Anda di halaman 1dari 1

Week 1: ACCOUNTING IN BUSINESS Entrepreneurship:

process of identifying & starting a new business venture, sourcing

and organizing the required resources, while taking both the risk
and rewards associated with the venture. 5 Stages of Entre:
Discovery, Concept Development, Resourcing, Actualization, and
Harvesting. Cash Flow Conundrum: the need to pay suppliers
before customers pay you. Financing Needs: the amount of
control to surrender equity vs debt financing, the amount of
financing needed, cost of financing. 3 Reasons to Know
Accounting & Finance: Predictions about the future, make more
effective commitments of time energy and money, measure and
reassess progress of the business Making Predictions: Future
revenues, operating expenses and assets. Making Commitments:
sales processes, delivery processes. 4 types of commitments:
sunken investments in LT fixed assets; promises to pay a fixed
amount over time to use fixed assets e.g. rent, salary; borrowing
money to expand (ST/LT); making working capital investments
(inventory or accounts receivables) Accounting for costs and
relating them to activity, CVP analysis. Cash flow projections and
analysis will help determine value of different types of
commitments. Measuring progress: appropriate incentive
compensation, measuring progress helps to highlight bottleneck
and problem areas, and spot trends in revenues and costs early.
Ethics: Identify ethical concerns analyze options make ethical
decision GAAP: Relevant, reliable, and comparable. IASB
responsible for issuing IFRS. ASC responsible for formulation and
promulgation of accounting standards. Monitoring and enforcement
of compliance are done by ACRA. Singapore Standards: SFRS in
Singapore, and SFRS for SMEs with lesser requirements: to provide
relief to small entities from compliance with full SFRS. Eligibility
for SFRS for SMEs: Not publicly accountable, publishes general
financial statements for external users, small entity with 2 out of 3
criteria annual revenue <10m, total gross assets <10m, total
number of employees <50 Principles of Accounting: Revenue
recognition principle (recognize revenue when earned), Cost
principle (based on actual cost), matching principle (record
expenses to generate revenue), full disclosure principle.
Accounting Assumptions: Going concern, monetary unit,
business entity (separate), time period (life of company can be
divided into time periods) Characteristic of Corporation: legal
entity, limited liability, unlimited life, business taxed, one owner

companys financial statements. Disadvantage: cost of

implementation. Depreciation: Straight Line = (Asset Cost
Residual Value)/Useful Life. Need to record the CARRYING VALUE of
fixed assets.

Worksheet: Benefits: Aids preparation of financial statements,

assists in planning and organizing audit, reduces possibility of
errors, helps in preparing interim financial statements, links
accounts and their adjustments, shows the effects of proposed
transactions Closing Entries: 1. Close credit balance in revenue
accounts to income summary 2. Close debit balances in expense
accounts to income summary 3. Close income summary account to
owners capital 4. Close withdrawals to owners account Summary
of Accounting Cycle: Analyze transactions Journalize Post
Prepare unadjusted trial balance Adjust Prepare adjusted trial
balance Prepare statements Close Prepare post closing trial
Week 4: Analysis of Financial Statements: Gross profit
= Revenue COGS | Income from Operations = Gross Profit other
operating expenses (EBIT) Net Income vs Cash Flow: Long run
net income is the end game. Two components of net income:
operating and non-operating. If operating income > non-operating
income indication of better health | Important for business
owners to know its net cash flows from operating activities
Operating Cash Flow: important for a business to have strong
operating cash flow. Operating cash flow is often viewed as a better
ongoing measure of a companys financial health. Basics of
Financial Statement Analysis: Reduces uncertainty, application
of analytical tools, involves transforming data. Helps users make
better decisions. Standards for Comparison: compare analysis
to benchmarks intra-company, competitors, and industry
Week 2: Basic Elements of FA Transaction Analysis
guidelines | Tools of Analysis: Horizontal analysis (across time),
and Financial Statements: Assets = Liabilities + Equity
Vertical analysis (base amount), Ratio Analysis Trend Analysis:
(Owner Capital Owner Withdrawals + Revenues Expenses)
e.g. 2006 as base year 100%, 2008 130%, 2009 165% Vertical
Accounting Cycle: analyze each transaction and event from
Analysis: Balance Sheet base amount: Total Assets, Income
source documents (employee earnings records, checks paid or
statement: Revenues RATIO ANALYSIS: Liquidity and
received, bills from suppliers etc) record relevant transactions
Efficiency: Net Working Capital = Current Assets Current
and events in a journal post journal information to ledger
Liabilities (current assets financed from long term capital sources
accounts prepare and analyze trial balance Account: record of
increases and decreases in a specific asset liability, equity, revenue that do not require near term repayment) Higher values of NWC
suggest strong liquidity position and ability to meet current
or expense item General ledger: record containing all accounts
obligations | Current Ratio: CA/CL (measures short term debt
used by the company. Core of business records, record of every
paying ability, benchmark of 1) | Acid Test/Quick Ratio: (Cash+
financial transaction, may use subsidiary ledgers as well. Ledger:
Short term investments+ Current receivables)/Current Liabilities
collection of all accounts for an info system. Chart of Accounts:
(similar to current ratio but excludes inventories and prepaid
list of all accounts and includes an identifying number for each
expenses that may not be as liquid. Accounts Receivable
account Double Entry Accounting: DEAL: Debit Expenses
Assets Losses, GIRL: Credit: Gains Income Revenue Liabilities Trial Turnover: Net Credit sales/Average accounts receivable (net credit
sales = gross sales on credit sales returns, discounts | avg. of beg
Balance: 1. List account title and amount 2. Compute total debit
A/R and end A/R | measures how many times a company converts
and credit balances 3. Prove total debit = credit Statement of
its receivables to cash a year) Inventory Turnover:
Cash Flow: Financing Activities: provide the means organizations
use to pay for resources e.g. land, buildings and equipment to carry COGS/average inventory (measures number of times merchandise
out plans. Investing Activities: acquiring and disposing of resources is sold and replaced during the year) Payable Turnover: total