LOB TUTORIALS

SESSIONS1-2
CHAPTERS 1-3
2019-06-05
 TOPICS COVERED IN SESSIONS 1-2
Chapter 1 Chapter 2 Chapter 3
Accounting Information: Intro to Financial The Accounting Cycle
A Means to End Statements
Accounting Systems Statement of Financial The Ledger
Position
Financial Accounting Income Statement The Use of Accounts
Information
Management Statement of Cash Debit and Credit
Accounting Information Flows Entries
Integrity of Accounting Relationships among The Journal
Information Financial Statements
Careers in Accounting Financial Analysis and Recording SFP
Decision Making Transactions
Summary of Learning Forms of Business What is Profit?/
Objectives Organization Dividends
Key Terms Use of FS by external Recording IS
Parties Transactions
The Trial Balance
CHAPTER 1
 A MEANS TO AN END

Financial Reporting
Accounting

Decision Making
Internal and/or External Users
 LANGUAGE OF BUSINESS
 Itis widely used to describe all types
of business activity

 Is
the means by which we measure
and communicate economic events

C1. P4
 TYPES OF ACCOUNTING INFORMATION

Financial Management Tax Accounting

Accounting Accounting • Preparation of
• Financial Position • Assists the Income tax returns
(Resources and management in • Complies with
Obligations at a operating the specialized legal
point in time) business requirements
• Results of • Special-purpose
Operations
(Financial activities
during the year)
• General-purpose
 ACCOUNTING SYSTEMS
 Consists of: Personnel, procedures, technology and
records used by the organization to:
1. Develop accounting information
2. Communicate this information to decision makers
 Must be cost-effective
 Basic functions
1. Interpret and record (Journalizing)
2. Classify the effects of similar transactions (Posting to Ledgers)
3. Summarize and communicate (Trial Balance, FS)
 Design and installation (specialized field)
 Internal Control – process designed to provide
reasonable assurance that the organization
1. Produces reliable financial reports
2. Complies with applicable laws and regulations
3. Conducts its operations in an efficient and effective manner
 USERS OF FINANCIAL REPORTS

 Internal  External
 BOD  Have current and
 CEO potential financial
 CFO interest in the reporting
enterprise but are NOT
 VPs involved in the day-to-
 Business Unit Managers day operations
 Plant Managers
 Store Managers  Owners, creditors,
 Line Supervisors potential investors, labor
 Employees unions, governmental
agencies, suppliers,
customers, trade
associations, general
public
INTERNATIONAL FINANCIAL REPORTING
STANDARDS (IFRS)
 Accounting information must be prepared in
accordance with standards that are understood by
both preparers and users

 Principles that provide general framework for

determining what information is included, how it is to
be prepared and presented

 International Accounting Standards Board (IASB)

 Issues IFRS
 Playing a leading role in the harmonization process
 CAREERS IN ACCOUNTING
•Auditing

Public •Income Tax work

•Management Advisory Services

•Chief Accounting Officer/Controller/Chief

Accountant
Management •Cost accounting, internal auditing,
forecasting

•Management accountants in governmental

agencies is similar to that in the business
Governmental organizations

•Educators

Education •Instructors
 CHAPTER 2
 Financial Statements
 A monetary declaration of what is believed to be true (fair
and accurate) about the enterprise

 Elements
 Assets – Resources controlled; Future economic benefits (+ CF)
 Liabilities – Obligations, debts; Creditors’ claims on the asset; (- CF)
 Equity – Owner’s claims; Residual Amount; Net assets
 Revenue - Increases in the company’s assets from its profit-
directed activities (+ CF)
 Expenses - Decreases ; (-CF)
 FORMS OF BUSINESS ORGANIZATION
Sole
Forms Proprietorship Partnership Corporations

Ownership 1 2 or more 5 or more /

1
Equity Capital Capital Shares

Liability Unlimited Unlimited Limited

 FINANCIAL STATEMENTS
Statement of Financial Position • Assets = Liabilities + Equity
Statement of Financial Condition • CA +NCA = CL + NCL + SC + RE
Balance Sheet (BS) • RE = Prior + Current years income

Statement of Financial Performance

Statement of Comprehensive Income • Sales – Expenses = Income/Profit
•Sales–COGS = GP – Expenses = Income/Profit
Profit and Loss Statement •Income Income Summary RE
Income Statement (IS)

•Operating =Revenue & Expenses (IS)

Statement of Cash Flow •Investing =Purchasing & selling assets (BS:A)
•Financing =Owners / Creditors (BS: L & E)

Statement of Changes in Equity •Shares

•Dividends
Statement of Retained Earnings •Profit / Loss (Cumulative and Current)

•Footnotes (Full Disclosure)

Notes to Financial Statements •Provides additional information
•Integral part of FS
RELATIONSHIPS AMONG FS
 CHAPTER 3
The accounting cycle

1. Journalizing (debit & credit)

2. Posting (to the ledger accounts; T Account)
3. Prepare Trial Balance
4. Adjusting entries
5. Adjusted Trial Balance
6. Preparing FS
7. Journalizing and Post-closing entries
8. After-closing trial balance
 DEBIT & CREDIT

ASSETS LIABILITIES
EFFECT EQUITY

EXPENSES REVENUE

INCREASE Debit Credit

DECREASE (Credit) (Debit)

 EXERCISES
C2. Page 52
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