Vous êtes sur la page 1sur 13

Ch 1 Introduction to financial accting Accounting: a process of identifying, measuring and communicating economic info affecting a company, to allow informed

decisions by users of the info Accounting systems Financial-for external decision makers in!estors, creditors, customers" #anagement-for int$ decision makers info for planning, performance rept$s" Financial performance-generating new resources from daily operations o!er a period of time Financial position-an enterprise%s set of resources and obligations at a point in time Financial statements-rept$s describing financial performance and position &otes-part of statements which add explanations to figures eg accrual accting ad'ustments" (articipants in accting )sers decision-makers"-demand for credible periodic rept$ing to make informed decisions and for managers the impacts as well (reparers decision facilitators"- #anagers: responsible for running enterprise, issuing accting info and ctrl financial affairs$ *ookkeepers and clerks: responsible for basic recordkeeping under direction of management, creates transactional data for accting rept$s Accountants: shape financial statements by applying accting principles to records Auditors credibility enhancers"- assists users, on behalf of owners !erify whether financial statements are prepared fairly and consistent with accting principles Cash accting-recording re!enues and expenses when cash is recei!ed or paid Accrual accting-records re!enues and expenses when they occur, not cash flow Framework )nderstandability +ele!ance: -#ateriality +eliability: Comparability -Faithful representation -,ubstance o!er form -&eutrality -(rudence -Completeness Financial statement assumptions -Accrual basis: effects of transactions and other e!ents are recogni-e as they occur -.oing concern: business will continue operations in the foreseeable future -Accounting entity: the enterprise is separate and distinct from its owners -Accounting period: discrete periods o!er life of business where performance is e!aluated e$g$ determining profit / loss -#onetary: transactions are measured in currency units that are rele!ant to country where enterprise is in -0istorical cost: assets are initially recorded at cost$ )nder accrual accting a cost will be allocated to expenses o!er se!eral accting periods as life of e1uipment is consumed depreciation" (ublic ,ector Issues -.eneral shift away from cash accounting to accrual accounting at 2 le!els of go!t -.roups need info for making and e!aluating decisions 3 departmental managers, ministers, #(s, policy ad!isors, Auditor .eneral, ser!ice users, ratepayers and o!ersight groups e$g$ regulatory agencies

-4etermines whether department is achie!ing ob'ecti!es, operating economically and efficiently, using resources as intended, worthy of continuing support, able to pro!ide in the future -.o!t departments and councils pro!ide financial rept$s -.o!ernment 5rading 6nterprises .56s" 3 Australia post, ,ydney water etc 3 source of go!t re!enue through di!idends and taxation 3 go!t maintains profitability through efficient accounting procedures$ +ecent structural changes to these companies 3 industry deregulation, increased accountability, commercialisation and pri!atisation, pricing reform e$g$ water industry"

Ch 7 #easuring, e!aluating fin$ prfmce / pstn Assets-resources ctrled by entity due to past e!ents: -Future economic benefits: pro!ides g%s / s%s for exchange, to generate net cash flows -Ctrlled by the entity: capacity of an entity to benefit from asset in pursuing its ob'ecti!es and to deny or regulate the access of others -8ccurrence of past e!ents9transactions: transaction9e!ent gi!ing entity ctrl o!er future economic benefits must ha!e occurred :iabilities-present obligations sourced from past e!ents, expected to result in outflows of resources -8bligation exists, settlement in!ol!es a sacrifice of future economic benefits -Ad!erse financial conse1uences ensue should the entity fail to honor its obligation, lea!ing little to no discretion to a!oid future sacrifice of economic benefits 61uity-owners% interest in enterprise -stemmed from direct contributions, retained profit not withdrawn -shareholder e1uity based on past transactions, not current market !alue (reliminary analysis-study of financial condition -debt to e1uity ratio ; 4:6 496" x 1<< =" -working capital ; current assets3current liabilities -current ratio ; current assets9current liabilities -1uick ratio9acid test ; cash > !ery short term in!estments > accts rc!ble" 9 current liabilities -di!idends based on retained profit in business -net e1uipment ; cost of e1uipment 3 accumulated depreciation -Accting e1n always in balance: A ; : > ,6 Income statement -accrual basis 1$ +e!enues: -cash, monetary promises, other forms of wealth -recognition through whether good9ser!ice has been rendered 7$ 6xpenses: -wealth decreases incurred to earn re!enue -operation costs, C8.,, depreciation -sold in!entory ;? C8., 2$ (rofit9loss-net inflow9outflow of cash -retained profit c9b" ; retained profit o9b" > net profit9loss 3 di!idends declared

Current-within next 17 months &on-current-after 1 year Current ratio: (ositi!e-indicates able to meet current obligations &egati!e-indicates may be unable to meet current obligations :i1uidity-ability to meet short term obligations ,ol!ency-ability to meet long term obligations Income statement updates balance sheet accounts (ublic sector organi-ations are re1uired to produce a balance sheet and income statement

Ch 2 4ouble entry system 5ransaction analysis-lists all affected accounts in accounting period, showing all transactions affecting accounts 4ouble entry bookkeeping: 4ebits Credits >A >: >6 >,6 -: >+ -,6 -A

+esource effect-transaction%s effect on asset ,ource effect-transaction%s effect on liability9e1uity &o$ of debit accounts affected by transactions maybe more than 1, likewise for credits$ 5otal debits ; 5otal credits

Ch @ +ecord keeping 5ransactional filter Fundamental economic / legal characteristics: -exchange: goods, money, financial instruments, legal promises, other items of economic !alue -past: exchange must ha!e occurred -external: exchange must ha!e been between the entity being accounted for and an external party ,upplementary characteristics: -e!idence: paper or electronic documentation of e!ent -dollars: e!ent must be measureable in currency unit rele!ant in country where transaction occurs 5hese characteristics constitute to the historical cost basis of accting and pro!ide the grounds on which records can be audited to ensure credibility in accounting info 6-commerce -Compatibility between computer systems must be present for proper recognition of transactions$ 5rust in electronic media for system to function -AIn transit% acti!ities are a challenge to ctrl and reconcile as records can be done much faster while separate from physical mo!ement of good -(arties can form partnerships easily as they are able to en1uire computer systems for progress in production and orders$ 5hus financial statements and records must be accurate to answer reliably #anagers, bookkeeping and ctrl *ookkeeping and recordkeeping: -pro!ide the principal data on which accting info is built and constrains decisions9e!aluations as management depends on this info -pro!ide data and systems management uses to meet responsibilities: safeguard assets and maintain ctrl in operations +esponsible recordkeeping and mutual trust must exist as e-commerce works without documentation and yet demands a consistent trail of e!idence

Ch B +e!enue / expense recognition Accrual framework 1$ +ecognition of re!enue9expense at the same time as cash inflow9outflow-ad'ust asset9liability9e1uity accts accordingly 7$ +ecognition of re!enue9expense prior to cash inflow9outflow-creates asset9liability acct 2$ Cash collections9payments related to pre!iously recogni-ed re!enues9expenses-affects cash, decrease asset9liability acct @$ Cash inflow9outflow before re!enue9expense recognition-creates liability9asset acct B$ +ecognition of re!enue9expense after cash inflow9outflow-decrease liability9asset acct Accrual accting ad'ustments-ad'usting 'ournal entries with the purpose of making financial statements as reliable as possible: noting on cash based figures the sources of re!enues / expenses 6xpiration of assets-as assets are consumed in the process of earning re!enues, a portion of historical cost is written off as expense during each accting period )nearned re!enues-at the time of cash collection, the deposit recei!ed is recorded as a liability$ As ser!ice is pro!ided, liability decreases and earned re!enue rises accordingly Accrual of unrecorded expenses-expenses incurred but not paid until following period, accrued exp" as liability while exp" is recorded in income statement Accrual of unrecorded re!enues-re!enues earned but cash not recei!ed until following period, accrued r!nu" as asset while r!nu" recorded in income statement Financial periods-break off transactions into year ended accting records to separate current and past$ 5o accurately describes current !alue be it: beginning, end or during that year Accting for in!entory ,ales: 4+ Cash9accts rec$ C+ ,ales re!enue 4+ C8., C+ In!entory +eturns: 4+ ,ales returns C+ Cash9accts rec$ 4+ In!entory C+ C8., Ctrl accounts-accts with balances supported by detailed lists, subsidiary ledgers or other background data Contra accounts-accts with balances in the opposite direction of the associated ctrl acct

Cash flows which do not in!ol!e re!enues and expenses are limited to balance sheet accts

Accumulated depreciation9amorti-ation-contra acct of buildings, e1uipment etc Accts recei!able and contra accts 4+ *ad debts expense C+ Allowance for doubtful debts A44" Caluation of accts rec$ ; gross accts rec$ 3 A44 8ther recei!ables-shown separately if large, otherwise under A8ther debtors% A44: +ecognition-4+ *ad debts expense C+ A44 Cash flow-4+ A44 C+ Accts rec$ A-ChB ,pecial 'ournals, subsidiary ledgers and ctrl accts ,pecial 'ournal 5ransactions recorded ,ales Credit sales of in!entory (urchases Credit purchases of in!t$ Cash receipts All cash inflows inc$ D sales" Cash payments All cash outflows inc$ D purch$" (urpose-to eliminate the need for detailed recording in a general 'ournal and the general ledger$ Amounts can be posted from special 'ournals to general ledger as totals rather than indi!idual transactions ,ubsidiary ledger-a set of ledger accts that collecti!ely represents a detailed analysis of one general ledger acct classification$ +ele!ant acct in general ledger is a ctrl acct$ A subisidiary acct established for each customer 5rade discount-ad'usting the actual price charged to a customer from a standard Alist price%$ #ost enterprises record only the net amount of transaction, as the effect of trade disc$ is merely to set an actual price for transaction Cash discount-conditional ad'ustment after determining the actual selling price at which the transaction takes place .eneral 'ournal-depreciation, ad'ustments for prepayments and other accruals 5rade discount differs from a cash discount in that 54 takes place before an agreement on transaction while C4 occurs after transaction as an incenti!e for immediate or prompt payment

Ch E Int$ ctrl and cash Int$ ctrl-process affected by an entity%s board of directors, management and other personnel, designed to pro!ide reasonable assurance regarding the achie!ement of 2 ob'ecti!es 8b'ecti!es: 1$ effecti!eness and efficiency of operations that relate to entity%s basic business ob'ecti!es and safeguarding of resources ;? understand the extent to which operation ob'ecti!es are being achie!ed 7$ reliability of financial rept$ing, inc$ published financial statements, such as extracts of financial data from these statements ;? financial statements are being prepared reliably 2$ compliance with laws and regulation to which the entity is sub'ect ;? there is compliance with rele!ant laws and regulations Int$ ctrl consists of fi!e interrelated components: 1$ Ctrl en!ironment-acts as foundation for all other comp$ of int$ ctrl$ pro!ides discipline and structure, sets tone of orgn, influencing ctrl consciousness of its ppl$ Ctrl$ en!$ Factors inc$ integrity9ethics and competence of entity%s pplF mgmt%s philosophy and operating styleF how mgmt assigns resp$ and auth$, ogns / d!lps its ppl, and attn and drtn pro!ided by *84s 7$ +isk assessment-a precon$ to assmt is the estmt$ of ob'ecti!es, linked at diff$ l!ls and int$ly consistent$ +isk assmt is idtn and analysis of rele!ant risks to achie!ement of ob'ecti!es, forming basis for determining how risks should be managed$ #echanisms are needed to identify and resp$ to special risks associated with change to external en!$ 2$ Ctrl acti!ities-the policies and procedures that help ensure mgmt directi!es are carried out ie nec$ actions are taken to address risks to achie!ement of entity%s ob'ecti!es$ Ctrl acti!ities occur throughout all l!ls and functions of orgn inc$ acti!ities such as appro!als, authori-ations, !erifications, reconciliations, re!iews of operating performance, security of assets and segregation of duties @$ Info and commn-pertinent info must be identified, captured and comm$d in a form and within a timeframe that enables ppl to carry

out resp$ Info systems produce rept$s, categori-ed info oprnl, fincl and comp$related info" that constitutes to run and ctrl the business$ Int$ly generated data and info about ext$ e!ents, acti!ities and conditions nec$ to informed decision-making and ext$ repting$ 6ffecti!e commn must be broad ie flowing up down, / across orgn$ All personnel must recei!e a clear mssg from top management about seriousness of ctrl resp$ and understand how their indi!idual roles correlate$ 5here must also be a means to communicate significant info upstream$ 6ffecti!e commn needs to be present with ext$ parties, stakeholders such as shareholders, regulators B$ #onitoring-int$ ctrl systems monitoring 3 ass$ing 1uality of system%s prfmce o!er time$ Accomplished by monitoring acti!ities a9o separate e!aluations$ 8ngoing monitoring occurs throughout operations, they inc$ regular mgmt and super!isory acti!ities, and other actions personnel take in prfmce of duties$ ,cope and fre1uency of separate e!aluations depend largely on an assmt of risks and effecti!eness of ongoing monitoring procedures$ Int$ ctrl deficiencies should be repted upstream with serious matters repted to top mgmt and *84s Ctrl acti!ities: 5op l!l re!iews-mgmt re!iew actual prfmce compared to budgets, forecasts and prior period results$ Assmt of which targets are being achie!ed$ Ctrl acti!ities inc$ mgmt actions to analyse progress and reporting actions Info processing,eparate record-keeping from handling assets(hysically protect sensiti!e assetsInt$ ctrl of cash *ank reconciliations (erforming a bank reconciliation from info in cash 'ournals (etty cash 4isclosure of int$ ctrl in annual rept$s #anagers and int$ ctrl

(ublic sector issues