Basic Accounting Certiticate (BAC)

This concludes our course on the Basics of Accounting. We touched on the major elements of accounting, giving you a good overall understanding of how accounting works. This started with a set of general ledger accounts expressed in the form of a Chart of Accounts. We used these accounts to capture and report transactions that touch all parts of the business. Most transactions are cash basis type transactions; i.e. a lot of our accounting transactions pass through our cash account or chequebook. However, in order to comply with accounting principles, we have to accrue certain entries. A good example of an accrual entry is to record depreciation on fixed assets.   We also illustrated how these transactions get compiled into a set of financial statements. This process starts with something called the Trial Balance. Adjusting entries are made and identified on the Trial Balance. Once we completed our adjusting entries, we pulled a complete set of financial statements to report financial results. It is important to note that financial statements alone are not sufficient when it comes to full and adequate disclosure. You need to include a complete set of footnotes with tables, narratives and other information to ensure users can fully understand the financial results.   Once we understood accounting transactions and financial statements, we moved into a better understanding of accounting principles. This included several important principles such as:

• Conservative Principle – Error on the side of being conservative when you are faced with a judgment on how to record an accounting transaction.
• Going Concern Principle – Accounting will assume that a business will continue to exist well into the future unless there are real signs of financial distress.
• Cost Principle – When recording the cost of an asset, we should take into account all costs to place the asset into service.

Specific Objectives Chapter by Chapter

Basics of Accounting

Chapter 1 – Framework for Accounting After completing this chapter, you will be able to:

• Interpret a Chart of Accounts for a small business
• Compare and contrast your own personal checking account to an accounting process
• Identify examples of important control accounts used within an accounting process
• Distinguish accrual accounting from cash basis accounting
• Describe important principles of accounting such as conservative and materiality
• Define what monetary value is appropriate for assigning to an accounting transaction
• Express the Accounting Equation correctly
• Identify which general ledger accounts comprise the Balance Sheet and the Income Statement

Chapter 2 – Accounting Transactions After completing this chapter, you will be able to:

• Recognize how debits and credits fit within the context of an account setup such as a T structure
• Post accounting entries for a small business that sells retail goods
• Calculate the cost and sales entries when goods are sold
• Identify what a normal balance is for the five major categories of accounts
• Calculate depreciation entries for the end of an accounting period
• Summarize and close out the accounting cycle using the Income Summary account

Chapter 3 – Compiling the Financial Statements After completing this chapter, you will be able to:

• Construct a Trial Balance for compiling a set of financial statements
• Apply three common types of closing entries at the end of the accounting period
• Identify how the Income Summary account is used to close out the Income Statement
• Assemble final adjusted balances on the Trial Balance
• Sequence the order in which accounts are presented on the Balance Sheet and the Income Statement
• Categorize cash flows into three types of activities for reporting in the Statement of Cash Flows
• Reconcile Net Income to Operating Cash Flow from the Statement of Cash Flows

Chapter 4 – Compiling the Financial Statements After completing this chapter, you will be able to:

• Reconcile changes to the Capital Account for the year
• Reconcile changes to the Equipment Account for the year
• Reconcile changes to the Retained Earnings Account for the year
• Calculate Cost of Goods Sold for the year
• Recognize a Contingent Liability based on two important conditions
• Identify what constitutes an Extra Ordinary Item in accounting
• Apply the Going Concern and Cost Principles of accounting
• Calculate gains and losses on the sale of assets
• Identify when it is necessary to recognize a loss on inventories when market values are below cost
• Construct accounting entries that are necessary for accounting for investments in other companies
• Post accounting entries for deferred taxes
• Interpret how to report revenues that are unearned and expenses that are prepaid
• Reconcile a bank statement to the cash account at the end of the period

Chapter 5 – Accounting for Inventories After completing this chapter, you will be able to:

• Identify the three standard methods used for costing inventories
• Apply the Retail Method and Gross Profit Methods for costing out inventories
• Compile all costs that are the basis for capitalizing a fixed asset
• Calculate the Straight Line Method of Depreciation
• Calculate the Double Declining Balance Method of Depreciation
• Calculate the Sum of Years Digits Method of Depreciation
• Distinguish two other important capitalization methods, depletion and amortization

Chapter 6 – Additional Selected Topics After completing this chapter, you will be able to:

• Identify four different types of accounting changes
• Differentiate how different types of accounting changes are handled
• Identify four elements of disclosure for a change in accounting principles
• Recognize the three main inputs associated with accounting by most manufacturing companies
• Identify and calculate different variances used by manufacturing companies
• Recognize two important changes that are impacting accounting going forward

Who should do this Training- It is suitable for those who are interested to join the financial sector or take responsibilities of organisations financial commitments and enhance career opportunities and personal development.