Summary -
Financial
Accounting for IBA
Exam preparations for the final exam
of semester 1
By: Jeffrey Engels
,TABLE OF CONTENT
Study guide…………………………………………………………………………………………………………………………………….…………………………………..p.2
Lectures Notes………………………………………………………………………………………………………………………………………………….…………p.3-p.23
Lecture 1…………………………………………………………………………………………………………………….………….……………………..p.3+p.4
Lecture 2...……………………………………………………………………………………………………….…….…………………………………….p.5+p.6
Lecture 3………………………………………………………………………………………………………………….……….…………………………..p.7+p.8
Lecture 4…………………………………………………………………………………………………………………………….……………………….p.9+p.10
Lecture 5………………………………………………………………………………………………………………..…………………………………p.11+p.12
Lecture 6…………………………………………………………………………………………………………….……………………………………..p.13-p.14
Lecture 7……………………………………………………………………………………………………………………………………………………..…….p.15
Lecture 8…………………………………………………………………………………………………………………………………………………..……….p.16
Lecture 9………………………………………………………………………………………………………………………………………………………..….p.17
Lecture 10…………………………………………………………………………………………………………………………..…………………….p.18+p.19
Lecture 11…………………………………………………………………………………………………………………………..…………………….p.20+p.21
Lecture 12……………………………………………………………………………………………………………………….……………………..…p.22+p.23
Book Summaries……………………………………………………………………………………………………………………………………………………….p.24-p.53
Chapter 1 - Financial Statements and Business Decisions..…………………..………………………………..…………………..p.24-p.26
Chapter 2 - Investing and Financing Decisions and the Accounting System….……………………………………..…….p.27+p.28
Chapter 3 - Operating Decisions and the Accounting System…………………………………………………………………….p.29+p.30
Chapter 4 - Adjustments, Financial Statements, and the Quality of Earnings………………………..…………………..p.31+p.32
Chapter 5 - Communicating and Interpreting Accounting Information…………………………..……..…………………..p.33+p.34
Chapter 6 - Reporting and Interpreting Sales Revenue, Receivables, and Cash…….…………………………………...p.35+p.36
Chapter 7 - Reporting and Interpreting Cost of Goods Sold and Inventory………………………………………………….p.37-p.39
Chapter 8 - Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural
Resources………………………………………………………………………………………………………………….……………………………..p.40+p.41
Chapter 9 - Reporting and Interpreting Liabilities………………………………………………………………………..…………………….p.42
Chapter 10 - Reporting and Interpreting Bond Securities…………………………………………………………………………..…p.43+44
Chapter 11 - Reporting and Interpreting Stockholders' Equity…………………………………………………………………...p.45+p.46
Chapter 12 - Statement of Cash Flows……………………………………………………………………………………………………….p.47+p.48
Chapter 13 - Analyzing Financial Statements………………………………………………………………………….....................p.49-p.51
Appendix A - Reporting and Interpreting in Other Corporations..……………….……………………………..………………p.52+p.53
Practice test (based on the lectures)………………………………………………………………………………………………………………………….……..p.54
Answers to the test……………………………………………………………………………………………………………………………………………………….….p.55
1
,Study guide
Course learning objectives & assessment goals
This course is an introduction to the fundamentals of financial accounting reporting. At the end of
this course, the student will be able to:
1. discuss the role and importance of financial statement information
2. construct the four main financial statements at the end of business period
3. demonstrate the links between the four main financial statements
4. apply journal entries and T-accounts to book transactions in the journal and the general
ledger during the year
5. apply different accounting methods for the evaluation of, amongst others, inventory, & cost
of goods sold, PPE& depreciation, and intangible assets & amortization (IFRS - US GAAP)
6. make adjusting journal entries and closing journal entries at the end of the business period
7. analyse company’s financial performance based on the information reported in financial
statements
8. journalize national and international investments in other firms and discuss the consolidation
of financial statements
9. discuss the current international evolution of the accounting standards (IASB - FASB)
Exam lay-out
The midterm for Financial Accounting consists out and multiple choice questions. Computing
numbers will be needed as well. The final exam consists of 70% of the final grade.
Personal opinions
It seems that an emphasis has been placed on understanding the 4 main financial statements.
Furthermore, T-accounts/journal entries and the general ledger will become a crucial part of the
exams as well. It is recommended to go through the theory in this document (both lecture slides and
book chapters) to gain a key understanding of the basis. It is also crucial to go through the tutorial
exercises which could not be summarized in this document to assess your knowledge in the subjects.
Good luck with the exams!
2
, Lectures & tutorials
Lecture 1
Accounting
Accounting if the system of recording and summarizing business and financial transactions, and
analyzing, verifying, and reporting the results. Accounting is used by the owner/manager of a
business, by creditors (these lend money for a specific period of time and gain by charging interest on
the money they lend), and by investors (buy ownership in the company in the form of stock).
Investors purchase stock in businesses hoping to gain in two ways:
1.) Sell ownership interest in the future for more than they paid.
2.) Receive a portion of the company’s earnings in cash (dividends).
Main users of financial accounting information
Accounting is an information system:
• Measures business activities
• Processes data into reports
• Communicates results to people and organizations
Financial accounting & management accounting
Financial accounting provides info for external decision makers. Info, therefore, must be relevant,
reliable, comparable, and consistent. The accountancy system that is generally used is called GAAP
(General Accepted Accounting Principles).
Management account generates info for internal decision makers (managers).
3
Financial
Accounting for IBA
Exam preparations for the final exam
of semester 1
By: Jeffrey Engels
,TABLE OF CONTENT
Study guide…………………………………………………………………………………………………………………………………….…………………………………..p.2
Lectures Notes………………………………………………………………………………………………………………………………………………….…………p.3-p.23
Lecture 1…………………………………………………………………………………………………………………….………….……………………..p.3+p.4
Lecture 2...……………………………………………………………………………………………………….…….…………………………………….p.5+p.6
Lecture 3………………………………………………………………………………………………………………….……….…………………………..p.7+p.8
Lecture 4…………………………………………………………………………………………………………………………….……………………….p.9+p.10
Lecture 5………………………………………………………………………………………………………………..…………………………………p.11+p.12
Lecture 6…………………………………………………………………………………………………………….……………………………………..p.13-p.14
Lecture 7……………………………………………………………………………………………………………………………………………………..…….p.15
Lecture 8…………………………………………………………………………………………………………………………………………………..……….p.16
Lecture 9………………………………………………………………………………………………………………………………………………………..….p.17
Lecture 10…………………………………………………………………………………………………………………………..…………………….p.18+p.19
Lecture 11…………………………………………………………………………………………………………………………..…………………….p.20+p.21
Lecture 12……………………………………………………………………………………………………………………….……………………..…p.22+p.23
Book Summaries……………………………………………………………………………………………………………………………………………………….p.24-p.53
Chapter 1 - Financial Statements and Business Decisions..…………………..………………………………..…………………..p.24-p.26
Chapter 2 - Investing and Financing Decisions and the Accounting System….……………………………………..…….p.27+p.28
Chapter 3 - Operating Decisions and the Accounting System…………………………………………………………………….p.29+p.30
Chapter 4 - Adjustments, Financial Statements, and the Quality of Earnings………………………..…………………..p.31+p.32
Chapter 5 - Communicating and Interpreting Accounting Information…………………………..……..…………………..p.33+p.34
Chapter 6 - Reporting and Interpreting Sales Revenue, Receivables, and Cash…….…………………………………...p.35+p.36
Chapter 7 - Reporting and Interpreting Cost of Goods Sold and Inventory………………………………………………….p.37-p.39
Chapter 8 - Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural
Resources………………………………………………………………………………………………………………….……………………………..p.40+p.41
Chapter 9 - Reporting and Interpreting Liabilities………………………………………………………………………..…………………….p.42
Chapter 10 - Reporting and Interpreting Bond Securities…………………………………………………………………………..…p.43+44
Chapter 11 - Reporting and Interpreting Stockholders' Equity…………………………………………………………………...p.45+p.46
Chapter 12 - Statement of Cash Flows……………………………………………………………………………………………………….p.47+p.48
Chapter 13 - Analyzing Financial Statements………………………………………………………………………….....................p.49-p.51
Appendix A - Reporting and Interpreting in Other Corporations..……………….……………………………..………………p.52+p.53
Practice test (based on the lectures)………………………………………………………………………………………………………………………….……..p.54
Answers to the test……………………………………………………………………………………………………………………………………………………….….p.55
1
,Study guide
Course learning objectives & assessment goals
This course is an introduction to the fundamentals of financial accounting reporting. At the end of
this course, the student will be able to:
1. discuss the role and importance of financial statement information
2. construct the four main financial statements at the end of business period
3. demonstrate the links between the four main financial statements
4. apply journal entries and T-accounts to book transactions in the journal and the general
ledger during the year
5. apply different accounting methods for the evaluation of, amongst others, inventory, & cost
of goods sold, PPE& depreciation, and intangible assets & amortization (IFRS - US GAAP)
6. make adjusting journal entries and closing journal entries at the end of the business period
7. analyse company’s financial performance based on the information reported in financial
statements
8. journalize national and international investments in other firms and discuss the consolidation
of financial statements
9. discuss the current international evolution of the accounting standards (IASB - FASB)
Exam lay-out
The midterm for Financial Accounting consists out and multiple choice questions. Computing
numbers will be needed as well. The final exam consists of 70% of the final grade.
Personal opinions
It seems that an emphasis has been placed on understanding the 4 main financial statements.
Furthermore, T-accounts/journal entries and the general ledger will become a crucial part of the
exams as well. It is recommended to go through the theory in this document (both lecture slides and
book chapters) to gain a key understanding of the basis. It is also crucial to go through the tutorial
exercises which could not be summarized in this document to assess your knowledge in the subjects.
Good luck with the exams!
2
, Lectures & tutorials
Lecture 1
Accounting
Accounting if the system of recording and summarizing business and financial transactions, and
analyzing, verifying, and reporting the results. Accounting is used by the owner/manager of a
business, by creditors (these lend money for a specific period of time and gain by charging interest on
the money they lend), and by investors (buy ownership in the company in the form of stock).
Investors purchase stock in businesses hoping to gain in two ways:
1.) Sell ownership interest in the future for more than they paid.
2.) Receive a portion of the company’s earnings in cash (dividends).
Main users of financial accounting information
Accounting is an information system:
• Measures business activities
• Processes data into reports
• Communicates results to people and organizations
Financial accounting & management accounting
Financial accounting provides info for external decision makers. Info, therefore, must be relevant,
reliable, comparable, and consistent. The accountancy system that is generally used is called GAAP
(General Accepted Accounting Principles).
Management account generates info for internal decision makers (managers).
3
