wk 2- accounting for decision making

Welcome and Introduction

• Lecture started at 12:04 PM.

• Emphasis on welcoming students back for Week 2 and the importance of financial accounting.

• Acknowledgment of livestream students and addressing the technical limitations of the lecture theatre regarding camera access.

Importance of Financial Accounting

• Financial accounting serves as the foundation of the accounting process, crucial for understanding accounting.

• Over the next weeks, students will encounter terminology (jargon) related to accounting; assurance that comprehension will develop over time.

• Focus of the next six weeks: Understanding the journey of business transactions and how they are recorded in an accounting information system.

Lecture Resources

• Students should access lecture slides on iLearn under Week 2 section. Reminded that slides provided to students differ from lecturers to encourage attendance.

• Reminder not to share lecture content without consent due to intellectual property concerns.

Tutorials and Assessments

• Tutorials commence this week; students required to attend their registered session.

• Active participation in tutorials is encouraged for better understanding and peer interaction.

• Assessment timelines available on iLearn, should be checked weekly.

• Student consultation hours: Tuesdays from 11:00 AM to 1:00 PM for students needing assistance, especially first-year students.

• Reminder that students must take responsibility for their learning; the lecturer can’t ensure passing.

Behaviour Expectations

• Disappointment expressed regarding inappropriate comments made during livestream chats.

• Clear communication about maintaining a respectful environment during lectures and the importance of relevant commentary.

• Notification that the question and answer function has been turned off due to misuse; students encouraged to use discussion forums for questions instead.

Continuation of Course Content

• Outline of what was discussed in the previous week: introduction to accounting, stakeholders, and users.

• Emphasis on understanding the role of accountants, accounting careers, and types of business structures; recording of missing sections available on iLearn.

• Lecture time reduced to one and a half hours leads to content coverage challenges.

Overview of Financial Accounting Topics

• Introduction to the accounting cycle, significant terms to understand: assets, liabilities, owner’s equity, income, and expenses.

• Discussion of transaction analysis as the foundation for later learning steps in the accounting cycle.

• Stress on building knowledge each week and the importance of understanding concepts progressively.

• Accounting equation: Assets = Liabilities + Owner’s Equity.

Steps in the Accounting Cycle

1. Transaction Analysis: Understanding how transactions impact accounting information.

   • Example: Buying a computer and its reflection in financial statements.

2. Common Accounts Overview: Assets, liabilities, owner's equity, income, and expenses (the elements of financial statements).

   • Concepts: Definitions and significance in the context of financial reporting.

Understanding Basic Concepts

• Assets: What the business owns; examples include cash, inventory, and office equipment.

• Liabilities: What the business owes, such as loans and accounts payable.

• Owner's Equity: Owner's claim on business assets; calculated as Assets - Liabilities.

• Income: Revenue from the business operations.

• Expenses: Costs incurred to generate income.

The Accounting Equation

• Basic Accounting Equation: Assets = Liabilities + Owner’s Equity.

  • Understanding the balance and its implications for recording transactions.

• Expanded Accounting Equation: Includes income and expenses to provide deeper insight into equity dynamics.

Double Entry Accounting

• Concept that every transaction affects at least two accounts, ensuring the accounting equation remains balanced.

• Importance of debits and credits in maintaining financial integrity within accounting records.

Transaction Analysis Examples

1. David Healy's Car Wash: Transaction contributions (capital) analyzed to show how it impacts accounting elements.

   • Effects noted: Increase in cash and owner's equity, maintaining balance in the accounting equation.

2. Loan from Bank: Increase in cash and liabilities reflects the business's financial situation post-transaction.

3. Purchasing Office Equipment: Cash outflow and simultaneous increase in equipment assets maintain balanced records.

4. Earning Income: Recorded as an increase to cash (assets) and owner's equity (income segment).

5. Expenses: Rent paid will decrease cash and owner’s equity through expenses.

6. Drawings: Out-flow of cash for personal use decreases equity.

Summary of Transaction Analysis

• Importance of identifying the five elements related to transactions and ensuring balanced records.

• Overall increases and effects on the accounting equation are monitored continuously across individual transactions, enhancing understanding of financial health.

Introduction to Debits and Credits

• Transition into understanding debits and credits concerning transaction analysis in accounting.

• Concepts of accounts will be expanded in future sessions, inviting students to disassociate preconceived ideas about debits/credits.

• Emphasis on memorizing rules around debits/credits to navigate accounting tasks effectively.

Conclusion

• Request for further questions from students. Observations noted throughout the session will inform future classes.

• Discussion of remaining slides to be supplemented with post-lecture recordings.