javid iqbal
DESCRIPTION
Javid Iqbal. Assistant Professor Department of Management Sciences COMSATS Institute of Information Technology, Islamabad. Education. M.Sc in Accounting (Pass with Distinctions, August 2007-June 2009) Graduate School, School of Business, Economics and Law, - PowerPoint PPT PresentationTRANSCRIPT
Javid Iqbal
Assistant ProfessorDepartment of Management SciencesCOMSATS Institute of Information
Technology, Islamabad
Education• M.Sc in Accounting (Pass with Distinctions, August 2007-June 2009)
Graduate School, School of Business, Economics and Law, Gothenburg University, Sweden
• Master of Business Administration in Finance (2004-2006)
Department of Business Administration University of Sargodha, Pakistan
• Master of Commerce in Accounting (2001-2003)
Hailey College of Commerce University of the Punjab, Pakistan
• Bachelor of Commerce (1999-2001) Hailey College of Commerce University of the Punjab, Pakistan
DISTINCTIONS & AWARDS
• Rotary International Student House (RISH) has selected one of the top five international students from Gothenburg University, Sweden.
• Awarded distinction on master project (Thesis) presented to fulfill the requirement of Master of Science in Accounting degree.
• Awarded cash prize and certificate on project of European financial crises
EXPERIENCE
• Assistant Professor– COMSATS Institute of Information Technology, Islamabad – (2009 to till date)
• Research Fellowship– School of Business, Economics and Law, Gothenburg University,
Sweden – 2009
• Lecturer– University of Education, Lahore, Pakistan – 2006 to 2007
• Lecturer– Hi-Aims College of Commerce, Jauharabad – 2004 to 2005
RESEARCH INTERESTS
• Financial Disclosure,
• Financial Regulations,
• Financial Statements Analysis,
•
• Accounting Practices,
• Management Accounting
End of Profile
Accounting 1Course Contents
MGT 130
Business Organizations
• Proprietorships,
• partnerships
• corporations.
Business types
• Manufacturing
• Merchandizing
• Services business.
Accounting Information for Decision Making
• Financial Accounting
• Management Accounting,
• Objectives with regards to the information
GAAP and Accounting Standards
• Generally Accepted Accounting principles,
• IAS and
• IFRS – Basis for business entities for Preparing
Financial Statements for the external users
Economic Transactions
• Double entry system
• Transactions
• Principles of Debit and Credit
Accounting Equation
• Rules of Accounting equation
• Techniques of calculating – Assets,
– Liabilities and
– Owner’s equity
• Transactions in Accounting Equation
Financial Statements
• Financial Accounting – Income Statement,
– Balance Sheet,
– Cash flow statement and
– Statement of changes in Owner`s equity
The Accounting Cycle
• Preparing Journals
• Preparing Ledgers; the main book of original entries
• Preparing Trial Balance,
• Adjusting entries and adjusted Trial Balance
• Preparing Financial Reports
• Closing entries and completion of Accounting cycle
• Special Journals
• Receivable
• Inventories
• Control over cash
– Bank Reconciliation Statement
End of Course Outline
Recommended Book
• Meigs, Williams, Haka and Bettner: Accounting: The Basis for Business Decisions. Ed(11th)
• Warren Reeve Fess: Accounting, 21st Edition
Chapter Chapter 11
Accounting 1Accounting 1MGT 130MGT 130
1. Describe the nature of a business.
2. Describe the role of accounting in business.
3. Describe the profession of accounting.
4. Summarize the development of accounting principles
5. State the accounting equation and define each element of the equation.
Objectives
6. Explain how business transactions can be stated in terms of the resulting change in the basic elements of the accounting equation.
7. Describe the financial statements of a proprietorship and explain how they interrelate.
Objectives
Types of Businesses• Manufacturing
• Merchandizing
• Services business.
Toyota Motors Cars, vansIntel Computer chipsNishat TextileNike Athletic shoesCoca-Cola BeveragesSony Stereos and television
Types of BusinessesManufacturing Business
Metro Cash & Carry General merchandiseD.Watson MedicineUnited Mobiles Mobile PhonesAmazon.com Internet books, music,
Types of BusinessesMerchandizing Business
PIA TransportationMarriott Hotels Hospitality and lodgingHBL Financial ServicesPTCL Telecommunication
PIA TransportationMarriott Hotels Hospitality and lodgingHBL Financial ServicesPTCL Telecommunication
Types of BusinessesServices Business
There are three types of business organizations
Proprietorship Partnership Corporation
A proprietorship is owned by one
individual.
Advantages• Ease in organizing• Low cost of organizing
Disadvantage• Limited source of
financial resources• Unlimited liability
A partnership is owned by two or more individuals.
Advantages• More financial resources than a proprietorship.• Additional management skills.
Disadvantage
• Unlimited liability.
A corporation is organized under state or federal statutes as a separate legal entity.
Advantage• The ability to obtain large amounts of
resources by issuing stocks.• Limited liability
Disadvantage
• Double taxation.
• Difficult process to establish
A business strategy is an integrated set of plans and actions designed to
enable the business to gain an advantage over its competitors, and in doing so, to maximize its profits.
Under a low-cost strategy, a business designs and produces products or
services of acceptable quality at a cost lower than that of its competitors.
Business StrategiesBusiness Strategies
Under a differential strategy, a business designs and produces products or services
that possess unique attributes or characteristics which customers are willing
to pay a premium price.
A business stakeholder is a person or entity having an interest in the economic
performance of the business.
• Owners• Banks• Customers• Government Agencies etc
Common ThingsCommon Things
–Organizational Goals–Need Information
Organizational Goals
• Profit Making
• Welfare Work
2Assess stakeholders’ informational needs.
The Process of Providing InformationThe Process of Providing InformationThe Process of Providing InformationThe Process of Providing Information
STAKEHOLDERS
Internal: Owners, managers, employees
External: Customers, creditors, government
1Identify stake-holders.
Design the accounting information system to meet stakeholders’ needs.
34Record economic data about business activities and events.
The Process of Providing InformationThe Process of Providing InformationThe Process of Providing InformationThe Process of Providing Information
5Prepare accounting reports for stakeholders.
Accounting Information
System
The Process of Providing InformationThe Process of Providing Information
STAKEHOLDERS
Internal: Owners, managers, employees
External: Customers, creditors, government
Purpose of Information
The Purpose of Accounting
The basic purpose of Accounting is to provide information to decision makers that is useful in making economic decisions.
Accounting System• The accounting system is a series of steps
performed to – Analyze, – Record, – Quantify, – Accumulate, – Summarize, – Classify, – Interpret– Report economic events and their effects on an
organization and to prepare the financial statements.
Accounting
• Accounting is a process of –Identifying,
–Recording,
–Summarizing, and
–Reporting economic information to decision makers
Accounting SystemAccumulates data for use in both financial and managerial accounting
Accounting SystemAccumulates data for use in both financial and managerial accounting
Accounting System
Accumulates cost information
Managerial AccountingFinancial Accounting
Financial Accounting
• Financial accounting - focuses on the specific needs of decision makers external to the organization, such as stockholders, suppliers, banks, and government agencies i.e. annual reports, quarterly reports, semi annual reports.
Financial Statements
• Balance Sheet
• Income Statement
• Cash Flow Statement
• Statement of Changes in Owner’s Equity– Notes
Financial StatementsBalance Sheet◦ Shows financial position of the company for a specific point in
time/date i.e. 31st December 2010, 30th June 2010 etc.
Income Statement◦ Shows net results of business operations for a specific period
of time i.e. a week, month, semi-annual, Annual
Cash Flow Statement◦ Shows inflow-outflow of funds for a specific period of time.
Statement of Changes in Owner’s Equity◦ Shows changes incurred in the total equity for a specific
period of time
The Balance SheetSections of the balance sheet:
Assets - resources of the firm that are expected to increase or cause future cash flows (everything the firm owns)
Liabilities - obligations of the firm to outsiders or claims against its assets by outsiders (debts of the firm)
Owners’ Equity - the residual interest in, or remaining claims against, the firm’s assets after deducting liabilities (rights of the owners)
Income Statement Sales Revenue xxxx- Less Expenses xxxx= Gross profit xxxx - Operating Cost: Selling General Administration Expenses xxxx= Net Income xxxx
Managerial Accounting
It is a science of Identify information, Measure information, Analyze information, Interpret information, and Communicate information
• Focus of managerial accounting is on the needs of managers within the organization rather than interested parties outside the organization.
Costing Accounting
• Accumulate cost data for use in both managerial and financial accounting i.e. production cost data (MA), value inventory for balance sheet (FA)
Accounting SystemAccumulates data for use in both financial and managerial accounting
Accounting SystemAccumulates data for use in both financial and managerial accounting
Accounting System
Managerial Accounting
Information for decision making, planning, directing,
and controlling an organization's operations and
assessing its competitive position
Financial Accounting
Published financial statements and other
financial reports
Managerial Accounting
Financial Accounting
Users of information Managers within organizations
Interested parties outside organizations
Regulations Not required and unregulated
Must confirm to GAAP/IFRS/IAS/SECP
Source of Data Organizations basic accounting system plus other sources
Almost exclusive drawn from the org`s basic accounting system which accumulate financial info
Nature of Reports and procedures
Focus on subunits within org (Dept, divisions, region etc), historical as well as projection of future events
Focus on entire enterprise based on Historical Data
Accountants employed by a business firm or a not-for-profit organization are said to be
engaged in private accounting.
Accountants and their staff who provide services on a fee basis are said to be
employed in public accounting.
Accountants and their staff who provide services on a fee basis are said to be
employed in public accounting.
Assets = Liabilities + Owner’s Equity
Assets = Liabilities + Owner’s Equity
Assets = Liabilities + Owner’s Equity
What is a business transaction?
A business transaction is an economic event or condition that directly changes an entity’s financial condition or directly affects its results of operations.
On November 1, 2010, Javid Iqbal begins a business that will be known as Opportunities Incorporation.
Javid , Capital25,000 Investment by
Javid Iqbal
Cash25,000 a.
Assets Owner’s Equity=
=
Javid Iqbal, Capital25,000
Cash + Land 25,000 Bal.
Assets Owner’s Equity=
=b. –20,000 +20,000Bal. 5,000 20,000 25,000
Accounts Javid Iqbal,Cash + Supplies + Land Payable Capital
Assets Owner’s Liabilities + Equity=
Bal. 5,000 20,000 25,000c. + 1,350 + 1,350
Bal. 5,000 1,350 20,000 1,350 25,000
=
Bal. 12,500 1,350 20,000 1,350 32,500d. + 7,500 + 7,500
Accounts Javid Iqbal,Cash + Supplies + Land Payable Capital
Assets Owner’s Liabilities + Equity
Bal. 5,000 1,350 20,000 1,350 25,000Fees earned
=
=
e. – 3,650 –2,125– 800– 450
– 275
Wages
Rent
Util.
Misc.
Accounts Javid Iqbal,Cash + Supplies + Land Payable Capital
Assets Owner’s Liabilities + Equity=
Bal. 12,500 1,350 20,000 1,350 32,500
=
Bal. 8,850 1,350 20,000 1,35028,850
Accounts Javid Iqbal,Cash + Supplies + Land Payable Capital
Assets Owner’s Liabilities + Equity=
Bal. 8,850 1,350 20,000 1,350 28,850f. – 950 – 950
=
Bal. 7,900 1,350 20,000 400 28,850
Accounts Javid Iqbal,Cash + Supplies + Land Payable Capital
Assets Owner’s Liabilities + Equity=
Bal. 7,900 1,350 20,000 400 28,850g. – 800 – 800
=
Bal. 7,900 550 20,000 400 28,050
Supplies expense
Accounts Javid Iqbal,Cash + Supplies + Land Payable Capital
Assets Owner’s Liabilities + Equity
Bal. 7,900 550 20,000 400 28,050h. –2,000 –2,000Bal. 5,900 550 20,000 400 26,050
With-drawal
=
=
Owner’s Equity
Financial StatementsFinancial StatementsFinancial StatementsFinancial Statements
• Balance sheet—A list of the assets, liabilities, and owner’s equity as of a specific date.
• Statement of cash flows—A summary of the cash receipts and disbursements for a specific period of time.
Financial StatementsFinancial StatementsFinancial StatementsFinancial Statements
• Income statement—A summary of the revenue and expenses for a specific period of time.
• Statement of owner’s equity—A summary of the changes in the owner’s equity that have occurred during a specific period of time.
Fees earned Rs. 750 000
Operating expenses:
Rent expense
Rs. 212500Wages expense
800 00
Supplies expense
450 00Utilities expense
275 00Miscellaneous expense
Total operating expenses 1 135 00
Opportunities Inc.Income Statement
For the Month Ended November 30, 2010
800 00
Net income Rs.3 050 00
Javid Iqbal, capital, November 1, 2010 Rs. 0
Opportunities Inc.Statement of Owner’s Equity
For the Month Ended November 30, 2010
Investment on November 1 Rs.25 000 00Net income for November 3 050 00
Rs.28 050 00Less withdrawals 2 000 00Increase in owner’s equity 26 050 00Javid Iqbal, capital, November 30, 2010 Rs.26 050 00
Javid Iqbal, capital, November 1, 2010 Rs. 0
Opportunities Inc.Statement of Owner’s Equity
For the Month Ended November 30, 2010
Investment on November 1 Rs.25 000 00Net income for November 3 050 00
Rs.28 050 00Less withdrawals 2 000 00Increase in owner’s equity 26 050 00Javid Iqbal, capital, November 30, 2010 Rs.26 050 00
Javid Iqbal, capital, November 1, 2010 Rs. 0
Opportunities Inc.Statement of Owner’s Equity
For the Month Ended November 30, 2010
Investment on November 1 Rs.25 000 00Net income for November 3 050 00
Rs.28 050 00Less withdrawals 2 000 00Increase in owner’s equity 26 050 00Javid Iqbal, capital, November 30, 2010 Rs.26 050 00
Assets Liabilities
Opportunities Inc.Balance Sheet
November 30, 2010
Cash Rs, 5 900 00 Accounts Payable Rs. 400 00
Supplies 550 00 Owner’s Equity
Land 20 000 00 Javid Iqbal, cap. 26 050 00
Total liabilities and
Total assets Rs.26 450 00 owner’s equity Rs.26 450 00
This balance sheet presented using the account form
Assets Liabilities
Opportunities Inc.Balance Sheet
November 30, 2010
Cash Rs, 5 900 00 Accounts Payable Rs. 400 00
Supplies 550 00 Owner’s Equity
Land 20 000 00 Javid Iqbal, cap. 26 050 00
Total liabilities and
Total assets Rs.26 450 00 owner’s equity Rs.26 450 00
This balance sheet presented using the account form
Cash flows from operating activities:Cash received from customers Rs. 7 500 00Deduct cash payments for expenses and payments to creditors 4 600 00Net cash flow from operating activities 2 900 00
Cash flows from investing activities:Cash payment for acquisition of land (20 000 00
Cash flows from financing activities:
Cash received as owner’s investment Rs.25 000 00
Deduct cash withdrawal by owner 2 000 00Net cash flow from financing activities 23 000 00
Net cash flow and Nov. 30, 2005 cash bal. Rs. 5 900 00
Opportunities Inc.Statement of Cash Flows
For the Month Ended November 30, 2010
)
Assets Liabilities
Opportunities Inc.Balance Sheet
November 30, 2010
Cash Rs, 5 900 00 Accounts Payable Rs. 400 00
Supplies 550 00 Owner’s Equity
Land 20 000 00 Javid Iqbal, cap. 26 050 00
Total liabilities and
Total assets Rs.26 450 00 owner’s equity Rs.26 450 00
This balance sheet presented using the account form
Cash Flows from Operating Activities—This section reports a summary of cash receipts and cash payments from operations.
Cash Flows from Investing Activities—This section reports the cash transactions for the acquisition and sale of relatively permanent assets.
Cash Flows from Financing Activities—This section reports the cash transactions related to cash investments by the owner, borrowings, and cash withdrawals by the owner.
Ratio of liabilities to owner’s equity
=Total Liabilities
Total owner’s equity (or total stockholders’ equity)
The ratio of liabilities to owner’s equity allows owners like Javid Iqbal to analyze the firm’s ability to withstand poor business conditions.
The ratio of liabilities to owner’s equity allows owners like Javid Iqbal to analyze the firm’s ability to withstand poor business conditions.
Ratio of liabilities to
owner’s equity=
Rs.400
Rs.26,050
= 0.015 / 15%Ratio of
liabilities to owner’s equity
Chapter 1Chapter 1