INTRODUCTION TO FINANCIAL ACCOUNTING

About this Course

This course is designed to provide a fundamental understanding of the basic accounting concepts, principles and techniques of double entry system, procedures in preparing financial statements of a sole trader for merchandising and service enterprise. This course aims to provide students with the basic accounting knowledge of the total recording process as well as maintenance of full set of accounts that a business organization should keep.

Course Learning Outcomes

1) Prepare financial statements and bank reconciliation statements using the basic accounting knowledge for a sole proprietorship business.
2) Work collaboratively with other students in completing the accounting simulation project.
3) Analyse financial statements using simple financial ratios for sole proprietorship business.

Course Syllabus

+ Course Syllabus

1) Introduction to Accounting
1.1) Definition of accounting
1.2) Functions of financial statements
1.3) Main user groups of financial statements
1.4) Accounting cycle
1.5) Various forms of business entities

2) Introduction to qualitative characteristics of useful financial information and other accounting assumptions and concepts
2.1) Fundamental qualitative characteristics
2.2) -Relevance
2.3) -Faithful representation
2.4) Enhancing qualitative characteristics
2.5) -Comparability
2.6) -Verifiability
2.7) -Timeliness
2.8) -Understandability
2.9) Other accounting assumptions and concepts
2.10) -Going concern
2.11) -Historical cost
2.12) -Entity
2.13) -Money measurement

3) Accounting equation and accounting classification
3.1) Statement of financial position format and its elements
3.2) Basic accounting equation
3.3) Effects of transactions on the basic accounting equation
3.4) Expanded accounting equation
3.5) Effects of transactions on the expanded accounting equation

4) Principles of double entry
4.1) Double entry rules
4.2) Ledger entries
4.3) Balancing off ledger accounts
4.4) Pre-adjusted trial balance
4.5) Pre-adjusted financial statements

5) Books of prime entry
5.1) Introduction to source documents
5.2) Types of journals
5.3) Types of ledgers
5.4) Recording process from source documents to journals and posting to ledgers

6) Balance day adjustments and preparation of financial statements
6.1) Adjustments of accruals and prepayments
6.2) Bad debts and bad debts recovered
6.3) Doubtful debts and allowance for doubtful debts
6.4) Capital expenditure and revenue expenditure
6.5) Depreciation of non-current assets
6.6) Post-adjusted financial statements
6.7) Application of financial accounting

7) Bank reconciliation statement
7.1) Use of banking facilities for safe keeping of cash (bank account)
7.2) Update Cash Book
7.3) Reconciling the bank account with the bank statement

8) Financial statements analysis
8.1) Objectives of financial statements analysis
8.2) Types of financial ratios analysis
8.3) Preparation and interpretation of financial ratios
8.4) Limitations of financial ratio analysis

Frequently Asked Questions

Q1 : What is accounting?
A1 : Accounting is the process of recording, classifying and summarising financial transactions to provide helpful information in making business decisions. Accounting also includes information about a company’s financial position, performance and cash flow statement.

Q2 : What are the Financial Statements?
A2 : The financial statements are the three primary reports that summarise a company’s financial position, results of operations, and cash flows. The accounting statements are the Statement of Financial position (balance sheet), Profit and Loss (income statement), and Cash Flow Statement.

Q3 : What is Bookkeeping?
A3 : Bookkeeping involves the recording and summarizing of financial transactions and other information related to the business on a day-to-day basis.