Lecture Guide for Acocunts Abe
ABE Level 6 Diploma Unit Title: Financial Accounting Learning Outcome: 1. Understand the framework of financial accounting. Please note that the content of this Lecture Guide is listed in its recommended teaching order, rather than in numerical order.
Assessment Criteria/Indicative Content: 1.1 Describe the scope, objectives and main users of financial accounting information in accordance with the international framework of the International Accounting Standards Board: • Describe the scope and objectives, i.e. the provision of useful information for people about their resources. This could include cost of assets, loans outstanding, income received, expenses consumed, etc. Identify the main users of accounting information in accordance with the IASB’s framework document. The needs of users will vary depending on the type of organisation and therefore students should consider the following organisations: sole trader, partnership, private and public company.
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1.2
Identify the main and sub-characteristics of useful information to users: • • • Identify and explain the four main characteristics of useful information to users, namely; relevance, reliability, ‘understandability’ and comparability. Identify and explain the sub-characteristics of the four main characteristics. Explain the twelve traditional accounting concepts and their relationship to the framework characteristics – going concern, accruals or matching, realisation, consistency, prudence, business entity, duality, monetary measurement, objectivity, historical cost, materiality, and separate valuation. Be able to give an example of the use of each, for example the matching principle requires expenses not consumed in the generation of revenue to be treated as prepayments. Distinguish between capital income and expenditure and revenue income and expenditure. Give examples of each of the above and state how they should be treated in financial statements, e.g. as assets, liabilities, expenses or
Assessment Criteria/Indicative Content: 1.1 Describe the scope, objectives and main users of financial accounting information in accordance with the international framework of the International Accounting Standards Board: • Describe the scope and objectives, i.e. the provision of useful information for people about their resources. This could include cost of assets, loans outstanding, income received, expenses consumed, etc. Identify the main users of accounting information in accordance with the IASB’s framework document. The needs of users will vary depending on the type of organisation and therefore students should consider the following organisations: sole trader, partnership, private and public company.
•
1.2
Identify the main and sub-characteristics of useful information to users: • • • Identify and explain the four main characteristics of useful information to users, namely; relevance, reliability, ‘understandability’ and comparability. Identify and explain the sub-characteristics of the four main characteristics. Explain the twelve traditional accounting concepts and their relationship to the framework characteristics – going concern, accruals or matching, realisation, consistency, prudence, business entity, duality, monetary measurement, objectivity, historical cost, materiality, and separate valuation. Be able to give an example of the use of each, for example the matching principle requires expenses not consumed in the generation of revenue to be treated as prepayments. Distinguish between capital income and expenditure and revenue income and expenditure. Give examples of each of the above and state how they should be treated in financial statements, e.g. as assets, liabilities, expenses or