Accounting: An introduction

Accounting: IntroductionMr. Barry

A-level Accounting Year 13 Mr. Barry A-level Accounting Year 13

A change to the school dayMr. Barry A-level Accounting Year 13

Starter Activity 1On the postit given, can you answer the following questions (use both sides)

How did you find your Year 12 accounting? Any problems with particular topics?What activities did you find most effective in lessons?

End A-level Accounting Year 13 Mr. BarryThis bar timer, will start when anywhere on the slide is clicked. The bar will move from left to right and the word End will appear at the end, accompanied by a Deep Gong sound. It is possible to change the duration of this timer to any time, by entering the animation settings, and changing the timing for rectangle 3. Note the time has to be entered as a number of seconds so if you want 2mins & 30secs this is entered as 150 (60X2 + 30 = 150).

4Format of this YearUnit 3- Further aspects of Financial AccountingUnit 4- Further aspects of management accounting6 Lessons every two weeksMr. Barry1 Lesson shared with Mr. Choudhury5 Lessons every two weeksMr. Choudhury 1 Lesson shared with Mr. BarryMr. Barry A-level Accounting Year 13 Topics WeekSources of finance1-2Incomplete Records3-6Partnership Accounts Introduction6-7Assessment 8Partnership Accounts9-14Assessment15Published Accounts2-5Accounting Standards (IASs)6-10Assessment 11Inventory Valuation1-2Assessment/ Revision3-6Mr. Barry A-level Accounting Year 13 Topic 1: Sources of FinanceCommonly used sources of finance for businesses, including bank loans and overdrafts, shares, debentures etc.Assess these types of finance and make appropriate recommendationsMr. Barry A-level Accounting Year 13

Topic 2: Incomplete RecordsCalculate the profits or losses of businesses that have not kept a full set of accounting recordsUse a variety of techniques that are used to find the key information required to prepare financial statements under circumstancesMr. Barry A-level Accounting Year 13 Topic 3: Partnership AccountsTechniques to share profit and loss between the partnersThe Partnership Act 1980Prepare partnership accounts, record the retirement, admission and dissolution of a partnershipMr. Barry A-level Accounting Year 13 Topic 4: Published AccountsIdentify the main elements of published reportsThe main requirements under IAS 1 for preparing published accounts e.g. SOCI, SOFP, Cash flow, changes in equityMr. Barry A-level Accounting Year 13 Topic 5: International Accounting StandardsExplore 10 of the International Accounting Standards with focus on gaining an insight into the purpose and importance of each standardMr. Barry A-level Accounting Year 13

Topic 6: Inventory valuationCalculate inventory using two different methodsAdvantages and Disadvantages of each methodCalculate year end inventory in situations where the valuation of the inventory has been delayedMr. Barry A-level Accounting Year 13 Topic: Sources of financeMr. Barry A-level Accounting Year 13

Learning OutcomesExplain the advantages and disadvantages of a number of sources of financeApply understanding of types of finance to be chosen in a particular situationEvaluate different sources of finance and recommend the most appropriate choice to the owner(s) of a businessMr. Barry A-level Accounting Year 13 Think, Pair, Share Can you remember the different types of finance? List and explain briefly?Explain any advantages and/ disadvantages of them in relation to an organisationThink for two minutes and write them individuallyShare with the person beside you for four minutesTogether, share with the rest of class

A-level Accounting Year 13 Individually2 minutesEndMr. Barry A-level Accounting Year 13

This sand timer will start on a mouse click anywhere on the slide. The sand will drain from the top section to the lower section and when completed will show the word End.

To change the timings of this timer, you need to enter the animation settings, and change the timings for the Isosceles Triangles. There will be 2 that need changing (to the same amount) one animates the top triangle emptying, whilst the other animates the bottom triangle filling.

When you change the timings these have to entered as a number of seconds.

16In Pairs3 minutesEnd A-level Accounting Year 13 Mr. BarryThis sand timer will start on a mouse click anywhere on the slide. The sand will drain from the top section to the lower section and when completed will show the word End.

To change the timings of this timer, you need to enter the animation settings, and change the timings for the Isosceles Triangles. There will be 2 that need changing (to the same amount) one animates the top triangle emptying, whilst the other animates the bottom triangle filling.

When you change the timings these have to entered as a number of seconds.

17CATEGORIESTHREE TIME FRAMESSHORT TERMMEDIUM TERMLONG TERMINTERNAL AND EXTERNALGenerated within the businessFrom outside sources A-level Accounting Year 13 Mr. BarryAttitude to RiskThe decision on balance between long and short term risks depend on the companies attitude to risk

A-level Accounting Year 13 Mr. BarryDeciding on the mix of financeCriteria for selecting sources of financeInternal resourcesHow much cash is available Projected cashflowsWorking capital managementExternal resourcesCostDurationGearingSizeSecurityEquity markets A-level Accounting Year 13 Mr. BarryInternal financeImproving Cash inflowsReducing Cash outflowsTighter credit control; offer discounts for early payment and/ or charge interest for late paymentSell non-current assets that are no longer requiredMinimise wastage; how could this be done?Tight Inventory control, e.g. Just In Time (JIT)Delay paying trade payables where possibleMr. Barry A-level Accounting Year 13 Internal FinanceWhat do you think is the biggest source of internal finance?

Equity and Share CapitalMr. Barry A-level Accounting Year 13

Thinking TimeEndCan you explain any possible advantages/ disadvantages of internal finance such as Equity?Mr. Barry A-level Accounting Year 13 This bar timer, will start when anywhere on the slide is clicked. The bar will move from left to right and the word End will appear at the end, accompanied by a Deep Gong sound. It is possible to change the duration of this timer to any time, by entering the animation settings, and changing the timing for rectangle 3. Note the time has to be entered as a number of seconds so if you want 2mins & 30secs this is entered as 150 (60X2 + 30 = 150).

23EQUITYORDINARY SHARE CAPITAL AND RESERVESNo fixed rate dividendDividends are not guaranteedLoss is limited to amount investedIn the event of winding up the ordinary shareholders receive the last payout of funds if any remain A-level Accounting Year 13 Mr. BarryOrdinary Share Capital Private CompanyDifficult to acquire sharesDifficult to valuePublic companyPLCTraded on Stock exchangeEasy to purchaseEasy to value

Mr. Barry A-level Accounting Year 13 Preference SharesCumulative vs. non-commulativeIn essence preference shares will be paid their dividend first Mr. Barry A-level Accounting Year 13 Profit after Taxation120,100-Preference Dividend^^(5,000)-Ordinary Dividend(20,000)Retained Earnings 95,100Advantages of Preference Sharesfor the companyDividends so not to be paid if profits are poorTreated as debt when calculating the companies gearing ratioNot secured against assets does not restrict borrowing power

Mr. BarryA-level Accounting Year 13Preference shares for the investorNot secured against assetsNot an attractive investment if the dividend is lowA-level Accounting Year 13Mr. BarryDEBENTURESDebenture written acknowledgement of a debt by a company normally containing provisions as to the payment of interest and the terms of the repayment of the principal. It may be referred to as a corporate bond or loan stockA-level Accounting Year 13Mr. BarryRAISING SHORT TERM FINANCECREDITFrom SuppliersAllows the company to use goods before they are paid for

A-level Accounting Year 13Mr. BarryPair WorkCan you list and explain some possible short term means for raising finance in a business?Mr. Barry A-level Accounting Year 13

OVERDRAFTSMr. BarryA-level Accounting Year 13Separate account for a loanWith an overdraft is a form of borrowing thru your current accountOverdraft fluctuatesInterest is charged at a daily rateRepayable on demandArrangement feeBank LendingBANK LOANSUp to 10 yearsFlexible select duration requiredFixed or variable rate of interest

MortgageObtained for purchasing property (premises)Non-Current Liability

Mr. Barry A-level Accounting Year 13 RiskTASK:Evans and Schleck have agreed to start up a new business as a private limited company. The business will require start-up funds of 250,000. They will invest a total of 100,000. They are considering raising the additional capital requited through the issuing of share capital. They believe profits will be low during the first year of trading.Assess the suitability of share issue and/ or other sources of finance available? Mr. Barry A-level Accounting Year 13