COM 1502 Financial Accounting


Financial accounting is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Financial accounting is used to prepare accounting information for people outside the organization or not involved in the day-to-day running of the company.

 

In short, financial accounting is the process of summarizing financial data taken from an organization’s accounting records and publishing in the form of annual (or more frequent) reports for the benefit of people outside the organization. Financial accounting is governed by both local and international accounting standards. However, with the adoption of International Financial Reporting Standards (IFRSs) in 2012 local accounting standards are now same as international accounting standards.

  • To introduce students to accounting as the “language of business” and to the various financial accounting topics covered in the course with the understanding that some students may pursue more in-depth study in subsequent courses while others do not intend to continue their accounting education.

 

  • To teach students to apply accounting theory, standards, principles and procedures to practical accounting problems in the elementary topical areas covered in the course.

 

  • To teach students the fundamental rationale for the various financial accounting procedures introduced in the course.

 

  • To require students to more fully develop their critical thinking skills.

 

To make learning accounting both interesting and fun.

Upon completion of this course, the students will be able to:

  • Understand salient principles, concepts and practices in functional disciplines of financial accounting.
  • Explain the aims, functions, uses and influence of accounting in society and in ethical financial decision-making.
  • Develop four basic financial statements: Income Statement, Statement of Owner’s/Stockholders’ Equity, Balance Sheet and Statement of Cash Flows.

1. Introduction
1.1 Nature and scope of financial accounting
1.2 Functions and usefulness
1.3 Evolution of financial accounting
1.4 Accounting information and users of accounting information
1.5 Conceptual framework of Accounting
1.6 Accounting concepts and accounting standards
1.7 Accounting equation
1.8 Double entry system

2. Accounting process
2.1 Passing journal entries
2.2 Preparation of ledger accounts
2.3 Subsidiary books
2.4 Recording of cash and bank transactions
2.5 Preparation of trial balance
2.6 Rectification of errors
2.7 Preparation of bank reconciliation statement
2.8 Accounting for depreciation-need for and significance of depreciation, methods of providing depreciation.

3. Financial statements of a Sole-trader
3.1 Manufacturing, trading and profit and loss account
3.2 Balance sheet
3.3 Adjustment entries

4. Accounts of non-profit organizations
4.1 Receipts and payments account
4.2 Income and expenditure account
4.3 Balance sheet
5. Partnership accounts:
5.1 Fundamentals – capital, fixed and fluctuating; adjustments for change in profit sharing ratios; revaluation of assets and liabilities; goodwill; joint-life policy.
5.2 Financial statements
5.3 Reconstitution of the firm – admission, retirement and death of a partner; amalgamation.
5.4 Dissolution of partnership including piece-meal distribution; sale to a company.

6. Single entry system
preparation of accounts from incomplete records.

7. Control account
self-balancing and sectional balancing ledgers.

8. Accounting for consignments and joint ventures.

Lectures, seminars, course manuals, workshops, assignments, self study.

  1. Financial Accounting Study text, Certificate in Accounting and Business I (CAB I), Institute of Chartered Accountants of Sri Lanka.

 

  1. Financial Accounting Study text, Certificate in Accounting and Business II (CAB II), Institute of Chartered Accountants of Sri Lanka.

 

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