MBA Accounting Unit 1

Introduction to Financial Accounting and to Financial Statements

The list immediately below is provided to help you hone in on the ideas and learnings of this unit as you work through the material. Please note that this unit uses material from Chapters 1 & 2 of the textbook. However not all the material in these two chapters is included in this unit. Also please note that many of the ideas raised in this unit will be considered in more detail in later units.
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Know the definition of accounting Know who uses accounting information and how and why they use it Understand at a high level the services accountants provide: y Financial accounting y Management accounting and cost accounting y Auditing y Internal auditing y Government and not for profit accounting y Income tax accounting Understand the importance of ethics for the accounting profession Know and understand the key components of ethics for the accounting profession y Integrity y Independence y Objectivity y Confidentiality y Competence Have an appreciation at a very high level as to how accounting has developed over the centuries At a high level, understand the role of accounting standards for financial accounting and reporting Know which organization is responsible for setting accounting standards for financial accounting and reporting in Australia Understand the term GAAP Understand that Australia has adopted International Accounting Standards, which are included in our laws as AIFRS Understand the idea of a conceptual framework Understand the benefits of the conceptual framework - Statements of Accounting Concepts (SACs) Understand the objective of financial reporting Understand that financial accounting and reporting standards are not static Understand the idea of an accounting transaction. Understand the connection between transactions and financial statements Be able to explain the purposes of each of the four financial statements Know the basic structure of each of the four financial statements Be able to explain the major accounts for each financial statement Know the fundamental accounting equation Understand at a high level the relationships between the four statements (these relationships will be explored in greater detail in later units) Understand the concepts of accounting relating to financial accounting and reporting that are generally agreed upon over time y Concepts relating to the entire model

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 Accounting entity  Going concern concept y Concepts relating to transactions  Unit of measurement  Objectivity  Cost principle y Concepts related to the accounting process  Matching concept  Accounting period  Accrual accounting y Concepts related to financial statements  Relevance  Comparability  Materiality  Full disclosure  Understandability  Prudence  Timeliness  Reliability Understand that financial statements are limited Know the structure of a companys annual report

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