Financial accounting plays a crucial role in the allocation of resources in the economic system while the information that it facilitates is used by a wide number of different agents in their respective decision-making processes. The objective of the course is to enhance students¿ ability to capture economic transactions using the accounting system and to elaborate compact information about the firms¿ value and the wealth created by the firm in a given time period. In addition to preparing this information, students should be able to understand and interpret this information as it is provided in the firms¿ statements (i.e. balance sheet, income statement and the notes).
The first part of the course introduces students to the financial accounting environment, financial statements, the accounting cycle, and the theoretical framework of accounting measurement. The second part of the course covers the elements of financial statements, emphasizing the process to obtain the accounting income.
Chapter 1: Introduction to accounting
- 1.1 Economic activity and information needs
- 1.2 Accounting: formal concept
- 1.3 Divisions of accounting
- 1.4 The importance of accounting information
- 1.5 The users of accounting information
- 1.6 How does accounting work?
- 1.7 The characteristics of accounting information
- 1.8 Accounting standardisation (regulation)
Chapter 2: Assets, Liabilities and Equity. The accounting equation
- 2.1 The value of the company
- 2.2 Economic structure and financing structure. Assets, Liabilities and equity. The accounting equation.
- 2.3 Categories of assets, liabilities and owners ¿ equity
- 2.4 Business transactions and the accounting equation
- 2.5 The balance sheet
- 2.6 The income statement (profit and loss account)
Chapter 3: The accounting method
- 3.1 Accounting for business transactions
- 3.2 The account: the double- entry system
- 3.3 The accounting books: the Journal and the Ledger. The Trial Balance
- 3.4 Recording transactions in the Journal
- 3.5 Charts of Accounts
- 3.6 Accounting¿s foundation: Principles and Concepts
Chapter 4: The accounting process
- 4.1 The phases of the accounting process
- 4.2 Opening phase
- 4.3 Transactions phase
- 4.4 Closing phase
- 4.4.1 Determining accounting income
- 4.4.2 Closing the books
- 4.4.4 Preparing the Financial Statements
Chapter 5: Valuation and reporting transactions
- 5.1 Measuring transactions (assets and inventories)
- 5.2 Recording purchases and sales of inventories (stocks)
- 5.2.1. The Perpetual system
- 5.2.2. The Periodic system
- 5.3 Financing activities
- 5.3.1. Internal finance sources
- 5.3.2. External finance sources
Chapter 6: Calculation of accounting earnings and producing the financial statements.
- 6.1 Expenses and revenues.
- 6.2. Accrued expenses and revenues.
- 6.3. Adjusting changes in inventories with the periodic system
- 6.4. Adjusting the value of the assets
- 6.5. The process to obtain accounting income
- 6.6. Preparation of the financial statements