ACC103.

FINANCIAL ACCOUNTING AND REPORTING, PART 2

Course Description

This is a continuation of the first course in accounting. It deals with transactions, financial statements, and
problems peculiar to the operations of partnerships and corporations as distinguished from sole
proprietorships. Topics include partnership formation and operations including accounting for the
admission of partners, changes in capital, and profit- and loss-sharing ratios; the conversion of an
unincorporated enterprise into a corporation; accounting for incorporated enterprises, including corporate
organizations, paid-in capital, accumulated earnings (loss), dividends and treasury shares. It will also
cover the preparation of financial statements for internal and external purposes, accounting information
systems manual and computerized special journals; understanding balance sheet, income statement,
statement of cash flows and statement of changes in equity; financial statements of companies in the
service, manufacturing, and trading industries; and analysis of accounting information and decision
making.

Credit : 3 units
Prerequisite : FINANCIAL ACCOUNTING AND REPORTING, PART 1 (ACC101)

Course Coverage

Learning Contents/ Topics

Course Syllabus

I. Partnership- Basic Concepts and Considerations

a. Overview
b. Definition
c. Characteristics
d. Partnership distinguished from corporations
e. Advantages and disadvantages from sole proprietorships and corporations
f. Kinds of Partnerships
g. Kinds of Partners
h. Articles of Partnership
i. Other legal concerns in Partnership

II. Accounting for Partnership Formation

a. Capital and Drawing accounts of partners

b. Partnership Formation Scenarios and their Accounting Treatment

 Individuals with no existing business form a partnership

 A sole proprietorship and an individual form a partnership
 Two or more sole proprietors form a partnership
 Partnership formation using bonus method
III. Partnership Operations
a. Profit or Loss Ratio
b. Division of profits and losses

 Equally
 Based on contributions
 By allowing salaries, interest on capital, and bonus to partners

c. Special profit allocations methods

d. Preparation of the Statement of Changes in Equity

IV. Partnership Dissolution

a. Definition
b. Causes
c. Accounting for the admission of new partner in an existing partnership

 Through purchase
 Through Investment

d. Withdrawal or retirement of a partner

e. Death or incapacity of a partner

V. Partnership Liquidation

a. Definition
b. Causes
c. Rules and accounting for the setting of accounts after dissolution

 Under Lump Sum Liquidation

 Under Installment Liquidation

VI. Corporation- Basic Concepts and Considerations

a. Overview
b. Definition
c. Characteristics
d. Advantages and Disadvantages from sole proprietorships and partnerships
e. Classes or classifications
f. Organizing a corporation

 Articles of Incorporation
 By- Laws
 Rights of Shareholder

g. Components of a corporation
 h. Minimum subscription and paid- in capital
i. Corporate organization structure
j. Corporate books and records

VII. Share Capital

a. Legal Capital
b. Share Premium
c. Types of Shares

 Ordinary
 Preference

d. Accounting for issuance of share capital

 Under memorandum entry method

 Under journal entry method

e. Share Subscription
f. Subscription Results
g. Accounting for Treasury Shares
h. Incorporation of Sole Proprietorships and/or Partnerships
i. Donated Capital

VIII. Retained Earnings

a. Introduction
b. Definition of Dividends
c. Important dates in dividend transactions
d. Kinds of Dividends
e. Accounting for Dividends

 With only one type of shares

 With two or more types of shares

f. Book Value per Share

g. Share Splits

 Share Split
 Reverse Share Split

h. Retained Earnings Appropriation

i. Prior Period Errors
j. Statement of Retained Earnings
k. Statement of Changes in Shareholder’s Equity
l. Earnings per Share
IX. Share Capital Transactions Subsequent to Original Issuance

a. Retirement
b. Conversion of Preference Shares to Ordinary Shares
c. Recapitalization