Week 4. Student Handout PDF

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Basically, all the homework questions and can also be used for class participation...

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UNSW Business School COMM1140 Financial Management Term 2 2021

Week 4

Recording Business Transactions: Part Two Student Handout

Lecturer: Dr. Greg Richins School of Accounting, Auditing & Taxation UNSW Business School

Moodle: https://moodle.telt.unsw.edu.au/login/index.php

WEEK 5: Recording Business Transactions: Part Two

1. Introduction This week, adjusting entries are the key concept. Adjusting entries are the steps required to ensure the accounts represent the assets, liabilities, revenues, and expenses once we get to the end of the accounting period. When preparing the financial statements for the accounting period, we want to ensure that all assets, liabilities, revenues, and expenses are recognised and measured. To make sure this happens, we must adjust the accounts. At the end of the accounting period, we must ensure that:  Wages owing (liability) are recorded together with the related wages expense for the period.  Interest receivable (asset) is recorded together with related interest revenue for the period.  Unearned revenue (liability) that has been settled by the provision of goods/services is recognised as revenue – only the unearned revenue that remains at the end of the period is a liability.  Prepayments (asset) that have expired during the period are recognised as expense only the prepayments that remain at the end of the period are an asset.

Learning objectives At the end of this topic you will be able to: 

Explain how revenue and expenses differ from cash inflows and outflows;

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Prepare journal entries for accrual accounting adjustments;

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Understand the concept of earnings management

Required Reading Trotman, Carson & Morgan:  Ch 5.1, 5.2. 5.4, 5.5 & 5.6 (excluding ledgers)

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2. Weekly Activities Tutorial Questions Students should attempt the following questions before their tutorial class.  DQ5.2, DQ5.4, DQ5.8, DQ5.9  P5.4, P5.10, P5.12 Additional Questions These questions are for your independent study. You do not need to complete these questions in advance of your tutorial. Solutions may be covered in PASS classes, should you require further assistance.  DQ5.1, DQ5.3, DQ5.5, DQ5.15  P5.5, P5.7, P5.13, P5.24

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