Points discussed in Lecture 1 Pune

What do we mean by Accounting? Two basis of accounting Cash and accrual basis Double book entry concept 4 main differences in Cash v/s Accrual basis of accounting (what are these and their effects on FS)
y y y y

Unearned Revenue Accrued Revenue Prepaid expenses Accrued Expenses

Different types of transactions operating, financing and investing How Financial Statements are prepared Journal entry to Ledger to Trial Balance to adjusted Trial Balance and then FS Underlying principles of accounting:
y y y y y

Accrual Basis Going Concern Consistency Materiality Fair Representation

5 statements required to be filed as per International Accounting Standards
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y

Income Statement (What is it and its main Components like Sales, COGS, depreciation, S,G&A, Interest and Tax) Balance Sheet (What is it and its main Components like assets- current & non-Current, liabilities like debt and equity; the most important equation: A = L + E) Cash Flow Statement (CFO, CFF, CFI what constitutes each) Statement of changes in Owner s Equity (What is it and its main Components like share capital, APIC, treasury stock, retained earnings and accumulated other comprehensive income) Footnotes, explanations included significant accounting policies used

Management Discussion & analysis in 10-K A must read for all analysts Role of an Auditor kinds of opinions and the role of regulatory agencies

its purpose. their respective effects and treatments in Income Statement. its significance as the most important measure of corporate profitability and performance What is a capital structure? What are its two types: Simple and Complex? . changes in accounting estimates and prior-period adjustments What do we mean by each of these accounting changes and their effects on financial statements The hierarchy of these components in Income Statement and whether they are reported gross or net of tax Differences between GAAP and IFRS w.t these components and their treatments Analysis of Earnings Per Share: What is EPS. two methods used are: The Installment Method or The Cost Recovery Method GAAP and IFRS have different treatments for recognizing barter transactions (see print-out given) Second most important component of Income Statement: Expenses. What is revenue and the criteria listed to determine revenue under GAAP and IFRS Ho w to recognize revenue in some specific cases like Long-term contracts. What are the different kinds of expenses and how are they classified. how is it calculated. An insight into various other components of Income Statement: y y y y y y y y How & why are the components of Income Statement classified as operating or nonoperating? What are discontinued operations and how are they reported in Income Statement? What are unusual or infrequent items and how are they reported? What are extraordinary items and how are they different from unusual or infrequent items? Where are the extraordinary items reported in Income Statement How do we account for changes in accounting standards which comprises of: changes in accounting principles.r. the methods to be used are: Percentage of completion or the completed contract method (difference between GAAP and IFRS treatments) In case of Installment Sales. its presentation formats. Classification of expenses as Period and Product costs.Lecture 2 INCOME STATEMENT What is an Income Statement. Installment Sales and Barter transactions: y y y In case of Long-Term Contracts. Its various components and the most important component: Revenue.

What are tangible and Intangible Assets? What is Goodwill. foreign currency translation gains/losses and unrealized gains/losses from cash flow hedge derivatives. accrued expenses. Stock options and Warrants in calculation of diluted EPS What is Comprehensive Income? Its four major components: Unrealized gains/losses from available for sale securities. comprehensive income and accumulated other comprehensive income BALANCE SHEET Significance of a Balance Sheet. Liabilities A brief introduction of the various common balance sheet liabilities accounts like accounts payable. additional paid-incapital. retained earnings. Treatment of Convertible Debt. Liabilities and Equity Assets A brief introduction of the various common balance sheet asset accounts like accounts receivable. Under Non-Current Assets. assets are further classified into Tangible and Intangible Assets. treasury stock. cash & cash equivalents and investments Classification of assets as current and non-current and a brief discussion on their components thereof. bonds & notes payable and unearned revenue. its importance and how is it calculated? A discussion on what all expenses are capitalized as Intangible assets and which expenses are expensed when incurred. Its major components: Assets. What does a statement of changes in stockholder s equity signifies and what all transactions comprise it. Difference between other comprehensive income. accumulated other comprehensive income. Equity A brief introduction of the various common balance sheet equity accounts like share capital. inventory. Convertible preferred stock. minimum pension liability adjustments. Various formats of presenting a Balance Sheet. Classification of liabilities as current and non-current and a brief discussion on their components thereof. .What do we mean by Basic and Diluted EPS and how are they calculated? Effects of stock dividends and stock splits on EPS.

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