Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
BPA 11403
Prepared by:
Nur Aniza Quantaniah binti Jusoh
Fakulti Pengurusan Teknologi dan Perniagaan
Universiti Tun Hussein Onn Malaysia
Room:J701-13
Tel : 07-4533930
E-mail: nuraniza@uthm.edu.my
Nur Aniza Q.Jusoh
LEARNING OBJECTIVES
At the end of this class, you should be
able to:
1. Define accounting
2. Identify business goals and activities
3. Describe the role of accounting in
making informed decisions.
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LEARNING OBJECTIVES
(cont)
4. Identify the various users of accounting
information in society and the
characteristics of such information
necessary to meet their objectives
5. Describe the three forms of business
organization.
6. Understand the accounting principles,
concepts and ethics
7. Identify the financial statements
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Introduction to Accounting
History of Accounting
Business & Accounting
Users of Accounting Information
Types of Business Organizations
Accounting Bodies
Accounting Concepts and Principles
Types of Financial Statements
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Accounting as a Business
Language
What is Accounting?
Accounting is ..
The art of identifying, measuring,
recording, interpreting and
communicating the results of economic
activities
Activities in Accounting
Identification
Select economic events relevant to business
(transactions)
Recording
Keeping a systematic, chronological diary of
events (double entries, ledger & journals)
Communication
Preparation of accounting reports
Analyzing and interpreting for users
Nur Aniza Q.Jusohratio analysis)
(Financial statements,
Collects and
process
financial
information
Reports
information
to decision maker
External users
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Fields of Accounting
Accounting is usually divided into two
main categories:
1. Management accounting.
2. Financial accounting.
The two may be distinguished by the
principal users and focus of their
information.
Other categories are :Auditing,
Taxation, Financial
Management
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Management
Accounting
Users
External
Internal
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10
Focus
Management
accounting
Focus
Profitability
Solvency
Liquidity
Efficiency
Productivity
Quality
11
History of Accounting
3500 B.C-Babylonian & Sumerian
civilization
Agricultural & small industries
Transaction recorded on clay boards
Earliest banks, gold & silver, credit facilities
Egyptian civilization
Taxation matters
Papyrus documents
Internal inspection by government treasury
12
History of Accounting
Roman civilization
Statement of assets and liabilities
Cash books for record of expenses
Yearly budget for coordination of income
and expenses
12th-15th century
Bookeeping based on double entry
system commenced in Italy
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Distinction between
Bookeeping and Accounting
Bookkeeping refers to the daily
activities of recording and classifying
routine transactions in an accounting
system. It is based on the double entry
method.
16
Distinction between
Bookeeping and Accounting
Accounting involves the designing of
accounting and internal control
systems, identifying and measuring
transactions and events to be recorded,
interpreting and communicating
information to decision makers in a
meaningful manner, and encompasses
bookkeeping.
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18
Owners
Profit
Value
Goods &
Services
Material
Consumers
Financial
Resources
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19
Business Goals
Profitability.
A business must take in enough
money to pay all the costs of doing
business, with enough left over as
profit for the owners to want to stay
in business.
20
Business Goals(cont)
Liquidity.
A business must have enough
funds available to pay debts
when they are due.
21
Business Activities
Companies do three basic things.
They invest in assets to conduct
business.
They raise money to finance these
assets.
They use the assets and the money they
raise to operate the business.
These transactions can be classified into
one of three categories operating,
investing, and financing activities.
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22
Business Activities
1.Financing Activities.
2.Investing Activities.
3. Operating Activities.
23
Business Activities
Profitability
Operating
Investing
Liquidity
Financing
24
Business and
Accounting
Business is about making decisions.
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27
Effects
Accounting Data
Effects
Reports
Internal users
External users
Decision Making
Decision Making
28
Tax Authorities
Regulatory Agencies
Economic Planners
Labor unions, financial advisors, others.
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30
Various users of
accounting information
Internal
Accountants
Marketing managers
Salespersons
Production managers
Operation supervisors
Strategic planners
Company president
Company engineers
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Various users of
accounting information
External
Stockholders (present and potential)
Bondholders (present and potential)
Government & Regulatory Bodies
Banks and other Lending Institutions
Suppliers
Creditors
Debtors
Customers
Competitors
Lobby groups
Public
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Forms of Business
Organizations
Proprietorships
Partnerships
Corporations
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34
Forms of Business
Organizations
Sole Proprietorship--a single
owner business
Partnership--a multiple-owner
business
Corporation--a business whose
ownership is divided into
"shares" and may be owned by a
large number of people
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35
Forms of Business
Organizations
Sole Proprietorship
individual engaged in a business or
profession on his/her own account
Smallest and simplest form of business
organization with minimal legal
requirements
total control, single main capital
contributor
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Forms of Business
Organizations
Sole Proprietorship
all the risks and benefits arising from the
business are taken by the owner
unlimited liabilities for owners
Examples-street vendors, small shops &
retail, beauty saloons, car workshops,
internet cafes and professional
business-(doctors, lawyers,
accountants, architects etc)
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Sole Proprietorship
What are some advantages?
easy and inexpensive to
establish
total control
What are some disadvantages?
unlimited liability
limited access to capital
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38
Forms of Business
Organizations
Partnership
2 persons or the maximum of 20 persons
pool their capital and agree to carry on a
business in common with a view to profit.
Utilizations of different skills
Wider capital base, moderate size
Partner is jointly and severally liable for the
partnership's obligations.
39
Forms of Business
Organizations
Partnership
Unlimited liability
Sharing of risks, profit and losses
Partnership agreements-rights, duties, and
obligations of the partners, and also provide rules
and procedures for partnership matters;
otherwise- governed by the Partnership Act 1961
Examples of partnerships are family retail
businesses, professional based services such as
lawyer, accountant, architect, engineers firms and
etc
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sharing of profits
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Forms of Business
Organizations
Corporation
A legal entity that is separate and
distinct/independent from its members and
shareholders
Company is formed, it is "incorporated" under
the Companies Act 1965.
Continuity of succession
Capable of owning property, making
contracts, employing people and being sued
or of suing
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Forms of Business
Organizations
Corporation
Company limited by shares- most common
structure in Malaysia.
Two categories - Public limited companies
(Berhad) and Private limited
companies(Sdn.Berhad)
Examples of limited company - banks and
financial institutions, consumer and industrial
products manufacturers, transports and
shipping companies, construction companies
and etc.
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Corporations
What are some advantages?
limited liability
greater access to capital
44
Characteristics of Different
Forms of Business
Organization
Issues in deciding between sole
proprietorship, partnership, or
corporation
Personal liability
Taxation
Transfer of ownership
Ability to raise capital
Government regulation
45
ORGANIZATION INFLUENCING
ACCOUNTING PRACTICES
In the 19th century, the accounting field
had achieved a professional standard
and accounting bodies was formed :
to determine the minimum qualification
and standards for the accounting
profession;
to shape and develop the accounting
codes of ethics and;
to ensure members ethical conducts and
compliance to the codes
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ORGANIZATION INFLUENCING
ACCOUNTING PRACTICES
International Accounting Standards
Board(IASB)
1973,Sydney encourage usage of
basic standard in accounting work
amongst members
Purpose- to ensure quality and
professionalism of accounting
profession & methodical and
regulated preparation of accounts and
statements
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ORGANIZATION INFLUENCING
ACCOUNTING PRACTICES
48
ORGANIZATION INFLUENCING
ACCOUNTING PRACTICES
Malaysian Institute of Accountant
(MIA)
Established under Accounting Act 1967
Authoritative body regulating the accounting
profession
Member body of regional and international
professional bodies
Helm of MIA stewardship is the Council
represented by the Accountant General, the
Registrar and accountants in the public
practice, private sector and from the
academia.
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ORGANIZATION INFLUENCING
ACCOUNTING PRACTICES
The Malaysian Institute of Certified
Public Accountant (MICPA)
The Association of Chartered
Certified Accountant (ACCA)
Chartered Institute of Management
Accountant (CIMA)
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Accounting Concepts
and Principles
Going Concern(Continuity)
Principle
A business will continue in
operation for an indefinite period or
for the foreseeable future and will
not be terminated or dissolved in a
short period
Matching principle
Expenses are recognized at the same
time that the related revenue is
recognized.
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Accounting Concepts
and Principles
Revenue Recognition Concept
Revenue is recognized when
earned
Materiality Concept
An item is "material" if its
knowledge might influence the
decisions of users of financial
statements.
Accruals Concept
Expenses are only those sums
which are due and payable.
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Accounting Concepts
and Principles
Consistency Concept
Accounting methods must remain the
same so that one periods statements
may be reasonably compared with
another.
Periodicity Concept
Results of activities are evaluated in
their related periods. Implies the
division of the endless life span of
companies into specific periods and the
determination of the results of each
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period independent
from others.
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59
Confidentiality
does not relieve a professional accountant
from his or her professional obligation to
correctly and fully disclose facts in
financial statements or accounting
documents
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61
Financial
Statements...
are the final
product of the
accounting process.
tell how the
business is performing
and where it stands.
62
External Decision
Making
Return on Investment
Risk
Financial
Reports
Buy
Hold
Sell
Financial Flexibility
Liquidity
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Operating
Capability
Extend Credit
Continue
Credit
Deny Credit
63
Financial
Statements...
income statement
balance sheet
statement of owners equity or
retained earnings
statement of cash flows
64
What is an Income
Statement?
Income Statement - a report of all
revenues and expenses pertaining
to a specific time period
Net income - the remainder after all
expenses (including income taxes)
have been deducted from revenue
Often seen as the bottom line
Net loss - the excess of expenses
over revenues
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What is an Income
Statement?
The income statement must always
indicate the exact period covered
(month ended, quarter ended, year
ended) because statements are
often prepared for different time
periods..
Income statement is FOR THE
PERIOD ENDING
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January 2012
67
What is an Income
Statement?
Decision makers inside and outside
the company use the income
statement to assess the companys
performance over a span of time.
By tracking net income from
period to period, decision makers
can evaluate the success of the
periods operations.
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Net Income
Revenues
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Expenses
69
1. Name of
entity
2. Title of
statement
3. Specific
date
(Unlike the
balance
sheet, this
statement
covers a
specified
period of
time.)
4. Unit of
measure
MAXIDRIVE CORP.
Income Statement
For the Year Ended December 31, 2012
(in thousands of dollars)
Revenues
Sales revenue
Expenses
Cost of goods sold
$ 26,980
Selling, general and administrative
3,624
Research and development
1,982
Interest expense
450
Total expenses
Pretax income
Income tax expense
Net income
$ 37,436
33,036
$ 4,400
1,100
$ 3,300
70
What Is A Balance
Sheet?
The balance sheet shows the financial
position of a company at a particular
point in time.
The balance sheet is sometimes
referred to as the statement of
financial position or the statement of
financial condition.
The left side lists assets the right side
lists liabilities and owners equity
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What Is A Balance
Sheet?
Elements of the balance sheet:
Assets - resources of the firm that are
expected to increase or cause future cash
flows (everything the firm owns)
Liabilities - obligations of the firm to
outsiders or claims against its assets by
outsiders (debts of the firm)
Owners Equity - the residual interest in, or
remaining claims against, the firms assets
after deducting liabilities (rights of the
owners)
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Balance Sheet
Transactions
The balance sheet is affected by
every transaction that an entity
encounters.
Each transaction has
counterbalancing entries that keep
total assets equal to total liabilities
and owners equity, i.e., the balance
sheet equation and the balance
sheet must always be
balanced.
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Balance Sheet
Transactions
Transactions are recorded in
accounts, which are summary
records of the changes in
particular assets, liabilities, or
owners equity.
The account balance is the
total of all entries to the
account.
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Balance Sheet
Transactions
A balance sheet could be prepared after
every transaction, but this practice would
be awkward and unnecessary.
Therefore, balance sheets are usually
prepared monthly or on some other
periodic schedule
Balance sheet is AS OF or AS AT
a particular date, sometimes called a
snapshot in time.
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Owners Equity
76
1. Name of entity
2. Title of statement
3. Specific date
4. Unit of measure
The
Balance
Sheet
reports the
financial
position of
an entity at
a particular
point in
time.
MAXIDRIVE CORP.
Balance Sheet
At December 31, 2012
(in thousands of dollars)
Assets
Cash
Accounts receivable
Inventories
Plant and equipment
Land
Total assets
Liabilities and Stockholders' Equity
Liabilities
Accounts payable
Notes payable
$ 4,895
5,714
8,517
7,154
981
$ 27,261
$ 7,156
9,000
Total liabilities
Stockholders' Equity
Contributed capital
Retained earnings
Total stockholders' equity
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Q.Jusoh
Total liabilities
and
stockholders' equity
$ 16,156
$ 2,000
9,105
11,105
77
$ 27,261
Relationship Between
Income Statement and
Balance Sheet
The balance sheet provides a
snapshot of an entitys financial
position at an instant in time.
The income statement provides a
moving picture of events over a span
of time and explains the changes that
have taken place between balance
sheet dates.
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81
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1. Name of entity
2. Title of
statement
3. Specific date
4. Unit of
measure
MAXIDRIVE CORP.
Statement of Retained Earnings
For the Year Ended December 31, 2012
(in thousands of dollars)
83
What is a Statement
of Cashflow?
Income does not measure an entitys
performance in generating cash,
especially if the income is measured
using the accrual basis.
84
What is a Statement
of Cashflow?
The statement of cash flows gives a
direct picture of where cash came from
and where cash went.
Statement of cash flows - reports the
cash receipts and cash payments of an
entity during a particular period
85
What is a Statement
of Cashflow?
It summarizes activity over a period
of time, so it must be labeled with
the exact period covered.
It details the changes in the cash account,
much like the income statement which
shows changes in retained earnings.
86
What is a Statement of
Cashflow?
Because
revenues reported
do not always equal
cash collected. . .
. . . and expenses
reported do not
always equal
cash paid . . .
net income is
usually not equal
to the change
in cash for
the period.
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What is a Statement
of Cashflow?
Preparation of the statement of
cash flows
List the activities that increased
(inflow) or decreased (outflow) cash.
Place each inflow or outflow into the
proper categories.
88
What is a Statement of
Cashflow?
The elements of a statement of cash flows are:
o Operating cash flows are the flows of cash from
acquiring, selling, and delivering goods for sale,
as well as providing services.
o Investing cash flows are the flows of cash from
acquiring and selling investments, property, plant,
and equipment, as well as from lending money and
collecting on loans.
o Financing cash flows are the flows of cash to and
from the owners and long-term creditors include
obtaining resources and repaying amounts
borrowed
89
The Statement of
Cashflow
The Statement of Cashflow cover a
period of time, and thus are FOR
THE PERIOD ENDING
90
The Statement of
Cashflow
91
1. Name of
entity
2. Title of
statement
3. Specific
date
4. Unit of
measure
MAXIDRIVE CORP.
Statement of Cash Flows
For the Year Ended December 31, 2012
(in thousands of dollars)
Cash flows from operating activities:
Cash collected from customers
Cash paid to suppliers and employees
Cash paid for interest
Cash paid for taxes
Net cash flow from operating activities
Cash flow from investing activities:
Cash paid to purchase equipment
Net cash flow from investing activities
Cash flow from financing activities:
Cash received from bank loan
Cash paid for dividends
33,563
(30,854)
(450)
(1,190)
$
(1,625)
(1,625)
1,400
(1,000)
400
$
1,069
(156)
5,051
4,895
$8,500
Expenses:
Salary expense
Utilities and telephone expense
Equipment rental expense
Office rent expense
Net income
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$1,200
400
600
1,100
3,300
$5,200
93
94
Relationships Among
the Statements:
Balance Sheet
Assets
Cash
$19,900
Accounts receivable
2,000
Supplies
500
Land
11,000
Total assets
$33,400
Liabilities
Accounts payable $ 200
Owners equity,
G. Gillen, capital
33,200
Total liabilities and
owners equity
$33,400
95
$6,500
3,600
$2,900
($11,000)
96
$30,000
2,000
$28,000
0
$19,900
97