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Aantekeningen Hoorcolleges Accounting
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Aantekeningen van elk hoorcollege van het vak Accounting (MAN-BCU168) Inclusief voorbeelden en plaatjes Radboud Universiteit
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Aantekeningen AccountingHoorcollege 1, 12-04-2022, Case Radboud Coffee Company
Sale = money that comes into a company based on business actions when the money has been
earned. Sale via telefoon is geen sale, wanneer het op papier staat, staat het vast en is het een sale.
Written → legally binding.
Wanneer je geld van een bedrijf gebruikt voor iets/iemand wat niks heeft te maken met het bedrijf,
is het geen business transaction. Bijvoorbeeld iemand koopt een cadeau voor z’n vriend (met geld
van het bedrijf), heeft dit niks te maken met het bedrijf, dus is het geen business transaction. Het is
een transactie tussen de cadeauwinkel en de persoon, het bedrijf waar je het geld van gebruikt heeft
hier niks mee te maken. Hier is sprake van geld stelen van het bedrijf, dit is geen business
transaction.
- Business transaction → business involved
- Transactie tussen bedrijven waar er in de toekomst/het heden een onderliggende value of
exchange is. Affects financial position of company.
Opname Chapter 1: Accounting and the Business Environment
Why is accounting important?
Users of accounting information
2 typen accounting:
, - Financial Accounting → External Decision Makers
o Investors, Competitors, Authorities, Current/future employees, Suppliers, etc.
o They don’t have direct inside information about the company
- Managerial Accounting → Internal Decision Makers
o Internal decisions to make
o Middle/top management
▪ Both different rules and different objectives
The organizations that govern accounting (Based on USA)
FASB SEC
- Financial Accounting Standards Board - Securities and Exchange Commission
- Privately funded - Oversees the US financial markets
- Creates the rules and standards that - Only listed companies
govern financial accounting ➔ In Europe: European Securities and Market
➔ In Europe: International Accounting Authority (ESMA) and National Authorities
Standards Board (IASB) and National
GAAP (elk land zijn eigen General
Accepted Accounting Principles – bijv.
Dutch GAAP)
Generally Accepted Accounting Principles (GAAP
- Guidelines/rules that govern accounting
- Based on a conceptual framework
- Principes
o Relevant → the info allows users to make a decision.
o Faithfully representative → the info should be complete, neutral and free from
material error.
Accounting assumptions
- Economic Entity Assumption → each entity/corporation stands apart from other
corporations. Build boundaries between one corporation and the other.
- Cost Principle → we need to record our costs at our assets, liabilities, and costs at the actual
costs. Not just the costs we think, but the actual costs.
- Monetary Unit Assumption → we need to compare different numbers over time. Difficult
because of inflation (devaluation of money) for example. Accountants don’t look al inflation,
because otherwise it is almost impossible to compare numbers over time. We must assume
that there’s a stable buying power.
- Going Concern Assumption → we assume that our company can continue to operate for the
foreseeable future. If this is not the case, some accounting problems/standards will change.
,The ‘accounting equation’
Assets = economic resource that are expected to benefit the business/corporation in the future
- Land, furniture, inventory, cash
Liabilities = debts that are owed to creditors
- Accounts payable → money you owe to e.g. suppliers, you haven’t payed yet
- Notes payable → long term: same as accounts payable, but over a longer period. Takes more
time to pay them.
- Salaries payable → money you owe to your employees.
- Tax payable → money you owe to the tax authorities.
Equity = the owner’s residual claim against the assets of the company. Every company has at least 1
owner. Equity is the money he/she invested when the business started.
- Owner’s withdrawals → money that is withdrawn from the company. E.g. the owner buys
food for himself.
- Owner’s capital
- Owner’s capital – owner’s withdrawals + revenues – expenses
o Revenues = all the money you have generated by selling your services/products.
Economic resources that have been earned by delivering products or services to
customers.
o Expenses = all the money you have paid/are going to pay for product/services you
have consumed in business activity. The costs associated with selling goods or
services.
▪ Owner’s capital – owner’s withdrawals + profit
DUS:
➔ Assets = liabilities + owner’s capital – owner’s withdrawals + revenues – expenses
Use the accounting equation to analyze transaction
What is a transaction?
A very special kind of historical event
1. It involves the exchange of economic resources. There must be something of value that is
exchanged.
2. We must be able to measure the economic impact/value in monetary units.
➔ YES: Buying a copying machine for the office for €4,000 cash
➔ NO: Meeting with a potential customer. Don’t know if customer is going to buy something. You
don’t know the value.
, Prepare Financial Statements
4 types of Financial Statements
- Income statement
- Statement of Owner’s Equity
- Balance Sheet
- Statement of Cash Flows
➔ These same 4 financial statements are used by all companies as the primary means of
communicating to stakeholders.
Income Statement
- Reports the success or failure of the company’s operations for a period of time
- How well was the company doing over a certain period?
Statement of Owner’s Equity
- Shows amounts and causes of changes in owner’s capital during a specific period
Balance Sheet
- Reports assets, liabilities, owner’s equity and claim to those assets at a specific point in time
Statement of Cash Flows
- Answers the question whether the business generates enough cash to pay its bills
- Where was the cash generated? Has cash changed over period? Why?
Dingen tussen ( ) betekent een min in accounting! (5.000) = -5.000
Return On Assets (ROA) ratio
It is a very important profitability ratio in Accounting and it informs us how well our company did. We
calculate it as follows:
- ROA = Net Income / Average total assets
For example: Net income for 2020 was $10,000 and total assets at the beginning (ending) of 2020
was $50,000 ($150,000). Hence our ROA will be equal to 10% (= 10,000 / (50,000+150,000)/2).
Opname Chapter 2: Recording Business Transactions
Explain accounts as they relate to the accounting equation and describe common accounts
What is an account?
➔ Assets = liabilities + equity
- Each element of the Accounting Equation contains smaller elements called accounts.
- Account = the detailed record of all increases and decreases that have occurred in an
individual asset, liability, equity, revenue or expense during a specified period.
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