31, 2011
Financial Statements
IFRS Statement of Financial Position Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flow GAAP Balance Sheet Income Statement
Statement of Shareholder Equity Statement of Cash Flow
Auditor Responsibilities
• Auditor’s have a responsibility to general public to assess the fairness of financial statements - Ensure compliance with GAAP - Examining financial statements and transactions - Expressing an opinion as to the fairness
Generally Accepted Accounting Principles (GAAP)
• Separate entity: Transactions of the business entity are separate from transactions of owners. • Continuity (Going Concern): The entity is expected to continue its operations into the near future (>= 1year). • Unit-of-measure: Accounting figures are reported in the national monetary unit ($). • Periodicity: The long life of a company can be reported over a series of short time periods. • The historical-cost principle requires an asset to be recorded at the historical cash-equivalent cost • The
Links: • Amortization expense per year =(300000-20000)/9 = $31,111.11 • With straight-line amortization, amortization expense is spread out evenly over the asset’s useful life