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AQA-Accounts and Quantitative analysis

FdA Business and Management Introduction. AQA-Accounts and Quantitative analysis. Today’s Lecture Aims to understand. 1) Accounts : Unit Aims 2) Purpose of Accounting 3) History of Accounting 4) Users of Accounting. Basic Rules.

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AQA-Accounts and Quantitative analysis

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  1. FdA Business and Management Introduction AQA-Accounts and Quantitative analysis

  2. Today’s Lecture Aims to understand • 1) Accounts : Unit Aims • 2) Purpose of Accounting • 3) History of Accounting • 4) Users of Accounting

  3. Basic Rules 1. Lateness – Come in quietly and sit down, respect your other colleagues 2. Mobile Phones – Switch to silent 3. If unhappy, unsure of something, didn't understand speak up.

  4. Unit Aim This unit aims to provide students with a sound foundation in the fundamentals of accounting, together with a basic understanding of the regulatory framework. It also aims to provide students with experience of basic quantitative techniques and skills, and to give them confidence in communicating numerically as well as verbally.

  5. Accounts • Introduction to the Financial Environment • The method of accounting: The Balance Sheet Equation • The method of accounting: Double Entry Bookkeeping, “T” accounts and the Trial Balance • Income, Expenses, Stock and the Trading and Profit & Loss format.

  6. Adjustments to the financial statements – returns, discounts accruals and prepayments etc. • Accounting for Provisions for Doubtful Debts and Depreciation • Limited Liability Companies : format • Limited Liability Companies : regulatory framework • Introduction to Management Accounting • Cost & Revenue Classification

  7. Corporate Governance – Other scandals and slides • Introduction to Management Accounting – Cost Behaviour, Contribution and Break-Even • Full Costing- Overhead Apportionemnt and Absorption • The Time Value of Money • Activity Based Costing

  8. What you will need Pens Pencils Ruler Paper Calculator

  9. Introduction to the Financial Environment

  10. The purpose of Accounting Organisation require written records which management can use for: -guiding their routine actions -taking decisions -formulating policy -expressing relationships with other organisations or Individuals

  11. History of Accounting 3000 bc or 1800’s

  12. Accounting In Ancient Egypt, China, Greece and Rome These early accountants had good reason to be honest and accurate, because irregularities disclosed by royal audits were punishable by fine, mutilation or death.

  13. The Users of Accounting Information The so called traditional users of accounting information are: Proprietors and managers Shareholders and investors Creditors Government

  14. Modern users are Employees Trade unions Consumers

  15. Main areas of Accounting

  16. Financial Accounting The maintenance and preparation of the statutory accounting process, and preparation of accounting statements for use by parties outside the company such as investors and creditors – predominantly historic

  17. Management Accounting The maintenance and preparation of accounting statements for use within the organisation by managers. Includes budgeting and planning

  18. Financial Management The planning and monitoring of raising funds for the business, and the use of those funds as the assets of the business

  19. Question What is the purpose of a commercial organisation ?

  20. To Make a Profit

  21. Correct Answer To provide a return of investment (ROI)

  22. Forms of Business Undertaking The legal structure of the business is quite important as different types of business are subject to very different regulations.

  23. Unincorporated firms An unincorporated firm is one that is not registered with Companies House as a business and there are two main types - sole trader and partnership. Sole Trader Partnership

  24. Sole trader The simplest form of business organisation. There are no legal requirements - you simply set up and get on with trading. Any income or profit that you earn is yours (you pay income tax on it). There are few legal constraints but you have what is called unlimited liability. This means that any debts are your debts , you will be personally responsible for these debts. Creditors will have a claim on your house, car or any other personal assets you have.

  25. Partnership This is, in essence, like a sole trader but with the ownership shared between partners. However, a partnership should have a partnership agreement (a legal document) drawn up to show the rights and responsibilities of all the partners. There may also be 'sleeping partners' who own a share of the business but are not involved in the day-to-day running of the business. A partnership also has unlimited liability. N.B. Since April 2001 there has been a new form of partnership called a limited liability partnership (llp). This is like a cross between a partnership and a limited company as it has limited liability.

  26. Incorporated firms The next step up in terms of legal structure is to form an incorporated firm. That is a firm that is a registered firm at Companies House (who are the government registrar of companies). There are two main types - a private limited firm and a public limited firm. Private Limited Company Public Limited Company

  27. Private limited company A private limited company is one where the liability is limited. Unlike a sole trader where the liability is unlimited, with a limited company the liability is limited to the value of the shares issued. This means that any debts are debts of the company and not of the owners. .

  28. Public limited company Like a private limited company, a plc has shares, but the key difference is that these shares can be bought by anyone freely on a stock exchange. Ownership is therefore open to anyone who wants to buy shares.

  29. In return for having a separate legal identity, private companies and PLCs must comply with the requirements of the Companies Acts. There are around 1million private companies around and 10,000 PLCs listed on the Stock exchange or Alternative Investments Market ( A.I.M.) Company Law is very much geared towards protecting the interests of the shareholder, in accordance with the separation of OWNERSHIP and the MANAGEMENT of companies

  30. Reporting Requirement for plc • Balance sheet • Profit & Loss account • Cash Flow statement • Auditors report • Chairman’s statement • Report of the Directors

  31. Regulatory Bodies • Parliament: Companies Acts Legislation • Government: Dept of Trade and Industry • Accounting Standards Board: SSAPs and FRSs • International Accounting Standards Board: IASs • Stock Exchange Listing Requirements ( yellow book )

  32. Homework for Thursday • Investigate • “EFFICIENT FINANCIAL MANAGEMENT” • You will be asked.

  33. Questions

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