FINANCIAL ACCOUNTING &

REPORTING 1
BBFA2103
MS.LEISA BT YUSUF
 TOPICS
1. Overview of accounting
2. Accounting principles and concepts
3. Accounting cycles
4. Adjusting entries and closing entries
5. Accounting for current assets
6. Accounting for non current assets
7. Property, plant & equipment
8. Accounting for liabilities & equity
9. Integrity and ethics in preparing and reporting financial
information
10. Comprehensive cases(partnership :changes in ownership)
11. Comprehensive cases(dissolution of partnership)
Topic 1:Overview of accounting
Definition of accounting
 Components of accounting
• Recording
• Summarising
• Analysing
• Interpreting
 Users of accounting
directors
internal
manager

owners

investors
users creditors

Government agencies
external
bank

suppliers

customers

employees
Branches of accounting
Forms of business
OWNERSHIP
 Functions or roles of accounting
1. Accounting as the language of trade
2. Accounting creating accountability and
control
3. Accounting is information system
 Topic 2
Accounting principles and concepts
• Regulatory and conceptual framework for
corporate reporting
-financial statement[mers101]
Financial statement
Components of FS
BALANCE SHEET
Characteristic of Accounting
information
 Accounting Assumption
• Separate entity
• Going concern
• Monetary unit
• Accounting period
 Basic accounting principles
• Principle 1 : historical cost
• Principle 2: revenue recognition
• Principle 3: matching
• Principle 4: full disclosure
 Topic 3:
Accounting cycle
Basic accounting equation
To be continue…..
EXCERCISE
 Topic 4:
Adjusting entries & closing
entries
Accounting basis
 Cash basis
Accrual basis accounting
Adjusting entries
 Adjusted trial balance
Initially prepared at the end of accounting
period before adjustments are made. It called
unadjusted trial balance
Meanwhile, after adjusting is adjusted trial
balance
 Closing entries
Close all accounts with credit balance to the
income summary account
Close all debit balance account to the income
summary account
Close the income summary account to capital
account
Close the drawing account to the capital account
Additional information

1. Office supplies used during

the year amounted RM350
2. Insurance was paid on 1 July
2012 for two years(24
months) coverage.
3. Building is depreciated at 5 %
of original costs.
4. Motor vehicles is expected to
have five years of useful life
5. The accounting fees include
retainer fees received for
service to be provided in July
and August 2013,amounting
to RM3400.
6. Tenant owed RM500 for May
and June shop rentals as at
30 June 2013.
 Topic 5:Accounting for current
asset
• Internal control for assets
Maintain adequate report
Insure assets
Separate bookkeeping from custody of assets
Apply technological controls
Perform regular and independent reviews
Current asset
 Bank reconciliation
• Purpose
Reconcile the balance of firm’s cash account with
the balance stated in the bank statement for a
particular month
Ensure the accuracy and the validity of items
recorded in the cash account .any omissions and
errors can then be corrected.
 Preparation of bank reconciliation
statement
1. Compare debit columns in firm’s cash
account with the credit columns in the bank
statement
2. Compare credit column in firm’s cash account
with the debit column in the bank statement.
3. Update the firm’s cash account with item
that are not yet recorded in the firm’s cash
account
receivables
inventories
Calculation method for stock value
Topic 6:Accounting for non
current asset
 Topic 7:Property , plant &
equipment
• Recognition of fixed assets
 Initial measurement
Acquired assets for cash or cash equivalent
Self constructed fixed asset
Exchange fixed asset
Subsequent expenditure
Impairment , retirement & disposal
Topic 8:Accounting for liabilities
and equity
Single proprietorship
equity
partnership
Topic 9:Integrity, and ethics in
preparing and reporting
financial information
Ethical code
Identify threads to comply with the fundamental
principles
Evaluate the significance of the threats identified
Apply safeguard when necessary ,to eliminate the
threads or reduce them to an acceptablelevel.
Ethical behaviour