Fundamentals of Financial and Management Accounting
(1CV10)
Lecture 1:
Management accounting: interne verslaggeving (gericht op verstrekken van
financiële informatie binnen organisatie (manager))
Financial accounting: externe verslaggeving (gericht op verstrekken van
financiële informatie buiten organisatie (overheid, aandeelhouders))
Financial accounting Chapter 1, 2:
Financial statements:
- Statement of Cash Flows: cash flow statement
- Income statement: profit and loss account
- Statement of Financial Position: balance sheet
- Each statement provides a part of the picture of financial performance and
the position of the business
Cash is a vital resource that is necessary for any business to
function effectively so we need a Statement of Cash Flows
But changes in cash do not give insights into the profit generated
so we need an income statement
The company is obligated to report the total wealth to investors, the
government, … so we need a Statement of Financial Position
Statement of Cash Flows: the statement records all cash flows in a period
- related to the financial health of the company
Income statement: the statement records incomes and costs, calculation the
profit or loss in a period
- Gross profit: sales revenue – cost of goods sold
- General Expenses: bedrijfskosten (salaris etc.)
- Operating Earnings (EBIT): Gross profit – General Expenses
- Net Profit: profit after tax
- Revenues: value of the goods and services delivered to clients
- Expenses: the cost of all resources used to deliver the goods and services
- Profit = Revenues – Expenses
,The Statement of Financial Position (Balance Sheet): the statement
records assets (bezittingen/activa), liabilities (vreemd vermogen), and equity
(eigen vermogen)
- Related to the company’s wealth
- Assets = Current Assets (vlotte activa) + Non-Current Assets (vaste
activa)
The resources of the business
- Claims = Equity + Liabilities
The obligations of the business
- Assets = Claims
- Equity = Assets – Liabilities
Assets:
- Assets should be able to:
Provide a right for the potential to receive economic benefits (zoals
inkomsten uit verkoop of kostenbesparingen)
Be exclusive to the business (andere bedrijven maken er geen
aanspraak op)
Control over the resource (het bedrijf kan bepalen wanneer en hoe
de economische voordelen worden benut
Be capable of measurement in monetary terms (de waarde van de
activa moet in geld uitgedrukt kunnen worden)
- Non-current and current assets:
Non-current assets: hold for a long period (property, computer
software, motor vehicles)
, Current assets: hold for a short period (Cash at bank, trade
receivable (debiteuren), inventories)
- Tangible and Intangible Assets
Tangible assets (tastbare activa): property, plant (fabrieken,
machines, etc.), inventories, cash
Intangible assets (niet-tastbare activa): computer software,
patents
- Non-current Asset value accounting approaches:
Net book value = historic costs (aanschafwaarde) –
depreciation (afschrijvingen)
Market value = current market value
Claims:
- Equity: claims of the owners against the business
- Liabilities: claims of other parties
Equity:
- Share capital: stock of the shareholders
- Retained earnings: accumulated profits (winstdeel dat opnieuw wordt
geïnvesteerd in het bedrijf)
- Others: capital reserves, etc.
Liabilities:
- Current liabilities: for a short period (Short-term borrowings (korte
termijn leningen), trade payables (crediteuren), accured expenses
(Kosten die een bedrijf heeft gemaakt, maar die nog niet zijn betaald)
Borrowing = lening
Bank overdraft = Schuld aan de bank (negatief banksaldo) (cash
saldo = inkomende cash – bank overdraft)
- Non-current liabilities: for a long period (Long-term borrowings
Relation Balance Sheet, Income Statement and Cash Flow Statement:
, Financial accounting Chapter 3:
Ledger accounts:
- Ledger account looks like ‘T’ or is called T-
account
- Categories of Ledger accounts:
Assets category, equity category,
liability category for balance sheet
Expenses category, revenue category for income statement
- Debit and credit rules
If assets or expenses(kosten) increase ledger account is debited
If equality, liabilities or revenues(omzet) increase ledger account
is credited
This works also vice versa
- Double-entry Keeping Rule: every transaction influences (at least) two
recording actions; debit and credit the same amount
Example:
(1CV10)
Lecture 1:
Management accounting: interne verslaggeving (gericht op verstrekken van
financiële informatie binnen organisatie (manager))
Financial accounting: externe verslaggeving (gericht op verstrekken van
financiële informatie buiten organisatie (overheid, aandeelhouders))
Financial accounting Chapter 1, 2:
Financial statements:
- Statement of Cash Flows: cash flow statement
- Income statement: profit and loss account
- Statement of Financial Position: balance sheet
- Each statement provides a part of the picture of financial performance and
the position of the business
Cash is a vital resource that is necessary for any business to
function effectively so we need a Statement of Cash Flows
But changes in cash do not give insights into the profit generated
so we need an income statement
The company is obligated to report the total wealth to investors, the
government, … so we need a Statement of Financial Position
Statement of Cash Flows: the statement records all cash flows in a period
- related to the financial health of the company
Income statement: the statement records incomes and costs, calculation the
profit or loss in a period
- Gross profit: sales revenue – cost of goods sold
- General Expenses: bedrijfskosten (salaris etc.)
- Operating Earnings (EBIT): Gross profit – General Expenses
- Net Profit: profit after tax
- Revenues: value of the goods and services delivered to clients
- Expenses: the cost of all resources used to deliver the goods and services
- Profit = Revenues – Expenses
,The Statement of Financial Position (Balance Sheet): the statement
records assets (bezittingen/activa), liabilities (vreemd vermogen), and equity
(eigen vermogen)
- Related to the company’s wealth
- Assets = Current Assets (vlotte activa) + Non-Current Assets (vaste
activa)
The resources of the business
- Claims = Equity + Liabilities
The obligations of the business
- Assets = Claims
- Equity = Assets – Liabilities
Assets:
- Assets should be able to:
Provide a right for the potential to receive economic benefits (zoals
inkomsten uit verkoop of kostenbesparingen)
Be exclusive to the business (andere bedrijven maken er geen
aanspraak op)
Control over the resource (het bedrijf kan bepalen wanneer en hoe
de economische voordelen worden benut
Be capable of measurement in monetary terms (de waarde van de
activa moet in geld uitgedrukt kunnen worden)
- Non-current and current assets:
Non-current assets: hold for a long period (property, computer
software, motor vehicles)
, Current assets: hold for a short period (Cash at bank, trade
receivable (debiteuren), inventories)
- Tangible and Intangible Assets
Tangible assets (tastbare activa): property, plant (fabrieken,
machines, etc.), inventories, cash
Intangible assets (niet-tastbare activa): computer software,
patents
- Non-current Asset value accounting approaches:
Net book value = historic costs (aanschafwaarde) –
depreciation (afschrijvingen)
Market value = current market value
Claims:
- Equity: claims of the owners against the business
- Liabilities: claims of other parties
Equity:
- Share capital: stock of the shareholders
- Retained earnings: accumulated profits (winstdeel dat opnieuw wordt
geïnvesteerd in het bedrijf)
- Others: capital reserves, etc.
Liabilities:
- Current liabilities: for a short period (Short-term borrowings (korte
termijn leningen), trade payables (crediteuren), accured expenses
(Kosten die een bedrijf heeft gemaakt, maar die nog niet zijn betaald)
Borrowing = lening
Bank overdraft = Schuld aan de bank (negatief banksaldo) (cash
saldo = inkomende cash – bank overdraft)
- Non-current liabilities: for a long period (Long-term borrowings
Relation Balance Sheet, Income Statement and Cash Flow Statement:
, Financial accounting Chapter 3:
Ledger accounts:
- Ledger account looks like ‘T’ or is called T-
account
- Categories of Ledger accounts:
Assets category, equity category,
liability category for balance sheet
Expenses category, revenue category for income statement
- Debit and credit rules
If assets or expenses(kosten) increase ledger account is debited
If equality, liabilities or revenues(omzet) increase ledger account
is credited
This works also vice versa
- Double-entry Keeping Rule: every transaction influences (at least) two
recording actions; debit and credit the same amount
Example:
