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1-Intermediate-Accounting-Introduction

about intermediate accountng from bsais

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0% found this document useful (0 votes)
10 views28 pages

1-Intermediate-Accounting-Introduction

about intermediate accountng from bsais

Uploaded by

graceannmanto154
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Intermediate Accounting

z
z

▪ Intermediate Accounting I and II are normally upper-


level courses at a 4-year school. You may not be
aware that intermediate accounting II is frequently
considered the toughest course offered in an AACSB
business school. (Association to Advance Collegiate
Schools of Business)
z
Is intermediate accounting hard?

▪ Both students and instructors alike will generally


agree that intermediate accounting courses
are among the most difficult and demanding in an
accounting or finance curriculum, and perhaps even
on the college campus.
z
What is intermediate accounting all about?

▪ Intermediate accounting explores the accounting


concepts, strategies and policies of business
transactions.

▪ Four aspects of intermediate accounting in terms of


auditing are. Leases - contractual arrangements that
outline the rights and obligations of the lessee and lessor.
What
z is intermediate accounting all about?

Intermediate accounting explores the accounting concepts,


strategies and policies of business transactions. Four
aspects of intermediate accounting in terms of auditing are.

Leases - contractual arrangements that outline the rights


and obligations of the lessee and lessor.
z

▪ Intermediate Accounting plays a crucial role in a


business' fiscal health; this level of expertise helps to
maintain transparency, facilitates strategic decision-
making, and ensures compliance with laws and
regulations.
z
Understanding the Concept of Intermediate Accounting

▪ Taking a closer look at Intermediate Accounting helps to


understand why it earns such an important place in
Business Studies. At its core, Intermediate Accounting
concerns itself with the finer aspects of business
transactions, as well as the preparation and analysis of
financial statements.
z
z
Intermediate Accounting handles a variety of complex
topics, such as
▪ Revenue recognition

▪ Purchase and expenditure cycles

▪ Asset valuation and impairment

▪ Debt financing
Tracingzthe Historical Development of Intermediate Accounting

▪ Understanding the evolution of Intermediate Accounting offers


valuable insights into the progression and sophistication of
today's accounting practices.

▪ The discipline has been discernibly shaped by economic and


business developments, legislation, advancement in
technology, and the complexity of modern business
transactions.
z
z
Significance and Role in Business Studies

▪ Intermediate Accounting plays a crucial role in a business'


fiscal health; this level of expertise helps to maintain
transparency, facilitates strategic decision-making, and
ensures compliance with laws and regulations.
z
Essential roles of Intermediate Accounting:

▪ Ensuring financial transparency by adhering to standard


accounting principles when reporting business transactions

▪ Facilitating strategic decision-making by providing detailed


financial insights

▪ Guaranteeing compliance with relevant laws and regulations by


following appropriate accounting practices
z
Intermediate Accounting Examples

▪ In practically every business context, you'll find formidable


cases that benefit from a deep dive into Intermediate
Accounting. By exploring detailed examples and case
studies, you can calibrate your understanding and
recognize its application in real-world business scenarios.
z
How Intermediate Accounting is Used in Real Business Scenarios
▪ Intermediate Accounting comes into play regularly in real business
scenarios. For example, imagine a retail company that deals with
customer returns. Intermediate Accounting helps decipher how these
returns should be recorded and reported.

▪ You'd need to account for the potentially returned merchandise in the


financial statements, even though that income was initially
recognized. Finally, consider the application of Intermediate
Accounting in a rapidly growing start-up.
z

▪ The start-up may have to analyze and decide whether to


lease or buy a necessary high-value equipment. This
decision would shape their future financial commitments and
cash flow projections, requiring a deep understanding of the
principles learnt in Intermediate Accounting, such as capital
lease versus operational lease implications, present value
calculations and understanding of lease agreement specifics.
Role zof Balance Sheets in Intermediate Accounting

▪ In Intermediate Accounting, the balance sheet is more than a simple


statement—it's a tool for peering into a company's financial health
and operational efficiency. By limiting the balance sheet to raw
numbers, you miss out on deep analyses such as understanding
the ratios of debt to equity, realizing the rate of inventory turnover,
or analyzing the accounts receivable turnover ratio.

▪ These insights from balance sheets aid in making predictions,


generating comparisons across different periods, and making
informed strategic decisions for the business.
z

▪ This application of accounting theory to the realistic business


landscape sets Intermediate Accounting apart from basic
accounting. As an Intermediate Accounting student, you'll learn to
grapple with elements like contingent liabilities or the
implications of a changed inventory valuation method.

▪ You'll understand the differences between current and non-


current assets or liabilities and when to rightly recognize revenue
or delay it. These complexities are where intermediate expertise is
needed and lend the balance sheet its real value.
Breaking
z Down the Elements of Balance Sheets
▪ A solid understanding of the elements contained in a balance sheet is vital
for Intermediate Accounting.

▪ A balance sheet, adhering to the fundamental accounting equation

▪ {Assets}={Liabilities}+{Shareholders' Equity},

is divided into three main sections:

▪ Assets: Resources owned by a company that provide economic benefits

▪ Liabilities: Obligations the company owes to others

▪ Shareholders' Equity: Represents the net value of the company,


calculated as Assets minus Liabilities.
z Steps in Accounting Cycle

1. Identifying and analyzing business 6.Preparing the adjusted trial balance


documents or transactions
(or worksheet preparation)
2. Journalizing
7.Preparing financial statements
3. Posting
8. Closing the books
4. Preparing the unadjusted trial balance
9.Preparing the post-closing trial balance
5. Preparing the adjusting entries
10. Recording of reversing entries

NOTE: Step No. 4,6,9,10 are optional, meaning they are not REQUIRED in the
preparation of financial statements.
However, for best internal control purposes, trial balance should be prepared.
z
Accounting records of a business entity

▪ 1. Business or source documents

▪ 2. Books of accounts ( Journal and Ledger)


z Systems of recording transactions

▪ Double – Entry - System –transaction is recorded in two


parts: (debit and credit)

▪ CONCEPTS :

✓ Quality

✓ Equilibrium

▪ Single – Entry - System –transaction is recorded


through simple narrative.
z Types of Journal

▪ 1. GENERAL JOURNAL – BOOK OF ORIGINAL ENTRY USED


TO RECORD TRANSACTION.

▪ SPECIAL JOURNAL – BOOK OF ORIGINAL ENTRY USED TO


RECORD TRANSAACTIONS OF A SIMILAR NATURE.

▪ EG. SALES JOURNAL, PURCHASE JOURNAL, CASH


RECEIPTS JOURNAL
z
Types of Journal Entries
1. Simple Journal Entry – single debit and single credit element

2.Compound Journal entry – contains two or more debits or credit

3. Adjusting entries – entries made prior to the preparation of financial


statements to update certain accounts

4. Closing entries – entries made at the end of the accounting period

5. Reversing entries – entries usually made on the first day of


accounting period to reverse certain adjusting entries.

6.Correcting entries –entries made to correct accounting errors.

7. Re classficaton entries – entries made to transfer an amount from one


account to another.
z
LEDGER
Posting - is the process of transferring data from journal to
the appropriate accounts in the Ledger.

1. General Ledger – contain all the accounts appearing in trial


balance.
2. Subsidiary Ledger – provides breakdown of the balances of
controlling accounts.
ACCOUNT -zBasic storage of information in accounting, e.g., CASH, Account
receivable, land etc.

Debit /Dr Credit/ Cr


T-Account

Chart of Accounts: Is a list of all the accounts used by the entity


.

Types of Accounts:
1. Real (Permanent) Accounts – accounts are not closed at the end of accounting period.
2. Nominal (Temporary) Accounts – accounts that are closed at the end of the accounting period.
3. Mixed accounts – are accounts have both real and nominal account components.
4. Contra accounts – are accounts that are deducted from a related account, eg accumulated depreciation
5. Adjunct accounts – are accounts that are added to related account, e,g., premiums on bonds payable
z
TRIAL BALANCE
▪ Is a list of general ledger accounts and their balance. It is prepared to check the
equality of total debits and total credits in the ledger.

Types of Trial Balance

1. Unadjusted trial balance – this is prepared before adjusting entries (contains real, nominal, mixed
accounts)

2. Adjusted trial balance –prepared after adjusting entries. (contains real and nominal accounts)

3. Post- closing trial balance – this is prepared after the closing process (contains real accounts only)
Activityz 1
Please answer the following key terms and definition :

1. Petty cash fund

2. Revolving fund

3. Payroll fund

4. Change fund

5. Dividend fund

6. Tax fund
NOTE: Please provide notebook for the subject
and write the highlights of our lesson (for checking)
7. Travel fund PLEASE WRITE all of the activity ON YOUR NOTEBOOK.

8. Interest fund

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