Date post: | 29-Dec-2015 |
Category: |
Documents |
Upload: | osborn-whitehead |
View: | 214 times |
Download: | 0 times |
RECAP LECTURE 7
• WHAT ARE THE INTERNAL FACTORS THAT AFFECT CAPITAL STRUCTURE?
• WHAT ARE THE EXTERNAL FACTORS THAT AFFECT CAPITAL STRUCTURE?
A REVIEW OF FINANCIAL ACCOUNTING
• ACCOUNTING IS OFTEN SAID TO BE THE LANGUAGE OF BUSINESS.
• IT IS USED IN BUSINESS WORLD TO DESCRIBE THE TRANSACTIONS ENTERED INTO BY ALL KINDS OF ORGANIZATIONS.
• ACCOUNTING TERMS AND IDEAS ARE THEREFORE USED BY PEOPLE ASSOCIATED WITH BUSINESS, WHETHER THEY ARE MANAGERS, OWNERS, INVESTORS, BANKERS, LAWYERS OR ACCOUNTANTS
A REVIEW OF FINANCIAL ACCOUNTING
• FINANCIAL ACCOUNTING IS A SYSTEM OF KEEPING BUSINESS RECORDS SO AS TO EXPLAIN WHAT IS HAPPENING IN THE BUSINESS
• IN THIS LECTURE WE WILL REVIEW THE BASIC PRINCIPLES AND STRUCTURE OF FINANVIAL ACCOUNTING
A REVIEW OF FINANCIAL ACCOUNTING
• THE FIELD OF ACCOUNTING CAN BE DIVIDED INTO FOUR MAJOR AREAS:
1. FINANCIAL ACCOUNTING2. MANAGEMENT / MANAGERIAL ACCOUNTING3. COST ACCOUNTING4. AUDITING
A REVIEW OF FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
• RECORDING TRANSACTIONS AND PREPARING REPORTS AND FINANCIAL STATEMENTS THAT CAN BE USED BY MANAGEMENT, OWNERS, CREDITORS, GOVERNMENT AGENCIES, AND OTHERS TO UNDERSTAND WHAT IS HAPPENING IN THE BUSINESS OR NON-PROFIT ORGANIZATION
A REVIEW OF FINANCIAL ACCOUNTING
MANAGEMENT/MANAGERIAL ACCOUNTING
• ALSO CALLED BUDGETING, THIS INVOLVES PLANNING FOR THE FUTURE. ACCOUNTING DATA ARE PREPARED ON AN EXPECTED OR PRO FORMA BASIS, THAT IS THE FIRM IS FORECASTING BUSINESS ACTIVITY
A REVIEW OF FINANCIAL ACCOUNTING
COST ACCOUNTING
• THIS AREA COVERS TECHNIQUES FOR DETERMINING THE COSTS OF A BUSINEE AND DEVELOPING METHODS FOR CONTROLLING THOSE COSTS.
• PARTICULAR ATTENTION IS GIVEN TO COMPUTING THE COST OF AN INDIVIDUAL PRODUCT OR SERVICE IN SITUATIONS WHERE THOUSANDS OF SUCH PRODUCTS OR SERVICES ARE SOLD
A REVIEW OF FINANCIAL ACCOUNTING
COST ACCOUNTING
• EXAMPLE: TOYOTA MOTOR COMPANY WANTS TO MANUFACTURE A NEW CAR, IT MUST INCUR LARGE CAPITAL COSTS IN ADVANCE, TRAIN THOUSANDS OF WORKERS ON A NEW ASSEMBLY LINE, STOCK MILLIONS OF COMPONENTS AND PARTS AND FINALLY BEGIN PRODUCTION.
• WHAT DOES IT COST TO PRODUCE THE FIRST CAR? • THESE QUESTIONS ARE ANSWERED IN THE AREA OF COST
ACCOUNTING
A REVIEW OF FINANCIAL ACCOUNTING
AUDITING
• AN AUDIT MAY BE DEFINED AS AN EXAMINATION OF ACCOUNTING OR FINANCIAL RECORDS TO DETERMINE WHETHER A COMPANY, BANK OR OTHER ORGANIZATION IS MEETING CERTAIN RULES OR STANDARDS.
• AUDITING IS THE FIELD THAT DEVELOPS STANDARDS FOR
AUDITS AND PROVIDES THE PEOPLE TO CONDUCT AUDITS.
A REVIEW OF FINANCIAL ACCOUNTING
INTERNAL AUDITOR
• AN AUDITOR MAY WORK FOR A COMPANY AND CONDUCT AN INTERNAL AUDIT, ENSURING THAT ESTABLISHED ACCOUNTING PROCEDURES AND MANAGEMENT INSTRUCTIONS ARE BEING FOLLOWED THROUGHT A COMPANY
A REVIEW OF FINANCIAL ACCOUNTING
EXTERNAL AUDITORS
• AN AUDITOR MAY WORK FOR AN OUTSIDE ACCOUNTING FIRM AND CONDUCT AN EXTERNAL AUDIT TO VERIFY ACCOUNTING AND FINANCIAL RECORDS TO CREDITORS, STOCKHOLDERS OR THE GOVERNMENT
A REVIEW OF FINANCIAL ACCOUNTING
GAAP
• IS THE OVERALL BODY OF REGULATION ESTABLISHING HOW CAMPANY ACCOUNTS MUST BE PREPARED IN THE UK. THIS INCLUDES NOT ONLY ACCOUNTING STANDARDS BUT ALSO UK COMPANY LAW
A REVIEW OF FINANCIAL ACCOUNTING
GAAP
• A PRINCIPLE IS A FUNDAMENTAL LAW OR RULE UPON WHICH OTHER RULES AND PRACTICES ARE FORMED.
• OVER THE YEARS, THE PROFESSION OF ACCOUNTING HAS DEVELOPED A NUMBER OF GAAP THAT MUST BE FOLLOWED IN RECORDING,TRANSACTIONS AND PREPARING FINANCIAL STATEMENTS.
A REVIEW OF FINANCIAL ACCOUNTING
GAAP
• THESE PRINCIPLES HAVE BEEN ACCEPTED BY PROFESSIONAL GROUPS SUCH AS AMERCIAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA), ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS (ACCA)
• INSTITUTE OF CHARTERED ACCOUNTANTS ENGLAND & WALES (ICAEW), INSTITUTE OF CHARTERED ACCOUNTANTS PAKISTAN (ICAP)