Unit 850: Fundamentals of Accounting

1. Introduction to Accounting

• Overview of Accounting Principles
  • Definition and purpose of accounting
  • Key accounting concepts: consistency, relevance, reliability, comparability
• Role of Accounting in Business Decision-Making
  • Internal vs external users
  • Decision-making support

2. Financial Statements

• Income Statement
  • Structure and components: revenues, expenses, net income
  • Purpose and interpretation
• Balance Sheet
  • Assets, liabilities, and equity
  • Accounting equation: Assets = Liabilities + Equity
• Statement of Cash Flows
  • Operating, investing, and financing activities
  • Importance in assessing liquidity

3. Recording Transactions

• Double-Entry Accounting System
  • Debits and credits explained
  • Rules of debit and credit for different accounts
• Accounting Equation in Practice
  • Effects of transactions on assets, liabilities, and equity
• Journal Entries and Ledger Posting
  • Recording transactions in journals
  • Posting to general ledger accounts

4. Adjusting Entries

• Purpose of Adjusting Entries
  • Accrual accounting basis
  • Matching principle
• Types of Adjusting Entries
  • Accruals, deferrals, depreciation
• Preparing Adjusting Entries
  • Identification and journalizing
• Impact on Financial Statements

5. Revenue Recognition

• Principles of Revenue Recognition under GAAP
  • Criteria for revenue recognition
  • Timing and measurement of revenue
• Methods of Recognizing Revenue
  • Point of sale, percentage of completion, installment sales
• Practical Examples

6. Inventory Valuation

• Inventory Cost Methods
  • FIFO (First-In, First-Out)
  • LIFO (Last-In, First-Out)
  • Weighted Average Cost
• Impact of Inventory Methods on Financial Statements
  • Cost of goods sold and net income variations
• Inventory Management Considerations

7. Depreciation and Amortization

• Concepts and Definitions
  • Depreciation for tangible assets
  • Amortization for intangible assets
• Depreciation Methods
  • Straight-line, declining balance, units of production
• Recording Depreciation and Amortization
  • Journal entries
  • Impact on financial statements

8. Internal Controls

• Importance of Internal Controls
  • Prevention of fraud and errors
  • Ensuring accuracy and reliability
• Types of Internal Controls
  • Segregation of duties
  • Authorization and approval processes
  • Physical controls and reconciliations
• Role in Financial Reporting

9. Budgeting and Forecasting

• Introduction to Budgeting
  • Purpose and types of budgets
  • Components of a budget
• Forecasting Methods
  • Qualitative and quantitative techniques
• Using Budgets and Forecasts in Decision-Making

10. Ethics in Accounting

• Ethical Considerations in Accounting
  • Integrity, objectivity, confidentiality, professional behavior
• Professional Standards and Codes of Conduct
  • Overview of relevant accounting bodies (e.g., AICPA, IMA)
• Consequences of Unethical Behavior
  • Fraud, legal issues, reputational damage
• Promoting Ethical Culture in Organizations