Financial accounting, lecture 1 30-08-2017
You have to use the 8th or 9th edition. We have 13 lectures each lecture contains one chapter of the
book. On iSTAR you can find videos containing information about each chapter. The math tests have
time slots in which you can make the tests several times.
In the planning you can find what you have to read before you start your lecture.
Final exam, 12th of December 70% (only multiple choice) The web tests are also multiple choice
Midterm, 17th of October 25% (open and multiple choice)
Web-test via Acc IBA, 4 tests x 1,25% test 1-3 open Friday and close Thursday, test 4 opens Friday
24th of November and closes the 1st of December
Resit, 8th of January 95% resit grade and 5% web tests
Lecture 1, chapter 1 & 5, 30-08-2017
financial accounting(FA): making a report at the end of an financial period. It provides information for
external decision makers (investors, creditors, suppliers, customers, government)
GAAP: generally accepted accounting principles (everybody uses the same principals)
Management accounting (MA): generates info for internal decision makers.
Main areas of differences
• Nature of report produced (general purpose vs specific purpose)
• Level of detail
• Regulations
• Reporting interval
• Time orientation
• Range & quality of information
=> MA is less constrained than FA
The annual report: basic overview of the operational, financial and extra-ordinary performance of a
company over a specific period (year). You can compare it to previous periods.
Financial statements summarize the financial activities of the business:
Income statement(resultatenrekening) = Profit & loss account, How well did the company
perform during the year?
Focus on financial performance over certain period
• Revenues= Inflow of economic sources from operations
• Expenses= Outflow of economic sources from operations
• Statement of stochkholders’ equity= How net income and dividends affect company’s
financial position at December?
Balance sheet= Statement of Financial Position (at a certain point in time). What is the
company’s financial position at December? What is accumulated wealth at end of period and
what form does the wealth take?
Assets = resources held by the business
Liabilities = claim on business assets by non-owners
Equity = claim on owner of business assets
, Statement of Cash Flows: How much cash did the company generate and spend during the
year? Focus on cash receipts and payments over certain period
Lecture 2, chapter 2 balance sheet, 4-9-2017
Balance sheet: reports the financial position of an entity at a specific date:
Asset side/ debit/ active side sources and equity side/ credit / passive side
Assets = Liabilities + Stockholders’ Equity
Liabilities and equity: where the company gets the money from
Double accounting: a chance on the one side also leads to a chance on the other side
Assets: what a company needs and it’s the owner from. When is an item treated as an asset?
A probable future benefit exists
The business has an exclusive right to control the benefit; he is the owner of the asset. So it’s
not rented
The benefit must arise from some past transaction or event
The asset must be capable of measurement in monetary terms
Example:
€1,000 owing to the business by a customer who is unable to pay. Is it and asset? No asset?
- If we expect customer to pay => trade receivables (asset)
- Here, item is incapable to provide future benefits => no asset
,Some points on the asset side:
Property: the land You use to make an income. You don’t
Plant: the building buy it to sell it again.
Equipment: for example a truck and cars
Inventories: the products that are in the company at the moment you step in
Trade and other receivables: debiteuren, so you have already sold the product but haven’t
received the money yet
Cash and cash equivalent: cash and investsments in other companies that can be sold within
one year
The posts are ranked from least comfortable in cash to the most liquid asset (comfortable into cash).
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Non-current/fixed asset: Intention of being used during multiple production cycles rather than held
for sale => not converted into cash > 1year:
E.g., PPE (property, plant and equipment), patents, copyrights,…
Current asset: Cash and other assets expected to convert into cash <1year:
E.g., Cash, Inventory, Accounts receivable
Assets can be:
Tangible (machines, office furniture, buildings,…), tastbaar
Intangible (copyrights, patents, goodwill purchased, licenses,…), niet tastbaar
=> Intangibles developed inside a company (not purchased): not on Balance Sheet
Stockholders’/ owners’ / shareholders’ Equity: a claim of the owner to the business
Owners’ investment (contributed capital)
+ the accumulated sum of undistributed profits (retained earnings)
+ all additional (follow-up) equity investments
Issued capital: the money invested in the company from the beginning
Share premium: agio
Retained earnings: accumulated profit after the dividend is paid (not sure if this is right)
Liabilities: All claims, other than those of owners
Notes (bank) and Accounts (suppliers)
- LT liabilities = Non-current liabilities (>12 months)
- ShT liabilities = Current liabilities (<12 months)
Interest bearing borrowings: leningen van een bank
Interest doesn’t belong to the balance sheet!
Transaction: any activity that impacts the financial position of a business that can be measured
reliably. Every transaction has 2 sides: Business gives something & the Business receives something.
Accounting records both sides of a transaction =>Each transaction affects at least 2 accounts
= DOUBLE-ENTRY ACCOUNTING A=L+SE
Account: records all changes in a particular assets, liability or equity during a
period. So you don’t have to make the whole balance sheet again
You buy a truck for 100.000,-. So on your equipment account you have an
increase of 100.000,- and on your cash account you have a decrease of 100.000,-
cash
100.000
, Journal (general journal)= Chronological record of the transactions
Three steps to book transactions:
1. Specify each account + identify type of account (A, L, SE)
2. Increase or decrease? Debit or credit?
3. Record in the journal => Making the journal entry= Journalizing the transaction
Example, you buy a truck for 100.000,- in cash:
Lecture 3, 11-9-2017
income statement:
Sales 0
Expenses 0
Net income 0
Contributed capital: the money that the owners invested in the company
Retained earnings: the accumulated increase of the profit, Net income= Revenue – Expenses
Revenue is almost always placed on the credit side, only when goods are returned or you give a
discount revenue can come on the debit side.
Income statement = profit and loss account: is about the performance over a certain period. Major
components:
- Revenues: operating revenues + financial revenues (income from investments…)
- Expenses: cost of merchandise sold (cost of goods sold, cost of sales) + general & administrational
expenses (other expenses) + financial expenses
- Taxes: Income taxes
Costs of goods sold: opening inventories + goods purchased - closing inventories
At which moment do you record your revenue? It depends on the notes:
You have to use the 8th or 9th edition. We have 13 lectures each lecture contains one chapter of the
book. On iSTAR you can find videos containing information about each chapter. The math tests have
time slots in which you can make the tests several times.
In the planning you can find what you have to read before you start your lecture.
Final exam, 12th of December 70% (only multiple choice) The web tests are also multiple choice
Midterm, 17th of October 25% (open and multiple choice)
Web-test via Acc IBA, 4 tests x 1,25% test 1-3 open Friday and close Thursday, test 4 opens Friday
24th of November and closes the 1st of December
Resit, 8th of January 95% resit grade and 5% web tests
Lecture 1, chapter 1 & 5, 30-08-2017
financial accounting(FA): making a report at the end of an financial period. It provides information for
external decision makers (investors, creditors, suppliers, customers, government)
GAAP: generally accepted accounting principles (everybody uses the same principals)
Management accounting (MA): generates info for internal decision makers.
Main areas of differences
• Nature of report produced (general purpose vs specific purpose)
• Level of detail
• Regulations
• Reporting interval
• Time orientation
• Range & quality of information
=> MA is less constrained than FA
The annual report: basic overview of the operational, financial and extra-ordinary performance of a
company over a specific period (year). You can compare it to previous periods.
Financial statements summarize the financial activities of the business:
Income statement(resultatenrekening) = Profit & loss account, How well did the company
perform during the year?
Focus on financial performance over certain period
• Revenues= Inflow of economic sources from operations
• Expenses= Outflow of economic sources from operations
• Statement of stochkholders’ equity= How net income and dividends affect company’s
financial position at December?
Balance sheet= Statement of Financial Position (at a certain point in time). What is the
company’s financial position at December? What is accumulated wealth at end of period and
what form does the wealth take?
Assets = resources held by the business
Liabilities = claim on business assets by non-owners
Equity = claim on owner of business assets
, Statement of Cash Flows: How much cash did the company generate and spend during the
year? Focus on cash receipts and payments over certain period
Lecture 2, chapter 2 balance sheet, 4-9-2017
Balance sheet: reports the financial position of an entity at a specific date:
Asset side/ debit/ active side sources and equity side/ credit / passive side
Assets = Liabilities + Stockholders’ Equity
Liabilities and equity: where the company gets the money from
Double accounting: a chance on the one side also leads to a chance on the other side
Assets: what a company needs and it’s the owner from. When is an item treated as an asset?
A probable future benefit exists
The business has an exclusive right to control the benefit; he is the owner of the asset. So it’s
not rented
The benefit must arise from some past transaction or event
The asset must be capable of measurement in monetary terms
Example:
€1,000 owing to the business by a customer who is unable to pay. Is it and asset? No asset?
- If we expect customer to pay => trade receivables (asset)
- Here, item is incapable to provide future benefits => no asset
,Some points on the asset side:
Property: the land You use to make an income. You don’t
Plant: the building buy it to sell it again.
Equipment: for example a truck and cars
Inventories: the products that are in the company at the moment you step in
Trade and other receivables: debiteuren, so you have already sold the product but haven’t
received the money yet
Cash and cash equivalent: cash and investsments in other companies that can be sold within
one year
The posts are ranked from least comfortable in cash to the most liquid asset (comfortable into cash).
������� �����=(������� ������)/(������� �����������)
Non-current/fixed asset: Intention of being used during multiple production cycles rather than held
for sale => not converted into cash > 1year:
E.g., PPE (property, plant and equipment), patents, copyrights,…
Current asset: Cash and other assets expected to convert into cash <1year:
E.g., Cash, Inventory, Accounts receivable
Assets can be:
Tangible (machines, office furniture, buildings,…), tastbaar
Intangible (copyrights, patents, goodwill purchased, licenses,…), niet tastbaar
=> Intangibles developed inside a company (not purchased): not on Balance Sheet
Stockholders’/ owners’ / shareholders’ Equity: a claim of the owner to the business
Owners’ investment (contributed capital)
+ the accumulated sum of undistributed profits (retained earnings)
+ all additional (follow-up) equity investments
Issued capital: the money invested in the company from the beginning
Share premium: agio
Retained earnings: accumulated profit after the dividend is paid (not sure if this is right)
Liabilities: All claims, other than those of owners
Notes (bank) and Accounts (suppliers)
- LT liabilities = Non-current liabilities (>12 months)
- ShT liabilities = Current liabilities (<12 months)
Interest bearing borrowings: leningen van een bank
Interest doesn’t belong to the balance sheet!
Transaction: any activity that impacts the financial position of a business that can be measured
reliably. Every transaction has 2 sides: Business gives something & the Business receives something.
Accounting records both sides of a transaction =>Each transaction affects at least 2 accounts
= DOUBLE-ENTRY ACCOUNTING A=L+SE
Account: records all changes in a particular assets, liability or equity during a
period. So you don’t have to make the whole balance sheet again
You buy a truck for 100.000,-. So on your equipment account you have an
increase of 100.000,- and on your cash account you have a decrease of 100.000,-
cash
100.000
, Journal (general journal)= Chronological record of the transactions
Three steps to book transactions:
1. Specify each account + identify type of account (A, L, SE)
2. Increase or decrease? Debit or credit?
3. Record in the journal => Making the journal entry= Journalizing the transaction
Example, you buy a truck for 100.000,- in cash:
Lecture 3, 11-9-2017
income statement:
Sales 0
Expenses 0
Net income 0
Contributed capital: the money that the owners invested in the company
Retained earnings: the accumulated increase of the profit, Net income= Revenue – Expenses
Revenue is almost always placed on the credit side, only when goods are returned or you give a
discount revenue can come on the debit side.
Income statement = profit and loss account: is about the performance over a certain period. Major
components:
- Revenues: operating revenues + financial revenues (income from investments…)
- Expenses: cost of merchandise sold (cost of goods sold, cost of sales) + general & administrational
expenses (other expenses) + financial expenses
- Taxes: Income taxes
Costs of goods sold: opening inventories + goods purchased - closing inventories
At which moment do you record your revenue? It depends on the notes:
