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Lecturers Name

Week 1 Chapter 1 LO 1-4

Consultation hours

An introduction to accounting

Location

PowerPoint presentation adapted from Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd

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ACCT 5001 - Introduction


Why are you doing this unit? Compulsory/elective/not sure What accounting background do you have? Undergrad/post-grad course/ other / none

Where are you from? Australia / Asia / Europe / America / Other

ACCT 5001 - Introduction


What are your expectations of the unit? Conceptual & practical & useful & lots of work What accounting background do you have to have? We assume none. How much time should you spend on ACCT5001? Including the class approximately 9-12 hours How many classes can you attend? Only 1 as indicated on your timetable

ACCT 5001 Unit of Study Outline



Refer to Unit of study Outline (p.1)

Coordinator: Dr. Cornelia Beck Senior Tutor: John Trowell Lecturer: HIGHLIGHT your Lecturer in the outline Appropriate communication Class Streams and attendance

Opportunity to change on myuni by the end of week 2 (only if the class is not full) Visiting another class must have valid reason and permission from the lecturer.

Unit of Study Outline key points


1.1 Unit description, 1.2 Aims & context: (p. 2)
Whats the unit about, what are its aims, and who is it intended for?

Learning & Teaching (p.2)


Lectures /classes: What is their purpose? What do I need to bring to class each week, Where do I find the lecture materials? Blackboard: (on-line learning management system) How and when will this be used? Self-Study Questions: Why are they set each week? When do I do them? When, where & how do I check solutions? (also see topic schedule on p.9) We strongly advise you attempt these each week, and before you look at the solutions!
Optional weekly reflection exercises Useful to complete weekly Reflection, Self-evaluation and Learning Strategies exercises each week. See why Optional consultation and/or workshop with the Senior Tutor in Electrical Engineering, Madsen Theatre 351
Group Consultation (Mon 9am 10am) or with any Lecturer in their consultation times. Workshop (Mon 10am 11am) particularly useful if you had problems with the self study questions

2.1 Alignment of Intended learning Outcomes (p. 3)


Intended Outcomes are linked to Graduate Attributes & Teaching & Learning activities and Assessment tasks

2.2 Learning and teaching activities (p. 2) Prescribed Textbook


What is it? Why I need it? Where to buy it

Optional PASS Program What is PASS? Whats in it for me? How do I register for it? Optional additional questions and on-line tutorials
See blackboard for details

Assessments (p.4)
2.3 - 2.4 Assessment Tasks:

Assessment (p.6)
2.5 Workload and minimum requirements

1. Academic Honesty Module (compulsory) 2. Group Assignment (20%) Groups will be formed in week 3. Information will be provided on Blackboard 3. Mid semester Quiz: (25%) When? What will it cover? What is its format? See Blackboard for more details. 4. Final Examination: (55%) How long is it, what will it cover? Sample exam questions will be provided.

How much effort is expected of the average student to get an average mark? What are the recommended weekly learning activities and process? (see summary p.6)

2.6 Feedback

Where do I get formal and informal feedback on my assessment and learning? Mid semester quiz and final exam feedback. How I can review my performance in these? What is /is not the purpose of this self review?

What is the criteria to pass the unit? (see top of p.5)

Academic Honesty and Plagiarism


2.7 Academic honesty and plagiarism (p.7) What does this include? Why is it wrong? see Faculty and Uni Policies from website listed What are the penalties? Serious!! Just dont do it!!!!

University Policies & Services (p.8)


Faculty policies
See Student Administration Manual for students at website listed See Student Information Office for assistance

eg. Special Consideration policy/rules, appeals, late submissions

3. Student feedback and evaluation

University policies www.usyd.edu.au/policy

(NB. it will be assumed you will know these policies) eg. Code of Conduct See Student Affairs Unit for assistance

3.1 3.3 (pp.7-8) Feedback and improvements How is feedback obtained from past semesters? What improvements have come from feedback? How will we collect feedback this semester?

See Blackboard under student resources (e.g. group work, academic writing, learning support, PASS, and lots more) Check it out See Faculty Learning & Teaching website for learning support www.econ.usyd.edu.au/business/learning

Links to other student services and resources

Access to Blackboard

eg. learning support (e.g. guide to group work)

Faculty IT will email you on how to activate it once you have been enrolled and registered as a user of the system

5. Topic & Assessment Schedule (p.9)


Topics: What topics are we going to study? Refer to week/date, Topic, relevant Learning objectives, Textbook references, self study questions and possible demonstration questions In-class Demo Questions and Self-study questions What is the purpose of these? Why is it important that self study questions, are done, and how they are done?

Summary of the recommended weekly learning activities and processes


1. Skim read text chapter before class each week start with the summary of learning objectives at the end of each chapter 2. Print off the lecture notes and demo questions from Blackboard and bring them to class. 3. Attend and actively engage in the weekly class you have been assigned in your timetable. 4. Practice, practice, practice. Complete the self-study questions for the week. Refer to the out-of-class study instructions (on blackboard) before completing the questions 5. Access the solutions to the weekly self-study questions on Blackboard and correct your answers after youve attempted the questions

How will you know how you are doing?

Week 1: An introduction to Accounting


Text: Chapter 1, Learning Objectives 1 4, pp.1-14 Demonstration Questions: PSA1.1(a), PSA1.2(a) Self-Study Questions: Q.1,2,3, E1.1; PSA1.1, PSA1.2 Outline: A) What is Accounting? B) The Accounting Process C) What is the role of an accountant? D) Business Organisations E) Who uses accounting information? F) Financial Statements initial overview

6. You can complete the weekly reflection, self-evaluation and learning strategies exercises. 7. Take actions to improve your understanding of the topic as selected for your learning strategies. 8. Ensure you understand the material for the week so you can build on your knowledge with the following weeks work. THEN Go back to 1 and complete the cycle each week

A) What is Accounting?
Primary function of accounting is to provide financial information for decision making that is
Reliable Relevant Why are these qualities necessary?

B) The accounting process


Accounting is the process of identifying, measuring, recording and communicating the economic transactions and events of a business operation Transactions are economic activities relevant to a particular business
e.g., - sale of item to customer - purchase of office stationery from supplier
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Accounting often referred to as language of business Suggest reasons for this analogy

The accounting process continued


Transactions are the basic inputs into the accounting process
Identifying Taking into consideration all transactions which affect business entity Measuring Quantifying in monetary terms Recording Analysing, recording, classifying and summarising transactions Communication Preparing accounting reports, analysing and interpreting

C) What is the role of an accountant?


Commercial accountants
Work in industry and commerce Undertake roles such as management accounting and financial accounting

Public accountants
Provide their professional services to the public and work in a range of offices from small to multi-national Auditing is a primary service Also taxation and advisory services
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Commonly referred to as bookkeeping

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DIVERSE ROLES OF ACCOUNTANTS


continued

D) Major Forms of Business Organisations


Sole Proprietorship
Owned by one person e.g. restaurants, dentist, panel beaters

Government accountants
Employed by local councils, state government and federal government Variety of roles such as financial accounting and auditing

Partnership
Owned by more than one partner e.g. accountants, solicitors, doctors

Not-for-profit accountants
Work in the not-for-profit sector Engage in planning, decision making, preparing financial and management reports for both internal and external users
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Corporation
organised as a separate legal entity and owned by shareholders BHP, CSR, Westpac, RM Williams
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What are the differences between a sole trader, a partnership and a company?
Sole Trader
Separation of ownership and management Separate legal entities Liability Ownership

FORMS OF BUSINESS ORGANISATION


continued

Partnership No No Unlimited Private (2 or more owners) As per agreement Separate Capital account for each partner

Company Yes Yes Limited Public (share traded) or Privately owned Dividends (per share) Share Capital and Retained Earnings
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No No Unlimited Private (1 owner) Drawings Capital Owners name

Other Forms
A trust is a relationship or association between 2 or more parties whereby one party holds property in trust for the other A cooperative is member-owned, controlled and used, and must consist of 5 or more people

Profit distribution Owners Equity

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What issues do you consider when advising a client on the most appropriate structure for their business? Case example PSA1.1(a)

What issues do you consider when advising a client on the most appropriate structure for their business? Possible suggestion: The concern over legal liability would make the limited liability company form a better choice over a partnership. Also, the corporate form will allow the business to raise cash more easily which may be of importance in a rapidly growing industry.

Three information systems lecturers have formed a business to improve the speed of information transfer over the Internet for stock exchange transactions. Each has contributed equal amounts of cash and knowledge to the venture. Although the approach looks promising, they are concerned about the legal liabilities that their business might confront.
Required: Determine what form of organisation the business is likely to take sole proprietorship, partnership or company. Give reasons 25 for your choice.

NOT-FOR-PROFIT ORGANISATIONS
Associations
Generally formed by small, non-profit, community-based groups May be incorporated e.g. Australian Medical Association, Epilepsy Association of Australia

D) Who uses financial information?


Internal Users
Managers who plan, organise and run the business e.g. production supervisors, marketing managers, and directors

Government
Organisations are owned by government: federal, state or local Departments or segments are operated as business enterprises
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USERS AND USES OF FINANCIAL INFORMATION continued


External Users
Resource providers
e.g. investors, employees, creditors

ACTIVITIES OF BUSINESS ENTITIES


Financing Activities
Outside sources of funds
Borrowing (debt funding) from banks or investors by debt securities
Unsecured notes Debentures

Recipients of goods and services


e.g. customers, beneficiaries

Parties performing a review or oversight function


e.g. regulatory agencies, media, governments, trade unions, special interest groups

Selling shares to investors


Issuing new shares Payments to shareholders are called dividends

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ACTIVITIES OF BUSINESS ENTITIES


continued

ACTIVITIES OF BUSINESS ENTITIES


continued

Investing Activities
Acquisition or sale of resources/assets needed to operate the business Examples:
Purchase or sale of property plant and equipment Purchase of investments

Operating Activities
Results from operational activities undertaken to earn income:
Revenue (sale of goods, provision of services, return from investments) LESS Expenses (cost of resources/assets consumed or services used) = Profit (internal generation of funds to finance operations, invest or pay dividends)
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PROFIT = Revenue - Expenses

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E) FINANCIAL STATEMENTS (Introduction)


Income Statement
Reports revenues less expenses for a particular period of time

FINANCIAL STATEMENTS (Introduction) - Continued


Statement of Changes in Equity
Reports amount of profit for the period and the changes in equity

Statement of financial position


Reports assets and claims to those assets at a particular point in time

Statement of Cash Flows


Reports information regarding cash receipts and cash payments for a particular period of time

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Practical implications
PSA1.2 (a) Although the decision maker should refer to all financial statements, state whether the decision maker would be most likely to place the main emphasis on information provided by the income statement, statement of financial position or statement of cash flows. Choose one financial statement and provide a brief justification for your choice.

Financial Statements for Decision Making


Possible solution: In deciding whether to extend credit for 30 days you would be most interested in the statement of financial position because it shows the assets on hand that would be available for settlement of the debt in the near-term.

North Sales Ltd is considering extending credit to a new customer. The terms of the credit would require the customer to pay within 30 days of receipt of the goods.

Before Week 2 Lecture


1. 2. 3. 4. 5. 6. 7. Read the Unit of Study Outline Get familiar with ACCT5001 Blackboard site Buy the textbook and read chapter 1; start with the summary of Learning Objectives on page 56 (remember we have only covered Learning Objective 1-4 this week) Do Week 1 self study questions Check solutions on Blackboard after doing the questions yourself Complete reflective, self-evaluation and learning strategies exercise Obtain a copy of Week 2 lecture material from blackboard site to bring to class