BBAW2103

Financial Accounting
Overview

Topics Assignment Final Exam

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Submission Online
online exam

MCQ
Format
 BBAW2103
Financial Accounting

Topic 1: Accounting
Environment
Learning Outcomes

• Meaning, Role and Importance of

accounting
• Users and Branch of accounting
• Professional Accounting Bodies in
Malaysia
• Qualitative characteristic of financial
information
• Assumptions, Principles and
Constraints in accounting.
Importance of Accounting

• Play important role whether Directly or

indirectly in daily life
• Provides valuable financial information
for better decision making
• Individuals or business
Definition of Accounting

• A system or a process that provides

economic transactions for users to make
better decision.
Accounting Activities
2. Measure and
1. Identifying Recording
Business Business
Activities Activities 3. Present Business
Activities
Users of Accounting Information

Internal Users

External Users

Managerial accounting provides

information needs for internal
decision makers.

Financial accounting provides

external users with financial
statements.
Users of Accounting Information

Internal Users

External Users

•Managers •Sales Staff

•Officers •Budget Officers

•Lenders •Consumer Groups •Internal Auditors •Controllers

•Shareholders •External Auditors

•Governments •Customers
Differences Internal and External

Internal External
Users Users

Help
Depend on
Types of planning
the types of
information and the
decision
entity

Information Use the Limited to

been status or the
obtained position availability
Branches of Accounting
Differences MA and FA

FA MA

Focus to Focus to
Preparation
external internal
of report
users users

Any time
Periodic and and not
Standard or follow subject to
Format standard and
and format standard or
format
Malaysian Institute of Accountant
(MIA)
❑ Objectives:
– To promote and regulate professional and ethical standards
– To enhance competency through continuous education and
training to meet the challenges of the global economy
– To enhance the status of members
– To lead research and development for the enhancement of
the profession
– To inculcate a high sense of social responsibility
Malaysian Institute of Certified Public
Accountant (MICPA)
❑ Objectives:
– To advance the theory and practice of accountancy in all
its aspects.
– To recruit, educate, train and assess by means of
examination or otherwise a body of members skilled in
these areas.
– To preserve at all times the professional independence of
accountants in whatever capacities they may be serving.
– To maintain high standards of practice and professional
conduct by all its members.
– To do all such things as may advance the profession of
accountancy in relation to public practice, industry,
commerce, education and the public service.
Malaysian Accounting Standards Board
(MASB)

• established under the Financial Reporting Act 1997

(the Act) as an independent authority to develop and
issue accounting and financial reporting standards in
Malaysia.
• Working with FRF to make up the new framework for
financial reporting in Malaysia, with representation
from all relevant parties in the standard-setting
process, including preparers, users, regulators and
the accountancy profession.
Financial Reporting Federation
(FRF)
❑ established under the Financial Reporting Act 1997
(Act), comprises representation from all relevant
parties in the standard setting process, including
preparers, users, regulators and accountancy
profession.
❑ oversight the MASB's performance, financial and
funding arrangements, and as an initial source of
views for the MASB on proposed standards and
pronouncements. It has no direct responsibility with
regard to standard setting. This responsibility rests
solely with the MASB.
Qualitative Characteristics of
Accounting Information

USEFUL
FINANCIAL
INFORMATION

RELEVANT RELIABLE
1. Forecast value 1. Verifiable
2. Feedback value 2. Objective
3. Timely 3. Trustworthy

COMPARABILITY CONSISTENTCY
Generally Accepted Accounting
Principles
Financial accounting practice is governed by concepts and
rules known as Generally Accepted Accounting Principles
(GAAP).

Relevant Affects the decision of

Information its users.

Reliable Is trusted by
Information users.

Comparable Is helpful in contrasting

Information organizations.
Accounting Assumptions

Going Concern
Reflects
assumption that
the business will
Separate Entity continue
The business is accounted for operating instead
separately from other business of being closed
entities, including its owner or sold

Monetary Unit Accounting Period

Express The economic life of
transactions business can be
and events in divided into artificial
monetary, or time period for the
money, units purpose of financial
reporting
Accounting Principles

Revenue
Recognition Historical
1. Recognize Cost
revenue when it Accounting
is earned. information is
2. Proceeds need based on
not be in cash. actual cost.

Matching
Expenses are matched
against revenues, Full Disclosure
and recorded in the Report enough information for
same period in users to make knowledgeable
which the related decisions about the company
revenues are earned
Accounting Constraints

Cost Benefit
Relationship

Materiality
Nature of Business
Types of Business

Proprietorship Partnership Corporation

Financial Statements

1. Income Statement
2. Statement of Owner’s Equity
3. Balance Sheet
4. Statement of Cash Flows
5. Notes to the account
Income Statement

Syarikat Megah
Income Statement Net income is the
For Month Ended 31 December 2019 difference between
Revenues and Expenses.
Revenues:
Consulting revenue $ 3,000
Less:Expenses
Salaries expense 800
Net income $ 2,200

The income statement describes a

company’s revenues and expenses along
with the resulting net income or loss over a
period of time due to earnings activities.
Statement of Owner’s Equity
Syarikat Megah
Income Statement The net income of
For Month Ended 31 December 2019
RM2,200 increases
Revenues:
Scott’s capital by
Consulting revenue $ 3,000 RM2,200.
Less Expenses:
Salaries expense 800
Net income $ 2,200
Syarikat Megah
Statement of Owner's Equity
The Statement of
For Month Ended 31 December 2019
Owner’s Equity
explains changes in
Johan, Capital, 1 Dec. 2019 20,000
equity from net Add: Investment by owner -
income (or net loss) Net income 2,200
and from owner Less: Withdrawals 500
investments and Johan, Capital, 31 Dec. 2019 $ 21,700
withdrawals for a
period of time.
Statement of Owner’s Equity
Syarikat Megah
Statement of Owner's Equity
For Month Ended 31 December 2019

Johan, Capital, 1 Dec. 2019 20,000

Add: Investment by owner -
Net income 2,200
Less: Withdrawals 500
Johan, Capital, 31 Dec.2019 $ 21,700

The Balance Sheet

describes a company’s
financial position at a
point in time.

Owner’s Equity in Balance Sheet

Balance Sheet
Syarikat Megah
Balance Sheet
31 December 2019

Fixed Assets:
Equipment $16,000

Current Assets:
Cash 9,700
Supplies 1,200
10,900
Less: Current Liabilities:
Accounts Payable 1,200
Notes Payable 4,000
Working Capital 5,700
21,700
Financed by:
Owner's Equity
Johan, Capital 21,700
21,700

From Statement of Owner’s Equity

Cash Flow Statement
Syarika Megah
Statement of Cash Flows
For Month Ended 31 December 2019

Cash flows from operating activities:

Cash received from clients $ 3,000
Purchase of supplies (1,000)
Cash paid to employees (800)
Net cash provided by operating activities $ 1,200
Cash flows from investing activities:
Purchase of equipment (15,000)
Net cash used in investing activities (15,000)
Cash flows from financing activities:
Investment by owner 20,000
Borrowed at bank 4,000
Withdrawal by owner (500)
Net cash provided by financing activities 23,500
Net increase in cash $ 9,700
Cash balance, 1 December 2019 -
Cash balance, 31 December 2019 $ 9,700

The Statement of Cash Flows identifies cash inflows and

cash outflows over a period of time.
Thank You