- •Contents
- •Introduction
- •1. The development and implementation of ifrs
- •1. Read the article and discuss
- •1) What is Accounting? Its Definition and Actual Meaning
- •2) Accounting Definition
- •3) Financial Accounting Basics
- •4) Brief ifrs Glossary
- •2. Complete the following sentences
- •3. Use «Debit» or «Credit» to complete the table below
- •4. Choose the correct answer in the table below
- •5. For each of the transactions in items 1 through 12, indicate the two (or more) effects on the accounting equation of the business or company.
- •6. Read the article and discuss
- •Is Accounting a Good Career Choice?
- •And It's an Excellent Choice.
- •Stability
- •Compensation
- •Diversity
- •7. Choose the correct answer
- •2. The Framework and the first application of ifrs
- •1. Fill in the gaps with a suitable word from the box
- •2. Use «Debit» or «Credit» to complete the table below
- •3. Sample Chart of Accounts For a Large Corporation
- •4. Match these words with their meanings
- •Types of accounts
- •5. Complete the following sentences
- •6. Complete the following sentences
- •1) Accounting Principles
- •2) Elements of Financial Statements
- •3) Financial Statements
- •4) Income Statement
- •5) Balance Sheet
- •7. Match these words with their meanings
- •Other Characteristics of Accounting Information
- •1. Reliable, Verifiable, and Objective
- •2. Consistency
- •3. Comparability
- •3. Property, plan, equipment and investment property
- •1. Read the article and discuss What is the difference between amortization and depreciation?
- •31 March 2009
- •31 March 2010
- •31 March 2011
- •Depreciation
- •Example 6
- •Accounting Entry
- •Methods of Depreciation
- •Straight Line Depreciation Method
- •Example 7
- •Reducing Balance Depreciation Method
- •Example 8
- •Units of Production Depreciation Method
- •Example 9
- •Example - Units of Usage (Activity) Depreciation
- •Considerations - Advantages and Disadvantages
- •Disposal of Fixed Assets
- •Example 10
- •4 Intangible assets
- •1. Read the article and discuss
- •2. Choose the correct answer “True” or “False” Depreciation
- •3. Choose the correct answer
- •5. Inventories
- •1. Read the article and discuss
- •1) Inventory and Cost of Goods Sold
- •Value of work in progress:
- •Value of finished goods:
- •2) Methods of calculating inventory cost
- •First In First Out (fifo)
- •Example 4
- •Last In First Out (lifo)
- •Example 5
- •Average Cost Method (avco)
- •Example 6
- •Actual Unit Cost Method
- •Accounting for Inventory
- •3) Perpetual vs Periodic Inventory System
- •Differences Between Perpetual and Periodic System
- •2. Complete the following sentences
- •3. Choose the correct answer
- •6. Biological assetS
- •6) Is the growing of plants to be used in the production of drugs an activity within the scope of ias 41?
- •7) Is the produce or harvest from a biological asset another biological asset?
- •8) Is land related to agricultural activity a biological asset in terms of ias 41?
- •9) In an integrated business, are all the activities treated as being in the scope of ias 41?
- •2. Complete the following table
- •3. Complete the following table
- •7. Cash and cash equivalents
- •1. Read the article and discuss
- •1) What is the difference between the direct method and the indirect method for the statement of cash flows?
- •2) What is the difference between net cash flow and net income?
- •3) What is the difference between cash flow and free cash flow?
- •4) How can a company have a profit but not have cash?
- •2. Complete the following sentences
- •4. For items 1 – 12 indicate whether they will have a positive or negative effect on cash.
- •5. Choose the correct answer
- •6. Use «Increases» or «Decreases» to complete the table below
- •7. Read the article and discuss
- •Cash Payments
- •8. Accounts Receivable and Revenues
- •1. Read the article and discuss What is accounts receivable?
- •Accounting for Receivables
- •Sales Tax
- •Example
- •Allowance Method for Reporting Credit Losses
- •Writing Off an Account under the Allowance Method
- •Bad Debts Expense as a Percent of Sales
- •Difference between Expense and Allowance
- •Pledging or Selling Accounts Receivable
- •2. Complete the following sentences
- •3. Choose the correct answer
- •4. Use the following information for questions 1-5:
- •4. Read the article and discuss What are the differences among accounting revenue, gain, and net income?
- •2. Example of revenue, income, gross profit, profit, net income, and gain
- •9. Stockholders' Equity
- •1. Read the article and discuss
- •1) What Is a Corporation?
- •2) What is stock?
- •3) What are the stockholders’ equity accounts?
- •4) Treasury Stock — Cost Method
- •Example
- •5) Treasury Stock — Par Value Method
- •Example
- •6) What is retained earnings?
- •Example
- •7) Does a dividend reduce profit?
- •8) What is the difference between stocks and bonds?
- •9) Does the income statement explain the change in the equity section of a balance sheet?
- •10) What is preferred stock?
- •11) Why is there a large difference between share value and stockholders’ equity?
- •Issuance of No Par Stock Example
- •12) Issuance of Shares for Non-Cash Items
- •Example
- •13) Lump-Sum Stock Issuance
- •Example
- •14) Stock Dividends
- •Small Stock Dividend
- •Large Stock Dividend
- •Example
- •Stock Splits
- •Example
- •15) Accounting For Stockholders' Equity
- •16) Paid-in Capital or Contributed Capital
- •17) Retained Earnings
- •18) Treasury Stock
- •19) Accumulated Other Comprehensive Income
- •20) Stock Splits and Stock Dividends
- •Cash Dividends on Common Stock
- •21) Preferred Stock
- •22) Par Value of Preferred Stock
- •23) Issuing Preferred Stock
- •24) Features Offered in Preferred Stock
- •Nonparticipating vs. Participating
- •Cumulative vs. Noncumulative
- •Callable
- •Convertible
- •Combination of Features
- •25) Entries to the Retained Earnings Account
- •26) Prior Period Adjustments
- •27) Book Value
- •28) Preferred Stock's Book Value
- •29) Common Stock's Book Value
- •30) Earnings Available for Common Stock
- •31) Weighted-Average Number of Shares of Common Stock
- •32) Earnings per Share of Common Stock
- •33) Other
- •2. Complete the following sentences
- •10. Liabilities and employee benefits
- •1. Read the article and discuss
- •1) Defined Contribution Plan
- •Accounting for a defined contribution plan
- •Example
- •2) Defined Benefit Plan
- •Example
- •3) Net pension asset/liability
- •Example
- •4) Pension expense
- •Projected Benefit Obligation
- •Example
- •Plan Assets
- •Example
- •Pension Expense
- •Pension expense under defined contribution plan
- •Example
- •Pension expense under defined benefit plan
- •5) Funded Status
- •Example
- •Suggested Reading
- •International Financial Reporting Standards
- •International Accounting Standards
- •Ifric Interpretations
- •Sic Interpretations
- •Other pronouncements
- •Облік за міжнародними стандартами (іноземною мовою)
- •54020, М. Миколаїв, вул. Паризької Комуни, 9
1. The development and implementation of ifrs
1. Read the article and discuss
1) What is Accounting? Its Definition and Actual Meaning
Accounting is famously known as the "language of business". Through the financial statements - the end-product reports in accounting - it delivers information to different users.
We can then say that accounting is a means through which information about a business entity is communicated. Let's take a moment to illustrate that.
Mr. Strauss started a printing business. He invested $100,000 personal money to start the company's operations. After a month, he wants to know how much the business made. He also wants to know if the money he invested is still there.
Without a way of recording the activities of the business, we will not be able to answer his questions. Surely we can tell him, "Mr. Strauss, we made a lot this month!", but we need proof! And he needs the figures!
We can easily answer Mr. Strauss' questions if we kept track of the company's transactions. If we used $30,000 of the $100,000 we had at the beginning to buy printers and pay the bills, then we'd have $70,000 cash left. If we collected $50,000 from our customers, then we would have $120,000. Easy, right?
Okay, that's just a tiny bit of what accounting can do. What if we have thousands of transactions? Also, there's a lot more to accounting than just recording. How much income did we make? How much do we owe our creditors? Is this a good investment? Ask away. Accounting would confidently say, "I'll have the reports prepared." Now, how cool is that?
2) Accounting Definition
Technical definitions of accounting have been published by different accounting bodies. The American Institute of Certified Public Accountants (AICPA) defines accounting as:
the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least of financial character, and interpreting the results thereof.
Though I am not a fan of technical definitions, I believe that studying the statement above will give us a better understanding of accounting.
1. Accounting is considered an art
Accounting is considered an art because it requires the use of skills and creative judgment. One has to be trained in this discipline to be able to perform accounting functions well.
Accounting is also considered a science because it is a body of knowledge. However, accounting is not an exact science since the rules and principles are constantly changing (improved).
2. Accounting involves interconnected "phases"
Recording pertains to writing down or keeping records of business transactions. Classifying involves grouping similar items that have been recorded. Once they are classified, information is summarized into reports which we call financial statements.
3. Accounting is especially concerned with transactions and events having financial character
For example, hiring an additional employee is qualitative information with no financial character. Hence, it is not recorded. However, the payment of salaries, acquisition of an office building, selling goods, etc. are recorded because they involve financial value.
4. Business transactions are expressed in terms of money
They are assigned amounts when processed in an accounting system. Using one of the examples above, it is not enough to record that the company paid salaries for April. It must include monetary figures -- say for example, $20,000 salaries expense.
5. Interpreting the results
Interpreting results is part of the phases of accounting. Information is useless if they cannot be interpreted and understood. The amounts, figures, and other data in the financial reports have meanings that are useful to the users.
By studying the definition alone, we learned some important concepts in accounting. It also gave us an idea of what accountants do.
You may not notice but the simple things you do and encounter everyday can actually be related to some level of accounting. You make budgets, count change and check the receipts from the supermarket. You may even have listed things you spent your money with at one point in your life.
We are surrounded by business -- from managing our own money to seeing profit statements of big corporations. And where there is business, there sure is accounting.