ACC_ACF 1200

Accounting for
Managers
workbook
Semester 1, 2020

Topic 2
Introduction to Accounting
Please note:

The solutions to these activities and exercises are only available in the workshops each week. If you are
unable to attend your workshop on a particular occasion, you will need to attempt the exercises on your
own and then attend a consultation session with a member of the teaching team to discuss your answers
and obtain further assistance where needed.

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to your respective workshops should you prefer a hardcopy. Please also remember to take your Faculty-
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understanding of topics and how they relate to decision making. It is vital that you spend some time
completing the Pre-Workshop Activities BEFORE your workshop each week. You are meant to research and
attempt to understand the key concepts covered in the Workshop Notes and attempt the questions in the
Workbook before each workshop. By doing so, you will be able to deepen and enhance your knowledge
when these questions are discussed and debated in your workshop.

All activities and exercises within these workbooks will be discussed in groups during the workshops. We
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complete the questions and exercises to develop your own study resource for the unit. Full solutions will
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 TOPIC 2 – Introduction to accounting
Learning objectives

• Recognise the role of accounting at all stages of an entity’s life cycle;

• Distinguish between the different types of accounting information and its users;
• Explain the qualitative characteristics from the Conceptual Framework; and
• Apply definition and recognition criteria of the elements to various cases and scenarios.

Topic Notes
Assets
Defined as 'resources controlled by the entity as a result of past events and from which future economic
benefits are expected to flow to the entity.'(examples: cash, car, textbooks, phone, jewellery, shares)
Liabilities:
Defined as 'presenr obligations of the entity arising from past events, the settlement of which is expected to
result in an outflow from the entity of resources embodying economic benefits.'(credit card, HECS debt, car
loan, money owed to parents, phone bill owing(not yet paid))
Assets -- Liabilities = Equity
Equity:
Defined as ‘the residual interest in the assets of the entity after deducting its liabilities.’
Income:
Defined as ‘increases in economic benefits during the accounting period in the form of inflows or
enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to
contributions from equity participants.’(Wages from a part time job, Government benefits, Interest)
Expenses:
Defined as ‘decreases in economic benefits during the accounting period in the form of outflows or depletions
of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions
to equity participants.’(Food and drink, university costs, clothes, rent, interest expense, electricity, gas and
water expenses.)
Recognition criteria:
Probable occurence
Reliable measurement

Questions
1. Why does financial accounting information have the characteristics of ‘standard format’, ‘highly

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 summarised’ and ‘historical focus’?
Comparing, Increase economy efficiency, Consistent, let users understand
To avoid giving too much info away about the business, understandability, privacy, Comparing
The reports take time to produce, so they will be looking at past results., To understand trends
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2. Do the terms ‘internal’ and ‘external’ user relate to being inside and outside of a business? Explain.

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3. When a business is starting out, what are the first two elements likely to be affected in the business
records?
Capital, Asset
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4. Explain the role of the qualitative characteristics contained within the Framework, distinguishing
between fundamental and enhancing characteristics.
These characteristics help set out what you tend to include or exclude from financial statements, Act as
guidelines, decision making
fundamental characteristics identify whether information is useful or not
________

Application
5. Provide an extensive list of assets, liabilities, incomes and expenses that would likely be seen in the
financial statements of a university. Be specific with your descriptions of the items.
Equipment, textbooks, laptop, supplies,databases, debtors,Prepaid rent
Unpaid...(bill,tax...) unearned revenue,
学费, donations...
Salary,bill,maintenance
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6. Most items in a business can be easily classified under one of the elements (A, L, OE, I, E), but
sometimes it is difficult to be sure of the classification. Where can guidance on this be found?
(a) Explain, using the example of the proceeds of passenger ticket sales received by an airline.
liabilities
________________________
(b) Explain, using the example of a business leasing computer equipment from a manufacturer for a five
year period.
asset
________
7. Provide an example of a case where an item’s definition is satisfied, but not its recognition criteria.
How is this recognition rule applied? Explain and illustrate with reference to an asset.
Teachers

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Critical Thinking Questions

8. Justify why internal users should have access to more information than external users.
________________
9. Without accounting, informed decisions could not be made. Comment.
________________
10. Provide a non-accounting related example to explain the role of the Framework.
________________
11. How can the payment of rent sometimes be considered an expense, but other times give rise to an
asset? Explain.
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