Are you in the right room? • You should be here if ▫ You think accounting is fun ▫ You can see how accounting will be relevant to your future career ▫ You think you may want to be an accountant ▫ You have successfully passed ADA or have been granted credit for this course because of your prior studies. 03/17/22 Prepared by Scott Copeland, UniSA 2007 1
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Are you in the right room?
•You should be here if▫You think accounting is fun▫You can see how accounting will be
relevant to your future career▫You think you may want to be an
accountant▫You have successfully passed ADA or have
been granted credit for this course because of your prior studies.
04/19/23Prepared by Scott Copeland, UniSA 2007
1
WELCOME TO FINANCIAL ACCOUNTING 1
Time to lift the curtain on the second act in your accounting education
Sportzone QuickBooks Practice Set 2006/7 -Value Pack, shrink-wrapped with CD for QuickBooks. http://www.pearsoned.com.au/Catalogue/TitleDetails.aspx?isbn=9780733990939
▫Topic Folders Lecture Notes Case Studies Solutions
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Course Expectations:Teaching arrangements
•Lectures/Seminars – 2.5 hours for 8 nights (2 visits)▫Time to go over the theory▫Demonstration of problems▫Lectures add to learning, they do not drive it
•Tutorials 2.5 hours per fortnight▫Your chance to seek assistance▫Small portion allocated to Practice Set▫You benefit more if you come prepared
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Resources and Expectations
• Assessment▫ Assignment
Major Focus on Topic 2 Research should go “beyond the text
book” Designed to give you early feedback on
the practice set
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Resources and Expectations•Practice Set
▫Not designed as training in QuickBooks▫Gives exposure to manual and
computerised systems to allow comparison▫Do a little bit each week
•Exam▫Must achieve 50% ▫Details provided closer to the date▫Past papers or specific guidance supplied
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Working as a team
•Your assignments are due individually, however,▫ I expect that you will work closely with your tutor▫And may compare your work with other students.▫This is OK.
•BUT▫ It is your responsibility to ensure your work is
easily distinguishable from everyone else's and is properly referenced.
▫Plagiarism will not be tolerated and will be pursued.
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Visits• These are designed to give you the key
information about the course.• We will cover a lot of information
quickly, but we will go through it clearly.• Visit 1 will cover the following topics
Specialised Journal and Ledgers Assets, Acquisition, Depreciation and
Disposal The key elements of inventories,
receivables and bank reconciliations
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Visits Continued
•Visit 2 will cover ▫Liabilities and Completing the Accounting
Cycle ▫Preparation for the exam.
•Remember▫Lectures add to learning, they do not drive
it
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Tutorials•You must make the most of these sessions
▫Do not let the tutor do the work for you▫They are not the one who will be doing the
exam•Accounting is a subject where practice
will help•It does not rely on rote learning equations•Your tutor is part of your team, make use
of them.
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Tonight in FA 1
•Establish a new accounting system▫Review the role of a chart of accounts▫Using the general journal
•Review the role of adjusting entries•Identify the need for reversing entries•Highlight the resources and expectations
in this course
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Where does it all begin?
•FA 1 is designed to pick up the threads exposed in ADA.
•These will be woven into a new and more comprehensive accounting system.
•To do this we must go back and review.•Our first port of call … the general
journal.
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Using the General Journal
•Later in this course we will see the GJ used in a new way.
•The old rules still apply▫All debits listed first▫Followed by credits slightly indented▫A date must be entered for each
transaction▫A narration is required
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The Opening Entry
•This is the first “transaction” you will complete in FA 1
•Entering data from a “chart of accounts” into the new system
•An example of a chart of accounts is on the next slide
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Chart of Accounts
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AssetsAssets (100-199) (100-199) Cash at BankCash at Bank 100100 Accounts ReceivableAccounts Receivable 104104 Prepaid InsurancePrepaid Insurance 110110 Office Supplies InventoryOffice Supplies Inventory 111111 LandLand 150150 BuildingBuilding 160160
July 1 Accrued Expenses 1 300 Maintenance Expense 1 300
expense incurred last period
Reversing entry1 300
Reversing entry1 300
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Accrued Revenue Sales Revenue
Reversing entry150
Reversing entry150
Revenue earnedlast period
June 30 Accrued Revenue 150 Sales Revenue 150
July 1 Sales Revenue 150 Accrued Revenue 150
Adjusting entry150
Why are these entries necessary?•To return the accounting system to the
position prior to adjustments•So that subsequent entries can be
processed “normally”•Allows for separation of duties and
greater efficiency
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Accrued Revenue Sales Revenue
Reversing entry150
July 10 Cash at Bank 150 Sales Revenue 150
Cash at Bank
$150 Cash is received for work $150 Cash is received for work completed last period on July 10completed last period on July 10
Payment entry150
Payment entry150
Payment entry150
Adjusting entry150
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Accrued Revenue Sales Revenue
Reversing entry150
July 25 Cash at Bank 450 Sales Revenue 450
Cash at Bank
If Reversing entries are completed “normal” entries can be made.
$450 Cash is received for all work $450 Cash is received for all work completed since June 15 on July 25completed since June 15 on July 25
Payment entry450
Payment entry450
Reversing entry150
Adjusting entry150
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Accrued Revenue Sales Revenue
July 25 Cash at Bank 450 Sales Revenue 300 Accrued Revenue 150
Cash at Bank
If no reversing entry is made the data entry becomes more complex.
$450 Cash is received for all work $450 Cash is received for all work completed since June 15 on July 25completed since June 15 on July 25
Payment entry300
Payment entry450
Payment entry150
Adjusting entry150
Next
•What guides accountants in their work?
•The Conceptual Framework Revisited
•What has been the impact of International Standards?
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TOPIC 2THE CONCEPTUAL FRAMEWORK’S RELEVANCE AND IMPACT
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The Conceptual Framework
•The road map to accounting in Australia•The contents of the Conceptual
Framework are deemed to represent best practice
•It should be followed by accountants in the preparation and presentation of financial statements
•Non-mandatory
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The Conceptual Framework
•Where did it come from?•Developed jointly by AASB and AARF•GOAL: Define the nature, subject,
purpose and broad content of general-purpose financial reporting
•MEANS: Statements of Accounting Concepts (SACs)
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Why have a Conceptual Framework?•Benefits of conceptual framework:
▫accounting standards more consistent▫increased international comparability▫the Boards should be more accountable for
their decisions▫enhanced process of communication
between the Boards and constituents▫more economical Accounting Standard
development
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Statements of Accounting Concepts•SAC 1 — Definition of the Reporting
Entity•SAC 2 — Objective of General Purpose
Financial Reports•AASB Framework
▫Qualitative Characteristics of Financial Information
▫Definition and Recognition of the Elements
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Statements of Accounting Concepts•Initial plan was to develop more•Next SAC was to be on measurement•Agreement could not be reached so SAC
development stalled•Now replaced with IASB Framework•Remember from ADA, accounting only
exists because of general acceptance of the basic principles
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SAC 1 — Definition of the Reporting Entity•Defines general-purpose financial reports
(GPFRs)▫reports intended to meet the information
needs common to users who are unable to command the preparation of reports tailored to their specific needs
▫GPFRs to be produced by entities who have users who cannot command the preparation of specific information
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SAC 2 — Objective of GPFRs
•Objective of GPFRs is to provide relevant and reliable information to assist users to make and evaluate decisions about the allocation of scarce resources and to allow management and governing bodies to discharge their accountability
•Defines users of GPFRs
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AASB Framework — Qualitative Characteristics of Financial Information•Identifies the characteristics of financial
information necessary to allow users to make and evaluate decisions about the allocation of scarce resources