1. CHAPTER 1: BASIC ACCOUNTING: CONCEPTS, AND CONVENTIONS
BASIC FINANCIAL ACCOUNTING
MGT 2304
MOHD ZARIR YUSOFF

3. Basic accounting terminology
IDENTIFYING ECONOMIC ACTIVITIES
One must identify that the transaction will affecting the company’s economic condition. E.G payment of staffs’ salaries
BOOK KEEPING
ACCOUNT
RECORDING
After identified the transaction, it must be record in accordance to certain sequence or system
COMMUNICATING
The activity of reporting the identified and recorded information to potential users.

4. USERS OF ACCOUNTING DIRECTORS CREDITORS MANAGERS INTERNAL USERS
EXTERNAL USERS
INVESTORS
EMPLOYEES
UNIONS
PUBLIC
GOVERNMENT

5. BRANCHES OF ACCOUNTING
AUDITING
TAXATION
FORENSIC
GOVERNMENT ACCOUNTING
COST AND MANAGEMENT ACCOUNTING
FINANCIAL ACCOUNTING

6. BASIC ACCOUNTING RULES
ETHICAL
BOUNDARY RULES
MEASUREMENT RULES

7. BOUNDARY RULES
ONGOING CONCERN – Assumption that the entity of the organization will operate forever.
SEPARATE ENTITY – The business is treated as separate entity from its owner. This is differentiate between the drawings transactions with purchase of asset.
ACCOUNTING PERIOD – Accounts must be prepared at the end of the accounting period, as determined by the organization

8. MEASUREMENT RULES
MATERIALITY- The accountant must only record the transaction that will affect the company’s financial condition (economics transactions)
HISTORICAL COST – Financial data must be recorded based on the transaction date’s result
MATCHING – Expenses incurred must be offset with revenue occurred
REALIZATION – Refer to the recognition of revenue ( once its occurred not once it is paid)
MONEY MEASUREMENT – Data must be presented in monetary value. E.G RM in Malaysia, SGD in Singapore
DUALITY – All transaction must have at least two effect on financial statement. It also refer o double entry.

9. ETHICAL RULES CONSISTENCY RELEVANCE INTEGRITY OBJECTIVITY PRUDENCE
CONFIDENTIALITY
INTEGRITY
OBJECTIVITY
PRUDENCE

10. Sole proprietor
Sole proprietorship is a business owned by one person who is involved in running and managing the business for profit. The law does not recognize sole proprietorship as a legal entity.
Advantages
Disadvantages
Easy to establish and dissolve.
The owner has sole control over the business.
No profit sharing.
Flexible regulations compared to other types of business.
Difficult to expand due to limited skill and capital.
The risk is solely on the owner.
Unlimited liability

11. partnership
Partnership exists when two or more (2 - 20) individuals share the ownership of a single business for profit. Contractual relationship can be formed through written or verbal agreement. The details of the agreement normally cover the management of the business such as capital contributions and how profits/losses are to be shared. In Malaysia, this type of business is registered under the Partnership Act
Legally, partnership is not a separate entity. Partners are jointly responsible for their business. This means that anyone with outstanding payment from the company can claim payment from any or all of the partners. Each of the partners is liable towards the partnership’s debt.

12. ADVANTAGES AND DISADVANTAGESOF
PARTNERSHIP
Advantages
Disadvantages
Larger capital as the owner is more than one.
Partners with skills and abilities can strengthen the business.
Not bound by requirement on disclosure of business information to public as imposed on limited company.
Unlimited liability.
Possible clashes among the partners that can affect the stability of the management.
Problem on business continuity arising from the death of a partner.