Introduction to Financial Accounting

Description

Introduction to Financial Accounting

Introduction to Financial Accounting specifies competencies required to maintain financial accounts of the business. It involves applying the legal and conceptual framework in preparation of financial accounts, accounting for revenues and expenses, accounting for assets and liabilities, accounting for assets and liabilities, correcting errors in accounting records and preparing financial statements for different business entities

LEARNING OUTCOMES

• Apply the legal and conceptual framework in preparation of financial accounts
• Account for revenues and expenses
• Account for assets and liabilities
• Correct errors in accounting records
• Prepare financial statements for different business entities

CONTENT:

1. Apply the legal and conceptual framework in preparation of financial accounts
   • Definition of key terms
     • Accounting
     • Accounting period
     • Accrual basis of accounting
     • Credit
     • Debit
     • Accruals
     • Closing the books
     • International Financial Reporting Standards
   • Introduction to Accounting
     • Nature and purpose of accounting
     • The objective of financial accounting
   • The elements of financial statements
     • Assets
     • Liabilities
     • Equity
     • Revenues
     • Expenses
     • Gains
     • Losses
     • Investments by owners
     • Distributions to owners
     • Comprehensive income
   • Accounting concepts (Principles)
     • Accrual principle
     • Conservatism principle
     • Consistency principle
     • Cost principle
     • Economic entity principle
     • Full disclosure principle
     • Going concern principle
     • Matching principle
   • Types of accounts
     • Real accounts
     • Personal accounts
     • Nominal accounts
   • The accounting equation
   • The users of accounting information (External users)
     • Creditors
     • Investors
     • Government
     • Trading partners
     • Regulatory agencies
     • International standardisation agencies
     • Journalists (Internal users)
     • Owners
     • Directors
     • Managers
     • Employees

2.                   Account for revenues and expenses

• The source documents
  • Receipts
  • Bills
  • Invoices
  • Statements
  • Cheques
• The books of prime entry/original entry
• Relating source documents and journals
• Journals
  • Sales journal
  • Purchases Journal
  • Sales returns journal
  • Purchases returns journal
• Cash books
  • Single column cashbook
  • Double column cashbook
  • Triple column cashbook
• Petty cash book
• The ledger
  • Definition of a ledger
• Types of ledgers
  • Sales ledger
  • Purchases ledger
  • General ledger
• Use of ledger
• Concept of double entry
• The trial balance
  • Definition
  • Format
  • Use
• The financial statements
• Statement of profit and loss
  • Definition
  • Format
  • Use
• Statement of financial position
  • Definition
  • Format
  • Use
• Manual accounting systems Vs computerised accounting systems

3.                   Account for assets and liabilities

• Definition of an Asset, Liabilities, Incomes and Expenses
• Property, plant and     equipment (depreciation, acquisition, disposal, excluding revaluations)
  • Fixed asset schedule
• Accounting for current assets:
  • Inventory
  • Cash in hand
  • Cash in bank
  • Bank reconciliation statement
• Intangible assets
  • Softwares
  • Licenses
• Trade receivables
  • Definition
  • Valuation
  • Accounting for trade receivables
  • Debtors control account
• Trade payables
  • Definition
  • Accounting for trade payables
  • Creditors Control account
• Accrued incomes/expenses and prepaid incomes/expenses
  • Definition of accrued incomes/expenses and prepaid incomes/expenses
  • Accounting for accrued incomes/expenses and prepaid incomes/expenses

4.                   Correct errors in accounting records

• Definition of error in accounting records
• Causes of errors
• Types of errors

(Errors affecting trial balance)

• Error of casting
• Error of carrying forward
• Error of balancing
• Error of posting to the correct account but with the wrong amount
• Error of posting to the correct account but wrong side
• Error of posting to the wrong side with the wrong amount
• Error of omitting to show an account in the trial balance
• Error of partial omission (Errors not affecting trial balance)
• Error of complete omission
• Error of original entry
• Transposition errors
• Compensating errors
• Errors of principle

• Correcting errors in source documents, the books of prime entry, the ledger, the trial balance and financial statements
• Use of a suspense account
• Adjusted trial balance

5.                   Preparing financial reports for different entities

• Financial statements of a sole trader
  • Statement of Profit or Loss
    • Definition
    • Format
    • Use
  • Statement of Financial Position
    • Definition
    • Format
    • Use
  • Financial statements of a partnership
    • Definition
    • Format
    • Use
    • The partnership deed/agreement
    • The statement of profit or loss and appropriation
    • Partners’ capital and current accounts
  • The statement of financial position
    • Definition
    • Format
    • Use
  • Financial statements of a company
    • Important concepts of a company (types of share capital, reserves, retained profits and corporation tax)
    • Statement of profit or loss
      • Definition
      • Format
      • Use
    • Statement of changes in equity
      • Definition
      • Format
      • Use
    • Statement of financial position
      • Definition
      • Format
      • Use
    • Statement of Profit or Loss

• Definition
• Format
• Use