Level 6 • Business Management

Course Description

This course is an introduction to the basic concepts, principles and standards underlying the financial accounting system. The course is designed to give students a thorough background in the basic accounting procedures used to operate a business such as analyzing, classifying, and recording and reporting business transactions. The course emphasizes a general understanding of the complete accounting cycle and the preparation of the basic financial statements.

Course Objectives

This course aims to give the student a basic understanding of the theories, principles, and applications of accounting. Following an investigation of the accounting information system and accounting cycle, the course will deepen knowledge on the components of the balance sheet, using a double entry bookkeeping perspective. By the end of the course, students are expected be able to analyze and record business transactions and to prepare financial statements for service and merchandising companies.

Key Concepts

1. Accounting: is an information system that identifies, records, and communicates financial information about a business.
2. Accounts: Basic units for accumulating and storing accounting data from similar transactions.
3. Accrual accounting: Recording transactions in the periods in which they occur, rather than in the periods in which cash is received or paid. Also called the matching rule.
4. Journal: A chronological record of all transactions; the place where transactions first enter the accounting records. Also called book of original entry.
5. Adjusting entries: Entries made to apply accrual accounting to transactions that span accounting periods.
6. Closing entries: Entries made at the end of an accounting period that set the stage for the next period by clearing temporary accounts of their balances and transferring them to the owner’s Capital account; they summarize a period’s revenues and expenses.
7. Deferral: The postponement of the recognition of an expense already paid or of revenue received in advance.
8. Depreciation: The portion of the cost of a long-term asset allocated to any one accounting period. Also called depreciation expense.
9. Double-entry system: The accounting system in which each transaction is recorded with at least one debit and one credit so that the total amount of debits equals the total amount of credits.
10. Financial statements: The primary means of communicating important accounting information to users. They include the income statement, statement of owner’s equity, balance sheet, and statement of cash flows.

Course Outline

Learning Outcomes

1. Introducing students to accounting and it's basic accounting equation and financial statements
2. Determine by T-Account analysis where a transaction should be properly recorded.
3. Record transactions in the appropriate ledger accounts using the double-entry bookkeeping system.
4. Complete and analyze the accounting cycle for service and merchandising companies
5. Prepare and evaluate the Income Statement, Statement of Retained Earnings, Statement of Financial Position and Statement of Cash Flow.
6. Analyze the Accounting Equation and the interaction of its elements.
7. Appraise the role and contribution of accounting information system in the firm management and performance.