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8/02/2018

BUSS 1030 Accounting, Business and


Society
Lecture 1 : BUSS 1030

Dr Abdul Razeed

BUSINESS SCHOOL

Content

1. Welcome
2. Teaching Staff
3. Textbook
4. Blackboard and Email Communication
5. Unit of Study Outline
6. Pass Program
7. Consultation
8. Lecture and Tutorial – Ground Rules

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Why BUSS 1030?

› Do you know why your credit card can be refused even though you are
profitable?
› Can I be profitable and still have no cash?
› How can I ‘balance my books’?
› If I set up a business, what kinds of decisions do I have to make?
› Which company is good to invest in?
› Why is my balance account in credit although having cash means that I
should have a debit balance?
› How do I manage stakeholders so that there is no financial controversy?
› How much should I produce?
› How is my future or current employer monitoring my progress?
› Am I being ripped off when I pay $100 for a pair of jeans?

Introduction-Welcome and Teaching


Staff
Teaching Team
Lecturer In Charge and Coordinator: Dr Abdul Razeed
Phone: 9306 6237, Email: business.buss1030@sydney.edu.au
Office: Economics + Business Building, Level 4, Room 339 Consultation
Consultation Times: Tues 9am to 11am (Weeks 1 to 7)
Wednesday 9am to 11am (Weeks 8 to 13)
Lecturer: Mrs Olga Gouveros
Consultation Times: Monday 1.30pm to 3.30pm

Passionate and Award Winning Tutoring Staff:


Bing Liang Maiying Si Yiyuan Cao
James Makey Gigi Wongwaiwetch
Shawn Ho Meth Mevan
Sandra Allan Werner Schulz
Roger Hartley Maria Asprou

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Textbook

Prescribed Texts:
› Accounting for Business Students, 1st Edition. NSW,
Pearson. Available as an E-Book.
(Note: Previous versions of BUSS 1030 textbooks are
NOT compatible with Sem 1 2018 textbook)

› Razeed, A., Blayney, P., Hamilton-Jessop, H. and


Gouveros, O.,
Integrated Accounting Narrative, Book 2015, 1st Edition.
NSW, Pearson.
(Note: You will need a fresh book for ongoing work.
Its cheap!)

Communicating with Staff

› Any questions?
- First see FAQ on Canvas Site
- Check with your peers (Ed)
- Email for all queries: business.buss1030@Sydney.edu.au
- Do not contact staff directly unless instructed otherwis

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Canvas and Email Communication

Email contact policy


1. All content related questions has to be asked on Ed discussion forum.
All other queries can be emailed to:
business.buss1030@Sydney.edu.au
2. If you do email in the exception, Students must ensure they use their
University email account.
3. Emails must include the student’s full name & SID and should use
proper grammar & spelling.
4. Emails must be address e.g. Hi Ms Janine. Unaddressed emails (e.g.
Hello/Hi/Hey/Yo, I would like to clarify…) will be deleted.
5. Change of tutorials is not personal in nature. No change of tutorials
possible after Week 1 – please act immediately.

Unit of Study Outline

Lectures:
Classes:
› You must attend the lecture time indicated in your personal
timetable.
› BUSS 1030 Lecture Stream 1 - Tues 11am to 12.30pm in
Eastern Avenue Lecture Theatre 315
› BUSS 1030 Lecture Stream 2 - Tuesday 1pm to 2.30pm in
Seymour Centre Lecture Theatre S301 (York)
› BUSS 1030 Lecture Stream 3 - Wednesday 9am to 10.30am in
Wallace Lecture Theatre 200

Tutorials: As per your personal timetable. Tutorials commence in Week 2. See


Canvas if you need to change tutorials. You must be do it before end of Week 1.

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Revel Demonstration

REVEL is the new e-book that we are using in Semester 1, 2018. It


has many features that makes your life much easier.
The REVEL demonstration below will help students get familiar with
REVEL interface and also answer any questions to do with
MyAccountingLab (compulsory online assessment)
Attendance is OPTIONAL BUT NO support is available beyond these
workshops. If you choose not to attend, you will need to email
Pearson (the publisher) and wait for their response. Staff in BUSS
1030 are not able to help.
Tue 14:00-16:00 [wks: 1] in Codrington Computer Laboratory 1
Wed 11:00-13:00 [wks: 1] in Codrington Computer Laboratory 2
Tue 14:00-16:00 [wks: 2] in Codrington Computer Laboratory 1

Unit of Study Outline

Assessment Work Type Program Length Weight Due Date Closing Date
Items Learning
Outcomes
Assessed
Tutorial Individual/Mandatory 1, 2, 3 800 10% Weekly Weekly
Contribution
Assignment Individual/Mandatory 1, 2, 3 1200 15% See UOS See UOS

Mid-Semester Individual/Compulsor 1, 2, 3 1000 25% TBA TBA


Examination y
Final Examination Individual/Mandatory 1, 2, 3 2000 50% Final Exam Period Final Exam
Period
Academic Honesty Week 4

TBA – To Be Advised

See UOS for Minimum Requirements

Please note – Mandatory has minimum assessment requirements (see UOS Outline)

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PASS Program

PASS Program (See Blackboard)


PASS Program: Peer Assisted Study Sessions
• The Faculty funds an additional program for students called PASS.
PASS stands for Peer Assisted Study Sessions.
• Research from the UK, USA and Australia has consistently
demonstrated that students who regularly attend PASS are likely to
improve their academic performance and are less likely to fail or drop
out.
• In 2009, 97% of respondents to end of semester, anonymous
surveys
reported they learnt during PASS and 97% reported that they enjoyed
the program.
• One student commented “I loved everything about PASS – it was
GREAT for clarifying ideas from class [and] helped my studies. I also
had the opportunity to make many friends through PASS”.

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Lecture and Tutorial – Ground Rules

Lecture and Tutorial Ground Rules


What you can expect out of lecturers:
1. Thought provoking lectures
2. Punctuality
3. Professional
4. Interactive
5. Respect

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Lecture and Tutorial – Ground Rules

Lecture and Tutorial Ground Rules


What we expect out of you:
1. Punctuality
2. Professional
3. Clarify doubts
4. Zero tolerance on any kind of distracting behaviour (talking, using mobile
phones, using computer and working other tasks, reading newspaper,
listening to music, walking out of the lecture before it has concluded…)
5. NO use of mobile phones
6. You must stay for entire lecture – no exceptions

•Refer to Student Code of Conduct:


http://sydney.edu.au/ab/policies/Student_code_conduct.pdf

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Why Accounting?

Decisions influenced by?


- Rapid development of information and communication
technology
- Increasing demand for information of a non-financial nature by
society
- Globalisation of business
- Adoption of international regulations including accounting
standards
- Because Accounting is more than just accounts – its also about
Accountability! And
- RESOURCES ARE LIMITED and hence EACH decision has
consequences for future decisions!

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BUSS 1030 Accounting, Business and


Society
Lecture 1 : Introduction
Abdul Razeed
(Read pages in textbook corresponding to Learning Objectives LO in lecture notes.
See the Learning Objectives for what to focus on. Focus on what is covered in
lectures and tutorials)

Read Chapter 1 Atrill et al. Pages 1-34

BUSINESS SCHOOL

Learning Objectives

1. Explain the nature and role of Accounting


2. List the main groups that use accounting reports of a business
entity
3. Compare and contrast financial and management Accounting
4. Identify the main purpose of a business
5. Outline an overview of the main financial reports prepared by a
business
6. Outline the main types of business ownership
7. Identify ways in which business and Accounting has been
changing
8. Explain why Accounting Information is generally considered
useful

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Introduction and Framework (LO1, LO2,


LO3)

› Different Type of Organisations, Entities and Business Structures

Financial Accounting Management Accounting

Transactions Planning and Budgets

Income Balance Cash Flow


Costs
Statement Sheet Statement

Pricing
Financial Statement
Analysis
External User Focus Internal User Focus
Emerging Trends and Issues in Accounting

Accounting profession in Australia (LO1,


LO2, LO3)
› Corporations Act (enforced by ASIC)
› ASX listing rules
› Accounting principles, standards, ethics and disciplinary procedures of accounting
professional bodies
- ICAA – Charactered Accountants (CA)
- CPA Australia - CPAs
- NIA
› ASIC
› ASX
› ACCC
› Reserve Bank of Australia
› Australia Prudential Regulation Authority
› Australian Tax Office
› Other government agencies

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Accounting profession in Australia (LO1,


LO2, LO3)
› AASB Standards to govern measurement rules and level of disclosure
› Australian Accounting Standards Board is responsible for technical accounting
standards
› Australia, like much for the rest of the world has adopted International Accounting
Standards Public Sector
The federal government through
the Financial Council (FRC) and the Australian
Accounting Standards Board (AASB) regulates accounting
standards.

Australian Private Sector


Accounting The International
Private Sector Accounting Standards
Professional Standards Board (AASB) sets
accountants apply IFRSs which are used
Australian as a basis for equivalent
Accounting Australian
Standards Accounting Standards

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Qualitative Characteristics and


Constraints on Financial Reporting
(LO1)
There are 2 types of qualitative characteristics

 Fundamental qualitative characteristics


• Relevance
• Information that is capable of making a difference to the
decision made by users;
• Information needs to have predictive value, confirmatory value
or both.
• Faithful representation
• Information is complete, neutral and free from error;
• Financial information may not always be entirely from error;
• However, no errors or omissions should affect the description
of the economic phenomena;
• And the process applied to produce reported information
should be applied without errors.

(see
http://www.ey.com/Publication/vwLUAssets/Supplement_86_GL_IFRS)

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Qualitative Characteristics and


Constraints on Financial Reporting
(LO1)
 Enhancing qualitative characteristics
• Comparability
• Users can identify similarities and differences between
different period within a set of financial statements and across
different reporting entities
• Verifiability
• Enables knowledgeable and independent observers to reach a
consensus if a particular event or transaction is a faithful
representation
• Timeliness
• The older the information, the less useful that information
• Depends on users’ needs
• Decision-makers need information available in time to be
capable of making informed decisions.
• Understandability
• If classified and presented in a clear, concise way, information
aids understandability
 Constraint – cost of preparation versus benefits

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The Accounting Process (LO1/LO2)

Special Purpose Reports Business Transactions Special Purpose Reports


Management reports: Various tax returns
Mgmt Acc Info (GST Income, Payroll, W/Comp)
Fin Acc Info Other reports
Accounting, Information System

Managers Government agencies


General Purpose Reports
• Income statement
• Balance Sheet
• Cash Flow Statement

Managers and Resource Recipients of Reviewers and


Governing Bodies Providers goods/services overseers

Managers, Investors, Customers, Govt, agencies,


Directors, Creditors, clients, employer groups,
ASIC,ASX Employees beneficiaries unions, media,
Suppliers general public

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Accounting Process (LO1/LO2)

› Accounting Decisions in Everyday life – You?


› What to buy?, Is it good value? what to sell? how much to price product?
› i.e. your bank savings are limited! (resources are limited)
› Need to have positive cash flow
› Cash outflow must be less than cash inflow
› I have surplus cash, what can I do with it?
› Invest? Buy equipment? Loan to a friend? Save?
› Should I do the right thing?
› Donations? Support carbon tax? Invest in sustainable companies?

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Conceptual Framwork (CF) LO1/LO2


(NOT IN TEXTBOOK)
› CF (2015, CF-Amendments and SAC 1) consists of:
› Objective of GPFR
› The reporting entity
› Qualitative characteristics
› Definition of elements of financial statement

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Conceptual Framwork (CF) LO1/LO2


(NOT IN TEXTBOOK)
› CF is a set of concepts defining the nature, purpose and content of genera-purpose
financial reporting
› It is used by both preparers and standard setters
› A bit of history
› Prior to 1970s, no GAAP
› Resulted in inconsistencies between accounting standards and practices
› As a result, US, UK, NZ, Australia started developing normative theory of financial
accounting
› Prior to 2005, CF in Australia was developed by AASB and AARF
› From 1 Jan 2005, Australian standards converged with international accounting
standards
› Following Sep 2010, the IASB issued CF but Australia continues to use a mixture
of this new CF and Australia’s own CF
› IASB issued an exposure draft on 28 May 2015 for revised CF
(thanks to Rosina Mladenovic for her assistance in compiling this)

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Qualitative Characteristics of
Accounting Information (LO1) –
NOT IN TEXTBOOK
What is the primary objective of financial reporting?
- To provide information useful for making investment and lending decisions.

The Entity Concept


-Assume that you decide to open up a garage and coffee shop.
-The garage made 250,000 in profits, while the coffee shop lost $50,000
-How much money did you make?
-At a first glance, we would assume that you made $200,000.
-However, by applying the entity concept we realise that the garage
made $250,000 while the coffee shop lost $50,000.
- Importantly the business activities and the personal affairs of the
owner are separate.

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Accounting measurement concepts


and principles (LO1) – NOT IN
TEXTBOOK
Accounting Time Period Concept
- Unit of time for which accounting data is collected and the financial
statements prepared
-In Australia many companies prepare their statements for the financial year –
from July 1 to June 30 the following year

The Cost Principle


- Assets and services acquired should be recorded at their actual cost (Reliable
and objective)
– E.G. If the garage purchases petrol pumps for $25,000, it would record these
at the same amount

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CF - Users of Accounting (LO2) – NOT IN


TEXTBOOK

› CF – Primary users are resource providers


› Equity Investors – e.g. shareholders
› Lenders – e.g. banks
› Other creditors – e.g. employees, suppliers, customers etc
› CF does not make explicit mention of internal and external user
classification

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Financial versus
Management Accounting (LO3)

› Accounting is an information system that measures business activities,


processes information and communicates financial information. It is the
language of business.

External users Internal users
make decisions make decisions
about the entity. about the entity.

e.g. investors e.g. management

This is This is
Financial Management
Accounting. Accounting

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Financial versus
Management Accounting (LO3)

› Financial Accounting › Management Accounting


› Financial accounting is the › Management accounting
preparation and presentation of provides economic
financial information to allow users to information for internal
make economic decisions about the users
entity
› Core activities include
› External User Focus formulating plans and
› Includes: budgets
› Statement of Comprehensive Income › Information used in
(“The Income Statement”) monitoring and control
within the entity
› Statement of Financial Position (“The
Balance Sheet”)
› Statement of Changes in Equity
› Statement of Cash Flows (“Cash Flow
Statement”)
3
0

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What is the financial objective of a


business? (LO4)

› Main objective: enhancing wealth of owners.


› Need to balance the required return with the risk level associated
with the business.
Short-term gains, long-term problems
› Global Financial Crisis – huge portfolios of loans made to poor
people who could not afford repayments.
› Loans securitised and so on, separating transactions from their
ultimate human origin.
› There was money to make on the deals – Was this responsible?
› Where was the stewardship?

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OVERVIEW OF FINANCIAL
REPORTS (LO5)

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Types of business organisations (LO6)


Sole Proprietorship Partnership Company
What are some advantages?
total undivided authority pooling in different separate legal existence
resources of partners
no restrictions on type of more brain power, but limited liability of
business – must be legal consultation with partners Shareholders
Required
easy to setup simple to form transferability of ownership
relatively easy
What are some disadvantages?
unlimited liability unlimited personal liability separation of ownership
for general partners and control

limitation on size – partnership agreement extensive governmental


fundraising power highly recommended to regulation
overcome possible future
problems
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The changing face of business and


Accounting (LO7)

› Customers are increasingly sophisticated and demanding.


› National frontiers are less important in a global economy.
› Technology is changing rapidly.
› Domestic markets are becoming more deregulated.
› Shareholders are increasing pressure for competitive returns.
› Financial markets are more and more volatile.
› Increasing awareness of the need to recognise the implications of
the actions of business on the environment and society at large.

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Ethics in Accounting (LO7)

› What are Ethics?


› What is right and wrong
› Normative rather than factual
› Enron, WorldCom, Lehman Brothers, OneTel are all firms
› where ethical behaviour was not a priority
› Ethical behaviour in accounting ultimately relates to the standard of
moral behaviour expected of accountants
› The CPA, ICAA and other professional accounting organisations and
many large firms have Codes of Professional conduct
› 1. Integrity; 2. Objectivity; 3. Professional competence and due
care; 4. Confidentiality; 5. Professional behaviour

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How useful is accounting


information? (LO8)

Why do I need to know anything about accounting and finance?


Important aspects of accounting and finance that all who work in a business
should be familiar with include:

• how financial reports should be read and interpreted.


• how financial plans are made.
• how investment decisions are made.
• how businesses are financed.

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Learning Objectives

1. Explain the nature and role of Accounting


2. List the main groups that use accounting reports of a business
entity
3. Compare and contrast financial and management Accounting
4. Identify the main purpose of a business
5. Outline an overview of the main financial reports prepared by a
business
6. Outline the main types of business ownership
7. Identify ways in which business and Accounting has been
changing
8. Explain why Accounting Information is generally considered
useful

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