Estimate of the future costs that may be incurred for repairing or replacing defective goods
The amount of the estimate for each year is recorded as an adjustment to the Warranty Provision account
Overview | LIABILITIES ~ Current liabilities
Types of current liabilities we’ve covered
Accounts payable Notes payable – same as accounts payable but with interest Unearned revenue – remember the concert example Accrued liabilities – provisions e.g. warranty liability
In this chapter, the focus is mostly on depreciation methods
Straight line (based on years of useful life) Units of production (based on units of useful life) Diminishing (or reducing) balance
EVERYONE wants it!!! So, we need internal control procedures. A fundamental internal control procedure for cash is the bank
reconciliation statement. In Week 5, our example was Friends Ltd. Key items in a bank reconciliation
Overview | ASSETS ~ Accounts receivable
What we’re interested here is how to account for measurement of accounts receivable and impairment.
If there is impairment, reduce accounts receivable via
Week 13
Revision and exam preparation
Things to cover this week
Subject evaluation Exam overview Preparation techniques Overview of topics Remember: if you have something to ask
Here we’re interested in calculating the value of ending inventory so we can complete the COGS calculation…
COGS = beginning inventory + net purchases – ending inventory.
One of the compulsory financial statements for annual reporting by companies (along with Balance Sheet and Income Statement)
A lot of financial information in the cash flow statement
Dividends
Overview | ASSETS ~ Non- current assets
Important to recognise that sometimes many costs can contribute to the actual cost of an asset (ie more than just purchase price)
EQUITY
Share capital, dividends & retained earnings
FINANCIAL STATEMENT ANALYSIS
Analysing financial statements
What about these topics?
CASH FLOW STATEMENTS
NON-CURRENT LIABILITIEerview | EQUITY ~ Share capital, dividends, retained earnings
Several elements of share issuing covered. Main focus:
BUDGETING
Budgeting is a basic life skill! Also important for all business/commerce majors, not just accounting.
Overview | ASSETS ~ Cash
What’s the problem with cash from a business point of view?
IGNORE any existing balance in impairment account
If using ageing method
ADJUST for any existing balance in impairment account
Overview | ASSETS ~ Inventories
Direct method Allowance method
Percentage of sales method Ageing of accounts receivable method
Key things to remember with allowance method
If using percentage of sales method
me about the final exam, it has to happen NOW!!! i.e. while the lecture is happening!!!! Thank you ☺
Exam overview
8 questions. No multiple choice. Problem-style questions. Similar to tutorials. Chapters covered include those AFTER mid-semester… More on the exam after we review the chapters…
Chapters…remember these ones???
Chapter 6 - Inventories – FIFO/LIFO/WA Chapter 7 - Accounting information systems Chapter 8 - Internal control and cash Chapter 9 - Accounting for receivables Chapter 11 - Current liabilities Chapter 10 - Non-current assets (PPE) Chapter 16 - Non-current liabilities Chapter 14 - Share capital Chapter 15 - Dividends & retained earnings Chapter 19 - Financial statement analysis Chapter 18 - Cash flow statements Chapter 20 - Management accounting Chapter 23 - Budgeting
First in, First out (FIFO) Last in, First out (LIFO) Average cost
Key things to remember:
Think about what it is you are working out…is it ending inventory or COGS?
Outstanding deposits Unpresented cheques Dishonoured cheques Bank or company errors Bank changes or collections on behalf of the company Any associated adjusting entries that might be required
Chapter 6 - Inventories Chapter 7 - Accounting information systems Chapter 8 - Internal control and cash Chapter 9 - Accounting for receivables Chapter 11 - Current liabilities Chapter 10 - Non-current assets (PPE) Chapter 16 - Non-current liabilities Chapter 14 - Share capital Chapter 15 - Dividends & retained earnings Chapter 19 - Financial statement analysis
Issuing of ordinary shares payable by installments
E.g. if a company wishes to issue 10,000 shares at an issue price of $20 per share with $10 payable on application, $5 payable on allotment and $5 payable on call.