202007Sem

Singapore University of Social Sciences

School of Business
ACC201 – Financial Accounting
Outline for Seminar 1:
Introduction to Financial Accounting
Recording Business Transactions

Learning outcomes:
• Describe the role of accounting in business and the users of financial accounting
information.
• Explain key accounting concepts, assumptions and principles behind financial
reporting as prescribed by the Conceptual Framework.
• Identify the four financial statements and evaluate a company’s operating
performance and financial position for decision-making.
• Define the elements of the financial statements.
• Use the accounting equation to describe a company’s financial position and
financial performance.
• Describe an account.
• Analyse business transactions.
• Explain the general rules of debit and credit.
• Identify the flow of data in the accounting cycle.
• Record business transactions in a journal journal and post to the respective
ledger accounts.
• Use a trial balance to prepare financial statements.
Required readings:
• Study Unit 1 and its chunked lectures*
• HHTS: Chapters 1 and 2
• The Conceptual Framework for Financial Reporting 2020^

* Available in iSG
^Available on ASC website (https://www.asc.gov.sg/pronouncements/financial-
reporting-standards/2020-volume)
Seminar requirements:
• Read the course guide and take note of the expectations and requirements for the
course in relation to seminar participation, mid-term quiz, group-based assignment
and final exam.

1
202007Sem

Study Unit 1 Chapter 1 – Introduction to Financial Accounting

1. Conceptual Questions:
a. What is the objective of general purpose financial reporting?
b. Generally, what are the assumptions behind financial reporting?
c. What are the key accounting equations?
d. How are the financial statements related?

Study Unit 1 Chapter 2 – Recording Business Transactions

1. Conceptual Questions:
a. Does debiting an account necessarily increase the balance of the
account?
b. Does crediting an account necessarily increase the balance of the
account?
c. What is a general ledger?
d. What is a trial balance?

2
202007Sem

2. Analyse the nature of each of the accounts and whether to debit and credit the
corresponding account given the increase or decrease as stated in the table.
(E.g. “Cash increases” – Since cash is an asset account and there is an increase
to an asset account, and assets are “debit” in nature, we debit cash and mark a
“X” in the debit column. Suppose “Cash decreases” – Since cash is an asset
account and there is a decrease to tan asset account, and assets are “debit” in
nature, we credit cash and mark a “X” in the credit column.)

Item "RELAX" Debit Credit

Utilities expenses increase
Interest expenses increase
Insurance expenses increase
Depreciation expenses increase Expenses
Loss on disposal of land (increases)
Salaries expenses decrease
Income tax expenses decrease
Prepaid expenses increase Asset
Cash increases Asset X
Office furniture increases
Office supplies increase
Goodwill increases Asset
Accounts receivables increase
Trade debtors decrease
Inventory decreases
Land decreases
Number of delivery vans decreases
Prepaid expenses decrease Asset
Loan payables increase
Note payables increase
Accounts payables increase
Trade creditors decrease
Wage payables decrease
Accrued expenses decrease Liability
Unearned revenue decreases Liability
Issue ordinary shares (increases)
Issue preference shares (increases) Equity
Service revenue increases
Sales revenue increases
Gain on disposal of land (increases)
*The items listed in bold would be covered in greater detail in the subsequent study
units.

3
202007Sem

3. Travis Ng incorporated a dental practice, TN Dentalcare Pte Ltd, on 1 January

20X1. During January 20X1, the following transactions took place:

Date Transaction

Jan 6 Travis invested $40,000 in the business, which in turn issued ordinary shares
to him.
Jan 9 The business paid $25,000 for dental equipment, with a residual value of zero
and a useful life of 5 years.
Jan 12 The business purchased $16,000 of dental supplies inventory on credit.
Jan 31 The business borrowed a loan of $18,000.
Jan 31 The business paid $1,100 for the dental supplies inventory that was earlier
purchased on credit.

During the month, the business earned service revenue of $8,000. As some procedures
are costly, credit was allowed to some patients and these patients are given 60 days to
pay for the services. For the month of January, cash was collected for half the service
revenue earned. During the month, the business also made the following cash expenses
- $800 for employee salaries, $800 for office rental and $200 for utilities. Assume that
TN Dentalcare Pte Ltd adopts the perpetual inventory system. 1

(a) For all the above transactions, analyse the effects on the accounting equation,
Assets = Liabilities + Equity, prepare the necessary journal entries, post the
journal entries to the general ledger and prepare the unadjusted trial balance.
(Partial Answer Key: Net effect on Assets = $79,100; Net Effect on Liabilities
= $32,900)

(b) Who are the stakeholders, current and potential, and what are their interests in
the financial information of the dental practice?

1
We will study this in Seminar 3.