Financial Accounting

Sooner or Later everyone will realize to be successful one has to be Financial literate.  Welcome to world of financial accounting.  

You are about to begin an exciting Interactive journey with us that will introduce you to  language of Business and Finance. Successful completion of this course will enable you  to understand how accounting systems are used to record the day-to-day economic  activities of a business and to generate reports about its financial health and  performance.

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Welcome to Financial Accounting

You are about to begin an interactive experience that will introduce you to financial  accounting, the language of business. Successful completion of this course will enable you to  understand how accounting systems are used to record the day-to-day economic activities of a  business and to generate reports about its financial health and performance.

Course Learning Objectives:

  • Discover how balance sheets, income statements, and cash flow statements are  developed and how each interact  
  • Understand IFRS and GAAP standards
  • Inventory valuation
  • Revenue and receivable
  • Depreciation and Long-lived assets
  • Financial ratios to evaluate financial health
  • Investment and income
  • Deferred taxes & Tax expense
  • Liability and Financing cost

Syllabus

Learning Objectives:
  • Briefly explore three fundamental accounting statements,
  • Learn about the entity concept, the money measurement concept, the going concern concept, the consistency concept and the materiality concept,
  • Start to appreciate the inherent conflict between relevance and reliability that accountants must resolve in setting standards and preparing financial reports,
  • Getting introduced to accrual accounting and GAAP and their use in financial accounting practice, and
  • Learning that in the near future IFRS may replace GAAP
Module Components:

Video Lectures:

  • Introduction to Balance Sheets
  • Analyzing Balance Sheets
  • Income Statement
  • Cash Flow Statement

Readings:

  • Overview of financial statement
  • Introduction to concepts
  • Quality attributes
  • Accrual accounting

Quiz:

  • Terms and concepts
Learning Objectives:
  • How a balance sheet is organized?
  • Define Assets, liabilities and owners’ equity.
  • The key relationship linking assets, liabilities and owners’ equity – explanation of the fundamental accounting equation.
  • Introduction to the dual aspect and historical cost concepts and record all of MI business transactions in November.
  • How to compute and use two simple but important balance sheet ratios – the current ratio and the total debt to equity ratio.
Module Components:

Video Lectures:

  • xyz

Readings:

  • Layout
  • Assets
  • Liabilities
  • Owner equity
  • The Accounting equation
  • Concepts
  • Review
  • Lets get MI started
  • Ratios

Quiz:

  • xyz
Learning Objectives:
  • How‌ ‌an‌ ‌income‌ ‌statement‌ ‌is‌ ‌organized‌ ‌and‌ ‌constructed.‌ ‌
  • Sales‌ ‌and‌ ‌different‌ ‌categories‌ ‌of‌ ‌expenses‌ ‌are‌ ‌defined‌ ‌and‌ ‌the‌ ‌relationship‌ ‌between‌ ‌the‌ ‌income‌ ‌statement‌ ‌for‌ ‌a‌ ‌period‌ ‌and‌ ‌the‌ ‌balance‌ ‌sheets‌ ‌at‌ ‌the‌ ‌beginning‌ ‌and‌ ‌end‌ ‌of‌ ‌the‌ ‌period.‌ ‌
  • The‌ ‌revenue‌ ‌recognition,‌ ‌matching‌ ‌and‌ ‌conservatism‌ ‌concepts‌ ‌and‌ ‌how‌ ‌they‌ ‌are‌ ‌used‌ ‌to‌ ‌record‌ ‌the‌ ‌financial‌ ‌effects‌ ‌of‌ ‌MI’s‌ ‌operations‌ ‌during‌ ‌the‌ ‌month‌ ‌of‌ ‌December.‌ ‌
  • The‌ ‌definition‌ ‌and‌ ‌use‌ ‌of‌ ‌two‌ ‌important‌ ‌income‌ ‌statement‌ ‌ratios‌ ‌—‌ ‌the‌ ‌gross‌ ‌margin‌ ‌percentage‌ ‌and‌ ‌the‌ ‌return‌ ‌on‌ ‌sales‌ ‌percentage.‌ 
Module Components:

Video Lectures:

  • xyz

Readings:

  • Layout
  • Link to balancesheet
  • Concepts
  • Lets keep going
  • Preparing for future
  • Ratios

Quiz:

  • xyz
Learning Objectives:
  • In double-entry book-keeping, both sides of each transaction are recorded, and at least two accounts are affected.
  • After analyzing a transaction, a journal entry is prepared using the rule that debits indicate increases in assets and in expenses and credits indicate increases in liabilities, owners’ equity and sales.
  • Journal entries are posted into a ledger of T-accounts where ‘debit’ means left side of the T-account and ‘credit’ means right side of the T-account.
  • Once all transactions with outside entities are recorded for the period, adjusting entries are made to particular accounts.
  • A closing entry is made to close or reset all sales and expense accounts to zero.
  • Finally, the balance sheet and income statement are prepared.
Module Components:

Video Lectures:

  • xyz

Readings:

  • Overview
  • Double entry accounting
  • Journal entries
  • Ledger
  • September accounts
  • Adjusting entries
  • Closing entries
  • Preparing the Balancesheet
  • Preparing the Income statement

Quiz:

  • xyz

 

Learning Objectives:
  • The statement of cash flows classifies and organizes information about the cash flows during an accounting period as operating, investing or financing.
  • There are two formats for the statement of cash flows: the direct method and the indirect method. They differ in their presentation of operating cash flows.
  • Under the direct method, in the operating section, are included a number of line items, each of which is a cash inflow to the reporting entity or a cash outflow to an external entity.
  • The operating section in the indirect method starts with the net income and makes a series of de-accrual adjustments to it in order to derive the net cash from operations.
  • The direct method statement of operating cash flows can be prepared directly from the entries in the cash T-account during the accounting period.
  • The indirect method statement of operating cash flows is prepared from the period’s income statement accounts and the period’s beginning and ending balance sheets.
Module Components:

Video Lectures:

  • xyz

Readings:

  • Direct Method
  • Indirect Method
  • Differences
  • Accruals and De accrual
  • An example
  • Why the Indirect method
  • Net income & Ops flow
  • Recap the indirect method
  • Relation to Balancesheet
  • September Indirect statement
  • Interpretation
  • Analysis of indirect statement

Quiz:

  • xyz

 

Learning Objectives:
  • For receivables, you will be introduced to the concept of deferred revenue and how to handle certain transactions where the basic criteria for revenue recognition are not met at the time of sale.
  • For bad debts, refunds, and prompt payment discounts, you will learn how to create allowance accounts and how to manage those accounts over multiple accounting periods.
  • Finally, you will also introduced to two important ratios used to evaluate accounts receivable: the day’s receivable ratio and the bad debt ratio.
Module Components:

Video Lectures:

  • xyz

Readings:

  • Review
  • Unredeemed Gift certificate
  • Bad debt
  • Refunds
  • Prompt payement discounts

Quiz:

  • xyz

 

Learning Objectives:
  • For manufacturing, you will learn what expenses go into the cost of producing a good and will be introduced to the three inventory accounts used by manufacturing companies: raw materials, work-in-process, and finished goods.
  • To be able to account for the cost of goods when input prices change, you learned about alternative approaches to inventory valuation, including LIFO and FIFO and the impact of their use on the balance sheet and the income statement. Recall that IFRS does not permit LIFO.
  • You will see how damaged inventory led to a write-down from applying the “lower of cost or market” rule, which requires that a loss be recognized when the market value of particular inventory items falls below their historical cost.
Module Components:

Video Lectures:

  • xyz

Readings:

  • Review of matching
  • Bought Merchandise flow
  • Merchandise COGS
  • New challenges
  • Inventory ratios

Quiz:

  • xyz

 

Learning Objectives:
  • Record the acquisition of a long-lived asset, recognizing that the asset’s cost includes any outlays for delivery and installation.
  • Estimate and record the depreciation expense for the usage of an asset over its expected life, under either the straight-line or double-declining balance methods.
  • Record the disposal of a long-lived assets, including any loss or gain on disposal.
  • Account for the improvement of an existing long-lived asset and how to differentiate between the betterment of an asset and maintenance expense.
Module Components:

Video Lectures:

  • xyz

Readings:

  • What is asset
  • Acquisition cost
  • Depreciation
  • Improvement & repairs
  • Assets sales
  • Intangible
  • Ratios

Quiz:

  • xyz

 

Learning Objectives:
  • Generally, executory contracts do not give rise to liabilities, but there are some exceptions.
  • Zero coupon debt is initially recognized as a liability at the amount received by the borrower. Over its life, the interest on zero coupon debt is accrued as a non-cash expense and as an addition to the related liability.
  • Leases are classified as either capital or operating leases. Capital leases are accounted for as if they are a purchase of an asset financed by an instalment loan. Operating lease rentals are an operating expense. Neither an asset nor a liability is recorded by the lessee.
Module Components:

Video Lectures:

  • xyz

Readings:

  • Definition
  • Zero coupon debt
  • Leases
  • Contingent Liability
  • Debt rating

Quiz:

  • xyz

 

Learning Objectives:
  • Marketable securities are short-term investments in debt or equity securities that a firm uses as an alternative to deposit surplus cash in the bank.
  • Marketable securities must be classified in one of three categories, depending on the intent of the investing firm. The accounting for each category is different.
  • Business combinations arise when one firm acquires more than 50% of the common stock of another firm.
  • Business combinations are accounted for using the acquisition method, which values the assets acquired and liabilities assumed at their estimated fair values.
  • Any difference between the purchase price for a business acquisition and the fair value of the net assets other than goodwill is recorded as a goodwill asset on the acquirer’s balance sheet. Goodwill is not amortized, but is reviewed for impairment each year and, if impaired, written down through a charge to earnings to its new fair value.
Module Components:

Video Lectures:

  • xyz

Readings:

  • Challenges
  • Investement motivation
  • Control
  • Marketable security
  • Business acquisition

Quiz:

  • xyz

 

Learning Objectives:
  • Firm’s taxable income and its earnings before taxes for financial reporting frequently differ. This arises because the objectives of the government, which sets rules for tax reporting, differ from those of investors who use financial reporting information to allocate resources. As a result, in many counties, firms have separate sets of books for tax and financial reporting purposes.
  • Deferred tax accounting is used in a firm’s financial reporting books to record an accrual for the tax effect of any temporary differences in earnings that arise from using different accounting methods in the firm’s tax and financial reporting books.
  • A deferred tax liability is created to record the future tax consequences of temporary accounting differences between financial and tax accounting policies that lead to higher future taxes.
  • Deferred tax assets arise when temporary differences between a company’s financial and tax accounting result in future lower taxes.
  • Deferred tax assets can also arise if a firm uses the same accounting policies for tax and financial reporting, but generates tax loss carry forwards.
  • The tax expense can be divided into two pieces – the current tax expense (which represents the firm’s obligation to the government for the current year) and the deferred tax expense (which represents the adjustment needed to reflect tax effects of temporary differences in accounting policies for tax and financial reporting income during the year.)
Module Components:

Video Lectures:

  • xyz

Readings:

  • Tax vs. Financial Reporting
  • Deferred tax accrual
  • Deferred Tax liability
  • Deferred Tax asset
  • Current and deferred tax expense

Quiz:

  • xyz

 

Learning Objectives:
  • Paid-in capital
  • Par value
  • Issues of preferred stock 
  • Stock repurchases 
  • Dividend distributions
  • Stock splits
  • Stock options
  • Comprehensive income
Module Components:

Video Lectures:

  • xyz

Readings:

  • Common stock
  • Preferred stock
  • Stock repurchase
  • Stock repurchase
  • Dividend
  • Stock splits
  • Stock options
  • Comprehensive income
  • Equity ratio & ROI

Quiz:

  • xyz

 

Support

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