ACF110C2B

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ACF110C2B

• Lecture One
• Miss Syamarlah Rasaratnam

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Contact Details

• Room L207
• E-mail s.rasaratnam_at_ulst.ac.uk
• Tel [phone] (direct line)
• Office hours Monday 10am to 12pm
• Tuesday 2pm to 4 pm

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Class and Tutorials

• Lecture
• 1.15 to 4.05 LT8
• Tutorials
• BSc Retail Management
• 9.15 to 11.05 L043 (one hour per group)
• BSc Business with Computing
• 11.15 to 12.05 L10 (one hour per group)
• Other degrees
• 1.15 to 2.05 L003

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Marking Scheme

• Assignment 10
• Class Tests 25 (you will have 10 small class
  tests during the tutorials) No repeats allowed
  without proper documents
• Final Exam 65
• Total 100

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Internal Assessment

• Assignment Interpretation of accounts
• (Week 10)
• Class test Previous weeks class notes
• Remember to bring your calculator

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Theory question

• Good accounting software has the look and feel
  of traditional book-keeping methods. Critically
  evaluate the above statement.
• (chapter 32)

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Computational questions

• Similar questions will be explained during the
  lecture hour. (one a week)
• Similar questions will be given as class test
• PLEASE ATTEND THE LECTURE TUTORIALS

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Any questions?
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What is accounting?

• American Association defines accounting as
• the process of identifying, measuring and
  communicating information to permit informed
  judgements and decisions by users of the
  information.

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Users of financial statement

• Existing shareholders
• Potential shareholders
• Creditors
• Investment and credit analysts
• The government
• Employee
• Society at large

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Existing shareholders

• Profitability
• Earnings per share
• Why?
• Keep/sell/increase their shares
• How to spent the money
• Change of management

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Potential shareholders

• Value of the company share price
• Earnings per share
• Why?
• Invest in the company

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Creditors

• Profitability
• Liquidity
• Future cash flows
• Why?
• Accept or refuse the application
• Asses credit worthiness

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Investment and credit analysts

• Profitability
• Liquidity
• Debt to equity ratio
• Why?
• Provide sophisticated interpretation of
  accounting to clients

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The government

• Growth
• Liquidity
• Profitability
• Why?
• By using these accounting data in conjunction
  with other economic information, the government
  can then make its economic policies and
  decisions.

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Inland Revenue

• Profit/loss of the year
• Why?
• Taxation purpose

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Employees

• Profitability
• Earning per share
• Why?
• Job security
• Increase in wages
• Investment in the company

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Society at large

• Profitability
• Liquidity
• Earning per share
• Share price
• Why?
• Obtain public opinion of the firm
• Change the policy if it is against public opinion

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Branches of accounting

• Auditing
• Bookkeeping
• Cost Accounting
• Receivership Liquidation
• Financial
• Management
• Taxation

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Professional Accountancy bodies

• The institute of chartered accountant in England
  and Wales (ICAEW)
• The institute of chartered accountants in
  Scotland (ICAS)
• The institute of chartered accountants in Ireland
  (ICAI)
• The association of Chartered certified
  accountants (ACCA)
• The chartered institute of management accountants
  (CIMA)
• The chartered institute of public finance and
  accountancy (CIPFA)

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Types of entities

• Sole Trader
• Partnerships
• Companies
• Limited (Ltd.)
• Public (Plc.)

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Accounting Regulations

• The evolution of Basic rules
• 1971 SSAPs Statements of Standard Accounting
  Practices
• FRSs Financial Reporting Statements
• Why?
• Comparability
• Uniformity
• Valuation

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Standards in Issue

• SSAP 2 Disclosure of accounting policies.
• SSAP 12 Accounting for depreciation

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FRs

• FRS 3 Reporting Financial Performance

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The basic accounting rules

• Boundary rules (4) - E P G Q
• What should be included
• Measurement rules (6) - MM HC R M D M
• How the information should be recorded
• Ethical rules (4) - P C O R
• The principles of accounting

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Boundary Rules

• Entity - restricted to the business itself.
• Periodicity - a defined period of time, usually
  12 months.
• Going concern - assumption of continuity
• Quantitative - only that which is quantifiable
  should be included.

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Measurement Rules

• Money measurement - monetary rules.
• Historic cost - recorded at original purchase
  price.
• Realization - transfer of legal title.
• Matching - cost of sales v sales revenue.
• Dual aspect - double entry
• Materiality - flexibility

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Principles/Ethics

• Prudence - paint the worst case scenario
• Consistency - year on year.
• Objectivity - personal prejudice to be avoided.
• Relevance - a true and fair view, in line with
  the rule of entity.

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SSAP 2 (Disclosure of Accounting Policies)

• Concerned with the fundamental accounting
  concepts, methods, and policies.
• Four main concepts Prudence, Going concern,
  Matching, Consistency
• To assist understanding by promoting improvement
  in the quality of information.
• Fully disclosed in Financial Statements.

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Accounting Equation

• Total Assets Total Liability Total Equity

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Total Assets

• Fixed Assets
• Premises
• Vehicles
• Fixtures and Fittings

• Current Assets
• Stock
• Debtors
• Bank balance

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Equity and liability

• Equity
• Shares
• Pref. Shares
• Ordinary shares
• Retained profit

• Liability
• Short-term lt 1yr
• Bank overdraft
• Creditors
• Long-Term gt1 yr
• Debentures
• Bank Loan

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Announcement

• The tutorial time will be posted in the notice
  board.
• E-mail me if you have any problem
• No Tutorials this week
• NEXT WEEK
• Double entry
• Class test on todays material