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=The Accounting Purpose and Process= toc //A Wiki for the Australian Capital Territory BSSS Year 11-12 College unit// **//The Accounting Process and Purpose 1.0 (T)//** //incorporating// **//The Accounting Process 0.5 (T) and The Accounting Purpose 0.5 (T)//**

= Upcoming Classes -- This Section = // The topic for Term 2 is Cash Flow. //

[|MYOB -- Inventory Management]
//"I buy", "I sell", "I inventory"...explained.//

MYOB -- Reversing and Deleting Transactions
If you make an error -- talk to someone about it! If you don't:
 * 1) You may make further errors trying to correct your original error
 * 2) Your activity may be tracked and your behaviour questioned
 * 3) **Both of the above are much worse than admitting you have made an error!**

[|MYOB -- Deleting Transactions]
//For when a transaction is to be completely removed. Security settings may prevent you from doing this!//

[|MYOB -- Reversing Transactions]
//This removes the effect of the mistaken transaction, but leaves both transactions in place so it is clear what has happened.//

BizEd -- Cash Flow Learning Trail
//BizEd's set of exercises, to be completed over time, walk you through basic// //ideas and build up to more difficult concepts. // [|Cash Flow Learning Trail]

[|Khan Academy] -- Finance
[|Accounting and Financial Statements] View [|Cash vs Accrual Accounting] View & Complete questions at [|Three Core Financial Statements]

Accounting Ethics and Corporate Tax Avoidance
[|News Limited avoids paying tax on $3.5b profit in Australia]

[|Glencore converts tax flow into tiny trickle]
[|Facebook Australia's $60 million a year business]

[|Google and Fairfax playing a different tax game]

// Michael West, Sydney Morning Herald 9 May 2014 //
How can two media companies pay such different rates of tax? The answer is aggressive transfer pricing, a technically legal form of tax minimisation.

[|JB Hi-Fi to buy $27m of its own shares]

Multitasking Test
As a class, do the Multitasking Test while [|watching the video] // Materials: 1xA4 sheet, pen //

Focus and Inspiration
[|John F. Kennedy's 1962 speech on the Moon mission] // One of the great inspirational speeches of history. //// The c ////ritical, most-quoted passage// //is at// //about 7:30 - 9:30 on the video.// //Keep this in mind for your last few weeks of the academic year.//

//"We go to the moon...not because (it is) easy, but because (it is) hard."//

//From 15:00 to the end isn't too shabby, either////.//

=Past Classes -- Below This Point=

[|Unit Grade Descriptors]
The Accounting Equation

A = L + O/E

Assets = Liabilities + Owners' Equity

Everything owned by business = Everything owed to others

Report & Seminar
// [|BizEd -- Accounting] // //[|Flying Solo -- Finance]// //[|Institute of Chartered Accountants Australia]// //[|Certified Practising Accountants Australia]//
 * //Resources used in this unit://**

MYOB Accounting Software
//**Always use the Command Centres.**// //These will keep you from wandering into the more specialised functions until you are ready to use them.//

//Note that the links below refer to MYOB v18, which has a few minor differences to v19.//

Entering a Cash Transaction
Video: [|Entering a Cash Transaction] Video: [|The Bank Register]

//Topics related to the Sales Command Centre //
[|Recording a Sales order]

Sales Transactions: Further Topics
[|Converting a sales order to a credit sale] [|Recording credit sales] [|Recording part cash part credit sales] [|Recording cash sales with a sales invoice]

2014 Term 1 Assignment: Financial Statements
//Articles here are provided for your reference. They are not compulsory.// //Take note however that you are expected to include references to financial media as part of your response.//

Westfield
http://www.canberratimes.com.au/business/westfield-flags-22b-for-split-plan-20140326-35iqp.html http://www.canberratimes.com.au/business/property/westfield-in-1b-uk-shopping-mall-selloff-20140320-355uk.html http://www.canberratimes.com.au/business/intelligent-investor/lowys-working-to-an-australian-exit-as-westfield-rents-fall-20140310-34gsc.html http://www.canberratimes.com.au/business/westfield-close-to-derby-sale-as-it-concentrates-on-malls-in-london-20140304-344k6.html

Coles, Wesfarmers
http://www.canberratimes.com.au/business/coles-woolies-shopperdocket-rumble-going-down-in-federal-court-20140326-35it8.html http://www.canberratimes.com.au/business/banking-and-finance/accc-green-light-for-iags-184b-wesfarmers-bid-20140326-35hf6.html http://www.canberratimes.com.au/business/the-time-is-ripe-for-wesfarmers-to-spin-off-broking-arm-in-ipo-20140309-34ffj.html http://www.canberratimes.com.au/business/comment-and-analysis/what-now-for-wesfarmers-as-coles-boss-ian-mcleod-to-depart-20140219-3310s.html

Commonwealth Bank, Westpac
http://www.canberratimes.com.au/business/banking-and-finance/commonwealth-banks-equity-plan-stokes-dilution-concerns-20140224-33b42.html http://www.canberratimes.com.au/business/banking-and-finance/commonwealth-bank-ups-shareholder-dividend-on-strong-profit-result-20140212-32gn8.html http://www.canberratimes.com.au/business/banking-and-finance/commonwealth-banks-ian-narev-backs-tough-stance-on-bailouts-20140212-32iaw.html http://www.canberratimes.com.au/business/commonwealth-bank-78b-profit-a-good-thing-for-all-says-chief-20130814-2rwvn.html

Bega Cheese
http://www.canberratimes.com.au/business/bega-cheese-bid-for-wcb-appears-set-to-be-first-to-fall-over-20131218-2zlcf.html http://www.canberratimes.com.au/business/fresh-twist-in-dairy-battle-as-fonterra-moves-on-bega-cheese-20131031-2wly4.html http://www.canberratimes.com.au/business/bega-cheese-boss-barry-irvin-to-consider-strategy-before-selling-stakes-in-wcb-20140109-30kft.html http://www.canberratimes.com.au/business/dairy-industry-should-stay-local-bega-cheese-boss-says-20131022-2vyhc.html http://www.canberratimes.com.au/business/dairy-wars-not-over-as-bega-cheese-positions-for-battle-20140219-32zk5.html

Woolworths
http://www.smh.com.au/business/consumer-watchdog-accc-takes-woolworths-coles-to-court-over-fuel-dockets-20140225-33egl.html http://www.smh.com.au/business/retail/woolworths-to-create-thousands-of-jobs-20140313-34nyz.html http://www.smh.com.au/business/property/woolworths-puts-north-melbourne-mixeduse-development-on-market-20140325-35gbh.html

JB Hi-Fi, Dick Smith
http://www.smh.com.au/business/jb-hifis-116m-profit-defies-slump-20130812-2rsbs.html http://www.smh.com.au/business/retail/jb-hifi-confirms-solid-profit-as-sales-climb-20140203-31vri.html http://www.smh.com.au/business/appliances-underpinning-jb-hifi-sales-20140203-31xbn.html http://www.smh.com.au/business/retail/jb-hifi-shares-jump-after-solid-result-20140128-31jqs.html http://www.smh.com.au/business/retail/dick-smith-turns-around-under-new-owners-20140219-32zb4.html http://www.smh.com.au/business/paradice-investment-management-takes-big-stake-in-dick-smith-20131229-301mb.html

**Telstra** http://www.smh.com.au/business/telstra-loses-federal-court-case-against-accc-rival-isps-20140312-34lj5.html http://www.smh.com.au/business/shakeup-at-telstra-as-digital-media-boss-exits-20140313-34nsm.html http://www.smh.com.au/digital-life/mobiles/travellers-to-pay-telstra-up-to-500-more-20140222-3398x.html http://www.smh.com.au/business/telstra-to-reward-investors-with-dividend-increase-on-back-of-bumper-profit-20140213-32nbg.html

Virgin
http://www.smh.com.au/business/aviation/virgins-richard-branson-puts-boot-into-alan-joyce-over-qantas-domestic-market-strategy-20140211-32g05.html http://www.smh.com.au/business/aviation/virgin-increasing-capacity-faster-than-us-say-qantas-20140312-34kxp.html http://www.smh.com.au/business/comment-and-analysis/at-capacity-too-many-seats-grounding--qantas-and-virgin-profits-20140228-33phq.html http://www.smh.com.au/business/aviation/qantas-bailout-virgin-wants-to-get-on-board-20140214-32rgf.html

CarSales
http://www.smh.com.au/business/new-products-pay-off-for-carsalescom-20140212-32gtv.html http://www.smh.com.au/business/earnings-season/carsalescom-drives-into-foreign-markets-20130814-2rw1r.html http://www.smh.com.au/money/investing/carsales-dominates-but-its-no-bargain-20131122-2y0dl.html http://www.smh.com.au/business/auto-makers-pull-ads-from-carsales-20131010-2vbg2.html

Income Statement (Profit and Loss Statement)
The Income Statement is a report of the income and costs of a business, consolidated to show Profit according to the formula:

PROFIT = INCOME - COSTS

> Limit is 100 words exactly.
 * BizEd has a Powerpoint presentation on [|Finance & Accounts]
 * Go to Accounting Coach and write your own definition for [|Income Statement] -- include description, examples, other terms used.
 * Complete the Income Statement exercises from the text at pp.
 * What is the difference between Revenues and Receipts? Why is such a distinction useful?

toc

The following table references the BSSS course document [|Accounting A-T 12-15]: Decision-makers: Internal users
 * ~ Week ||~ Content 1 ||~ Content 2 ||
 * **1** || **Welcome!** **The Global Financial Crisis (GFC: September 2008 - present)** ||
 * || **Financial Markets in Australia 1:**
 * **functions and role of the Reserve Bank of Australia (RBA)**
 * **brief overview of Australia's monetary system** ||  ||
 * || **Financial Markets in Australia 2:**
 * **key factors that influence the Australian economy**
 * **role of the regulators of accounting information: AASB, IASB, FRC, ASIC, APRA** || **Assets and Liabilities** ||
 * || **Nature and functions of accounting**
 * ** the nature of accounting information and key accounting terms **
 * ** the functions of accounting **
 * **The difference between bookkeeping and the role of accounting in business**
 * **careers in accounting -- accountant, forensic accounting, auditing, carbon accounting, bookkeeper, financial advisor,...** ||
 * 2 || ** Main accounting assumptions/principles: **
 * **accounting entity**
 * **monetary**
 * **historical cost**
 * going concern
 * **accounting period**
 * **revenue (and costs) recognition and realisation** || **Dual entry accounting principles** ||
 * || **Entities:**
 * **Legal entity**
 * **Accounting entity** ||  ||
 * || **The users of accounting information and their needs**
 * STAKEHOLDERS **
 * ** Owners/partners **
 * ** Board of Directors **
 * ** Management **
 * ** Employees **

External users Indirect financial interest: Preparation using a spreadsheet: * produce a statement of financial position after the creation of a chart of accounts for small service and trading businesses ||   ||
 * ** Investors **
 * ** Lenders **
 * ** Other creditors or capital providers ** ||
 * || **Other entities using accounting information:**
 * **Individuals**
 * **Sole traders**
 * **Partnerships**
 * Not-for-profit entities
 * **Limited liability companies (public and private)**
 * Incorporated and unincorporated associations ||  ||
 * || Users of accounting information:
 * || Users of accounting information:
 * Economic planners
 * **Employees and trade unions**
 * Financial advisers
 * General public
 * Public (government) entities (eg Commonwealth Treasury, Finance)
 * Pressure groups
 * **Regulatory agencies (ASIC, APRA)**
 * Not-for-profit entities
 * **Stock exchange (ASX, Australian Securities Exchange)**
 * **Taxation authorities (ATO)** ||
 * 3 || **Financial statements: formal reports of an entity's financial information** ||  ||
 * || **Statement of financial position (Balance Sheet)** ||  ||
 * || The general principles of reporting:
 * relevance
 * reliability
 * materiality
 * comparability
 * understandability
 * timeliness || Preparation of fully classified business reports from a worksheet:
 * statement of comprehensive income (income statement)
 * statement of financial position (balance sheet) ||
 * || Balance Sheet:
 * || Balance Sheet:
 * Use of formulas
 * Use of separate worksheets within the same document
 * design and format worksheets ||  ||
 * 4 || Statement of changes in equity || Distinguish between service and retailing business reports ||
 * || Statement of comprehensive income ||  ||
 * || Statement of cash flows ||  ||
 * 5 || Computerised accounting exercise
 * produce a statement of financial position after the creation of a chart of accounts for small service and trading businesses ||  ||
 * || Computerised accounting exercise ||  ||
 * || Computerised accounting exercise ||  ||
 * || Computerised accounting exercise ||  ||
 * 6 ||  ||   ||
 * || Tools of Analysis: a basic introduction to ratio analysis || Use of a spreadsheet to calculate ratios and chart data ||
 * || Return on total assets || Return on Owners' Equity ||
 * || Current ratio || Acid-test (quick asset) ratio ||
 * 7 || Debt ratio (gearing) ||  ||
 * || Computerised accounting exercise
 * || Current ratio || Acid-test (quick asset) ratio ||
 * 7 || Debt ratio (gearing) ||  ||
 * || Computerised accounting exercise
 * || Computerised accounting exercise
 * || Computerised accounting exercise

Dual Entry Accounting principles
A concise explanation of dual entry accounting principles. Key: A = Assets. L=Liabilities. O/E = Owners' Equity (note: this is NOT "O divided by E") You'll laugh...you'll cry. It's better than //Cats//. // A masterpiece -- courtesy of Chris Loch. //

Assets and Liabilities
//Assets are what we own...liabilities are what we owe.// //However, at times the distinction can be difficult ...//

News Corporation tax sting
Rupert Murdoch's News Corporation accused of manipulating its figures to [|avoid tax]. No wonder tax evasion is such a problem, if such large sums of money are involved.

Senior Citizens and the Global Financial Crisis
The GFC has led to a surge in the number of [|older Australians relying on welfare] payments. Self-funded retirees use their superannuation investments for living expenses (put another way, their income is derived from distributions on their shares)
 * these dramatically deteriorated in the wake of last year's share market collapses.

Fixed and Variable Costs spreadsheet
//From// [|//www.BizEd.co.uk//]//, a spreadsheet for analysing fixed and variable costs, developed by Duncan Williamson.//
 * This gives an idea of content, formatting and function for your own developed spreadsheet in your assignment.

Exercise

 * 1) Open the spreadsheet above. It is locked, so you won't be able to edit the values
 * 2) Read and carry out instructions in the spreadsheet, starting with Introduction sheet and following with Total Costs (1), Total Costs (2) and so on.
 * 3) Right click on the graphs and formulas, examining the way each is structured.
 * 4) Use those structures in creating your own spreadsheet for fixed and variable costs.

Take the BAIT (Bookkeeping & Accounting Interactive Tutor)
[|BAIT] is a tutoring site with exercises on various accounting topics. Use this to test yourself and practice the accounting skills we've learned.

Assignment 2
Here is a link to a sample ATO Business Activity Statement ([|BAS])

Numbers Don't Lie...or do they?
Stephen Mayne, shareholder activist, analyses the financial state of some of Australia's biggest companies, including Crown Casino.
 * Read the Chairman's Letter in [|Crown Casino's Annual Report for 2013]**, and **answer the following questions** on the discussion tab:
 * 1) Refer to the Financial Reports (p.83 onwards) Describe **THREE** recent events that are likely to have influenced the net asset values of Crown Casino? How?
 * 2) What effect have these events had on the share price? Why/why not?
 * 3) Are Crown Casino's shares correctly valued? Why/why not?
 * 4) Can there be a difference between a company's net assets and the value that the market "believes"? Why/why not?
 * 5) Can such a difference last over the long run, ie over a period of years? Why or why not?
 * 6) How can a company join the "negative equity club"? What does this term mean?

Friday 28/8/2009
Watched a video on **ICT in Accounting**

Here are directions to the video for those who couldn't make it. From the student network desktop:
 * start ClickView
 * Economics and Accounting tab
 * View video: ICT in Accounting
 * Be sure to look at the 4 Word documents under the Resources tab. These provide additional material supporting the video.

Visit the page on [|Accounting Theories at BizEd]. Take notes on the sections there (Balance sheet, etc) and complete the exercises. Post answers to the Discussion tab of this Wiki. When you are finished -- you have assignments due soon. Everybody should be gainfully employed.

Record Keeping Requirements
What financial records must a business keep? Use the links at the [|Australian Taxation Office's business]support page and answer the following questions for a small business in the retail sector. Write your responses on the Discussion tab:
 * 1) The financial records that must be kept, with an explanation why the records are required
 * 2) A description of the process of collecting and keeping records, eg Cash Register Summaries
 * 3) Explain where the financial records must be kept, and for how long they must be kept.
 * 4) What records are kept for physical inventories when goods are sold? Explain why.
 * 5) What records must be kept for non-physical (eg service) transactions? Explain why.
 * 6) What time period is set for an ATO tax review of your assessment and record keeping for: an individual taxpayer? a small business entity? any other taxpayer?
 * 7) What time limit is there on lodging objections to a tax review ruling?

Exercise
Go to the ASX website at [|http://www.asx.com.au]
 * 1) Find the Balance Sheet from the 2008 Annual Report
 * 2) Select 3 accounts from each of Assets, Liabilities and Owners' Equity
 * 3) For each account -- write down details
 * 4) Make up TWO transactions for each account in T-Format.
 * 5) Remember that each transaction must have a balancing transaction. eg purchasing new vehicles (asset) balanced by an increase in debt (Liability)

Glossary
The Commonwealth Bank website has an extensive [|glossary] of banking-related terms. Many of these will be useful to your studies of the Accounting discipline, or just a good way of improving your business vocabulary. Remember that one of the criteria under which you will be assessed is using the "language" of Accounting -- this really counts!

Accounting Ethics: Bernard Madoff's Ponzi Scheme
Madoff was a highly-trusted figure in the New York investment scene, who was recently found guilty of a multi-billion dollar fraud against his clients. []

Accounting Ethics: Corporate credit cards
An interesting case study here in the proper use of a business credit card. Rear-Admiral Geoff Smith, CEO of Sydney Ferries, is in trouble over his use of a [|corporate credit card] for personal purchases.

Class Exercise:
Read the above 2 articles on Accounting Ethics, and answer the following questions:
 * 1) What are ethics?
 * 2) What is the difference between ethics and laws?
 * 3) Is it possible to act legally but unethically? or illegally but ethically? Explain.
 * 4) Give 3 reasons why ethics are important in business.
 * 5) How might a strong culture of accounting ethics lead to a better outcome in the case of Bernard Madoff?
 * 6) What is the ethical problem with the behaviour of Rear-Admiral Geoff Smith?
 * 7) Did Sydney Ferries act unethically in its dealings with R.Adm Smith? Why/why not?

Crossword Terms

The Trial Balance
Complete and take notes from this [|Trial Balance tutorial] THEN Answer the following questions on the Discusssion tab:
 * 1) Why is it important to do a Trial Balance for all accounts?
 * 2) What problems might arise if we only take an end-of-month balance across all assets, liabilities, OE, revenue, expenses?
 * 3) Why should each column in a Trial Balance sum to zero, after all transactions are taken into account?
 * 4) What does it mean if a column in the Trial Balance does NOT sum to zero?

Next, complete the Accounting exercises on [|Pepe's Pizza Parlour], with particular attention to the sections on the preparation of accounts. Be sure to follow all links to the reference material, and test your knowledge on the questions given.

Online Accounting Tutorials
NJM, a small accounting firm, has made available a number of basic online accounting [|tutorials]. Dip into these as an adjunct to your classroom studies.

Transaction Analysis
What are debits and credits? What happens with debit and credit accounts? How can I decide which is which? NJM [|tutorial on transaction analysis] gives rules and exercises to develop your skills in classifying and recording transactions.

Accounting in Mining Businesses
[|This document] is an additional online resource for our Accounting textbook. Those of you looking into extractive enterprises (taking non-renewable resources, eg Rio Tinto, BHP Billiton, Santos...) may find it useful.

Glossary of Accounting Terms
This simple [|glossary] is good for basic accounting terminology.

=Assignment Referencing= Please be sure to reference in the accepted manner, according to the Harvard or APA systems. This cheat sheet gives some good examples of referencing, especially for internet sources. []

Note especially the way in which internet sources are referenced:

Sopensky, E. (2002). "Ice rink becomes hot business" //Austin Business Journal.// Retrieved October 16, 2002 from []

You MUST include some idea of the author and/or the publisher -- if these cannot be found, your source is unlikely to be reliable!

When accounting goes wrong...
Some red faces at Westpac New Zealand with a $10m transfer by mistake. Now it seems that Westpac might not have ever noticed without an outside [|tip-off]. A good point made in the article was that several banking checks and controls had utterly failed.

Spreadsheet Exercise: Building the Story
Using the financial statements for the public listed company you will be using in your assignment, use MS Excel (or similar spreadsheet) to calculate the following: On the discussion tab, describe what each of these ratios tells you about your chosen company. > Note that [|Openoffice.org] is an excellent free spreadsheet program if you do not have home access to MS Excel. OpenOffice does the same job as Word, Excel etc. and costs nothing!
 * Return on Total Assets
 * Return on Owners' Equity
 * Current Ratio
 * Acid-test (quick asset) ratio
 * Debt ratio (gearing)
 * Here is an [[file:economicandfinancialmanagement/financial management dashboard.xls|example]] that I did last year in another subject. You might wish to use this as a starting point -- you will need to change the comments and the number fields.
 * A document summary on Financial Ratio Analysis

ASX Education -- Online Courses
The ASX runs investor education seminars and online courses.
 * Complete the Annual Reports [|Online Course] -- Fundamental Analysis.
 * The course is in two versions; switch to the text (PDF) version if the online version doesn't work for you.
 * Read over the financial statements for your chosen ASX company. They should begin to make more sense!

Australian Securities Exchange (ASX)
Go to the [|ASX] website and find a public listed company to use in your assignment.

Exercise

 * What is the value of total assets?
 * What is the value of total liabilities?
 * What is the value of owners' equity?
 * In which countries does the company operate?
 * Why are operations placed in those particular locations?
 * What advantages and disadvantages are there in the chosen locations?

Links
links

Financial Ratio Analysis
2008 Wiki for another subject, including Financial Ratio Analysis.

Accounting Terminology
[|glossary]

Term 2 Assignment
HERE