Details
Accounting, or accountancy, is the measurement, processing and communication of financial information about economic entities. Accounting, which has been called the “language of business”, measures the results of an organization’s economic activities and conveys this information to a variety of users including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants.
Accounting can be divided into several fields including financial accounting, management accounting, auditing, and tax accounting. Financial accounting focuses on the reporting of an organization’s financial information, including the preparation of financial statements, to external users of the information, such as investors, regulators and suppliers; and management accounting focuses on the measurement, analysis and reporting of information for internal use by management. The recording of financial transactions, so that summaries of the financials may be presented in financial reports, is known as bookkeeping, of which double-entry bookkeeping is the most common system.
Accounting is facilitated by accounting organizations such as standard-setters, accounting firms and professional bodies. Financial statements are usually audited by accounting firms, and are prepared in accordance with generally accepted accounting principles (GAAP). GAAP is set by various standard-setting organizations such as the Financial Accounting Standards Board (FASB) in the United Statesand the Financial Reporting Council in the United Kingdom. As of 2012, “all major economies” have plans to converge towards or adopt the International Financial Reporting Standards (IFRS).
Outline
Key Learning Points:
Part I: Welcome to the World of Accounting
Module I: Accounting Information
- Accounting defined
- Financial Accounting
- Managerial Accounting
- A Quality Information System
- Inherent Limitations
Module II: The Accounting Profession and Careers
- Accounting and Professional Ethics
Module III: The Fundamental Accounting Equation
- Assets
- Liabilities
- Owners’ Equity
- Balance Sheet
Module IV: How Transactions Impact the Accounting Equation
- Edelweiss Collects an Accounting Receivable
- Edelweiss Buys Equipment With Loan Proceeds
- Edelweiss Provides Services to a Customer on Account
- Edelweiss Pays Expenses With Cash
- Generalizing About the Impact of Transactions
- Distinguishing Between revenue and Income
Module V: The Core Financial Statements
- Financial Statements
- Income Statements
- The Statement of retained Earnings
- Balance Sheet
- Statement of cash Flows Articulation
- Unlocking the Mystery of Articulation
Part II: Information Processing
Module VI: Accounts, Debits and Credits
- Accounts
- Debits and Credits
- The Fallacy of +/- Nomenclature
- The Debit – Credit rules
- Assets, Expenses and Dividends
- Liabilities, Revenues and Equity
- Analysis of Transactions and Events
- Determining an Account’s Balance
- A Common Misunderstanding About Credits
Module VII: The Journal
- Illustrating the Accounting Journal
- Special Journals
- Page Numbering
- But, What are the Account Balances?
Module VIII: The General Ledger
- Posting
- To review
Module IX: The Trail Balance
- Debits Equal Credits
- Financial Statements from the Trial Balance
Module X: Computerized Processing Systems
- What do they Look Like
Module XI: T-Accounts
- Comprehensive T-accounting Illustration
- Chart of Accounts
- Control and Subsidiary Accounts
Part III: Income Measurement
Module XII: “Measurement Triggering” Transactions and Events
- The Meaning of Accounting income
- More Income Terminology
- An Emphasis on Transactions and Events
Module XIII: The Periodicity Assumption
- Accounting Implications
Module XIV: Basic Elements of Revenue Recognition
- Payment and Revenue Recognition
Module XV: Basic Elements of expense Recognition
- Payment and Expense Recognition
Module XVI: The Adjusting Process and Related Entries
- Illustration of Prepaid Insurance
- Illustration of Prepaid Rent
- I’m a Bit confused – Exactly When do I Adjust?
- Illustration of Supplies
- Depreciation
- Unearned Revenues
- Accruals
- Accrued Salaries
- Accrued Interest
- Accrued Rent
- Accrued revenue
- Recap of Adjustments
- The Adjusted Trial Balance
- Alternative Procedures for Certain Adjustments
Module XVII: Accrual – Versus Cash – Basis Accounting
- Modified Approaches
- Illustration of Cash-Versus Accrual Basis Accounting
Part IV: The Reporting Cycle
Module XVIII: Preparing Financial Statements
- An Illustration
- Considering the actual Process for Adjustments
- Financial Statements
- Computerization
- A Worksheet Approach
- An Additional Illustration
Module XIX: The Accounting Cycle and Closing Process
- The Closing Process
- Post-Closing Trial Balance
- Revisiting Computerization
Module XX: Reversing Entries
Module XXI: Classified Balance Sheets
- Assets
- Liabilities
- Equity
- Other Entity Forms
- Notes to the Financial Statements
Module XXII: Business Liquidity and the Operating Cycle
- Working Capital
- Current Ratio
- Quick Ratio
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