I. learning objectives
After completing this session, students will be able to
(1) defines the assets, liabilities, owner's equity, revenue and expenses.
(2) Understand the features of basic accounting equation;
(3) to record business transactions and illustrate their impact on the fundamental accounting equation;
(4) Understand the accounts payable, accounts receivables, prepaid insurance and drawing accounts;
(5) Understand the fundamental principle of double entry and use of the T-account form.
(6) understand the rules for debits and credits.
(7) Prepare a trial balance.
II. lecture notes
1. Some important definitions according to International Accounting Standards (IAS)
(1) assets: financial resources controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise.
Must stress three elements in this definition: control (compared to ownership), past events and future economic benefits.
Recognition of elements of financial statements:
* An item that meets the definition of asset should be recognised if:
(a) it is possible that some future economic benefits associated with the item will flow to the enterprise. and
(b) the item has a cost or value that can be measured with reliability.
* Example: human resources are the most important assets of a company, but why can't we find them in the book end?
* Some Football Club is an exception to these criteria.
(2) Liabilities: the existing obligations of the enterprise arising from past events, the settlement of which is expected to result in a sacrifice of economic benefits for the company.
Must stress three elements in this definition: existing obligations, previous incidents, and the sacrifice of economic benefits
(3)...
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