Financial
accounting
Chapter Conceptual Framework and Financial Statement
1 :
. Understand the rols
1
of accounting communicating financial information in
Def Accounting language of business how business financially
: the : = do
↳ an
information system that identifier , measures ,
records summarize and reports economic
, , information
from business activities to decision makers in theform offinancial statements
Financial statement-business document to report the activities to their
company's result of
this information to make decisions
various user
groups ,
they use
Financial
Accounting focuses on the
specific needs of decision maker external to the organisation
Maragement Accounting serve internal usere with
information like detailed costprice calculations
Financial statements for external publishing need tofollow accounting rules GAAP some
Generally Accepted Accounting Principles depend the jurisdiction and the form ofbusiness organization
on
the rules International
of Accounting Standards Board IFRS Accounting Standards (IAS/IFRS)
↳ we use
↳ International Reporting Financial Standards
Organizing a Business
1) Proprietorship : 1
owner-proprietor the proprietar is
,
his personal
personally table for business delta without including
finances proprietorship is separat from its proprietos .
2) Partnership : 2 owners and each owner in a partner ,
the incons and loss in
recognised or their
agreedpercentage
-General partnership have mutual
agency
and unlimited
liability s each partner
may
conduct
ofthe entity andmaks agreements thatbind all partners
business in the name
-
Limited-liability partnership created partner can't create large liability for
was so as a
the other partners each partner liable for partenhig debt
,
now
only up to the extent of
is
their investment in the partnership
3) Corporation owned by shareholders they shares thatrepresent ownershipThe
mayor acdroutage in
:
,
own L
the
ability to
capital by selling
raisshares to the public Proprietorships parthenship
and . s more
numerous > corporationtransout mars business and
larger in assets ,
income ,
of employees
and number .
The shareholders have personal obligation for the debt's and hows limited liability do
no
They get s vote
.
for each share
they own.
They elect the boad
of directors which set
,
policy and appoint management officers r
↳ like CEO ,
LOO CFO ..
, -Chapters
.
2 Understand the
underlying accounting concepts the in FFRs conceptual framework
Def Assets Resources the
: = that
company
owns or controls can
bring future benefits
economic
Liabilities obligation to transfer
Present
resulting from past
: resources to others ,
events
The owners' claim
Equity : on the
companyassets after babilities are deducted
labilities shareholder transactions Includes severe agains
equity, excluding
Income = assets as =
.
.
Exercess assets labilities shareholder transactions
equity, excluding
Includes losse
as =
.
regular costs a
net totalrevenues exceed total net
income =
expenses =
profit
net los-total expenses exceed where
net- to an amountrefers substraction after a
=> Netiione (or loss) equation : total Reverus -
total expenses = Netincome or loss
their inverterets, when
dividers = is
payed to shareholders as return on
usually in cash ,
an increas in returned
earnings
. Obtain
3
insight into business operation through financial statements
Balanes Sheet :
snapshot at one
point in time the
life of business and showe it's financialposition
in as
assets-liability+ equity or
aets-bability equity -
converted to cash short-term payablesmonths)
2 old or consumed ( within the next 12
the next 12 months
during
The
equation is based with a double
entry accounting
recording methods where at leastaccount or
achways affected by each tromeoutir
a chaiparties
summeryofthe
a
=
Incons Statement : show the reverses and experen over a , like
period of time one
financialyear , ·
↳ Retained the total has accumulated
incons :
carings the
company
over its
lifetime ,
Retained earnings minur its total laser and dividends paid out.
RFs11x RE =
.
+ net income -
dividen
, Chapter 2 :
Recording Business Transactions
.
1 Explain what as Business transaction is
the business and
..
Def Transaction = an event that has a
financial impact on can be measured
reliably .
>
-
They also provide objective information aboutthe financial impact of exchange of entity an an
x
they reflect increases and /or decreases to
financial statement elements .
.
4
Recording journalis and post) transactions in the book
Accountants us
double-entry accounting system at leat I accounts are
always affected by each tromeaction
there transaction need to be recorded in a
systematic manner
=> Transactions) Documentation Journal 3) Ledger 1) Trial Balance >
-
51 Financial Statement
1) Documentation , lash receipt ships
supporting original records of any transaction
: invoices ,
ex .. ...
2) Journal : a
chronologicalrecord oftransaction process with steps ,
a 3 :
specify each affected classify each account by type
account o
Trick
Both
:edit
2) determine ifeach account is increased as decreased debit as credit
record tha transaction in the
jara debit is fi lite i
,
the
left on the credit i the
right n g
3) Ledger : a
grouping of allthe T accounts ,
with their balances
5 -
Construct and us a trail balance
4) Trail Balances of all the account balances for the financial statement
summary
:
a ,
it also shows
iftotal debit total credit, usually constructed atthe end of the period
chart
of accounts is used to list all their accounts and account numbers
↳ count number Assets begin babilities equity
, , ,
revenue 4
, expenses
the 2nd
higer indicates the position
↳ 3th and
,
Final step
Recording process-the financialstatement
=>
in are
prepared
the start the preperation is the trailbalance balance sheet and income
of of the statement
>
-
.
accounting
Chapter Conceptual Framework and Financial Statement
1 :
. Understand the rols
1
of accounting communicating financial information in
Def Accounting language of business how business financially
: the : = do
↳ an
information system that identifier , measures ,
records summarize and reports economic
, , information
from business activities to decision makers in theform offinancial statements
Financial statement-business document to report the activities to their
company's result of
this information to make decisions
various user
groups ,
they use
Financial
Accounting focuses on the
specific needs of decision maker external to the organisation
Maragement Accounting serve internal usere with
information like detailed costprice calculations
Financial statements for external publishing need tofollow accounting rules GAAP some
Generally Accepted Accounting Principles depend the jurisdiction and the form ofbusiness organization
on
the rules International
of Accounting Standards Board IFRS Accounting Standards (IAS/IFRS)
↳ we use
↳ International Reporting Financial Standards
Organizing a Business
1) Proprietorship : 1
owner-proprietor the proprietar is
,
his personal
personally table for business delta without including
finances proprietorship is separat from its proprietos .
2) Partnership : 2 owners and each owner in a partner ,
the incons and loss in
recognised or their
agreedpercentage
-General partnership have mutual
agency
and unlimited
liability s each partner
may
conduct
ofthe entity andmaks agreements thatbind all partners
business in the name
-
Limited-liability partnership created partner can't create large liability for
was so as a
the other partners each partner liable for partenhig debt
,
now
only up to the extent of
is
their investment in the partnership
3) Corporation owned by shareholders they shares thatrepresent ownershipThe
mayor acdroutage in
:
,
own L
the
ability to
capital by selling
raisshares to the public Proprietorships parthenship
and . s more
numerous > corporationtransout mars business and
larger in assets ,
income ,
of employees
and number .
The shareholders have personal obligation for the debt's and hows limited liability do
no
They get s vote
.
for each share
they own.
They elect the boad
of directors which set
,
policy and appoint management officers r
↳ like CEO ,
LOO CFO ..
, -Chapters
.
2 Understand the
underlying accounting concepts the in FFRs conceptual framework
Def Assets Resources the
: = that
company
owns or controls can
bring future benefits
economic
Liabilities obligation to transfer
Present
resulting from past
: resources to others ,
events
The owners' claim
Equity : on the
companyassets after babilities are deducted
labilities shareholder transactions Includes severe agains
equity, excluding
Income = assets as =
.
.
Exercess assets labilities shareholder transactions
equity, excluding
Includes losse
as =
.
regular costs a
net totalrevenues exceed total net
income =
expenses =
profit
net los-total expenses exceed where
net- to an amountrefers substraction after a
=> Netiione (or loss) equation : total Reverus -
total expenses = Netincome or loss
their inverterets, when
dividers = is
payed to shareholders as return on
usually in cash ,
an increas in returned
earnings
. Obtain
3
insight into business operation through financial statements
Balanes Sheet :
snapshot at one
point in time the
life of business and showe it's financialposition
in as
assets-liability+ equity or
aets-bability equity -
converted to cash short-term payablesmonths)
2 old or consumed ( within the next 12
the next 12 months
during
The
equation is based with a double
entry accounting
recording methods where at leastaccount or
achways affected by each tromeoutir
a chaiparties
summeryofthe
a
=
Incons Statement : show the reverses and experen over a , like
period of time one
financialyear , ·
↳ Retained the total has accumulated
incons :
carings the
company
over its
lifetime ,
Retained earnings minur its total laser and dividends paid out.
RFs11x RE =
.
+ net income -
dividen
, Chapter 2 :
Recording Business Transactions
.
1 Explain what as Business transaction is
the business and
..
Def Transaction = an event that has a
financial impact on can be measured
reliably .
>
-
They also provide objective information aboutthe financial impact of exchange of entity an an
x
they reflect increases and /or decreases to
financial statement elements .
.
4
Recording journalis and post) transactions in the book
Accountants us
double-entry accounting system at leat I accounts are
always affected by each tromeaction
there transaction need to be recorded in a
systematic manner
=> Transactions) Documentation Journal 3) Ledger 1) Trial Balance >
-
51 Financial Statement
1) Documentation , lash receipt ships
supporting original records of any transaction
: invoices ,
ex .. ...
2) Journal : a
chronologicalrecord oftransaction process with steps ,
a 3 :
specify each affected classify each account by type
account o
Trick
Both
:edit
2) determine ifeach account is increased as decreased debit as credit
record tha transaction in the
jara debit is fi lite i
,
the
left on the credit i the
right n g
3) Ledger : a
grouping of allthe T accounts ,
with their balances
5 -
Construct and us a trail balance
4) Trail Balances of all the account balances for the financial statement
summary
:
a ,
it also shows
iftotal debit total credit, usually constructed atthe end of the period
chart
of accounts is used to list all their accounts and account numbers
↳ count number Assets begin babilities equity
, , ,
revenue 4
, expenses
the 2nd
higer indicates the position
↳ 3th and
,
Final step
Recording process-the financialstatement
=>
in are
prepared
the start the preperation is the trailbalance balance sheet and income
of of the statement
>
-
.
