Introduction to Accounting
Main Elements in Financial Statements
Statement of Comprehensive Income (Statement of Profit or Loss/Income Statement)
Statement of Changes in Equity
Statement of Financial Position (Balance Sheet)
Statement of Cash Flow
Notes to the Financial Statements
Objective
To provide information that is useful for making business and economic decisions
3 Basic Activities
Identifies
Records
Communicates
Accounting Concepts
Accrual Basis
Going Concern
Prudence
Balance Sheet Equation
Accounting Period
Accounting Conventions
Historical Cost
Monetary Measurement
Separate Entity
Realisation
Materiality
Accounting Principles
Understandability
Relevance
Consistency
Comparability
Reliability
Objectivity
Basic Accounting Equation
ASSETS = LIABILITIES + EQUITY
Accounting Flow/Cycles
Analyze business transactions
Journalize the transactions
Post to ledger accounts
Prepare a trial balance
Journalize and post adjusting entries
Prepare an adjusted trial balance
Prepare financial statements
Journalize and post closing entries
Prepare a post-closing trial balance
Type of Adjusting Entries
Deferrals
Prepaid expenses
Unearned revenues
Accruals
Accrued revenues
Accrued expenses
Classification of Cash Flows
Operating activites
Investing activities
Financing activities
Format of the statement of cash flows
Operating activites
Investing activities
Financing activities
Main Advantages of a Computerized Accounting System
Speed
Automatic document production
Accuracy
Up-to-date information
Availability of information
Management information
GST/VAT return
Legibility
Efficiency
Staff motivation
Cost savings
Reduce frustration
The ability to deal in multiple currencies easily
Effective Financial Management
Regulatory requirements
Written policies and procedures
Documentation of expenses
Managing cash
Efficient accounting system
Budget controls
Time and activity documentation
Matching requirements and in-kind contributions
Reporting
Internal controls
Benjamin