tactoid | © Ge Hordory tofre ty feturer, @ NW orano featyrer @ on ome 6 howte @ orectrm wt Breryy eencutiatrens 9/10/2015 m= “*You have to know accounting. t's the language ‘of practical business ie FINANCIAL ACCOUNTING + Charlie Munger FINANCIAL ACCOUNTING Lecture (Mr. Lim Cheo Ming + Thurs 1600-4700 FIAIS Optional Ctinies + One efinic per week for 9 woeks ‘a. Commencement - Wook & ESI nna accournne ‘Nanci ACCOUNTING Lm cHEE mine °: Thurs 4200-1400 (1410) Room: Fri 4000 1100 (F122) ELG 17, NUBS, Feculty of Social Sciences ‘100 - 1200 (F122) ‘200 » 1300 (F122) Email cheeming im@nottingham.edumy 4430 - 1530 (F122) 4530 "4690 (F122) Tor 8824 8783 FINANCIAL AccouNTING ‘HNanirat ACCOUNTING Ground rules onsutaton: * Mobile phone {a)Mon 1100 - 1300 + Reading in advance meee * Lectures Thurs 1100 - 1300 + Optional + Consultation + Approaches ~ self di + Questions ~ Practice, Practice, Practice + Think it! + Please do not ‘audit rected learning (0) By appointment9/10/2015 FINANCIAL ACCOUNTING Learning Objectives and Outcom "ro enable the tent eat ne features of aecoumting information ‘lye the key ‘DTobe abet emonsrae a understanding the wie ofifaematontn seountng reports Ao aliow stedontsto develo appropri is by proving oppatuntyto prover accuntng "uansacions, mansaly and develop acounng reports To develop students understanding ey accounting ‘tems sein typi anal company report. FINANCIAL ACCOUNTING jothod and eritoria of assosement (Resi) +The resit exam mark will form the cntire resit module mark and hence the basis of a decision on progression or otherwise FINANCIAL ACCOUNTING ANCIAL ACCOUNTING Essential points Lectures The lectures will onl give you the skeleton of Reading & Thinking 22 tho tpl. Your need to ea tout tid 7 yourselves: Thewil nvalve Clinic 9 * reading Exam Preparation _25 + thinking = Fr “practising Note: It should be revision in Dec / Jan, not learning Access to Moodie ‘nancias accouNTiNs GHEE emwansaccouwnme Method and criteria of assessment + Atwo-hour examination + _ Three sections + Section A~ compulsory (oo ane rt 20MCas, 40 marks + Section 8 - compulson(uyfhm sanivurt’) 2 Questions - largely numerical, 50 marks + Section C~3 essay questions + essay type questions attempt ONE only, 10 marks vo es Essential text tories ‘buchos Aecouneig PAP bd ama a a + Fully worked examples help you to understand and apply the theory you are learning + Review questions at the end of every chapter + Extra online resources will give you extra practice to help you pass the module! Root hing oF Aca, a mai tates Ao morta > 8o - as minatee= ewe 3 moMNMG Chace Pareptinant (+ ll stapes 9/10/2015 FEES swancraaccouwrns Other useful resources + Other text - please see module outline + Newspapers, eg. Financial Times & AWS + Magezines + Journals, eg. Financial Management (CIMA), Accountancy, Accounting and Businoss Research (ABR) and otc. + @Finance Definition of accounting a saries of proceses and techniques use to ident, measure and communiate economic information whieh users fndhelpfutia making deesions FINANCIAL ACCOUNTING Part “Introduction to financial accounting” Definition of accounting |. Uses and users of accounting information I. Types of business entity Definition of accounting 2 sales of processes and techniques used to ideny, measure and communiste economic Information which user find helpulin making dections Semin: Points to note ‘Financio Accounting: An Introduction, Pauline ‘Wetman, 62d, + scouring a tev function, tan endin el © chapters! Business Accounting 1, Frank Wood & Alan Sangster, 13% ed Framework forthe Preparation and Presentation of Financial Statements ASB9/10/2015 Definition of accounting sn sere of processes and techniques used to identity, messure and communiate economic Information which Urs find help in making decsions Points to note + sczountingis a service fonction, nt an endin el + sezountingdeas with economic information + daefiation ane measurement of informstion Points to note + scountingisa service function, not an enn elf + scexuntng deals with economicinformation Definition of accounting 2 series of processes and techniques used to ident measure and communieate economic Information which user find helpfulln making decisions Definition of accounting whic users fina elpflin making a sales of processes and techniques used to rely ener a nT Information Points to note accountings Service function, notan end in sell accounting dels with economic information + ientiction and measurement of formation ‘communication ofnformation + te iformation must be helfuln making decisions9/10/2015 Uses and users * is i Users of accounting information oe -e Points to note + accountings serie function not an end in el + accounting dal with economicinformation + identification and measurement of information + communication of information Definition of accounting 3 series of processes and techniques sed to ident measure and communiate economic information which ser find help ia making Seciions Uses of accounting information Shall T ives in this a How shall Ladvise my client? ‘Should I sell my shares? Will my money be ester? Tlend ‘The company wants sofire me what Wit eee Campensation ely? Year Wil receive bonus ‘This fiem is pllting How much taxis due? curenvironment Tai safe to supply goods? Major branches of accountancy9/10/2015 Communication Rar bo 1S Terminolog co alryena + Salas revenue Geo 000 turnover 4 (0 cm Tans income * Cost of goods sold (cogs) > RINEED x _{O + Gis prof em e900, + expenses + Net profit + Appropriations How do Accountants communicate? it conta axed of any oy ot Fone conte Sreener SS9/10/2015 PregoRTDN oF Reosae) state for only Language difficulties Types of Business Entity + Sole trader * al + Partnership Debtors Accounts receivable 2% Viiitedtabilty company one inearess, + Lmited iby partnership * (Ordinary shares Common stock For accounting purposes business entity is seen 23 separate economic entity fom the Property Realestate ouner/partners/shareholders crettors ‘Accounts payable roatty wr oottnned. SOM. BHO = Untied froktttting wotig OPM] = MMO RA + Miror hobitifag Statement of Financial Position terminology Part2 + Reserves: money tained inthe busess ~~ + Curentassets: moneyinvested ih working apa “Framework, concepts, fechniques & + cureneibities: money owed to supers qualitative characteristics” + Debtors: customers who have not yet paid for goods r services FINANCIAL ACCOUNTING + creditors: suppliers who have not yet bea pa for ods or services isions to titles of Financial Statements Sec the Comprehensive nce Reading + se sam-of conthoneg ion = cctwmart of al PORT oF her + vita nents. =FRET OH CO A framework should enhance comparability to cRA. ee const conor? 70 ororge. eco, ae, 9/10/2015 The need for a framework A framework should increase financial statement users’ understanding of and confidence in financial reporting, ‘among companies financial statements. 1 New and emerging practical problems should be ‘more quickly solved by reference to an existing framework of basi theory. heaton Aeeanting Sencar Goord. Fnoneral fenontig stancord @coed FASB / IASB Improve the usefulness of financial reporting Keep standards current 1 Consider promptly any significant areas of deficiency in firancial reporting Promote the international convergence —F Improve the common understanding OO 1 improve the ersanaing OS OI EDO “Guattative characters of nancial statements Understandabilty kelevance Rellabilty Comparabilitytecture 3 Dg ozo cpm oF Scan, copay sal tte for Aytura of ArCONcide aver accouvtng “nay mother was determines to make vs independent. When | vas four years old she stopped the cara few niles from our house and made me find my own way home across the feds. got hopelessly lost” + Sit Richard Branson @ [setO0 > ~~~ Learning objectives + Understand the meaning ofthe various es: + boundary measurement fundoment!| © Appreciate the assumptions inherent inthe concepts ‘© Consider he ettocts of he concepts on the financial statements Reading + Framework forthe preparation and presentation of Financial Statements +S 1 Presentation of Financial Statements (Honout &.19. 2015) + Wetman -Chapters 2,3, 4&5 + Wood ~Chapter 10 &1 Buying and selling stock ‘You buy 30 tas of beans at 10p each ‘ou ell7 ts of beans fora5p each ‘nat profit nave you made? sles 245, ost of Goods Sot (C065) 070 Prott Txq.25 xh109/10/2015 Statement of Financial Position Income Statement / Statement of Profit or Loss TP ewtor se + Income Statement / statement of Profit or ass + Statement of Finandal Postion ( €CrU -4 CONDO) The Financial Statements period statement = how we have we done this year where te we nw? "where dé the money come from and go 107" Boundary Measurement ‘ules ies Statement of Financial Position Btral > clorty pasrautry Perna > mod 4a ie chor before “Th kalng Sakb for an OL fou. The Financial Statements Assets and Liabilities9/10/2015 fe neroree Elements of the Statement of Financial Position (Dwetg, ve cathy ord honk. Trachmort => iororgTe ances (uit prysteal oes} Pe}> RoE WRC shold eR cero Leet onder Ae Net Cone onpe / obTHa. 9/10/2015 Elements ofthe Statement of Financial Position Statement of Financial Position continued ... erased exgtiy vere con cet choet famM WGAND HE (WD SRA renmnisar Iota rete Elements ofthe Statement of Financia Position The accounting equation Foot ar = hay SKE AP CUM Of count raised) ocwart aloes 1H 0 Oars, on QudraKTAD (wong eee 40 uREE Fe vorndore RTT AT Statement of Financial Position format ances Sof 3 cespenny AOE ‘Rage sees ated Assets = Equity + Liabilities ‘oremasets ea ‘our chlo Ba aerate oon, ae, Resources; = Resources Carers wae what they are who supplied them Newent aie asen war oe Fe ie ea aoc = _ © Fomof Paials FOE Sit balones. CqoetvD © smo Coane (cep EL radars foc ake atone CoegSTNG) “es practatr = qigate poroDNA:The accounting equation rearranged “Te equation can be rearranged s0 as to enable the caleuation of missing figures: Assets = Equity + Liabilities Liabilit Assets - Equity -crease another asset The Accounting Equation Increase an asset..... Hea [ee @oy inventory Coon oe) Increase an asset. ..0F increase a liability {xaanzraes 9/10/20159/10/2015 Accounting Profit Income Statement / Statement of Profit or Loss Definitions of profit frottisconma nee fisheye. yan you sp yeor thon at the beginning of the year Assets and Costs > Incaina —S4BNRD rot pecacre ot rattler ton Profit "the excess of the selling price over the costs of providing the goods or services sal (cog) (A oererary of accountng Profit =Tncome -Expenses ___ ovr) chan UNNORETY FAR Fea Rohs in Stern oF FOMEY O Lox Receive abilfor gas consumed Sequel —> IER = NH OT Teh RON ‘Transaction ‘Assets Liabilities | Equity 1 _ cree THOR 2 pax’ fio 3 toe Jog dacttOO 4 ¥ p | +/r_| 6 Ks _ 7 | ince nce 8 WORGRA 3 [packer WARS 10 [PMO fo Padus | 9/10/2015 _— oS eaity erty Ronan i — fm 19 tomnney of Prot /L9e > eoord, 10, Pay cash to the owner for personal use > GownTep > cokt tro = Peel - Ucarttieg, cpt OF aquity