Application & Awareness Application & Awareness - - PowerPoint PPT Presentation

Application & Awareness Application & Awareness

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• Introduction of 3FOLD
• Understanding of GAAP
• Understanding of Financial Statement
• Income and Expenses Recognition

Income Tax , Equity Measurement

• Income Tax , Equity Measurement
• Assets & Liability Valuation and
• Disclosures Requirements
• GAAP Vs. IFRS

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intended Statements everything addressing issues extent that are not

• bligations.

regulators may keep apprised to assist employers, employees, and others

• Statements. While we attempt to thoroughly address specific

everything necessary to ensure compliance. Thus, this issues related to preparation of Financial Statement, this information references practices or required by a statute, regulation, or standard, may modify rules and interpretations in light of apprised of such developments, or to review information as they specific this information Statement, rather procedures standard, it cannot,

• f new technology,

information

Principles of GAAP Principles of GAAP WHY GAAP Regulating GAAP How to apply GAAP Why Should I Know GAAP

UNDERSTANDING OF GAAP

Principles of GAAP Principles of GAAP Regulating GAAP How to apply GAAP Why Should I Know GAAP

rules used balance balance companies measured making economic GAAP is concerned with: the measurement of economic activity; the time when such measurements are to be made and recorded; the disclosures surrounding this activity; and the preparation and presentation of summarized economic information in the preparation and presentation of summarized economic information in used to prepare and standardize the balance sheets, income statements and balance sheets, income statements and companies and many private companies in measured so that the information provided economic decisions about a company, the measurement of economic activity; the time when such measurements are to be made and recorded; the disclosures surrounding this activity; and the preparation and presentation of summarized economic information in the preparation and presentation of summarized economic information in the reporting cash cash the United

• n financial

such as the time when such measurements are to be made and recorded; the preparation and presentation of summarized economic information in the preparation and presentation of summarized economic information in

makes a company's and others and others useful and relevant, company's financials comparable and

• thers can make rational investment,
• thers can make rational investment,

and helpful to users, GAAP requires reliable, comparable and consistent. and understandable investment, credit investment, credit requires information .

makes a company's and others and others useful and Comparable And company's financials comparable and

• thers can make rational investment,
• thers can make rational investment,

and helpful to users, GAAP requires and understandable investment, credit investment, credit requires information

in 1973, was formed, between preceded by known as

• pinions and

, the FASB has issued over 100 formal formed, its predecessor, the Accounting between 1959 and 1973. by the Committee on Accounting Procedure, as Accounting Research Bulletins (ARBs) and ARBs are still in force today. formal FAS Accounting Principles Procedure, (ARBs) from

that are fundamental entity" that is entity" that is

• perations

that can

• f an enterprise

and report materiality generally measurement and value measurement and value always be Judgment. is that it conservatism refers and list the accounting if accounting if should be fundamental to GAAP is separate from its owners. is separate from its owners.

• perations indefinitely.

be "quantified" resources and obligation for which enterprise can be divided into artificial time periods. report for both assets and liabilities active at their original generally refers to the relative importance of the various value that are reported in the financial statements value that are reported in the financial statements be elements of complexity and an uncertainty, which it allows information to be prepared with the exact refers to the fact that many accountants have a bias towards the economic substance of a transaction as opposed if a business transaction generates revenue in a period if a business transaction generates revenue in a period reported in that same period. which an agreed

• riginal purchase,

various financial statements of a business statements of a business which will have exact same methods towards

• pposed to just

period then period then

entity, you should understand the principles of GAAP. , if you are simply preparing your individual income tax statements, understanding GAAP probably isn't as important to you The FASB measures GAAP-based income so that the information provided is useful to those making economic decisions (i.e., investors and creditors). those making economic decisions (i.e., investors and creditors). IRS, on the other hand, uses income tax reporting to achieve social and economic

• bjectives, such as reducing unemployment and encouraging investment in capital

entity, you should understand the principles of GAAP. , if you are simply preparing your individual income tax statements, understanding GAAP probably isn't as important to you. based income so that the information provided is useful to those making economic decisions (i.e., investors and creditors). those making economic decisions (i.e., investors and creditors). IRS, on the other hand, uses income tax reporting to achieve social and economic

• bjectives, such as reducing unemployment and encouraging investment in capital

, if you are simply preparing your individual income tax statements, based income so that the information provided is useful to those making economic decisions (i.e., investors and creditors). those making economic decisions (i.e., investors and creditors). IRS, on the other hand, uses income tax reporting to achieve social and economic

• bjectives, such as reducing unemployment and encouraging investment in capital

UNDERSTANDING OF FINANCIAL STATEMENT

Accounting Overview and Accounting Overview and Definitions And Forms of Financial Statement

UNDERSTANDING OF FINANCIAL STATEMENT

Accounting Overview and Purpose Accounting Overview and Purpose Definitions And Forms of Financial Statement

UNDERSTANDING OF FINANCIAL STATEMENT

communicate communicate for anyone language transactions expressions expressions known as double time. Pacioli's that there that there communicate in a precise and ordered manner communicate in a precise and ordered manner anyone to interpret, a language has been language of business and it allows people transactions of a business or even an entire industry expressions and ideas published by Pacioli expressions and ideas published by Pacioli double-entry accounting or double-entry Pacioli's double-entry bookkeeping was that, there should be a separation of five different there should be a separation of five different manner that manner that been developed people to communicate industry Pacioli were Pacioli were entry bookkeeping that, "for different different

controlled by a business. These items can include cash, inventory, property, and vehicles. Liabilities are the amounts of money that are owed to people or other Liabilities are the amounts of money that are owed to people or other companies outside of your business. Examples of these would be amounts owed for car payments, or bank loans. Equity is what someone owns the business and is represented by the assets of the business minus the liabilities of the business. The revenues for a business are the earnings or income. These can be things The revenues for a business are the earnings or income. These can be things like the sales of goods or services as well as selling stock or property. Expenses are defined as monetary cash outflows of a business. Examples of this would be payments that are made to employees for wages or salaries, the purchasing of raw materials or goods, the purchase of advertising, etc. controlled by a business. These items can include cash, inventory, property, and vehicles. Liabilities are the amounts of money that are owed to people or other Liabilities are the amounts of money that are owed to people or other companies outside of your business. Examples of these would be amounts owed for car Equity is what someone owns the business and is represented by the assets of the business minus the liabilities of the business. The revenues for a business are the earnings or income. These can be things The revenues for a business are the earnings or income. These can be things like the sales of goods or services as well as selling stock or property. Expenses are defined as monetary cash outflows of a business. Examples of this would be payments that are made to employees for wages or salaries, the purchasing of raw materials or goods, the purchase of advertising, etc. controlled by a business. These items can include cash, inventory, property, and vehicles. Liabilities are the amounts of money that are owed to people or other Liabilities are the amounts of money that are owed to people or other companies outside of your business. Examples of these would be amounts owed for car Equity is what someone owns the business and is represented by the assets of The revenues for a business are the earnings or income. These can be things The revenues for a business are the earnings or income. These can be things like the sales of goods or services as well as selling stock or property. Expenses are defined as monetary cash outflows of a business. Examples of this would be payments that are made to employees for wages or salaries, the purchasing of raw materials or goods, the purchase of advertising, etc.

1.) Balance Sheet 2.) Income Statement 2.) Income Statement 3.) Statement of Stockholders' Equity 4.) Statement of Cash Flows 3.) Statement of Stockholders' Equity 4.) Statement of Cash Flows

Identify the users of these Financial Statements and their needs, Demonstrate the understanding of the purposes and uses of each statement Demonstrate the understanding of the purposes and uses of each statement Identify the Major Components and classification of each statement Identify the limitation of each financial Statement Identify how various financial transaction affect the elements of each of the financial statement and determine the proper classification of the transaction. Identify the basic disclosure related to each of the statements ( Footnotes, Identify the basic disclosure related to each of the statements ( Footnotes, supplementary schedules etc. Demonstrate the understanding of the relationship among the Financial Statement Prepare the B/S, Income statement, a statement of changes in equity and statement ndirect Method). Identify the users of these Financial Statements and their needs, Demonstrate the understanding of the purposes and uses of each statement Demonstrate the understanding of the purposes and uses of each statement Identify the Major Components and classification of each statement Identify the limitation of each financial Statement Identify how various financial transaction affect the elements of each of the financial statement and determine the proper classification of the transaction. Identify the basic disclosure related to each of the statements ( Footnotes, Identify the basic disclosure related to each of the statements ( Footnotes, supplementary schedules etc. Demonstrate the understanding of the relationship among the Financial Statement Prepare the B/S, Income statement, a statement of changes in equity and statement ndirect Method). Identify the users of these Financial Statements and their needs, Demonstrate the understanding of the purposes and uses of each statement Demonstrate the understanding of the purposes and uses of each statement Identify the Major Components and classification of each statement Identify how various financial transaction affect the elements of each of the financial statement and determine the proper classification of the transaction. Identify the basic disclosure related to each of the statements ( Footnotes, Identify the basic disclosure related to each of the statements ( Footnotes, Demonstrate the understanding of the relationship among the Financial Statement Prepare the B/S, Income statement, a statement of changes in equity and statement

• f uncollectable accounts.

Determine the F/S Effect of using % to Sales ( Income Approach) as opposed to % of Receivable Determine the F/S Effect of using % to Sales ( Income Approach) as opposed to % of Receivable in calculating the allowance for uncollectible accounts. Distinguish the Receivable sold with Recourse basis ( Factoring) and those without recourse basis and determine the effect on the B/S Identify issues in inventory valuation, including which goods to include what cost to include and which cost assumption to use. and which cost assumption to use. Identify and compare the Cost ( Not Cash Flow) flow assumptions used in accounting for Demonstrate and understanding of the lower of Cost or market rule for inventories. Calculate the effect on income and on assets of using different inventory methods. Analyze the effects of Inventory Errors Identify the Advantage and Disadvantage of the different inventory methods Identify the Advantage and Disadvantage of the different inventory methods Recommend the Inventory method and cost flow assumption that should be used for a firm

• f uncollectable accounts.

Determine the F/S Effect of using % to Sales ( Income Approach) as opposed to % of Receivable Determine the F/S Effect of using % to Sales ( Income Approach) as opposed to % of Receivable in calculating the allowance for uncollectible accounts. Distinguish the Receivable sold with Recourse basis ( Factoring) and those without recourse basis and determine the effect on the B/S Identify issues in inventory valuation, including which goods to include what cost to include and which cost assumption to use. and which cost assumption to use. Identify and compare the Cost ( Not Cash Flow) flow assumptions used in accounting for Demonstrate and understanding of the lower of Cost or market rule for inventories. Calculate the effect on income and on assets of using different inventory methods. Analyze the effects of Inventory Errors Identify the Advantage and Disadvantage of the different inventory methods Identify the Advantage and Disadvantage of the different inventory methods Recommend the Inventory method and cost flow assumption that should be used for a firm Determine the F/S Effect of using % to Sales ( Income Approach) as opposed to % of Receivable Determine the F/S Effect of using % to Sales ( Income Approach) as opposed to % of Receivable Distinguish the Receivable sold with Recourse basis ( Factoring) and those without recourse Identify issues in inventory valuation, including which goods to include what cost to include Identify and compare the Cost ( Not Cash Flow) flow assumptions used in accounting for Demonstrate and understanding of the lower of Cost or market rule for inventories. Calculate the effect on income and on assets of using different inventory methods. Identify the Advantage and Disadvantage of the different inventory methods Identify the Advantage and Disadvantage of the different inventory methods Recommend the Inventory method and cost flow assumption that should be used for a firm

Trading Security Available for Sale Available for Sale Held to Maturity Demonstrate the understanding of the Fair value method, Equity method and consolidated method for equity securities. Determine the effect on the financial statement of using different depreciation methods Recommend the Depreciation method for a given set of data Recommend the Depreciation method for a given set of data Demonstrate the understanding of the accounting for impairment of long term assets. Demonstrate the understanding of the accounting for impairment of intangible assets, Identify the classification issues of short term debt expected to be refinanced. Compare the effect on F/S when using either the expenses warranty approach or the sales warranty approach for accounting for warranties. warranty approach for accounting for warranties. balance sheet financing and identify different forms of this type of borrowing. Demonstrate the understanding of the Fair value method, Equity method and consolidated method for equity securities. Determine the effect on the financial statement of using different depreciation methods Recommend the Depreciation method for a given set of data Recommend the Depreciation method for a given set of data Demonstrate the understanding of the accounting for impairment of long term assets. Demonstrate the understanding of the accounting for impairment of intangible assets, Identify the classification issues of short term debt expected to be refinanced. Compare the effect on F/S when using either the expenses warranty approach or the sales warranty approach for accounting for warranties. warranty approach for accounting for warranties. balance sheet financing and identify different forms of this type of borrowing. Demonstrate the understanding of the Fair value method, Equity method and consolidated Determine the effect on the financial statement of using different depreciation methods Demonstrate the understanding of the accounting for impairment of long term assets. Demonstrate the understanding of the accounting for impairment of intangible assets, Identify the classification issues of short term debt expected to be refinanced. Compare the effect on F/S when using either the expenses warranty approach or the sales balance sheet financing and identify different forms of this type of borrowing.

Distinguish between deferred Tax Liabilities and deferred Tax Assets. Distinguish between deferred Tax Liabilities and deferred Tax Assets. Differentiate between temporary difference and permanent difference and identify example of Indicate the proper income statement and balance sheet presentation of income tax expenses

and deferred taxes. Explain the issues involved in determining the amount and classification of tax assets Explain the issues involved in determining the amount and classification of tax assets Distinguish between Operating lease and a Capital Lease Explain why an operating lease is a form of off balance sheet financing, Demonstrate an understanding of why lessees may prefer accounting for lease as an

• perating lease as opposed to capital lease.
• perating lease as opposed to capital lease.

Recognize the correct F/S presentation of operating lease and capital lease,

Distinguish between deferred Tax Liabilities and deferred Tax Assets. Distinguish between deferred Tax Liabilities and deferred Tax Assets. Differentiate between temporary difference and permanent difference and identify example of Indicate the proper income statement and balance sheet presentation of income tax expenses

Explain the issues involved in determining the amount and classification of tax assets Explain the issues involved in determining the amount and classification of tax assets Distinguish between Operating lease and a Capital Lease Explain why an operating lease is a form of off balance sheet financing, Demonstrate an understanding of why lessees may prefer accounting for lease as an

• perating lease as opposed to capital lease.
• perating lease as opposed to capital lease.

Recognize the correct F/S presentation of operating lease and capital lease,

Distinguish between deferred Tax Liabilities and deferred Tax Assets. Distinguish between deferred Tax Liabilities and deferred Tax Assets. Differentiate between temporary difference and permanent difference and identify example of Indicate the proper income statement and balance sheet presentation of income tax expenses

Explain the issues involved in determining the amount and classification of tax assets Explain the issues involved in determining the amount and classification of tax assets Explain why an operating lease is a form of off balance sheet financing, Demonstrate an understanding of why lessees may prefer accounting for lease as an Recognize the correct F/S presentation of operating lease and capital lease,

Identify reasons for the appropriation of retained earnings Apply Revenue recognition principles to various types of Apply Revenue recognition principles to various types of Identify issues involved with revenue recognition at POS, Sales with buy back when right of return exists and trade loading ( or channel stuffing).

Identify the instances where revenue is recognized before delivery and when it is recognized Distinguish between % completion and completed contracts methods for recognizing Compare and Contrast the recognition of Cost of Construction, Progress billings, collections and Gross profit under the two long term contract accounting methods Identify the situations in which each of the followings revenue recognitions methods would be used , Installment Sales Method, Cost Recovery Method and deposit method. nd concerns that have been identified with respect to recognition practices recognition practices

Identify reasons for the appropriation of retained earnings Apply Revenue recognition principles to various types of trasactions Apply Revenue recognition principles to various types of trasactions Identify issues involved with revenue recognition at POS, Sales with buy back when right of return exists and trade loading ( or channel stuffing).

Identify the instances where revenue is recognized before delivery and when it is recognized Distinguish between % completion and completed contracts methods for recognizing Compare and Contrast the recognition of Cost of Construction, Progress billings, collections and Gross profit under the two long term contract accounting methods Identify the situations in which each of the followings revenue recognitions methods would be used , Installment Sales Method, Cost Recovery Method and deposit method. concerns that have been identified with respect to

Identify issues involved with revenue recognition at POS, Sales with buy back arrangments

Identify the instances where revenue is recognized before delivery and when it is recognized Distinguish between % completion and completed contracts methods for recognizing Compare and Contrast the recognition of Cost of Construction, Progress billings, collections and Gross profit under the two long term contract accounting methods Identify the situations in which each of the followings revenue recognitions methods would be used , Installment Sales Method, Cost Recovery Method and deposit method. concerns that have been identified with respect to

Demonstrate an understanding of the proper accounting for loss on long term contracts Demonstrate an understanding of the treatment of gain and losses on the disposal of fixed assets Demonstrate an understanding of the treatment of gain and losses on the disposal of fixed assets Demonstrate an understanding of expenses recognition practices Define and calculate comprehensive income Identify correct treatment of extra Demonstrate an understanding of the proper accounting for loss on long term contracts Demonstrate an understanding of the treatment of gain and losses on the disposal of fixed assets Demonstrate an understanding of the treatment of gain and losses on the disposal of fixed assets Demonstrate an understanding of expenses recognition practices Define and calculate comprehensive income Identify correct treatment of extra-ordinary items and discontinued operations. Demonstrate an understanding of the proper accounting for loss on long term contracts Demonstrate an understanding of the treatment of gain and losses on the disposal of fixed assets Demonstrate an understanding of the treatment of gain and losses on the disposal of fixed assets

• rdinary items and discontinued operations.

Expenses recognition w.r.t. share based payments and employee benefits. Intangible Assets w.r.t. development cost and replacement cost or revaluation Intangible Assets w.r.t. development cost and replacement cost or revaluation Inventories w.r.t. Costing methods, Valuations and write down Leases w.r.t. leases of Land and Building Long lived Assets w.r.t. revaluation, depreciations and capitalization of borrowing costs. Impairment of assets w.r.t determination , calculation and reversal of losses. F/S presentation w.r.t. extra ordinary items and changes in equity. Expenses recognition w.r.t. share based payments and employee benefits. Intangible Assets w.r.t. development cost and replacement cost or revaluation Intangible Assets w.r.t. development cost and replacement cost or revaluation Inventories w.r.t. Costing methods, Valuations and write down Leases w.r.t. leases of Land and Building Long lived Assets w.r.t. revaluation, depreciations and capitalization of borrowing costs. Impairment of assets w.r.t determination , calculation and reversal of losses. F/S presentation w.r.t. extra ordinary items and changes in equity. Expenses recognition w.r.t. share based payments and employee benefits. Intangible Assets w.r.t. development cost and replacement cost or revaluation Intangible Assets w.r.t. development cost and replacement cost or revaluation Long lived Assets w.r.t. revaluation, depreciations and capitalization of borrowing costs. Impairment of assets w.r.t determination , calculation and reversal of losses.

Q&A

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