Introduction to Accounting Foundation Diploma
Year: 2024/2025
Introduction to the Module
The module firstly aims to give students a basic knowledge of financial accounting (context, purposes, regulatory framework). It introduces the principal concepts of financial accounting. The preparation of principal financial statements will also be explored. This module is also designed to introduce students to key management accounting skills necessary to support decision-making. It will emphasise the acquisition and application of skills and knowledge necessary to inform managers responsible for planning, decision-making and control and will provide the underpinning skills and knowledge required for more advanced study. The key issues addressed will be the fundamentals of convention, accounting cycle, accounting equation, internal control, statement of cash flow and analysis of financial information. The key techniques and their theoretical underpinning will be explained in lecture sessions and students will be expected to work on practical examples and case studies for discussion and clarification in tutorials.
Learning Outcome
On successful completion of this module the student will be expected to be able to display the understanding and application of the following
1. To understand the complete cycle of accounting procedures and controls that identify, classify, summarise and record different sorts of financial data
2. Process and present such data into information according to established accounting principles
3. Understand the conventions, assumptions, concepts and limitations behind such practices
4. Recognise and explain fundamental financial and management accounting terminology
5. Identify and apply appropriate planning and decision-making techniques to management problems involving organisational resources.
6. Analyse, communicate and make use of accounting information
7. To understand the Convention, Principles & Assumptions, Accounting Cycle: An Overview
8. Accounting Entries, Internal Control, Statement of Cash Flow and Analysis of Financial Information
Lesson Plan
Topic 1: Introduction to Accounting and Business
Topic 2: Analyzing Transactions
Topic 3: The Matching Concept and the Adjusting Process
Topic 4: Completing the Accounting Cycle
Topic 5: Receivables
Topic 6: Fixed Assets
Topic 7: Statement of Cash Flows
Topic 8: Financial Statement Analysis
Recommended Test
Warren, Reeve and Duchac (2018), Accounting, 27th ed. Cengage Learning
Assessment
The assessment for this module consists of two forms of assessment. Submission dates are as indicated.
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Part
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Type of
assessment
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Word or
time limit
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Mark
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Submission method
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Submission dates
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1.
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AS1 - MCQ TEST
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50%
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BLACKBOARD
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Refer to
BLACKBOAR D
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2
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AS2 - Written
Assessment
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1,000
Words
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50%
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Upload the ITA Assignment 2 as an attachment in PDF format on BLACKBOARD
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Refer to
BLACKBOAR D
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AS1 - MCQ TEST
AS2 - Written Assessment
Q1 (20 marks)
Thomson Company is owned and operated by Sara Thomson. The following selected transactions were completed by Thomson Company during August:
1. Received cash from owner as additional investment $15,000.
2. Paid creditors on account $3,000.
3. Billed customers for services on account, $7,665.
4. Received cash from customers on accounts $5,645.
5. Paid cash to owner for personal use, $3,500.
6. Received electric bill $60, to be paid next month.
Indicate the effect of each transaction on the accounting equation:
1) By Account type - (A)assets, (L)liabilities, (O)owner’s (E)equity, (R)revenue, and (E)expense
2) Name of Account for the entry
3) The amount by of the transaction.
4) Indicate the specific item within the account equation element that is affected.
Note: Each transaction has two entries.
Q2 (20 marks)
The assets and liabilities of Robinson Tree Services at May 31, 2018, the end of the current year, and its revenue and expenses for the year are listed below. The capital of the owner was
$190,000 at June 1, 2017, the beginning of the current year. Additional information: Mr. Robinson made an additional investment of $15,000 during the year.
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Accounts Payable
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$1,200
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Miscellaneous Expense
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$220
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Accounts Receivable
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$12,340
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Office Expense
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$560
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Cash
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$32,990
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Building
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$143,670
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Fees Earned
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$78,350
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Wages Expense
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$26,770
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Land
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$65,000
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Drawing
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$3,000
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Prepare a balance sheet for the current year ended May 31, 2018.
Q3 (20 marks)
Journalize the following selected transactions for August 2018 in a two-column journal. Journal entry explanations may be omitted.
Aug Received cash from the investment made by the owner, $15,000.
1
2 Received cash for providing accounting services, $8,000.
3 Billed customers on account for providing services, $4,000.
4 Paid advertising expense, $400.
5 Received cash from customers on account, $3,500.
6 Owner withdraws, $1,000
7 Received telephone bill, $100
8 Paid telephone bill, $100.
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Date
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Description
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Post
Ref
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Debit
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Credit
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Q4 (20 marks)
Complete the following worksheet for Mantle Enterprises.
Q5 (10 Marks)
From the following data, determine for the current year the (a) rate earned on total assets, (b) rate
earned on stockholders' equity, (c) rate earned on common stockholders' equity, (d) earnings per share on common stock, (e) price-earnings ratio on common stock, and (f) dividend yield on common stock. Assume that the current market price per share of common stock is $27. (Present key figures used in your computations.)
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Current
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Preceding
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Year
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Year
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Current assets
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$ 735,000
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$ 820,000
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Property, plant, and equipment
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1,500,000
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1,400,000
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Current liabilities
(non-interest-bearing)
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150,000
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140,000
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Long-term liabilities, 12%
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400,000
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400,000
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Preferred 10% stock
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250,000
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250,000
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Common stock, $25 par
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1,200,000
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1,200,000
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Retained earnings: Beginning of year
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230,000
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160,000
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Net income for year
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85,000
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155,000
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Preferred dividends declared
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(25,000)
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(25,000)
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Common dividends declared
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(60,000)
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(60,000)
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Q6 (10 marks)
On the basis of the following data for Teller Co. for 2018 and the preceding year ended December 31, 2018, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.
Year Year
2018 2017
Cash $100,000 $ 78,000
Accounts receivable (net) 78,000 85,000
Inventories 101,500 90,000
Equipment 410,000 370,000
Accumulated depreciation (150,000) (158,000)
$539,500 $465,000
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Accounts payable (merchandise creditors)
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$ 58,500
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$ 55,000
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Cash dividends payable
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5,000
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4,000
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Common stock, $10 par
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200,000
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170,000
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Paid-in capital in excess of par--
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common stock
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62,000
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60,000
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Retained earnings
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214,000
$539,500
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176,000
$465,000
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