Acc291 Principles Of Accounting II

Acc291 Principles Of Accounting Iicopyright 2014 By University Of Ph

This course introduces accounting concepts in a business environment. Students learn to create and apply accounting documents in making better business decisions. Other topics include plant assets, liabilities, accounting for corporations, investments, statements of cash flows, financial statement analysis, time value of money, payroll accounting, and other significant liabilities.

Prepare journal entries to account for transactions related to accounts receivable and bad debt using both percentage of sales and the percentage of receivables methods. Compare tangible and intangible assets. Identify journal entries for acquisition, disposal, and sales of plant assets. Distinguish between revenue and capital expenditures, including their entries. Describe the impact of IFRS on US financial reporting.

Sample Paper For Above instruction

Accounting principles are fundamental to the operation of a business and understanding these concepts is essential for making informed financial decisions. This paper explores critical areas covered in the Principles of Accounting II course, focusing on accounts receivable and bad debt accounting, tangible versus intangible assets, plant asset transactions, and the influence of International Financial Reporting Standards (IFRS) on US financial reporting.

Accounting for Accounts Receivable and Bad Debt

Managing accounts receivable and bad debt is vital for maintaining healthy cash flows. The percentage of sales and percentage of receivables methods are two primary approaches for estimating bad debts. Using the percentage of sales method, companies record bad debt expense as a percentage of credit sales, reflecting the cost of potential losses in the period in which sales occur (Weygandt et al., 2019). Conversely, the percentage of receivables method estimates bad debts based on outstanding receivables, adjusting allowances periodically to match expected uncollectible accounts (Kieso et al., 2018). Both methods serve to present a realistic view of receivables on financial statements and influence income recognition.

Differences Between Tangible and Intangible Assets

Tangible assets are physical resources such as machinery, buildings, and land. They are tangible and measurable, and their valuation is straightforward. Intangible assets, however, lack physical substance; examples include patents, trademarks, and goodwill. Intangible assets require valuation strategies that often involve complex estimates of future benefits (Nair & Rajendran, 2016). Recognizing and amortizing these assets appropriately is crucial for accurate financial reporting and compliance with accounting standards.

Transactions Involving Plant Assets

Accounting for plant assets involves recording acquisitions, disposals, and sales accurately. Acquisition involves debiting the asset account and crediting cash or payable accounts. Disposals and sales require removing the asset's cost and accumulated depreciation from books, recognizing gains or losses where applicable (Penman, 2018). Proper accounting ensures the integrity of the balance sheet and accurate depreciation expense calculation, which affects net income.

Revenue and Capital Expenditures

Understanding the distinction between revenue and capital expenditures is essential. Revenue expenditures are short-term expenses incurred for the maintenance and repair of assets, recognized immediately in the income statement (Kieso et al., 2018). Capital expenditures, on the other hand, improve or extend the useful life of an asset and are capitalized, then depreciated over time. Proper classification affects both financial reporting and tax considerations.

Impact of IFRS on US Financial Reporting

International Financial Reporting Standards aim to harmonize accounting practices globally. IFRS influences US standards through initiatives by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). While convergence efforts have reduced discrepancies, differences persist in areas such as revenue recognition and lease accounting (Loftus, 2020). Adoption of IFRS principles enhances comparability for multinational companies and investors, although differences in implementation remain a challenge.

Conclusion

Understanding and properly applying accounting principles concerning receivables, assets, expenditures, and international standards are foundational to transparent and accurate financial reporting. As businesses operate in a global economy, familiarity with IFRS and its differences from US GAAP becomes increasingly important. Mastery of these concepts ultimately supports better business decisions and compliance with regulatory requirements.

References

• Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2018). Intermediate Accounting (16th ed.). Wiley.
• Loftus, J. (2020). IFRS and US GAAP convergence: Opportunities and challenges. Journal of International Business and Economics, 8(2), 45-53.
• Nair, S., & Rajendran, C. (2016). Intangible assets: Recognition, measurement, and disclosure. International Journal of Accounting, 51(2), 203-224.
• Penman, S. H. (2018). Financial Statement Analysis and Security Valuation (5th ed.). McGraw-Hill Education.
• Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2019). Financial Accounting: Tools for Business Decision Making (9th ed.). Wiley.