Summary

Accounting II summary

0 purchase

Course
Accounting II

Institution
Vrije Universiteit Amsterdam (VU)

This is a summary of the Accounting II course in the 2nd year of the Economics and Business Economics study. The summary is about all the financial and management accounting material you need to know before the exam.

[Show more]

Preview 3 out of 30 pages

View example

Uploaded on January 11, 2024
Number of pages 30
Written in 2022/2023
Type Summary

accounting ii
accounting 2
accounting samenvatting
samenvatting
summary

Institution
Vrije Universiteit Amsterdam (VU)
Education
Economie en Bedrijfseconomie
Course
Accounting II

$7.52

Also available in package deal from $11.29

Add to cart

Add to wishlist

100% satisfaction guarantee
Immediately available after payment
Both online and in PDF
No strings attached

Also available in package deal (1)

EBE year 2 summary bundel

$ 22.56 $ 11.29

1x sold

3 items

1. Summary - Accounting ii summary
2. Summary - Finance ii summary
3. Summary - Marketing ii summary
Show more

Accounting II

Lecture 1:

Introduction to financial statement analysis

 Who are the users of financial statements:
o Shareholders  main focus of IFRS (international financial reporting standards)
o Bank / creditors  main focus of IFRS
o Customers/suppliers
o Employees
o Government
o ‘Society’



Financial reporting and capital markets




 Financial reporting entails the disclosure of financial (and related) information about a
company’s financial performance in a certain period. Financial statements are the chief
instrument to do that.

Recap accounting I: what is financial reporting?

 Financial statements measure and summarize the economic cocnsequences of business
activities
o Reported on an annual, semi-annual an/or quarterly basis
 Financial statements comprise:
o Statement of comprehensive income; income statement
o Statement of financial position; balance sheet
o Cash flow statement

, o Statement of changes in equity
o Notes

o


Beyond accounting I: influences on financial reporting


 We focus on two major themes (or influences on financial reporting)
o Accrual accounting and discretion
o Managers’ influence on financial statements
 Other factors that affect financial reporting:
o Accounting conventions and standards
 European listed firms apply IFRS
o Auditing and the regulatory framework
 Key takeaway: accounting is not ‘objective’, and there is no ‘true’ outcome

Theme 1: accrual accounting and discretion

 IFRS defines the following statement elements
o Revenues, expenses (income statement)
o Assets, liabilities, equity (balance sheet)
 Financial reports are prepared using accrual accounting
o Transactions are recorded when they occur, rather than at the time of a cash flow
 For example: revenue recognition, depreciation
 Net income = cash flow + accruals (discretion!)
 Accrual accounting means that there is a trade-off due to:
o Accounting estimates: what is the right number?
o Flexibility in standards: how much discretion to choose a number?

, o Imperfect rules: do the rules still reflect the current environment?
o Managers’ incentives: do they want to present the right number?

Theme II: management incentives

 Management has superior knowledge of a firm’s business:
o Using accounting, it can communicate insider information to investors
 For example:
 Useful lives of assets
 Revenue recognition
o However there are also incentives to distort accounting numbers
 Management compensation
 Debt contracts
o As a result there is a trade-off surrounding management discretion

ESG reporting & stakeholder orientation

 Three pillars of ESG reporting

o
 Major ESG focus on reporting greenhouse gas emissions
o Scope 1:
 All direct emissions within organization’s control
o Scope 2:
 Indirect emissions from purchased electricity, heat, steam, or cooling
o Scope 3:
 Other indirect emissions in entire value chain
 Greatest share of a firm’s carbon footprint

Toturial 1

Accounting I

Balance sheet  debit = assets, credit = liabilities + equity

Income statement  expense/loss, revenue/gain (change in equity)

Accounting for non-current assets:

 Property, plant and equipment
o Cost of property, plant and equipment is
recognized as an asset if, and only if:
• it is probable that future economic
benefits associated with the item
will flow to the entity; and
• the cost of the item can be
measured reliably.

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller femkehillen04. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $7.52. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

69411 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling