Referring to 4. Financial (Detailed Study Guide)
Under FA1
Define types of discounts including, where applicable, the effect that trade discounts have on sales tax.
processing and security procedures relating to the use of:[K] 1. Cash 2. Cheques 3. Credit and debit cards 4. Digital payment methods
the principles of coding
petty cash vs etc why not just cash?
Imprest?
what is irrecoverable debt?
receivables vs payables?
wtf is reconciliations?
FA1 heavily introduce us to accounting cycles, how transactions are made, what type of transactions, how to record and document different type of transactions (payables vs. receivables), how to calculate and record them (not just number), then what is double-entry bookkeeping, how to journal, what systems do we use, typical transactions such as payroll, purchase, sales, once captured all transactions into a simple journal, then how to build a general ledger to consolidate all journal into one, types of accounts, cash vs. credit, types of cash, then how to ensure that our general ledgers align with our real number (in banks, in deposits), through the act of reconciliation, then last checking of all balance through trial balance.
It’s really the basis of bookkeeping, accounting cycle and principles of accounting, the basics.
Need to read more:
- Document section, topic 2 FA1. Remittance, etc, process of cash transaction documents vs credit etc. Document flow, parties,
Under FA2
So how do FA2 relates to FA1?
In FA2, we did expand a bit on fundamental of accounting, mostly on higher level concepts, and philosophy, principles/
But mainly FA2 focuses on turning a typical day to day accounting cycle to end period financial statement, from journal entries to general ledgers, then closing off general ledgers, using trial balance to create financial statement, what is financial statement, what’s inside it, what is it, how to build one, carry forward, Building income statement from journal entries, understanding sales and purchase events etc, this is all for income statement. Seems like focusing more on understand tax, and sales tax, and it’s impact to income or net operating income.
Next to understand COGS we understand inventories, cost of sales, understand methods to measure inventories,
The whole FA2 early syllabus was to understanding Income Statement items, it evolved around it’s calculation of EBITDA. To find earning, to find interest, taxes, depreciation, and amortization.
Then we proceed to Balance Sheet, whereby we’re seeing accrued income and deferred income, accrual accounting etc, and then we’re seeing equity on last,
Explain key principles and concepts of accounting:[K] i) Going concern ii) Accrual accounting iii) Materiality iv) Consistency v) Prudence vi) Duality vii) Business entity viii) Historical cost
main requirements of IFRS® Accounting Standards
Under MA1
If the goal of FA1 to teach student how accounting principally work, the extension of FA1 which is the FA2 is the pinnacle of a accounting principle (the financial statement model), the management accounting, is the process and activities we do specifically that contribute to the cycle and financial statement. If the FA is all about recording and document it, MA is all about contributing to it and using it.
So to understand the process or activity, the verb (Action), we first need to understand who’s going to do it.
This is where we learn about entities, organization, centers, functions.
Then we understand the type of processing and how we systematically process the action.
The third one, (so we already have, who’s going to do it, how they going to do it) the next is understanding what, which is organizing what we have captured, and this fall under Classification.
So we know, who, how, what next is when, this is where we understand typical type of accounting for costs, such as materials, labour, products, when for materials, when it comes for labour. These are type of expenses.
Describe the systems used to ensure the correct authorization, coding, analysis and recording of direct and indirect labour and expenses. Explain and illustrate different methods of coding data (including sequential, hierarchical, block, faceted and mnemonic)
Cost units, cost centres, profit centres and investment centres
- Explain and illustrate the concept of cost units.[K]
- Explain and illustrate the concept of cost centres.[K]
- Explain and illustrate the concept of profit centres.[K]
- Explain and illustrate the concept of investment centres.[K]
- Describe and apply performance measures appropriate to cost, profit and investment centres.[S]
Under MA2
If MA1 is all about understanding WHO, WHAT, HOW, WHEN.
MA2 is all about the information passed within them.
It introduce function such as management information
It delves deeper, however with context of the information passed around them, it still using the fundamental WHO, WHAT, HOW, WHEN, it’s different in a sense that these function was meant to be managed.
Next, in order to passed information within them properly, it’s required for a bit more “derivatives” this purpose of derivatives was meant for ease of use, understanding, providing more data on decision-making.
When it comes to decision making it’s all about optimization, and based of our previous study of optimization, there’s two ways of optimization, more or less.
So less, would be things like: CVP Analysis
For more will be on raising fund, so to raise funds what can we do?
d) Explain and illustrate the net present value (NPV) and internal rate of return (IRR) methods of discounted cash flow.[S] e) Calculate present value using annuity and perpetuity formulae.[S] f) Calculate payback (discounted and nondiscounted).[S] g) Interpret the results of NPV, IRR and payback calculations of investment viability.[S]