Accounting Fundamentals In Society ACCY111

Lecture 13
Dr Sanja Pupovac
 Week 1 - Decision Making and Accounting
Chapter 1:

• Decision making and the role of accounting in society

• Accounting is a service activity

– Its function is to provide and interpret financial information to aid decision making.
• Accounting is used in a range of organisations
– Business
– Government
– Charities
– Not-for-profits

• Internal and external users of accounting information

• Financial and management accounting

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Week 2 - Financial Statements for Decision Making

Chapter 2:
• The accounting equation:
assets = liabilities + equity
• Know each of the elements and common accounts in reporting.
• Common financial statements:
– Balance sheet (account format and narrative format)
– Income Statement
– Statement of Changes in Equity

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Week 2 - Conceptual framework
• Chapter 10:

• The conceptual framework

• Qualitative characteristics of financial statements
– Fundamental: relevance, faithful representation, economic substance
– Enhancing: comparability, consistency, verifiability, timeliness,
understandability

• Accounting principles, e.g. entity concept etc.

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Weeks 3 and 4 Recording Transactions
Chapter 3:
• Recording transactions
– Source documents: tax invoice, purchase order, cash register receipts,
credit card slips to name a few
– Identifying account categories: all the different accounts
– The accounting cycle – recognise transactions, general journal, ledgers,
trial balance, financial statements
– The accounting equation must remain in balance!
(double-entry accounting)

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Weeks 5 and 6 Adjusting the accounts
Chapter 4:
• Classification of adjusting entries

• Adjusting entries for deferrals – deferrals are expenses paid in advance (prepaid
expenses) or revenue (unearned revenues)

• Adjusting entries for accruals – accruals are expenses not yet paid for (accrued
expenses) or revenue earned but not yet received in the form of cash (accrued
revenues)

• Adjusted trial balance

•
6 Classification of current and non-current assets and liabilities
Week 8 - Completing the Accounting Cycle
Chapter 5:

• Closing entries: the balance in revenues, expenses, profit and loss accounts back to zero to start the next year.

• Closing temporary accounts:

1. Debit all revenue accounts to get them to zero.

2. Credit all expense accounts to get them to zero.

3. In both cases, the other part of the entry is to the account “Profit and Loss Summary.”

4. Close “Profit and Loss Summary” and “Drawings (and Dividends)” to the Owner’s Capital” account (or to “Retained
Earnings” if it’s a private or public company).

• Post closing trial balance – only permanent accounts.

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 Week 9 - Accounting for Retailing

Chapter 6:
• Income statement for a retailer: Revenue – Cost of Sales = Gross Profit.
• Gross Profit– Other Expenses = Profit.
• Freight can be EXW or DDP
• Accounting for sales transactions
• Accounting for purchases and cost of sales
– Periodic system (use the purchases account)
– Perpetual system (use the inventory account)
• Remember also - Settlement discounts; purchase returns and allowances; freight charges; recording
sales, note different depending on use of periodic or perpetual!

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Week 10
• Christ et al., (2019) journal article will NOT be examined in the final
exam.

• Rio Tinto Modern Slavery statement will NOT be examined in the

final exam.

• Week 11 tutorial discussion

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Week 11 - Accounting Systems and internal
controls
Chapter 7:

• Thinking of accounting as a system

• Internal Controls of accounting systems
• Principles of good internal control (including subsidiary ledgers)
• Limitations of internal controls in an accounting system

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Week 11 - Accounting Systems and internal
controls
• Special journals = form of good internal controls
– Sales journal
– Purchases Journal
– Cash Receipts Journal – used to record ALL receipts of cash
– Cash Payments Journal – used to record ALL payments of cash
– General Journal
• Use of control accounts
– Accounts receivable
– Accounts payable
Week 12 Analysis and interpretation of
financial statements
Chapter 19:
• Percentage analysis
• Ratio analysis (Liquidity, solvency, profitability) – know WHAT each ratio will
help analyse/show.
• Limitations of financial analysis
• Useful revision questions:
– All tutorial questions and lecture example.

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FINAL EXAM - Details
• Weighted 60% of total grade
• You must PASS the final exam to PASS the subject

• 3 Hours
• 8 Questions worth a total of 100 marks
• NO multiple choice questions
• ALL questions must be answered
• Questions are worth different marks (budget your time accordingly)
• You must bring a UOW approved calculator (this must be issued with a sticker on the back of it).
• Dictionaries are NOT permitted in the exam room.
• Watches are NOT permitted in the exam room.

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Final Exam Details
• Week 10 and all associated materials will NOT be examined in the final exam.

• GST will NOT be examined.

• Reversing entries will NOT be examined.

• There is no worksheet in the exam.

• Income statement for a retailer is not in the exam.

• Subsidiary ledgers (week 11) are not in the final exam.

• There is no T-ledgers or running balance ledgers.

•14 ALL other aspects of the subject are examinable.

The following ratios are in the exam
1. Current ratio
2. Receivables turnover ratio
3. Average collection period of accounts receivable
4. Inventory turnover
5. Profit margin

Note: NO formula sheet will be given in the exam.

• In addition to ratios there is a discursive question on this topic.

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Feedback from PASS
• When writing cash at bank, can students write “CAB”, “cash” or do they have to write
“cash at bank” – Please write Cash at Bank.

• Can Accounts Receivable and Accounts Payable be shortened to “AR” and “AP” –
Please write in full , e.g. Accounts Payable

• Do students have to write “particulars” or “description” when they do their general

journal entries – Yes, write PARTICULARS then Debit and Credit side. Narrations
will be required for some questions.

• If there is a worksheet, will they be given the worksheet to fill in or do they have to
draw it themselves – no worksheet in the exam this year.
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Exam Technique
• Answer each question on a new page

• Clearly label the number of the question you are answering, and which part, e.g. Q3 a) etc.

• Show ALL workings (if you do the right thing with the wrong number you may still get
marks for understanding of process).

• Make sure the examiner can read your writing!

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HINTS FOR SUCCESS
• Tutorial questions and lecture examples are very important, and
should play a key part in your preparation
– Remember practice, practice, practice!!!

• SHOW ALL YOUR WORKINGS

• Manage the time well on the questions

• Attempt all questions

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BE AWARE
• Check and recheck the exam timetable on your
SOLS.
• Students who misread the exam timetable will NOT
be offered another exam.
• Be aware of university policy re examinations

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NOW YOU ARE JUST LIKE Joe Surfer ALL
READY TO GO AND SURF THROUGH
ACCY 111 FINAL EXAM!!!!

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 Study Week Consultation Times

- Tuesday 5th November: 9:00-10:00.

- Wednesday 6th November from 10:00-13:00.

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Post Exam Consultations

• 5th December 10:30-12:30

• 6th December 10:30-12:30

• I will be away on annual leave after supplementary exam, returning to

work late January 

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GOOD LUCK and Thank-you for:

- your efforts this session

- for attending the lectures
- showing interest and commitment
- inspiring me to be a better teacher!

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 BE THE CHANGE THAT YOU WISH TO SEE IN
THE WORLD !
-Mahatma Gandhi

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