Course

Introduc-on
Introduc)on
and
Accoun)ng Informa)on
S1

Introduc)on

Introduc)on
Chong Kooi Wah
kwchong@ntu.edu.sg

Course Descrip)on and Objec)ves

Prepara<on of Financial Statements
Measuring and disclosing informa<on that facilitates
decision-making quality of informa<on
Accoun<ng Standards
Conceptual Framework
The Standards
Recogni<on
Measurement
Presenta<on & Disclosure

Course Assessment
Components

1 Seminar Par<cipa<on

10

2 Team Project

15

3 In-class Quiz

4 Term Test

20

5 Final Examina<on

50
100
5

Prescribed References and Ar)cles

Customised Text (CT)
Financial Repor<ng Standards (FRS)
Reading Ar<cles

Course Schedule
23 Seminars (including e-Learning)

Introduc<on
Measurement System
Opera<ng Ac<vi<es
Inves<ng Ac<vi<es
Financing Ac<vi<es
Other Measurement and Disclosure Issues
7

Course Schedule
Introduc<on
Measurement System
Conceptual Framework, Standard-se[ng, etc.
Opera<ng Ac<vi<es
Revenue, Trade Receivables, Inventory
Inves<ng Ac<vi<es
PPE, Investment Property, Intangibles, etc.
Financing Ac<vi<es
Equity nancing, Debt nancing, Dividends, etc.
Other Measurement and Disclosure Issues

GROUPING
Teams of 5

Course Descrip)on and Objec)ves

Prepara<on of Financial Statements
Measuring and disclosing informa<on that facilitates
decision-making quality of informa<on
Accoun)ng Standards
Conceptual Framework
The Standards
Recogni<on
Measurement
Presenta<on & Disclosure

10

Course Descrip)on and Objec)ves

Prepara<on of Financial Statements and Accoun<ng Standards
Accoun)ng Framework
Recogni)on (when?)
Accrual basis of accoun<ng, probability, reliable measurement,
Measurement (at which amounts?)
Es<mates, judgment, models, ...
Alloca<ons, provisions, etc.
Historical cost, fair value, value in use, etc.
Presenta)on & Disclosure
Presenta<on, classica<on, ose[ng, disclosure, etc.
11

Accoun)ng Informa)on

12

Course Introduc<on: Accoun<ng Informa<on for Business Processes and Decision Making

Impact
tion, &
i
n
g
o
Rec
:
2
tation
0
n
1
e
1
s
B
e
A
t, Pr
n
e
ation
m
m
e
r
r
o
u
f
of in
Meas
e
r
u
s
Disclo
erspe
p
s

r
re
Prepa

Firms
business
processes

Accumulate

ctive

Accounting

Users ve
ecti
persp

External
Users

External
Decision
Making

Other
sources
Information

Internal
Users

Internal
Decision
Making

Impact
13

Demand for Financial Repor)ng

Shareholders and investors
Managers and employees
Lenders and suppliers
Customers
Government and regulatory agencies
14

Objec)ves of Financial Statements

..... provide nancial informa<on about the
repor<ng en<ty that is useful to exis<ng and
poten<al investors, lenders and other
creditors in making decisions about providing
resources to the en<ty ..

(Conceptual Framework (CF) Chp 1 para ) OB2)

15

Informa)on Needs of Investors and

Creditors
Investors (e.g. equity investors, nancial advisors,
etc.)

Creditors (e.g. commercial banks, insurance
companies, lenders, suppliers, etc.)

16

Informa)on Needs of Investors and

Creditors
What are the factors that Investors and Creditors use in their
assessment?
Interest, dividends, repayments,
Liquidity, solvency,
Priori<es in payments,

What informa<on do Investors and Creditors need for their

assessment?
Resources (assets)
Claims
Eciency of management and opera<ons

17

Myths
Objec)ves of Financial Statements
Record of historical transac<ons?
Support tax returns?
Meet informa<on needs of all users?
..

18

Quiz

General-purpose nancial repor<ng?

19

Disclosure Incen)ves and Supply of

Financial Informa)on
Mandatory repor<ng (covered in Seminar 2)
Voluntary disclosure
Disclosure benets
Disclosure costs

20

Informa)on Risks and Role of

Assurance
Flexibility in accoun<ng policies/prac<ces
Uncertainty
Cost constraint
Self-interest
Role of assurance
To mi<gate informa<on risks
(to be covered in AA205)

21

Q2
a) What role do accoun<ng numbers play in
contracts?
b) What incen<ves do contracts based on accoun<ng
numbers create for par<es involved?
c) How do these incen<ves help us understand why
managers choose certain accoun)ng methods and
avoid others?
d) How do these incen<ves inuence when
transac<ons are recorded?
(Ref: RCJM chp 7)

22

Quiz

Accoun<ng Standards?

23

Seminar 2
The Linkage and Preview

24

Conceptual Framework
Conceptual Framework sets out agreed concepts
that underlie nancial repor<ng
objec<ves
qualita<ve characteris<cs
element deni<ons
...

Rule-based vs Principle-based
25

Conceptual Framework
Standard semers uses Conceptual Framework to set standards
enhances consistency across standards
enhances consistency over <me as Board members change
(provides benchmark for judgments)
Preparers use Conceptual Framework to develop accoun<ng
policies in the absence of specic standard or interpreta<on
Auditors?
>>> Comparability?
26

Seminar 1 - END

Introduc)on
and
Accoun)ng Informa)on

27