FINANCIAL ACCOUNTING 2 (ACCT 212)

OVERVIEW

1. COURSE DESCRIPTION

This course introduces the students to the fundamentals of the regulatory framework relating to financial reporting and to the qualitative characteristics of useful information. Students will gain a solid understanding of the fundamentals and principles of account preparation, including the process of recording, processing, and reporting business transactions and events. The course also covers important topics such as reconciliations, trial balance preparation, error correction, and suspense accounts, all of which are essential for preparing accurate financial statements for incorporated and unincorporated entities. Additionally, students will learn how to prepare consolidated financial statements for a parent company with a single subsidiary. While the primary focus of the course is on mastering the preparation of the main financial statements, there is also a concise overview of notes and disclosures. In the final sessions, students will develop the ability to analyze and interpret financial statements.

2. REASON FOR THE COURSE

This course aims to develop students’ knowledge of the principles and concepts of financial accounting, as well as their proficiency in using double-entry accounting techniques to prepare basic financial statements in accordance with IFRS.

Nearly all roles that bachelor of accounting and finance graduates pursue will require extensive interaction with financial statements. For example, graduates may work as financial accountants who are responsible for preparing financial statements, investors or investment analysts who collate and analyze data drawn from financial statements, or auditors who assess whether financial statements comply with relevant accounting standards.

Therefore, it is essential that graduates have a deep and firm knowledge of financial accounting. This course will provide them with the skills and knowledge they need to be successful in their careers.

3. STUDY HOURS

4. ROLE IN CURRICULUM

Prerequisites:
Students must have successfully passed Financial Accounting I (ACCT 211) before attempting this course.

SKILLS

  • LEARNING OUTCOMES
  • ASSESSMENT AND GRADING
  • TEACHING METHODS
  • STUDY PLAN
  • TEXTBOOKS AND REFERENCES

5. COURSE LEARNING OUTCOMES (CLO)

 On successful completion of this course, students will be able to:

Knowledge Level of
Learning		 Related PLO
Discuss the regulatory framework, qualitative characteristics, and basic principles of financial reporting (CK1)
Discuss the regulatory framework for financial reporting, the qualitative characteristics of useful financial information, and basic accounting principles.		 Understand PC5
Cognitive Skills Level of
Learning		 Related PLO
Apply accounting principles and techniques (CC1)
Apply the fundamental accounting principles and techniques to accurately record, process, and report business transactions and events.		 Apply PC5
Perform reconciliations, prepare trial balance, correct errors, and manage suspense accounts (CC2)
Perform reconciliations, prepare trial balance, correct errors, and manage suspense accounts to ensure the accuracy and reliability of financial statements for both incorporated and unincorporated entities.		 Apply PC5
Prepare basic and consolidated financial statements (CC3)
Prepare financial statements for both single companies and groups of companies.		 Create PC5
Analyze and interpret financial statements (CC4)
Analyze and interpret financial statements to assess a company’s financial performance and position, identify trends and patterns, and make informed decisions about the company’s business.		  Analyze PC1
Communication, Information Technology, and Numerical Skills Level of
Learning		 Related PLO
Use spreadsheets and accounting software (CCIT1)
Use spreadsheets and accounting software to efficiently prepare, analyze, and interpret financial statements.		 Apply PCIT2
Interpersonal Skills and Responsibilities Level of
Learning		 Related PLO
Collaborate with team members and demonstrate ethics and professionalism in financial reporting (CIP1)
Collaborate effectively with team members and demonstrate ethical and professional behavior in the preparation and presentation of financial statements.		 Value PIP2

 

6. ASSESSMENT AND GRADING

Grades will be determined based on the following assessments and score allocations:

SKILL Assessment Skill Weighting for Grade
Participation In-Class Test Accounting simulation Final Exam
Discuss the regulatory framework, qualitative characteristics, and basic principles of financial reporting (CK1) 90%   10%   10%
Apply accounting principles and techniques (CC1)   50% 20% 30% 30%
Perform reconciliations, prepare trial balance, correct errors, and manage suspense accounts (CC2)   50% 20% 30% 10%
Prepare basic and consolidated financial statements (CC3)     30% 70% 20%
Analyze and interpret financial statements (CC4)     50% 50% 10%
Use spreadsheets and accounting software (CCIT1)     100%   10%
Collaborate with team members and demonstrate ethics and professionalism in financial reporting (CIP1)     100%   10%

 

7. TEACHING METHODS

This course is taught with a variety of teaching methods, including lecture, discussion, didactic questioning, case study analysis, demonstration, and group work.

During the course, there is one Project:

Assignment:

Accounting simulation (All CLOs)
Group Work:  Group of 5
Output Format

 The outputs will be submitted in 5 phases:
Phase 1: Understanding the entity’s business and preparing a chart of accounts
Phase 2: Documenting and recording transactions
Phase 3: Adjusting entries and closing entries
Phase 4: Preparing financial statements
Phase 5: Final presentation
Language: English
Description:

This project aims to:

  • Provide students with the opportunity to work in a team and experience real-world applications of financial accounting concepts
  • Promote experiential learning from the start to the end of the accounting cycle
  • Develop students’ work-readiness, particularly in the field of financial accounting and reporting.

Rubric for Phases 1 – 3

Rubric for Phases 4 & 5

  

8. STUDY PLAN

The course targets the 50 lessons in the study plan below. Each lesson is 1.5 class hours each; there are a total of 75 class hours.  The study plan below describes the learning outcome for each lesson, described in terms of what the student should be able to do at the end of the lesson.  Readings should be done by students as preparation before the start of each class.  Implementation of this study plan may vary somewhat depending on the progress and needs of students.

No Lesson Learning Outcomes Teaching (T), and
Assessment (A) Methods
1

Review of accounting basics

  1. Describe the course learning outcomes and assessment
  2. Demonstrate how transactions affect the accounting equation. (CC1)

Lecture (T)
Demonstration of the accounting equation (T)
Spreadsheet exercise on the accounting equation (A)

Reading: Chapter 1
2

Business Entities

  1. Describe the purpose of financial statements and their relevance to users. (CK1)
  2. Identify the advantages and disadvantages of operating as a limited liability company, sole trader or partnership. (CK1)

Lecture (T)
Group brainstorming on the financial information needs of stakeholders (T)
Case study of James Cropper Plc financial statements (T)
Problem sets to be solved in groups (A)

Reading: Chapter 1
3

The qualitative characteristics of financial information

  1. Explain the qualitative characteristics of the IFRS conceptual framework. (CK1)
  2. Define the key accounting concepts in the IFRS conceptual framework. (CK1)

Lecture (T)
Group problem based learning (T)
Discussion (T)

Reading: Chapter 1
4

The Regulatory Framework and Corporate Governance

  1. Describe the role of the regulatory system, including IFRS related entities. (CK1)
  2. Describe International Financial Reporting Standards. (CK1)
  3. Describe the responsibilities of directors, especially in regards to financial reporting. (CK1)

Lecture (T)
Didactic questioning (T)
Discussion (T)
Kahoot Quiz (A)

Reading: Chapter 2
5

Business transactions and documentation

  1. Identify and explain the purpose of common business documentation. (CK1)
  2. Identify the main types of ledger accounts and books of prime entry Identify and explain the purpose of common business documentation..  (CK1)
  3. Explain the procedures for petty cash transactions. (CK1)

Lecture (T)
Discussion (T)
Kahoot Quiz (A)

Reading: Chapter 3
6

Ledger accounts and double entry

  1. Apply the concept of double entry accounting and the accounting equation. (CC1)
  2. Illustrate the uses of journals and the posting of journal entries into ledger accounts. (CC1)
  3. Record sales, sale returns, purchases, and purchase returns transactions in ledger accounts. (CC1)

Lecture (T)
Demonstration of double entry (T)
Spreadsheet exercise on recording transitions (A)

Reading: Chapter 5
7

From trial balance to financial statements

  1. Demonstrate how to balance and close a ledger account. (CC1)
  2. Prepare a trial balance. (CC2)

 

Demonstration of balancing off ledger accounts and preparing a trial balance (T)
Spreadsheet exercise on balancing off ledger accounts and preparing a trial balance (A)

Reading: Chapter 6
8

From trial balance to financial statements

  1. Identify and understand the limitations of a trial balance. (CC2)

Discussion on limitations of a trial balance (T)
Demonstration of preparing basic financial statements for sole traders (T)

Reading: Chapter 6
9

Inventory

  1. Apply and explain the impacts of methods of valuing inventory in accordance with IAS 2.  (CC1)

Lecture (T)
Demonstration of inventory costing (T)
Group problem solving to record inventory cost (A)

Reading: Chapter 7
10

Inventory

  1. Describe the use of continuous and periodic inventory records. (CC1)
 Lecture (T)
Demonstration of accounting entries under continuous and periodic inventory systems (T)
Reading: Chapter 7
11

Inventory

  1. Calculate the value of closing inventory using first in, first out (FIFO) and average cost (AVCO). (CC1)

Lecture (T)
Demonstration of FIFO and AVCO methods valuing inventory (T)
Spreadsheet exercise on valuing inventories (A)

Reading: Chapter 7

 
12

Property, Plant and Equipment

  1. Recognise the difference between current and non-current assets. (CC1)

Lecture (T)
Didactic questioning (T)
Case study to solve in groups (A)

Reading: Chapter 8
13

Property, Plant and Equipment

  1. Prepare ledger entries to record the acquisition, depreciation, revaluation and disposal of Property, Plant and Equipment (PPE).  (CC1

Lecture (T)
Case study discussion (T)
Demonstration of recording depreciation and revaluation (T)
Spreadsheet exercise on depreciation and revaluation (A)

Reading: Chapter 8
14

Property, Plant and Equipment

  1. Explain the purpose and function of an asset register. (CC2)
  1. Draft a disclosure note for property, plant and equipment. (CC3)

Lecture (T)
Didactic questioning (T)

Reading: Chapter 8
15

Intangible non-current assets

  1. Account for intangible assets and amortization in accordance with IFRS. (CC1)
  2. Identify and account for ‘research costs’ and ‘development costs’ in accordance with IFRSs. (CC1)
  3. Draft a disclosure note for intangible assets. (CC3)

Lecture (T)
Case study discussion (T)
Demonstration of recording intangible asset cost and amortisation (T)
Spreadsheet exercise on intangible assets (A)

Reading: Chapter 9
16

Accruals and prepayments

  1. Calculate the adjustments needed for accruals and prepayments. (CC1)

Lecture (T)
Demonstration of calculating and recording accruals (T)
Spreadsheet exercise on accruals (A)

Reading: Chapter 10
17

Accruals and prepayments

  1. Prepare journal entries for an accrual or prepayment. (CC1)

Lecture (T)
Demonstration of calculating and recording prepayments (T)
Spreadsheet exercise on prepayments (A)

Reading: Chapter 10
18

Provisions and contingencies

  1. Define ‘provision’, ‘contingent liability’ and ‘contingent asset’ in accordance with IFRS. (CC1)
  2. Demonstrate accounting for provisions, contingent liabilities and contingent assets. (CC1)
  3. Draft disclosure notes for provisions and contingent liabilities. (CC3)

Lecture (T)
Discussion (T)
Group problem based learning (T)

Reading: Chapter 11
19

Irrecoverable debts and allowances

  1. Prepare the bookkeeping entries to create and adjust an allowance for bad debts, including write offs and reversals. (CC1)

Demonstration of determining and recording bad debts (T)
Group problem sets to determine and record bad debts (T)

Reading: Chapter 12
20

Irrecoverable debts and allowances

  1. Prepare the bookkeeping entries to create and adjust an allowance for bad debts, including write offs and reversals. (CC1)

Demonstration of determining and recording movements in allowance for receivables (T)
Group problem sets to determine and record bad debts (T)
Spreadsheet exercise on accounting for bad debts and allowance for receivables (A)

Reading: Chapter 12
21

Sales Tax

  1. Describe the general principles of the operation of a sales tax. (CC1)
  2. Calculate sales tax on transactions and record the consequent accounting entries. (CC1)

Lecture (T)
Group problem based learning (T)
Spreadsheet exercise on calculating and recording sales tax (A)

Reading: Chapter 13
22

Receivables and Payables

  1. Account for discounts allowed and discounts received. (CC1)
  2. Account for contras against trade receivables and payables. (CC1)
  3. Identify and correct errors in control accounts and ledger accounts. (CC2)

Lecture (T)
Demonstration of correcting errors in control accounts (T)
Group problem based learning to correct errors (T)

Reading: Chapter 14
23

Bank reconciliations

  1. Identify the main reasons for differences between the cash book and the bank statement. (CC2)

Lecture and discussion (T)
Demonstration of preparation of a bank reconciliation (T)
Group work to prepare a bank reconciliation (A)

Reading: Chapter 15
24

Bank reconciliations

  1. Prepare a bank reconciliation statement, correcting for any errors or omissions. (CC2)

Group problem based learning (T)
Lecture and discussion (T)
Spreadsheet exercise on bank reconciliation (A)

Reading: Chapter 15
25

Correction of errors

  1. Identify and correct the types of error which may occur in bookkeeping systems. (CC2)
  2. Create and use a suspense account. (CC2)
 Lecture and discussion (T)
Demonstration of use of suspense account (T)
Group problem based learning to solve errors using a suspense account (T)
Spreadsheet exercise on correction of errors (A)
Reading: Chapter 16
26

Incomplete records

  1. Apply the following techniques used in incomplete records situations: use of the accounting equation, use of ledger accounts, use of cash and/or bank summaries, and use of profit percentages. (CC2)

Lecture (T)
Group problem based learning (T)
Discussion (T)
Spreadsheet exercise on incomplete records (A)

Reading: Chapter 17
27

Preparation of financial statements for sole traders

  1. Prepare a statement of financial position. (CC3)
  2. Prepare a statement of profit or loss and other comprehensive income. (CC3)

Demonstration of preparation of a statement of profit or loss and a statement of financial position (T)
Group problem based learning to prepare a statement of profit or loss and a statement of financial position (T))

Reading: Chapter 18
28

Introduction to company accounting

  1. Record movements in the share capital and share premium accounts. (CC1)
  2. Record and show the effects of a bonus (capitalisation) issue and a rights issue in the statement of financial position. (CC1)
  3. Record dividends in ledger accounts and the financial statements. (CC1)
  4. Calculate and record finance costs in ledger accounts and the financial statements. (CC1)

Lecture (T)
Demonstration of recording issue of shares, rights shares and a bonus issue (T)
Group problem based learning (T)
Spreadsheet exercise on calculating the balances of shareholders’ equity accounts (A)

Reading: Chapter 19
29

Preparation of financial statements for companies

  1. Identify the components of the statement of changes in equity.  (CC3)

Lecture (T)
Case study discussion (T)

Reading: Chapter 20

 
30

Preparation of financial statements for companies

  1. Prepare a statement of financial position for a company. (CC3)
  2. Prepare a statement of profit or loss and other comprehensive income for a company. (CC3)

Demonstration of preparation of financial statements (T)
Group problem based learning to prepare financial statements (T)

Reading: Chapter 20
31

Preparation of financial statements for companies

  1. Prepare a statement of financial position for a company. (CC3)
  2. Prepare a statement of profit or loss and other comprehensive income for a company. (CC3)

Demonstration of preparation of financial statements (T)
Group problem based learning to prepare financial statements (T)
Spreadsheet exercise on preparing financial statements of a single company (A)

Reading: Chapter 20
32

Preparation of financial statements for companies

  1. Record income tax in the statement of profit or loss of a company, including the under- and overprovision of tax in the prior year. (CC3)

Lecture (T)
Group problem based learning (T)

Reading: Chapter 20
33

Preparation of financial statements for companies, Events after the reporting period

  1. Draft disclosure notes for events after the reporting period. (CC3)
  2. Define an event after the reporting period in accordance with IFRSs. (CC3)
  3. Classify events as adjusting or non-adjusting. (CC3)
  4. Distinguish between how adjusting and non-adjusting events are reported in the financial statements. (CC3)

Lecture (T)
Didactic questions (T)
Group problem based learning (T)

Reading: Chapter 20, 21
34

Statement of cash flows

  1. Differentiate between profit and cash flow. (CC3)
  2. Understand the need for management to control cash flow. (CK1)
  3. Explain the difference between operating cash flow following the direct method and the indirect method. (CC3)
  4. Classify cash flows. (CC3)

Lecture (T)
Case study group analysis and discussion (T)

Reading: Chapter 22
35

Statement of cash flows

  1. Calculate the figures needed for the statement of cash flows. (CC3)

Demonstration of preparation of a statement of cash flows (T)
Group preparation of a statement of cash flows (T)

Reading: Chapter 22
36

Statement of cash flows

  1. Prepare a statement of cash flows. (CC3)

Demonstration of preparation of a statement of cash flows (T)
Group preparation of a statement of cash flows (T)

Reading: Chapter 22
37

Statement of cash flows

  1. Prepare a statement of cash flows. (CC3)

Demonstration of preparation of a statement of cash flows (T)
Spreadsheet exercise on preparing statement of cash flows (A)

Reading: Chapter 22
38

Introduction to consolidated financial statements

  1. Define the entities in a group of companies. (CC3)
  2. Describe the accounting method used for different entities of a group in the group’s consolidated financial statements. (CC3)

Lecture (T)
Didactic questions (T)
Case study discussion (T)

Reading: Chapter 23
39

The consolidated statement of financial position

  1. Prepare a consolidated statement of financial position for a group including a single subsidiary. (CC3)

Demonstration of preparation of a consolidated statement of financial position (T)

Reading: Chapter 24
40

The consolidated statement of financial position

  1. Prepare a consolidated statement of financial position for a group including a single subsidiary. (CC3)

Group case study to prepare a consolidated statement of financial position (T)
Discussion (T)

Reading: Chapter 24
41

The consolidated statement of financial position

  1. Calculate goodwill (excluding impairment of goodwill) using the full goodwill method only. (CC3)

Lecture (T)
Demonstration of calculation of goodwill (T)
Group problem set to calculate goodwill (T)
Discussion (T)
Spreadsheet exercise on preparing consolidated statement of financial position (A)

Reading: Chapter 24
42

The consolidated statement of profit or loss

  1. Prepare a consolidated statement of profit or loss. (CC3)

Demonstration of preparation of a consolidated statement of profit or loss (T)
Group preparation of a consolidated statement of profit or loss (T)

Reading: Chapter 25
43

The consolidated statement of profit or loss

  1. Prepare a consolidated statement of profit or loss. (CC3)

Demonstration of preparation of a consolidated statement of profit or loss (T)
Group preparation of a consolidated statement of profit or loss (T)

Reading: Chapter 25

 
44

The consolidated statement of profit or loss

  1. Prepare a consolidated statement of profit or loss. (CC3)

Demonstration of preparation of a consolidated statement of profit or loss (T)
Spreadsheet exercise on preparing consolidated statement of of profit or loss (A)

Reading: Chapter 25
45

Analysis and interpretation of financial statements

  1. Explain the purpose and limitation of financial statement analysis. (CC4)
  2. Calculate and interpret key financial ratios with regard to profitability, liquidity, and efficiency. (CC4)

Case analysis and discussion (T)

Reading: Chapter 26
46

Analysis and interpretation of financial statements

  1. Calculate and interpret key financial ratios with regard to profitability, liquidity, and efficiency. (CC4)

Group case study analysis (T)
Discussion (T)

Reading: Chapter 26
47

Analysis and interpretation of financial statements

  1. Calculate and interpret key financial ratios with regard to profitability, liquidity, and efficiency. (CC4)

Group case study analysis (T)
Discussion (T)

Reading: Chapter 26
48

Analysis and interpretation of financial statements

  1. Calculate and interpret key financial ratios with regard to profitability, liquidity, and efficiency. (CC4)

Group problem sets (T)
Discussion (T)
Spreadsheet exercise on financial statement analysis (A)

Reading: Chapter 26
49 Review and preparation for final exam (All CLOs) Lecture
50 Review and preparation for final exam (All CLOs) Lecture
Total Hours

TEXTBOOKS AND REFERENCES

Textbooks

  1. BPP Learning Media, Paper FFA/F3 Financial Accounting, 2020.
  2. BPP Learning Media, Practice & Revision Kit Paper FFA/F3 Financial Accounting, 2020.

References

  1. Kaplan Publishing, Paper FFA/F3 Financial Accounting, 2020.
  2. Kaplan Publishing, Practice & Revision Kit Paper FFA/F3 Financial Accounting, 2020.

Education Resources