1. Intro to Accounting

2. 2 Accounting Areas Financial Accounting Past Events
Performance over the year
Position at end of year
Trading, Profit and Loss account
Balance Sheet
Cashflow Statement
OBJECTIVE:
Info for internal and external use to make economic decisions
Comply with company law and accounting regulatory bodies
Management Accounting
Past and Future Events
Budgeting
Costing etc
OBJECTIVE: information for the organisation to plan control and make economic decisions
Info is for internal use for managers to make management decisions

3. Qualities of financial information
Relevant – meet user needs Reliable – certified by auditor or a director Comparable – prepared on consistent basis from one period to the next so that results can be compared and economic decisions Understandable – Clear, concise and easily understood -follow convention

4. Users Users Users Interests Banks and Lenders
Capacity to repay interest
Ability to repay capital
Security – collateral
Gearing
Trade Creditors
Liquidity – working capital to repay
Credit terms being met
Where in the priority list
Shareholders
Profitability
Dividend
Share Value
Liquidity – cashflow - keep trading
Directors & Managers
Liquidity – keep trading
Management team and performance
Employees and unions
Wage levels – trend
Staff levels
Liquidity
Competitors
Comparison in performance
Changes in business strategies
Takeover potential
Revenue
Tax liability calculation
EU and Gov grants
Gov contracts
Users

5. 4 Fundamental Concepts
Going Concern – stay in business for foreseeable future 1 yr
Accruals – income and expenditure accounted for in the period it occurs not in the period it is paid eg electric
Consistency – items treated in same way from one accounting period to the next eg depreciation policy
Prudence – caution should be exercised. Losses can be anticipated but not gains. Profits may not be overstated

6. Explain these concepts
Other Concepts
Entity Concept
Money Measurement Concept
Materiality Concept
Realisation Concept
Double Entry Principle
Period of Accounting Convention
Objective Concept
Explain these concepts

7. Accounting Bases Procedures and Policies for Preparing Accounts
How items are treated = accounting bases
Eg how depreciation is treated, the method of stock valuation, use of the historical cost convention
Accounting Policies used to prepare accounts should be explained by way of a note to the accounts. Notes should be clear, fair and brief