ACCT3 financial

Description

cover Title page Imprint page Brief Contents Contents Guide to the text Guide to the online resources Chapter 1: Financial accounting Beginning assumptions Economic entity assumption Accounting period assumption Monetary unit assumption Going concern assumption Reporting profitability: the income statement Revenues Expenses The income statement Reporting financial position: the balance sheet Assets Liabilities Equity The balance sheet Reporting equity: the statement of changes in equity Linking the income statement and the balance sheet Reporting cash flows: the cash flow statement Financing activities Investing activities Operating activities The cash flow statement The objectives of financial reporting Relevance and materiality Faithful representation Comparability Verifiability Timeliness Understandability The language of accounting Exercises Problems Cases Chapter 2 : Financial statements Business forms Generally accepted accounting principles (GAAP) The balance sheet The income statement Profits before income tax expense Other comprehensive income Horizontal and vertical analyses Horizontal analysis Vertical analysis The statement of changes in equity Information beyond the financial statements Notes to the financial statements Auditor’s report Directors‘ report Other information Sustainability reporting Governance information Exercises Problems Cases Chapter 3: Recording accounting transactions The accounting information system Accounting transactions and the accounting equation Transaction analysis The dual-entry accounting system The T-account Debit and credit rules Summary of debit and credit rules Recording transactions in the accounting system The journal The ledger The trial balance Comprehensive example: journal entries to financial statements Recording transactions in the journal and posting to the ledger Preparing a trial balance Preparing financial statements Exercises Problems Cases Chapter 4: Accrual accounting and adjusting entries Accrual and cash bases of accounting Reporting accrual- and cash-based income Adjusting journal entries Scenario 1: Deferred revenue Scenario 2: Accrued revenue Scenario 3: Deferred expense Scenario 4: Accrued expense Summary of adjusting journal entries Comprehensive example: adjusting journal entries Journalising and posting adjusting entries Preparing an adjusted trial balance Preparing financial statements Closing process The accounting cycle: a summary Exercises Problems Cases Chapter 5: Cash and internal controls Internal control Components of internal control Control environment Risk assessment Control activities Information and communication Monitoring Limitations of internal control Cash controls Bank reconciliations Bank reconciliation example Petty cash funds Reporting cash and cash equivalents Analysing cash Horizontal and vertical analyses Free cash flow Exercises Problems Cases Chapter 6: Receivables Recording and reporting accounts receivable Recording accounts receivable Reporting accounts receivable Uncollectible receivables Direct write-off method Allowance method Estimating bad debt expense Percentage-of-sales approach Percentage-of-receivables approach Analysing accounts receivable Horizontal and vertical analyses Receivables turnover ratio Allowance ratio Notes receivable Recording the note Recording interest Collecting the note Exercises Problems Cases Chapter 7: Inventory Recording, expensing and reporting inventory Recording inventory Expensing inventory Reporting inventory and cost of sales Inventory costing methods Specific identification First-in, first-out (FIFO) Last-in, first-out (LIFO) Moving average Comparing inventory costing methods Estimating ending inventory Lower-of-cost-and-net realisable value Evaluating a business’ management of inventory Horizontal and vertical analyses Inventory turnover ratio Appendix: periodic inventory system Recording inventory Inventory costing methods Exercises Problems Cases Chapter 8: Non-current assets and intangible assets Recording, expensing and reporting non-current assets Recording non-current assets Expensing non-current assets Reporting non-current assets Calculating depreciation expense Straight-line method Reducing-balance method Units-of-activity method Comparing depreciation methods Adjustments made during a non-current asset’s useful life Changes in depreciation estimates Expenditures after acquisition Asset impairment Asset revaluations Disposing of non-current assets Loss example Gain example Evaluating a company’s management of non-current assets Horizontal and vertical analyses Non-current asset turnover ratio Average life and age of non-current assets Non-current assets and cash flows Intangible assets Recording intangible assets Amortising and impairing intangible assets Exercises Problems Cases Chapter 9: Liabilities Current liabilities Taxes payable Current liabilities with payroll Notes payable Current portion of non-current debt Reporting current liabilities Non-current liabilities Bonds Bonds issued at face value Bonds issued at a discount Bonds issued at a premium Redeeming a bond before maturity Additional liabilities Lease liabilities Contingent liabilities Evaluating a company’s management of liabilities Horizontal and vertical analyses Current ratio Debt to assets ratio Appendix: determining a bond’s Issue price Appendix: effective interest method of amortisation Discount example Premium example Exercises Problems Cases Chapter 10: Partnerships The partnership form of business Ease of formation Partnership agreement Mutual agency and co-ownership of property Unlimited liability of owners Transferability of ownership No partnership taxation Capital accounts for each partner Commencing a partnership Capital account for each partner Allocate profits and losses Sharing profits based on a set percentage Sharing profits based on capital balances and on service Admission and withdrawal of a partner Purchasing a current partner’s interest Investing in the partnership Investing in the partnership: bonus to new partner Investing in the partnership: bonus to existing partners Withdrawal of a partner Revaluation of assets before withdrawal of a partner Withdrawal of a partner at carrying amount Withdrawal of a partner at more than the carrying amount Withdrawal of a partner at less than the carrying amount Liquidation Sale of assets Paying the liabilities Partners receive remaining cash Partnership financial statements Exercises Problems Cases Chapter 11: Shareholders’ equity The corporate form of business Separate legal entity Ability to raise capital Limited liability of owners Transferability of ownership Dividend imputation Regulation Ordinary shares Shareholder rights Recording ordinary shares Issuing shares by instalment Oversubscription Forfeiture Dividends Cash dividends Share dividends Dividend Reinvestment Plans in Australia Share splits Preference shares Recording preference shares Cash dividends on preference shares Share buybacks Recording share buybacks Evaluating a company’s management of equity Horizontal and vertical analyses Earnings per share Return on equity Dividend payout ratio Dividend yield Shareholders’ equity and cash flows Exercises Problems Cases Chapter 12: Statement of cash flows The statement of cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net increase (decrease) in cash Additional disclosures Preparing the statement of cash flows Direct and indirect methods for operating cash flows Example data Reporting cash flows from operating activities: direct method Cash received from customers Cash paid for inventory Cash paid for operating expenses Cash paid for taxes Other revenues and expenses Net operating cash flows Reporting cash flows from operating activities: indirect method Adjustments for non-cash items Adjustments for gains and losses from investing and financing activities Adjustments for current assets and current liabilities Net operating cash flows Calculating cash flows from investing activities Investments Equipment Accumulated depreciation Summary of investing cash flows Calculating cash flows from financing activities Non-current liabilities Contributed equity Retained earnings Net financing cash flows Complete statement of cash flows: indirect method Analysing a company’s statement of cash flows Free cash flow Cash flow adequacy ratio Exercises Problems Cases Chapter 13: Financial statement analysis Financial statement analysis Financial information Standards of comparison Analysis tools Horizontal and vertical analyses Horizontal analysis Vertical analysis Profitability analysis Profit margin Return on equity Return on assets Earnings per share Price to earnings ratio Summary of profitability Liquidity analysis Current ratio Quick ratio Receivables turnover ratio Inventory turnover ratio Summary of liquidity analysis Solvency analysis Debt to assets ratio Debt to equity ratio Times interest earned Summary of solvency DuPont analysis Exercises Problems Cases Appendix A: Time value of money Appendix B: CSL Limited, annual report 2017 Endnotes Index Tear-out review cards