W1 Lecture Summary ACC101
Good morning everyone!
Welcome to ACC101 Financial Accounting 1.
August 2022 Intake (Semester 3)
My name is K Chandran B. Acc (Hons.); MEd.
1.Subject outline
2. Lecture Notes
3. Tutorial Qs
4. PYQs
Decision Making Process
1. Objective & Constraints
2. Gather information
3. Analyse the consequences
4. Make a choice
5. Review
Accounting: Is a process of
measuring, (Look for date, amount, what & how from a source document and
quantify the transaction)
recording, (Using double entries system, record the transaction in to Journal &
post to the Ledger)
reporting (Prepare financial statements at the end of the period) and
interpreting (Analyse & interpret the financial statements to make reasonable
conclusions)
financial & non-financial information
to interested parties (users of accounting information)
to enable them to make economic decisions.
Accounting Equation (Assets = Liabilities + Owner’s Equity);
i.e. A = L + OE; Hence, A – L = OE = Net Assets
Definition of Assets: 3 essential characteristics
1. … possess future economic benefits
2. … controlled by an entity
3. … due to past events
W1 Lecture Summary ACC101
Definition of Liabilities: 3 essential characteristics
1. … present obligation
2. … due to past events
3. … future sacrifice of economic benefits
Definition of Owner’s Equity:
1. … based on the accounting equation
2. … residual interest in the assets of the entity after the claims made by liabilities
Definition of Income: (Student to complete)
1. …
2. …
3. …
Definition of Expenses: (Student to complete)
1. …
2. …
3. …
Recognition Criteria: (in order report/ show the above on a financial statement…)
1. Reliable measurement
(the value must be determined with evidence or in without bias)
2. Probable that … will occur
(The probability that … will occur is more than 50%)
For e.g.
A lecturer may be an asset (meeting the essential characteristics) to the institution but he/
she cannot be shown on the financial statement as an asset because the recognition criteria
(what is the value to assign for the lecturer). The lecturer was not bought from anywhere!
What is the probability of the lecturer’s performance in the future; will it be more than 50%;
Any evidence to substantiate it?) may not have been met.
Q. A restaurant is popular for its food and the chef. Can the chef be shown as an asset of the
restaurant?
