Lecture 1-Introduction to Accounting..ppt

Introduction to ACCA

2. Lecture 1.
Introduction
to
Accounting

3. Learning Outcomes:
Upon successful completion of the session, students will be able
to…
1.To define financial accounting – recording, analyzing and summarizing
financial data;
2.To identify the users of financial statements and state and differentiate
between their information needs;
3.To identify the purpose of each of the main financial statements;
4.To explain what is meant by governance specifically in the context of
the preparation of financial statements;
5.To describe the duties and responsibilities of directors and other parties
covering the preparation of the financial statements;
6.To analyze the role of International Financial Reporting Standards;
7.To distinguish the role of the regulatory system including the roles of
the IFRS Foundation (IFRSF), the International Accounting Standards
Board (IASB), the IFRS Advisory Council (IFRS AC) and the IFRS
Interpretations Committee (IFRIC).

4. General information
Liliya Memesheva (Module Leader) [email protected]
Akhrorjon Yakubjonov [email protected]
Gulhayo Nusratova [email protected]
Chingiz Babaev [email protected]
Nurgul Tatybekova [email protected]
Mohiraxon Abdullaeva [email protected]
Yusufjon Pulatov [email protected]
Telegram channel:
Financial Accounting Students Semester 1
Link: https://t.me/FA2022_Sem1

5. Teaching Week Topic
1 Introduction to Accounting
2 Accounting Cycle: categories of accounts; double-entry rules
3 Accounting Cycle: journals, ledgers, trial balance
4 End of year adjustments: Inventory
5
End of year adjustments: Depreciation
6 End of year adjustments: Accruals and Prepayments, Provision for
Bad and Doubtful Debt
7 In-class test
Preparation of Profit and Loss Account
8 Balance Sheet Part
9
Preparation of Cash-Flow Statement
10 Interpretation of Financial Statements: Ratio Analysis
11 Consolidated Financial Statements
12 Revision
Teaching schedule
12 lectures (2 hours) – TW1-TW12
12 seminars (2 hours) – TW1-TW12

6. Assessment
In-class test– 40% (TW 7)
Final exam - 60% - (TBA)

7. WHAT IS ACCA?
Chartered Certified Accountants, a thriving global ACCA is the
Association of community of 233,000
 members and 536,000 future
members based in 178 countries that upholds the highest
professional and ethical values. ACCA qualifications develop forward-
thinking professionals with the financial and business skills essential
for the creation of sustainable economies and flourishing societies

8. ACCA Accredited Programme
Association of Chartered Certified Accountants (ACCA) has
accredited the following programmes of Westminster
International University in Tashkent:
BSc Finance https://www.wiut.uz/finance
BSc Economics with Finance https://www.wiut.uz/economics-
with-finance
BA Business Management https://www.wiut.uz/business-
management

9. The students should choose the following modules to
get exemptions from ACCA examinations:
WIUT Module ACCA Qualification Offered in
No Paper F1 Business and TechnologyOn completion of
University
Management Accounting (MA) Paper F2 Management Accounting Level 5
Financial Accounting (FA) PaperF3 Financial Accounting Level 4
Commercial and Corporate Law (CCL) PaperF4Corporate and Business Law Level 5
Strategic Management Accounting and
Performance Measurement (SMAPM)
PaperF5 Performance Management Level 6
Principles and Practices of Taxation (PPT)PaperF6 Taxation Level 6
Financial Reporting (FR) PaperF7 Financial Reporting Level 6
Audit and Assurance (AA) PaperF8 Audit and Assurance Level 6
Financial Management (FM) PaperF9 Financial Management Level 5

10. What is business ?
An organization
or economic
system where
goods and
services are
exchanged for
one another or for
money.
l

11. Sole trader
A sole tradership is a business
owned and run by one
individual, perhaps employing
one
or two assistants and controlling
their work.
(+) Owner has complete control over the business
(-) Owner is personally liable for all debts (unlimited liability)

12. Partnership
These are arrangements
between individuals to carry on
business in common with a view
to profit. A partnership,
however, involves obligations to
others, and so a partnership is
usually governed
by a partnership agreement.
(+) Additional capital can be raised because more people are
investing in the business
(-) Partners are jointly personally liable for all debts (unlimited liability) unless
they have formed an LLP

13. Liability limited company
Limited liability status means
that the business's debts and
the personal debts of the
business's owners
(shareholders) are legally
separate. The shareholders
cannot be sued for the debts of
the business unless they have
given some personal guarantee.
(+) Limited liability makes investment less risky than being a sole trader or
investing in a partnership.
(-) Limited liability companies have to publish annual financial statements.
This means that anyone (including competitors) can see how well (or
badly)they are doing.

14. 1.Separate Business Entity
The corporation is separate and distinct from its owners.
An owner cannot remove funds from a business without
recording it as either a loan, compensation, or an equity
distribution.
Accounting Concept*

15. Separate business entity task
Person named Mr. Brown who owns a house that has a
market value of $300,000. He has a business of textiles
named Texticom where he has invested $150,000 as on
Jan 1
st
, 2019.
During the year 2019, Mr. Brown withdraws $7,000 from
the business for his personal use.
  The assets of the
business include plant & machinery worth $4,000,
computer worth $5,000. Mr. Brown has also done shopping
worth $500.
Comment and analyze the above scenario.

16. Accounting concept*
2.Going concern or Continuity. The valuation of the
assets and liabilities of a corporation is based on the
assumption that the company is going to continue in
business for a reasonable period of time in the future.

17. 3. Money Measurement – the monetary unit is used as
the standard to record all transactions of the company.
Otherwise, it would be difficult to compare the relative
performance of the same company over time or the
performance of two companies for the same time period.
Accounting concept*

18. Money measurement task
Which of the following transactions should be
recorded in the Financial Accounting System?
1) The employment of 10 personnel.
2) The purchase of plant & machinery worth $200.
3) The purchase of Goods worth $100.
4) The retirement of 2 employees.

19. What is the main goal of any business ?
Businesses of whatever
size or nature exist to
make a profit.
Profit is the excess of
income over
expenditure.
When expenditure
exceeds revenue, the
business is running at
a loss.

20. Accounting?

21. Accounting?
The systematic recording, reporting, and analysis of financial
transactions of a business
Communicates financial information to those who make decisions
and control the implementation of those decisions

22. Stage 1
Stage 2
The Scope of FA
Collect information
regarding financial
transactions
Express in monetary
terms
Record in accounting
journals
Summarize and present such
financial information in
financial statements
Balance
Sheet
Profit and
Loss Account
Cash flow
statement
Analyze and interpret
financial statements
Stage 3

23. Users of FA

24. Why Should I Study Accounting?

25. Accounting career path

26. Branches of Accounting
Financial Accounting
Managerial Accounting
Auditing
Tax Accounting

27. “The classification and
recording of the monetary
transactions of an entity in
accordance with established
concepts, principles,
accounting standards and
legal requirements;
and their presentation, by
means of the profit and loss
accounts, balance sheets,
cash-flow statements,
during and at the end of an
accounting period.”
Financial Accounting

28. 4.Time period /
Periodicity – financial
statements should be
prepared at the end of a
defined period of time,
and this period should be
adopted as the regular
accounting (reporting)
period. Usually entities
use twelve-month period
to prepare their financial
statements.
Accounting concept*

29. FA highlights
•The way in which company funds have been invested
(the balance sheet);
•The return made on those investments
(the income statement);
•The uses and sources of cash
(cash flow statement)

33. Management Accounting
•Provides information that
supports strategic and operating
management decisions
•A Control tool that provides
information to management
about performance of the
organization

34. Financial vs. Managerial Accounting

35. Auditing
 An examination of assessment of the
activities, controls, records and systems
that underpin accounting information
•External audit
The independent examination of, and
expression of opinion on, the financial
statements of an enterprise.
•Internal audit
An appraisal activity established within
an entity as a service to the entity. Its
functions include, amongst other things,
examining, evaluating and monitoring
the adequacy and effectiveness of the
accounting’s internal control systems.

36. True or False?
1. Accounting is much more theoretical than practical
2. Accounting is information science which is concerned
with collecting, organizing and analyzing information
3. Financial accounting information is prepared only for
internal users.
4. Managerial accounting information is more detailed than
Financial accounting.
5. Financial accounting is about budgeting

37. Duties and responsibilities of
those charged with governance
Those charged with governance of a
company are responsible for the
preparation of the financial statements.
Corporate governance is the system by
which companies and other entities are
directed and controlled.
The board of directors of a company are usually the top management and
are those who are charged with governance of that company.

38. Responsibility for the financial statements
Directors are responsible for the preparation of the financial
statements of the company. Specifically, directors are responsible for:
The preparation of the financial statements of the company in
accordance with the applicable financial reporting framework (eg
IFRSs)
The internal controls necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
error or fraud
The prevention and detection of fraud
It is the directors' responsibility to ensure that the entity complies
with the relevant laws and regulations.

39. Accounting standards
•IFRSs are produced by
the International
Accounting Standards
Board (IASB).
•The IASB operates under
the oversight of the IFRS
Foundation.
https://www.ifrs.org/

40. The IFRS Foundation
The IFRS Foundation (formally called the International Accounting Standards
Committee Foundation or IASCF) is a not for profit, private sector body that
oversees the IASB.
The objectives of the IFRS Foundation, summarized from its document IFRS
Foundation Constitution to:
develop a single set of high quality, understandable, enforceable and
globally accepted IFRSs through its standard-setting body, the IASB;
 promote the use and rigorous application of those standards;
take account of the financial reporting needs of emerging economies and
small and medium-sized entities (SMEs); and
bring about convergence of national accounting standards and IFRSs to
high quality solutions.

41. IFRS Advisory Council
The International Accounting Standard Board (IASB) develops IFRSs. The
IASB is an independent, privately funded body that develops and approves IFRSs.
The IFRS Advisory Council is essentially a forum used by the IASB to consult
with the outside world. It consults with national standard setters, academics, user
groups and a host of other interested parties to advise the IASB on a range of
issues, from the IASB's work programme for developing new IFRSs to giving
practical advice on the implementation of particular standards.
The IFRS Interpretations Committee provides guidance on specific practical
issues in the interpretation of IFRSs.
The IFRS Interpretations Committee has two main responsibilities.
To review, on a timely basis, newly identified financial reporting issues not
specifically addressed in IFRSs.
To clarify issues where unsatisfactory or conflicting interpretations have
developed, or seem likely to develop in the absence of authoritative guidance, with
a view to reaching a consensus on the appropriate treatment

42. Lecture Roundup:
1.Financial accounting is a way of recording, analyzing and
summarizing financial data.
2.Businesses of whatever size or nature exist to make a profit.
3.There are various groups of people who need information about the
activities of a business.
4.Those charged with governance of a company are responsible for
the preparation of the financial statements.
5.The principal financial statements of a business are the statement of
financial position and the statement of profit or loss.
6. Many figures in financial statements are derived from the application
of judgment in applying fundamental accounting assumptions and
conventions. This can lead to subjectivity. Accounting standards
were developed to try to address this subjectivity.
7.The IASB develops IFRSs. The main objectives of the IASB are to
raise the standard of financial reporting and eventually bring about
global harmonization of accounting standards.

43. Reading material
1. Dyson, J.R (2010) Accounting for Non-Accounting
Students. Chapter 1
2.Woods, F. & Sangster, A.(2005) Business Accounting
1, 10
th
ed. Chapter 1
3.ACCA (2020) Approved Interactive Text. Foundations
in Accountancy FFA 2019/2020. BPP Media Ltd.