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Year 11 Accounting

Year 11 Accounting. "If you don't have daily objectives, you qualify as a dreamer.” Zig Ziglar. Quote of the Day. Each chapter has learning objectives (these are your goals) You need to do a minimum five exercises at the end of each chapter Don’t just do the first five – mix them up

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Year 11 Accounting

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  1. Year 11 Accounting

  2. "If you don't have daily objectives, you qualify as a dreamer.” Zig Ziglar Quote of the Day

  3. Each chapter has learning objectives (these are your goals) • You need to do a minimum five exercises at the end of each chapter • Don’t just do the first five – mix them up • Then, if you keep it up, SUCCESS!! Your Goal…

  4. Refer to the Study Design • We need to do one chapter per week - that way there will be enough time for revision • There will be a letter sent home too. This is only to make your parents aware of what you are in for later so that can support you better. • Please give me feedback as time goes on. Every class is different and I need to know what suits you best. The Plan…

  5. Funnies!

  6. Chapter One The Nature & Role of Accounting in Small Business Avoiding business failure

  7. Insufficient capital • Financial mismanagement • Incompetent management • Staffing problems • Ineffective marketing • General economic conditions Reasons

  8. Insufficient sales • Poor location • Slow moving stock • Poor staff and/or customer relations • Lack of product knowledge • Being let down by suppliers (or franchisor) What may also contribute…

  9. Why is business planning so important? • ‘Businesses do not plan to fail, they fail to plan’. • What does this mean? • It takes hard work, persistence, adequate resources and, MOST OF ALL, continual planning to be successful. Why?

  10. A business plan is essential, whether you are starting out or expanding a business • It outlines a purpose (mission statement), goals, management, finance, marketing & human resources • If you need to borrow money, the lenders will want to see a business plan The Business Plan

  11. Debtors and other customers • Creditors and other suppliers • Banks (& other financial institutions) • Employees • Prospective owners • Australian Taxation Office (ATO) Users of Accounting Info (otherwise known as ‘stakeholders’)

  12. Financial data • Raw facts & figures upon which information is based • Financial information • Financial data which has been sorted, classified & summarised into a more usable and understandable form Financial Data vs. Financial Information

  13. The Accounting Process

  14. The pieces of paper that provide both evidence that a transaction occurred and the details of the transaction itself • Example are: • Receipts • Cheque butts • Invoices • Memos 1. Collecting Source Docs

  15. As far as the Accounting process is concerned, if it isn’t written down, it didn’t happen! Remember…

  16. Sorting, classifying and summarising the information contained in the source documents so it is more usable • Common records include • Journals (which record daily transactions of a common type) • Ledgers (which record the effect of each transaction on the items in the firm’s accounting reports) • Stock cards (which record movement of stock in & out) 2. Recording

  17. The preparation of financial statements that communicate financial information to the owner. • The three general purpose reports are: • Cash Flow Statement (which reports the firm’s cash inflows & outflows and the change in the cash balance over the period) • Profit & Loss Statement (which reports on the firm’s ability to earn a profit over a period) • Balance Sheet (which reports on the firm’s assets & liabilities at a particular point in time) 3. Reporting

  18. The provision to the owner of a range of options appropriate to their aims/objectives, and recommendations as to their suitability. 4. Advice

  19. stimson.andrew.j@edumail.vic.gov.au Andrew’s Email

  20. Accounting principles & qualitative characteristics needs to be remembered. • I mean literally! • I will provide ‘posters’ that I want put up on your toilet door! • I am not kidding! This is important!

  21. The generally accepted rules that govern the way accounting information is recorded. • Entity: The business is assumed to be separate from the owner and other businesses, and its assets should be kept on this basis. • Going Concern: The life of the business is assumed to be continuous, and its records are kept on that basis. • Reporting Period: The life of the business must be divided into periods of time to allow reports to be prepared, and the accounting records should reflect the reporting period in which the transaction occurs. Accounting Principles

  22. Historical Cost: Transactions should be recorded at their original cost or value, as this value is verifiable by reference to the source document. • Conservatism: Losses should be recorded when probable, but gains only when certain so that liabilities and expenses are not understated and assets & revenues are not overstated. • Consistency: Accounting methods should be applied in a consistent manner to ensure that reports are comparable between periods. Accounting Principles

  23. Monetary Unit: All items must be recorded and reported in the currency of the country of location. Accounting Principles

  24. Qualitative characteristics set out the broad concepts that underpin the preparation of the financial reports and defines the items that will be reported in each report. • The Qualitative characteristics are basically the qualities we would like our accounting information to possess. Qualitative Characteristics

  25. Relevance • Relevance states that reports should include all information that is useful for decision making, and exclude information that is not. This information should be up-to-date, and appropriate to the decision at hand. • Reliability • Reliability states that reports should contain information that is free from bias, and thus can be relied upon for its accuracy. Qualitative Characteristics

  26. Comparability • Comparability states that reports should be comparable over time, and between different companies, through the use of consistent accounting procedures. • Understandability • Understandability states that reports should be presented in a manner that makes it easy for the user to comprehend their meaning. Qualitative Characteristics

  27. In summary, accountants are guided by: • Accounting principles, which govern the way accounting information is recorded. • Qualitative characteristics, which inform the way accounting reports are prepared. • Principles apply mainly to records, and qualities apply to reports. Summary

  28. Finish note taking. • Read Summary. • Do a minimum of five exercises at the end of the chapter (don’t just do the first five). You!

  29. EXCELLENT!

  30. "Inspiration exists, but it has to find us working.” Pablo Picasso Quote of the Day

  31. Funnies!

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