Professional Documents
Culture Documents
Collier - 1ce - Ch04 Amended Sept 19 2014
Collier - 1ce - Ch04 Amended Sept 19 2014
Income Statement
Balance Sheet
Cash Flow Statement
Managements Responsibility
for Fair Presentation
International Financial
Reporting Standards (IFRS)
IFRS Objectives
Conceptual Framework
for Financial Reporting
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
Qualitative Characteristics
of Financial Statements
Relevance
Faithful representation
Comparability
Verifiability
Timeliness
Understandability
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
GAAP
When to recognize
revenue?
Bad Debts
Returns Discounts
Inventory
Valuation- FIFO,LIFO,
average cost
What is included in
inventory cost?
Write-downs of obsolete
and damaged inventory,
Net Realizable Value
Capital Assets
Amortization Method
Capitalization policies
Liabilities
Leases
When to recognize
liabilities
Warranty provisions
Pensions
Accruals
Assets vs
Expenses
Capitalization policies
Other
Other
Expensing assets
Classifications Long/Short
term, ordinary, unusual,
extraordinary
Disclosure of contingencies
Revenues
Gains
Expenses
Losses
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
10
11
12
Reporting Profitability:
The Statement of Comprehensive Income
Profit = Income - Expenses
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
13
Matching Principle
Expenses
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
14
Reporting Profitability:
The Statement of Comprehensive Income - Extended
Operating profit = Gross profit - Expenses
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
15
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
16
Assets
Current
Money in Bank
Accounts receivable
Inventory
Non
current
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
17
Liabilities
Current
?
Non current
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
18
2.
3.
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
19
20
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
Accrual Accounting
Recognizes income when it is earned and
expenses when they are incurred
Cash versus accruals accounting
Matching principle
Adjustments for
Prepayments
Accruals
Provisions
Depreciation
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
21
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
22
Provisions
Doubtful debts (Bad Debts)
Inventory
Depreciation
The
23
Depreciation
Depreciation is an expense that spreads the cost of the
asset over its useful life
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
24
From operations
Depreciation
Increases or decreases in working capital
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
25
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
26
27
Critical Perspective on
Accounting Standards
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
28
Conclusion
Financial Statements
Statement
of comprehensive income
Statement of financial position
Statement of cash flows
2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 4
29