Financial Accounting: from Beginner to Expert

outlines the conceptual framework behind GAAP, the role of accounting standards, and the move toward IFRS, including the IFRS foundation, board, and interpretation committee.

analyze the conceptual framework for general purpose financial statements, and explain the objective, qualitative characteristics, and elements that ensure faithful representation and relevance for investors and creditors.

Explore the five elements of financial statements: asset, liability, equity, income, and expense, defined by past events, control, and resulting economic benefits in the conceptual framework.

Explore recognition as the process to determine which items qualify as elements of financial statements—assessing assets by criteria of probable future economic benefits and reliable measurement within the conceptual framework.

Explore measuring elements of financial statements, including balance sheet and income statement, using historical cost, current cost, realizable value, and present value with time value of money and discount rates.

Explore the concept of capital and capital maintenance, distinguishing financial capital maintenance from physical capital maintenance by comparing beginning and end-of-period net assets, distributions, and owner contributions.

Explore the double entry principle, based on the accounting equation, and learn how every transaction affects two accounts with debits and credits, ensuring balanced records.

Explore the accounting equation and its double-entry principle, showing why assets equal liabilities plus capital through practical business examples, including cash, inventory, and land.

Explore the accounting equation in practice, showing how assets equal capital plus liabilities through cash, inventory, and profit-driven entries using double-entry principles.

Learn how transactions affect the accounting equation, detailing assets, liabilities, and capital, including credit purchases, trade payables, trade receivables, drawings, and profits.

Examine the accounting system as the framework for recording an entity’s business transactions. Identify and classify transactions, analyze documents, and prepare final accounts within this systematic process.

Master the source documents in financial accounting, from purchase orders and quotations to invoices, payment vouchers, dispatch notes, goods received notes, debit and credit notes, and statements of accounts.

Identify the accounts affected in a transaction, classify them into assets, liabilities, equity, income, or expenses, and determine their increases or decreases to decide debits and credits.

Analyze transactions by identifying affected accounts, choosing cash or bank, and applying debits and credits; illustrate starting a business with cash, inventory purchases, and a bank loan for motor vehicle.

Analyze cash sale transactions, identify cash and sales accounts affected, understand debits and credits when income increases, and distinguish cash sales from credit sales.

Apply the double-entry principle to analyze each transaction. Identify debits and credits across accounts such as cash, trade payables, and drawings, noting effects on equity and assets.

Explore how the daybook, a subsidiary book or journal, records daily transactions as the first entry, covering the sales book, purchases book, cash book, and petty cash book.

Learn to record credit sales in the sales day book, identify the customer, issue an invoice, and apply debit and credit to trade receivable and sales.

Explore the purchases day book for recording credit purchases from suppliers, identifying affected accounts (trade payables and purchases) and capturing the invoice date, supplier, and total amount.

Analyze how credit notes and debit notes affect customer receivables and goods, and learn to record daybook entries for inward transactions.

Analyze a supplier return and record it in the outward day book, using a debit note or credit note, linking supplier, date, quantity, and amount.

Learn how the cash book records receipts and payments in cash or bank using debit and credit sides, voucher details, and the treatment of discounts allowed and received.

Explore cash book analysis through practical examples, identifying cash versus bank transactions, and recording debits and credits, including discounts allowed or received and related entries.

A petty cash book records small expenses under an imprest system, with a fixed cash float on premises used for taxi, stationery, and other minor payments.

Demonstrates recording petty cash transactions in a petty cash book, creating expense columns for postage, transport, stationery, and phone cards, and replenishing the float to the original amount.

Discover how the journal records transactions not captured elsewhere using debits, credits, and clear descriptions. See examples like motor vehicles on credit, bank loans, and end-of-year adjustments.

Explore recording and posting transactions from the daybook to the ledger and journals using the double-entry principle, with debits and credits across assets, liabilities, and equity.

Post sales day book to the ledger by recording credit sales with proper debits and credits, updating customer accounts and the general ledger with descriptions, amounts, and references.

Post purchases from the purchases day book to the ledger by recording credit purchases, debiting purchases, crediting suppliers, and updating the general ledger.

Learn to post returns inwards from the day book to the ledger, identifying the customer and posting debits and credits across the general, sales, and receivables ledgers.

Explore posting from the returns outward day book to the ledger, including identifying suppliers, recording debits and credits, and updating general ledger accounts.

Post from the cashbook to the ledger by processing transactions across cash, bank, and capital accounts. Record payables and receivables, and apply discounts received or allowed in ledgers.

Post petty cash book transactions to the general ledger, from opening a cash float with the bank to recording expenses such as postage, transport, stationery, and a phone card.

Post from journal to ledger by recording debits and credits for transactions like motor vehicles, bank loans, and purchases on credit in the general ledger.

Balance ledger accounts by comparing debit and credit totals to determine asset, liability, and equity balances. Prepare period-end reports such as the statement of profit or loss.

Learn to prepare a trial balance by transferring ledger balances, applying the double-entry principle, and verifying assets on the debit side and liabilities and equity on the credit side.

Practice double-entry bookkeeping by posting cash, purchases, sales, and liabilities to ledger accounts, balance ledgers, and analyze October transactions in a case study.

Explore case study 1b by posting cash and other transactions to the general ledger, applying debits and credits, balancing ledgers, and preparing the end-of-period trial balance.

Explore double-entry bookkeeping for case study 2a, recording capital, bank balances, purchases, salaries, and ledger entries to prepare balanced accounts.

Balance ledger accounts by aligning debits and credits, identifying deficits, and carrying forward balances like balance forward and brought forward across capital and bank accounts.

Post and balance the cash and bank ledger accounts, recording September transactions from opening balances to credit purchases, cash payments, wages, utilities, and credit notes into the general ledger.

Explore ledger accounts through a cash account case study, analyzing debit and credit entries, beginning balances, and the process of balancing accounts over a reporting period.

Apply the double-entry system in case study 4a by posting transactions to ledgers, analyzing debits and credits across cash, bank, capital, inventory, payables, loans, sales, and expenses.

Balance ledger accounts by balancing debits and credits, carry forward balances, and transfer totals to financial statements to illustrate liquidity, capital, and expenses.

Post transactions to ledger accounts for a sole proprietorship, test posting accuracy, and use balances to prepare statements of profit or loss, financial position, and cash flows for the owner.

Explore the statement of profit or loss, showing profitability by comparing sales with expenses and classifying direct and indirect costs, cost of goods sold, and gross and net profit.

Learn how the statement of financial position captures a company's assets, liabilities, and equity at a specific date, illustrating the balance between resources and obligations through double-entry accounting.

Learn to prepare statement of profit or loss and statement of financial position using a trial balance, balancing debits and credits, and compute gross profit and cost of goods sold.

Learn to interpret ledger accounts, perform end-of-year adjustments, reconcile cash with the bank, and value inventory, depreciation, bad debts, and prepayments.

learn how to determine the value of inventory, record it in the books of account, and prepare and present inventory output in financial reporting.

Define inventory as items held for sale, in production, finished goods, or materials, and value them at the lower of cost and net realizable value.

Learn to determine cost of purchase for inventory, including purchase price, import duties, transport costs, recoverable taxes, VAT, discounts, and the cost to bring items to present location and condition.

Understand conversion costs, including materials, labor, and production overhead, in manufacturing to transform raw materials into finished goods, and note that administrative and selling costs are excluded from inventory cost.

Explore cost formulas to determine item costs, applying specific identification for unique items and FIFO or weighted average for interchangeable goods, including conversion and directly attributable costs.

Explore how to value inventory using first in, first out (fifo) and compare with the weighted average cost method, including calculating closing stock.

Explore how the weighted average cost formula values inventory and how first in, first out determines closing stock. Compare cost versus net realizable value to assess inventory efficiency.

Discover how to value inventory using net realizable value, compare cost to NRV item by item or by category, and apply the lower of cost and NRV rule.

Learn how to record closing inventory in the books of account by identifying affected accounts, classifying inventory as an asset, and applying double-entry rules to the ledger.

Demonstrates recording a year-end closing inventory of 50,000 using a journal voucher, identifying inventory as an asset and affecting the profit or loss and ledger balances.

Present inventory in the statement of financial position as current assets and determine gross profit by deducting cost of goods sold from sales, using opening and closing inventory.

Present inventory by matching cost of goods available for sale with sales and deduct closing stock to determine cost of goods sold and gross profit.

Demonstrates inventory presentation by starting with opening stock, adding purchases, calculating cost of goods available for sale, determining closing stock, and deriving gross profit from sales.

Explore how value added tax (vat) applies at every stage of the supply chain, from supplier to final consumer, and how input and output vat affect prices and tax remittances.

Analyze a supplier invoice to record a purchase on credit, separate the price from the input vat, and post to purchases, input vat, payables accounts, and cash or bank payment.

Explore depreciation and amortization as cost allocation for tangible and intangible non-current assets, using the matching principle with property, plant and equipment.

Define property, plant and equipment as tangible assets held for use, explain recognition criteria, and outline cost including purchase price, import duties, taxes, discounts, and dismantling or site restoration estimates.

Define depreciation as the systematic allocation of the depreciation amount over a non-current asset's estimated useful life, covering the three elements: systematic allocation, depreciation amount, and useful life.

Define the depreciable amount as cost minus the estimated residual value, and show how assets with a limited useful life are depreciated over time, while land is not.

Learn how to estimate useful life for depreciable assets using estimates, judgments, and comparisons to similar assets, considering physical and economic life.

Compare straight-line and reducing balance depreciation methods, applying cost allocation over asset's useful life based on economic benefits, and compute annual depreciation and current asset value.

Learn depreciation fundamentals by applying the straight-line method to a 17,000 asset with a 5-year life and a scrap value of 2,000, calculating annual depreciation and accumulated depreciation.

Change depreciation method when the pattern of economic benefits changes, and apply the chosen method consistently. Adjust current and future depreciation based on the remaining life, preserving prior periods.

Learn how to handle a change in an asset’s useful life using the straight-line depreciation method, recalculate depreciation charges, and adjust estimates as new information emerges.

Explore how depreciation affects financial statements by posting depreciation expense to the ledgers and recording accumulated depreciation against assets, aligning with the matching principle.

Post depreciation using the straight-line method for furniture and fittings, calculating 4500 yearly from 16000 cost with 2500 residual value, and reflect entries in the ledger and financial statements.

Learn how to revalue non-current assets to fair value, compare book value with market value, and make upward or downward adjustments, choosing between cost and revaluation models, affecting depreciation.

The lecture guides calculating depreciation for land and building under straight-line method, notes land is non-depreciable, applies a revaluation, and shows five-year effects on depreciation expense and the financial position.

Record a revaluation of property, plant and equipment by debiting the asset and crediting a revaluation surplus, while adjusting accumulated depreciation to reflect fair value.

Compare the asset’s current amount to its market value, reduce the asset to 40000, and recognize a 20000 revaluation deficit that impacts the profit or loss.

Learn to post depreciation using the straight-line method for motor vehicles, calculating depreciation charges and updating the depreciation and accumulated depreciation accounts to reveal net book value.

Explain excess depreciation from asset revaluation, transfer the excess from the depreciation surplus to retained earnings, and recognize related amounts when assets continue to be used.

Explore how to dispose of non-current assets and determine the profit or loss on disposal by comparing the asset's carrying amount with the net selling price minus costs to sell.

Calculate the profit on disposal of a non-core asset using straight-line depreciation, given cost 25,000, residual value 7,000, and 6-year life; disposal after 3 years yields 1,500 profit.

This lecture shows how to calculate loss on disposal of non-core asset using straight-line depreciation, by comparing carrying amount 21000 with net sale price 17000 to reveal a 3600 loss.

Record ledger entries for disposal of a tangible non-current asset by crediting the asset account and debiting accumulated depreciation, and debit cash or bank for the sale proceeds.

Explains disposal of machinery: compute depreciation on cost 110,000 at 20% per year, remove asset and accumulated depreciation, record a 19,000 sale, and determine gain or loss.

Record a part exchange of assets by valuing the asset received at fair value, accounting for 60000 cost, 19000 credit, and 41000 cash, with machinery, disposal, and depreciation entries.

Adjust closing stock. Compute depreciation using 1.5% straight-line on property and 25% reducing balance on equipment, for the statement of profit or loss and the statement of financial position.

Develop the year’s profit or loss and balance sheet, compute cost of goods sold from opening and closing inventory, and outline assets, liabilities, and equity.

Explore IAS 38 intangible non-current assets, their recognition and amortisation, and compare it to depreciation for tangible assets, with an asset of 50,000 over 10 years as an example.

Explain how research and development costs are treated in financial accounting, with research expensed and development capitalized only when technical feasibility, intent to complete, market, and resources are met.

Apply the accrual concept and the matching concept to recognize income and expenses in correct reporting period, and show revenue earned and expenses incurred in the profit or loss statement.

Apply accrual accounting to recognize quarterly telephone expenses in the period, including January and February 2007, even without invoices, and report the expense in the year ending 28 February 2007.

Apply the matching concept to prepayments by recognizing rent outgo in the current year. Adjust for advance payments that relate to next year in the statement of profit or loss.

Demonstrate the double entry for accrual by posting invoices to electricity and cash accounts. Record debits and credits, recognize end-of-period liabilities, and balance the ledger.

Demonstrate double-entry for prepayments by debiting prepaid rent and crediting cash, then recognizing rent expense as the prepaid balance is consumed in the period.

Apply adjusting entries to the trial balance, including closing inventory, damaged goods write-off, prepaid rent, and rent accruals, to show effects on profit or loss and the financial position.

Examine a case study to prepare the statement of profit or loss and the statement of financial position, detailing cost of goods sold, gross profit, operating and finance expenses.

Identify how bad debt arises from end-of-year assessments of credit sales and write off uncollectible trade receivables, using the debit to bad debt expense and credit to trade receivables.

Learn how to estimate an allowance for receivables to reflect likely bad debts, using aging-based or general percentages, and distinguish between bad debt and allowance for receivables, per prudence concept.

Increase the allowance for receivables from 200 to 240 (2% of 12,000) by debiting profit or loss and crediting the allowance for receivables, reducing net current assets to 11,760.

Adjust the allowance for receivables by debiting the allowance and crediting the profit or loss to reflect a decrease from 240 to 210, netting trade receivables to 10,290.

Apply double-entry steps to recognize the expected recovery of a debt by debiting the receivable and crediting the bad debt; then debit cash or bank and credit the trade receivable.

Learn to calculate and adjust bad debt and the allowance for receivables, and to prepare the receivables and allowance accounts, reflecting movements in profit or loss and the financial position.