FINANCIAL ACCOUNTING 2 (ACCT 212)

AIM

This course aims to develop knowledge of the principles and concepts relating to financial accounting and proficiency in the use of double entry accounting techniques, including preparation of basic financial statements in accordance with IFRS. Nearly all of the roles of a bachelor of accounting and finance graduate will require extensive interaction with financial statements. This may be in the role of: ● A financial accountant who is responsible for preparing financial statements; ● An investor or investment analyst who collates and analyses data drawn from the financial statements; or ● An auditor whose responsibility includes assessing whether financial statements comply with relevant accounting standards. Thus, it is essential that graduates have a deep and firm knowledge of financial accounting.
  • COURSE DESCRIPTION
  • ROLE IN CURRICULUM
  • LEARNING OUTCOMES
  • STUDY PLAN
  • TEACHING METHODS
  • ASSESSMENT AND GRADING
  • TEXTBOOKS AND REFERENCES

COURSE DESCRIPTION

The course introduces the candidate to the fundamentals of the regulatory framework relating to financial reporting and to the qualitative characteristics of useful information. Following this, the course studies processing, documenting and recording business transactions and events. It then covers the principles of accounts preparation and the drafting of financial statements. It also covers the use of the trial balance and how to identify and correct errors. The course then teaches preparation of consolidated financial statements, consolidating a parent company with a single subsidiary and an investment in an associate. Throughout the course, the emphasis will be on preparation of the main financial statements, with only a brief review of the notes and disclosures. In the last sessions of the course, students learn how to analyze and interpret financial statements.

Credits: 5
Lecture Hours: 76.5

Self-Study Hours: 90

  • Reading: 60 (Reading textbook, BPP Study Text, Chapter 1 to 26, 478 pages)
  • Practice: 50 (Practice MCQ, BPP Revision Kit, 507 Objective Questions, 13 Case Studies and 2 sets of Mock Exams)
  • Assignment: 40 (Interview, research, analysis and writing of Final Assignment)
    150  

Total Study Hours: 226.5

ROLE IN CURRICULUM

Prerequisites

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

 

 

LEARNING OUTCOMES

The learning outcomes for this course cover four main areas: The context and purpose of financial reporting, recording transactions in double-entry accounting, preparing financial statements for a single company and group of companies, and financial statement analysis. On successful completion of this course, students will be able to:

1.  Knowledge

Level of Learning PLO CLO Learning Outcome
Understand PK5 CK1 Explain users’ and stakeholders’ needs and responsibilities in relation to financial reporting and regulation thereof.

2.  Cognitive Skills

Level of Learning PLO CLO Learning Outcome
Apply PC7 CC1 Apply double-entry accounting to record common transactions involving income, expense, assets, liability and items of equity.
Apply PC7 CC2 Prepare basic financial statements: statement of financial position, statement of profit or loss and other comprehensive income, and statement of cash flows.
Apply PC7 CC3 Prepare a consolidated statement of profit or loss and a consolidated statement of financial position for a group comprising a single subsidiary.
Analyze PC1 CC4 Analyze and interpret basic financial statements.

3.  Communication, Information Technology, and Numerical Skills

Level of Learning PLO CLO Learning Outcome
Apply PCIT2 CIT1 Use Excel to carry out consolidation of basic financial statements

4.   Interpersonal Skills and Responsibilities

Level of Learning PLO CLO Learning Outcome
Apply PIP2 CIP1 Participate in a team to solve basic financial accounting and reporting problems.

STUDY PLAN

The course targets the 51 lessons in the study plan below. Each lesson is 1.5 class hours each; there are a total of 76.5 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 and Learning Activities, Assessment
1

Review of Accounting Basics

  1. Describe the course learning outcomes and assessment
  2. Demonstrate how transactions affect the accounting equation. (CC1)
Lecture Demonstration of the accounting equation Group problem on the accounting equation Reading: Chapter 1
2

Business Entities, Governance

  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)
  3. Describe the responsibilities of directors, especially in regard to financial reporting (CK1)
Lecture Group brainstorming on the financial information needs of stakeholders Case study of James Cropper Plc financial statements Problem sets to be solved in groups Reading: Chapter 1
3

The Regulatory Framework

  1. Describe the role of the regulatory system, including IFRSrelated entities. (CK1)
  2. Describe International Financial Reporting Standards. (CK1)
Lecture Didactic questioning Discussion Reading: Chapter 2
4

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 Group problem-based learning Discussion Reading: Chapter 3
5

Sources, records and books of prime entry

  1. Identify and explain the purpose of common business documentation. (CK2)
  2. Identify the main types of ledger accounts and books of prime entry.  (CK2)
  3. Explain the procedures for petty cash transactions. (CK2)
  Lecture Discussion Reading: Chapter 4
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 Demonstration of double entry from the books of prime entry Group problem to record transactions from books of prime entry Review test 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.
Demonstration of closing accounts and preparation of financial statements Reading: Chapter 6
8

From trial balance to financial statements

  1. Identify and understand the limitations of a trial balance. (CC2)
Discussion Group work to close accounts and prepare financial statements Reading: Chapter 6
9

Inventory

  1. Apply and explain the impacts of methods of valuing inventory in accordance with IAS 2.  (CC2)
Lecture Demonstration of inventory costing Group problem solving to record inventory cost Reading: Chapter 7
10

Inventory

  1. Describe the use of continuous and period-end inventory records. (CC1)
Lecture Discussion Reading: Chapter 7
11

Inventory

  1. Calculate the value of closing inventory using first in, first out (FIFO) and average cost (AVCO).  (CC1)
Lecture Demonstration of FIFO and AVCO Group problem solving to determine inventory following FIFO and AVCO Reading: Chapter 7
12

Property, Plant, and Equipment

  1. Recognise the difference between current and non-current assets. (CC1)
Lecture Didactic questioning Case study to solve in groups Review test 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 Case study discussion Demonstration of recording depreciation and revaluation Group problems to record depreciation and revaluation Reading: Chapter 8
14

Property, Plant and Equipment

  1. Explain the purpose and function of an asset register. (CC2)
  2. Draft a disclosure note for property, plant and equipment. (CC1)
Lecture Didactic questioning 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. (CC2)
Lecture Case study discussion Demonstration of recording intangible asset cost and amortisation Group problem-based learning Reading: Chapter 9
16

Accruals and prepayments

  1. Calculate the adjustments needed for accruals and prepayments. (CC1)
Lecture Demonstration of recording accruals and prepayments Group problem-based learning Reading: Chapter 10
17

Accruals and prepayments

  1. Prepare journal entries for an accrual or prepayment. (CC1)
Lecture Demonstration of recording accruals and prepayments Group problem-based learning 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. (CC2)
Lecture Discussion Group problem based learning Review test 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 Group problem sets to determine and record bad debts 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 bad debts Group problem sets to determine and record bad debts 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 Group problem-based learning Reading: Chapter 13
22

Control accounts

  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. (CC1)
Lecture Demonstration of correcting errors in control accounts Group problem-based learning to correct errors Reading: Chapter 14
23

Bank reconciliations

  1. Identify the main reasons for differences between the cash book and the bank statement. (CC1)
Lecture and discussion Demonstration of preparation of a bank reconciliation Group work to prepare a bank reconciliation Reading: Chapter 15
24

Bank reconciliations

  1. Prepare a bank reconciliation statement, correcting for any errors or omissions. (CC1)
  2. Review for midterm case study assessment

Midterm Case Study Exam

Group problem-based learning Lecture and discussion Reading: Chapter 15
25

Correction of errors

  1. Identify and correct the types of error which may occur in bookkeeping systems. (CC1)
  2. Create and use a suspense account. (CC1)
Lecture and discussion Demonstration of use of suspense account Group problem based learning to solve errors using a suspense account 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. (CC1)
Lecture Group problem-based learning Discussion Reading: Chapter 17
27

Preparation of financial statements for sole traders

  1. Prepare a statement of financial position. (CC2)
  2. Prepare a statement of profit or loss and other comprehensive income. (CC2)
Demonstration of preparation of a statement of profit or loss and a statement of financial position Group problem-based learning to prepare a statement of profit or loss and a statement of financial position 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 Demonstration of recording issue of shares, rights shares and a bonus issue Group problem-based learning Reading: Chapter 19
29

Preparation of financial statements for companies

  1. Identify the components of the statement of changes in equity.  (CC2)
Lecture Case study discussion Reading: Chapter 20
30

Preparation of financial statements for companies

  1. Prepare a statement of financial position for a company. (CC2)
  2. Prepare a statement of profit or loss and other comprehensive income for a company. (CC2)
Demonstration of preparation of financial statements Group problem-based learning to prepare financial statements Review test Reading: Chapter 20
31

Preparation of financial statements for companies

  1. Prepare a statement of financial position for a company. (CC2)
  2. Prepare a statement of profit or loss and other comprehensive income for a company.
Demonstration of preparation of financial statements Group problem based learning to prepare financial statements 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. (CC1)
Lecture Group problem-based learning 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 (CC2)
  2. Define an event after the reporting period in accordance with IFRSs.  (CC2)
  3. Classify events as adjusting or non-adjusting. (CC2)
  4. Distinguish between how adjusting and non-adjusting events are reported in the financial statements. (CC2)
Lecture Didactic questions Group problem-based learning Reading: Chapter 20, 21
34

Statement of cash flows

  1. Differentiate between profit and cash flow. (CC2)
  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(CC2)
  4. Classify cash flows.  (CC2)
Lecture Case study group analysis and discussion Reading: Chapter 22
35

Statement of cash flows

  1. Calculate the figures needed for the statement of cash flows.  (CC2)
Demonstration of preparation of a statement of cash flows Group preparation of a statement of cash flows Reading: Chapter 22
36

Statement of cash flows

  1. Prepare a statement of cash flows.(CC2)
Demonstration of preparation of a statement of cash flows Group preparation of a statement of cash flows Review test Reading: Chapter 22
37

Statement of cash flows

  1. Prepare a statement of cash flows. (CC2)
Demonstration of preparation of a statement of cash flows Group preparation of a statement of cash flows 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 Didactic questions Case study discussion Reading: Chapter 23
39

The consolidated statement of financial position

  1. Prepared a consolidated statement of financial position for a group including a single subsidiary.(CC3)
Demonstration of preparation of a consolidated statement of financial position Reading: Chapter 24
40

The consolidated statement of financial position

  1. Prepared 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 Discussion 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 Demonstration of calculation of goodwill Group problem set to calculate goodwill Discussion 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 Group preparation of a consolidated statement of profit or loss Review test 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 Group preparation of a consolidated statement of profit or loss 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 Group preparation of a consolidated statement of profit or loss Reading: Chapter 25
45

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)
  3. Draw valid conclusions from the information contained within the financial statements and present these to the appropriate user of the financial statements.  (CC3)
Case analysis and discussion Reading: Chapter 26
46

Interpretation of financial statements

  1. Calculate and interpret key financial ratios with regard to profitability, liquidity, and efficiency.  (CC4)
Group case study analysis Discussion Reading: Chapter 26
47

Interpretation of financial statements

  1. Calculate and interpret key financial ratios with regard to profitability, liquidity, and efficiency. (CC4)
Group case study analysis Discussion Reading: Chapter 26
48

Interpretation of financial statements

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

  Submission of Assignment

Group problem sets Discussion Review test Reading: Chapter 26
49 Review and preparation for final exam (All CLOs) Lecture
50 Review and preparation for final exam (All CLOs) Lecture
51 Review and preparation for final exam (All CLOs) Lecture
Total Hours: 76.5 hours

TEACHING METHODS

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

ASSESSMENT AND GRADING

Grades will be determined based on a grading score, calculated using the following assessments and score allocations:

Assessment Weight of each assessment Learning Outcome Assessed
CLO PLO
Attendance 5%  CIP1 PIP2
Participation 5% CK1, CC1,CC2, CC3, CC4, CIT1, CIP1 PK5,PC7,PC1,PCIT2,PIP2
In-class tests 25% CK1, CC1, CC3, CC4, CIT1 PK5, PC7, PCIT2
Assignments 15% CC1, CC2 PC7, PIP2
Midterm exam 20% CK1, CC1 PK5, PC7
Final exam 30% CC1, CC2, CC3, CC4 PC7, PC1
Total grading score 100%  

During the course there is one assignment:

Preparation of Financial Statements

Work Group: Group
Output format: IFRS format Financial Report
Language: English
Assignment: This assignment requires students working in groups of 2-5 to prepare a set of financial statements for a small business covering a period of one month. Students will need the agreement and cooperation of the business or shop in question.​​ However, it may be that the business owner does not wish to share certain information. In that case, students should use the techniques for estimating missing information, making clear notes in their draft financial statements which items have been estimated.

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.