1 / 21

WELCOME TO ACN102-N

WELCOME TO ACN102-N. THE COURSE AHEAD. Aspects of accounting reporting Partnerships (3 weeks) * Close corporations Companies * Cash Flow Statements (2 weeks) * Manufacturing Branch accounting. ABOUT THE CLASSES. Discipline and respect (two way street) Consideration for others

elizabeth-whitley
Télécharger la présentation

WELCOME TO ACN102-N

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. WELCOME TO ACN102-N

  2. THE COURSE AHEAD • Aspects of accounting reporting • Partnerships (3 weeks) * • Close corporations • Companies * • Cash Flow Statements (2 weeks) * • Manufacturing • Branch accounting

  3. ABOUT THE CLASSES • Discipline and respect (two way street) • Consideration for others • Intensive study • Interaction • No such thing as a stupid question • Einstein: “The way forward is not by asking big questions, but by asking lots of little ones.”

  4. STUDYING AND EXAM TECHNIQUE • Reasons for failure • Stress and burnout • Exam technique • Motivation – why are you here? • Effort made and work done • Lack of planning • Your tertiary studies are about more than just learning and rote repeating information • How can one address these areas?

  5. ACTUAL STUDYING • Passive versus active studying • Your studying and work environment • Clutter free desk, soft background music, liquids, no distractions • Plan your studies • Power sessions • Memory mnemonics • No conducive environment at home? - Libraries • Group sessions – are friends a help or a hindrance? • Lectures alone are not enough • Why do questions? • Knowledge and comprehension versus application • Prioritise between sections • DON’T MERELY SPOT CERTAIN SECTIONS – HIGH RISK • DON’T LEAVE IT ALL UNTIL THE LAST MONTH – TOO LATE

  6. GENERAL ASPECTS OF ACCOUNTING REPORTING “Is accounting a science or an art?” Understand: • Financial reporting • Qualitative characteristics • Underlying assumptions * • Quantitative restrictions • Equity • Form, layout and structure of the financials • Inflation accounting (Zimbabwe) Note: GAAP or Generally Accepted Accounting Practice no longer exists. It is now known as ‘IFRS’ or ‘International Financial Reporting Standards’.

  7. FINANCIAL REPORTING • Why do we do accounting/what are we trying to achieve? • Who is it all meant for? • Who are the decision makers and why or what is it that is useful to them? • What are the components of financials statements and what do they prove? • Balance Sheet • Income Statement • Statement of Changes in Equity • Cash Flow Statements • Notes to the financials • Value Added Statements (not in course)

  8. QUALITATIVE CHARACTERISTICS, UNDERLYING ASSUMPTIONS AND QUANTITATIVE RESTRICTIONS • Qualitative characteristics • Understandability • Relevance • Reliability • Comparability and consistency • Underlying assumptions * • Going concern • Accruals concepts • Quantitative restrictions • Cost versus benefit • Materiality *

  9. EQUITY AND LAYOUT • Remember your basic accounting equation • A-L=OE • OE=Income – Expenses + Capital invested – withdrawals • Layouts • Balance Sheets: Assets versus Equity and Liabilities • Current • Non-current • What goes where? • Income Statements • Nature versus function • Statement of Changes in Equity • Cash Flow Statement (later) • Notes to the financials

  10. http://www.netcareinvestor.co.za/

  11. INFLATIONARY ACCOUNTING • Time value of money • A Rand today is worth more than a Rand tomorrow • Impact on comparison of financial values • Hyperinflationary economies • Zimbabwe

  12. QUESTIONS Question 1) Describe the users of financial statements, and list two of the qualitative aspects that they’re concerned about with financial statements. (4) Question 2) Clarify what type of asset you think ‘work in progress’, in a construction company that builds skyscrapers and that take several years to complete, are? Why? (2)

  13. QUESTIONS AND SUMMARY • Summarise what you thought were the most important aspects from the lecture in your own words. Write it down for yourself now! • Questions for the lecturer?

  14. PARTNERSHIPS • What are they? • Legal entity but not a juristic person – Companies Act • 2 – 20 persons • Why would people enter into them? • Unite capital • Eliminate competition • Unite capital and skill together • Other? • What makes up a partnership agreement and why do we need it? • Obvious items e.g. name and profit share • The concept of Goodwill

  15. PARTNERSHIPS: HOW AND WHY? • How do you establish a partnership? • By action • By agreement • By registration • Limited partnership– for specialised practices • How does a partnership end? • Mutual agreement • Time passes or partnership fulfills its purpose • A partner dies, leaves or is admitted • Violations – illegalities, technical • Bankruptcy • Remember: When a partner leaves or joins the partnership the old entity is regarded as having ceased to exist

  16. PARTNERSHIPS: ACCOUNTING • Important components of the partnerships • Capital accounts • Current accounts • Loan accounts • Each partner will have their own individual general ledger account for each of these aspects • Where does loan interest come in the sequence when sharing profits? Why? • What about drawings?

  17. PERFORMING THE FINANCIALS • Before we begin with examples, consider: • Drawings • The two methods for paying salaries • Profit and loss sharing ratios • ‘Sequence’ of doing the accounting? • Elements to watch out for: • Salaries, bonuses and commissions • Interest on loan • Interest on drawings • Interest on capital • Interest on current account • Profit share

  18. TECHNIQUE TO DOING LARGE CONVENTIONAL PARTNERSHIPS QUESTIONS • Read the required • Start reading the actual question • Split the Trial Balance into its Income Statement and Balance Sheet items • Note the date of the partnership’s year end • Read the rest of the question • Do rough ‘T’ accounts workings for each aspect • Read the required again • Start doing your workings while concurrently doing the obvious elements of the Balance Sheet and Income Statement first. • Begin the Current Account if required to • Start doing the financial notes when you have done the workings for the current year’s depreciation • Start the obvious elements for the Statement of Changes in Equity • Complete the Income Statement and do the workings for the profit/loss split to partners • Complete the Current Account • Complete the Notes • Complete the Statement of Changes in Equity • Complete the difficult parts of the Balance Sheet

  19. CURVEBALLS IN PARTNERSHIPS • Drawings – It’s not an Income Statement item • Stock and year end dates – watch out, it can potentially be opening stock • One of the partners has a debit balance in their current account • The entity records a loss • Take the bad debts amount off the debtors before calculating the provision • They like to use Gross Profit or Margin percentages to force you to work out the gross profit and sales • Stationery on hand at year end is not stock • But it can be a prepayment • Prepayment and accrual splits and their effect on the Income Statement • Final stock that has to be raised – entry goes into the Income Statement and the Balance Sheet – Dr Stock (B/S), Cr Closing Stock (I/S) • The presentation of interest on capital and interest on current account. The first goes to the finance costs section in the Income Statement and the second goes under operating expenses • Commission – you likely have to calculate the net profit before doing it Note: This list is not inclusive of all aspects

More Related