1. FINANCIAL ACCOUNTING
COURSE DESCRIPTION
The primary aim of Financial Accounting is to provide students with an introduction
to the process and function of financial reporting. Whilst a large proportion of the
course is aimed at understanding accounting as a process, taking a preparers’
perspective, we will also seek to develop an understanding of the importance of the
role of accounting in today’s society.
LEARNING OUTCOMES
By the end of this course it is expected that the students will be able to:
1. Comprehend the language of accounting and financial reporting;
2. Understand Accounting Cycle
3. Understand the role of Journal, Ledger and subsidiary books
4. Be able to prepare balance sheet, profit and loss and cash flow statement.
5. Understand Final accounts of companies.
COURSE CONTENT
Week 01
Accounting and its role
Development of accounting
Accounting Theory and Conceptual framework
Accounting Defined
Why study Accounting
Financial statements
Major fields of Accounting
Accounting as a Career
Question for Class Discussions
Week 02
Basic Accounting Concepts
The Entity Concept
The Reliability (or Objectivity) principle
The cost Principle
The Going-Concern Assumptions
The Stable Currency Assumptions
Ethics-the-Most Fundamental Principle of Accounting
Week 03
The recording process
The Recognition Issue
The Valuation Issue
The Classification Issue
The Recording Process
Analysis of Transaction
The Journal
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The Ledger
Balancing the Accounts
Trial Balance
Limitations of Trial Balance
Chart of Accounts
Week 04
The year and adjustments and financial statements
Recording Revenue and Expenses
Accounting Period
Need for Adjusting Entries
Adjusting Entries Illustrated
Preparation of Financial Statements
Week 05
Accounting for trading organization
The Purchase Function
Accounting for Purchase
Accounting for Stock and Cost of Goods Sold
Periodic System
Closing Entries
Perpetual System
The Accounting for Sales
Worksheet
Preparation of financial Statements
Departmental Accounts
Week 06
Accounting Systems
Developing a System
Special Journal
Subsidiary Journal
Special Journal and Posting Process
Posting from the Cash Book
General Journal
Week 07
Cash and temporary investment
Nature and Composition of Cash
Cash Management and Control
Maintaining Bank Account
Steps in Preparing the Bank Reconciliation
Over the counter recipts
Short term investments
Week 08
Accounting for debtors and stock
Accounting Treatment of Bad Debts
Direct write-Off Method
Aging Schedule
Percentage of Sales Method
Recoveries of Bad debts
Stock
Measurement of Stock Quantity
Measurement of Stock Cost
Perpetual Stock System
Periodic Stock System
174
First in First out
Last in First out
Week 09
Mid-Term
Week 10
Accounting for property, plant and equipment
Property, Plant and Equipment
Lum-sum Purchase
Subsequent Expenditure
Depreciation
Units-of-Output Method
Reducing-Balance Methods
Sum-of-the-years-digits Method
Revaluation
Review of Useful life
Intangible Assets and Amortization
Wasting Assets and Depletion
Demonstration Problem
Week 11
Accounting for companies
The Company
Types of Company
Formation of a Public Limited Co,
Classes of Shares
Ordinary Shares
Preference Shares
Issuance of Shares
Market Value of Shares
Share Capital and Share Premium
No Par Value Share
Week 12
Chapter 11. Company final Accounts
Published Annual Report
The contents of the Published Accounts
Dividends
Reserve
Dividend payment process
Profit and Loss Appropriation Account
Week 13
Company final Accounts
Alteration of Capital
Bonus Shares
Right Issue
Stock Splits
Treasury Stock
Week 14 & 15
Cash Flow Statement
The Concept
The Advantages
Accounting Profit and Cash Flows
Preparation of statement of cash Flows
Operating Activities
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Investing Activities
Financing Activities
Week 16 Final Exam
RECOMMENDED BOOKS
1. Williams, Haka, Bettner: Financial & Managerial Accounting, Latest Edition,
Prentice Hall
2. Professor Muhammad Ammanullah Khan: Financial Accounting, Latest Edition
3. Frank Wood’s: Business Accounting 1, Eleventh Edition
4. Meigs and Meigs, Accounting for Business Decision, 14th Edition