ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Business Administration)

FINANCIAL ACCOUNTING (5004)

CHECKLIST

SEMESTER: AUTUMN 2020

This packet comprises the following material:

1. Textbook (one)
2. Course Outline
3. Assignment No. 1, 2
4. Assignment Forms (2 sets)

In this packet, if you find anything missing out of the above mentioned material, please
contact at the address given below:

Director Admission and Mailing

Allama Iqbal Open University
Sector H-8, Islamabad.
Ph: 051-9057611-12

Mahmood - ul - Hasan
(Course Coordinator)
 ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Business Administration)

WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENT(S) BORROWED OR STOLEN FROM
OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
“AIOU PLAGIARISM POLICY”.
Course: Financial Accounting (5004) Semester: Autumn 2020
Level: MSc Administrative Science Total Marks: 100
Pass Marks: 50
ASSIGNMENT No. 1
(Units: 1 – 4)

Q. 1 Accounting is sometimes described as the language of business. What is meant by this

description? (20)

Q. 2 In its simplest form, an account has only three elements or basic parts. What are
these three elements? (20)

Q. 3 When Torretti Company began business on August 1, it purchased a one-year fire

insurance policy and debited the entire cost of $7,200 to unexpired insurance.
Torretti adjusts its accounts at the end of each month and closes its books at the end
of the year. (20)
(a) Give the adjusting entry required at December 31 with respect to this
insurance policy.
(b) Five the closing entry required at December 31 with respect to insurance
expense. Assume that this policy is the only insurance policy Torretti had
during the year.
(c) Compare the dollar amount appearing in the December 31 adjusting entry
(part a) with that in the closing entry (part b). Are the dollar amounts the
same? Why or why not? Explain.

Q. 4 Concord Products uses a perpetual inventory system. On January 1 the Inventory

account had a balance of $84,500. During the first few days of January the
following transactions occurred: (20)

Jan. 2 Purchased merchandise on credit from Smith Company for $9,200.

Jan. 3 Sold merchandise for cash, $22,000. The cost of this merchandise was
$14,300.
a. Prepare entries in general journal form to record the above transactions.
b. What was the balance of the Inventory account at the close of business
January3?

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 Shown below are selected statistics from the recent annual reports of two well-known
retailers.
Sears, Roebuck and Co. Broadway Stores,
Inc.
Percentage increase (decrease0 in net sales 7.2% (0.3)%
Percentage increase in comparable store net 4.7% 3.1%
sales

(a) Explain the meaning and significance of each of the two measures.
(b) Evaluate the performance of the two companies based on the two measures.

Q. 5 Which form of partnership would be most appropriate for a law practice? Explain.

(20)

GUIDELINES FOR ASSIGNMENT # 1

You should look upon the assignments as a test of knowledge, management skills, and
communication skills. When you write an assignment answer, you are indicating your
knowledge to the teacher:
· Your level of understanding of the subject;
· How clearly you think;
· How well you can reflect on your knowledge & experience;
· How well you can use your knowledge in solving problems, explaining situations,
and describing organizations and management;
· How professional you are, and how much care and attention you give to what you do.

To answer a question effectively, address the question directly, bring important related
issues into the discussion, refer to sources, and indicate how principles from the course
materials apply. The student must also be able to identify important problems and
implications arising from the answer.
For citing references, writing bibliographies, and formatting the assignment, APA format
should be followed.
ASSIGNMENT No. 2
Total Marks: 100
Pass Marks: 50

This assignment is a research-oriented activity. You are required to obtain information

from a business/commercial organization and prepare a report of about 1 000 words on
the issue allotted to you to be submitted to your teacher for evaluation.

You are required to select one of the following issues according to the last digit of your
roll number. For example, if your roll number is P-3427180 then you will select issue # 0
(the last digit): -
ISSUES:
0- Inventory Management
1- Accounting Receivable
2- Accounting Information System
3- Accounting for Plant Assets (Acquisition & Disposal)

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4- Accounting for Merchandizing Business
5- Partnership Accounting
6- Accounting for Non-profit Organization
7- Accounting for Corporation
8- Accounting for Cash & Short-term Investment
9- Accounting for Long Term Liabilities

The report should follow the following format:

1- Title page
2- Acknowledgements
3- An abstract (one page summary of the paper)
4- Table of contents
5- Introduction to the issue (brief history & significance of issue assigned)
6- Practical study of the organization (with respect to the issue)
7- Data collection methods
8- SWOT analysis (strengths, weaknesses, opportunities & threats) relevant to the
issue assigned
9- Conclusion (one page brief covering important aspects of your report)
10- Recommendations (specific recommendations relevant to issue assigned)
11- References (as per APA format)
12- Annexes (if any)

GUIDELINES FOR ASSIGNMENT # 2:

· 1.5 line spacing
· Use headers and subheads throughout all sections
· Organization of ideas
· Writing skills (spelling, grammar, punctuation)
· Professionalism (readability and general appearance)
· Do more than repeat the text
· Express a point of view and defend it.

WORKSHOPS
The workshop presentations provide students opportunity to express their communication
skills, knowledge & understanding of concepts learned during practical study assigned in
assignment # 2.
You should use transparencies and any other material for effective presentation. The
transparencies are not the presentation, but only a tool; the presentation is the
combination of the transparencies and your speech. Workshop presentation
transparencies should only be in typed format.

The transparencies should follow the following format -

1) Title page
2) An abstract (one page summary of the paper)
3) Introduction to the issue (brief history & significance of issue assigned)
4) Practical study of the organization (with respect to the issue)
5) Data collection methods
6) SWOT analysis (strengths, weaknesses, opportunities & threats) relevant to the
issue assigned
7) Conclusion (one page brief covering important aspects of your report)
8) Recommendations (specific recommendations relevant to issue assigned)

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GUIDELINES FOR WORKSHOP PRESENTATION:
Make eye contact and react to the audience. Don't read from the transparencies or from
report, and don't look too much at the transparencies (occasional glances are acceptable
to help in recalling the topic to cover).

A 15-minute presentation can be practiced several times in advance, so do that until you
are confident enough. Some people also use a mirror when rehearsing as a substitute for
an audience.

WEIGHTAGE OF THEORY & PRACTICAL ASPECTS IN ASSIGNMENT # 2 &

WORKSHOP PRESENTATIONS
Assignment # 2 & workshop presentations are evaluated on the basis of theory & its
applicability. The weightage of each aspect would be:
Theory: 60%
Applicability (practical study of the organization): 40%

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Business Administration)

Course: Financial Accounting Course Code: 5004

Level: MSc Administrative Science Credit Hours: 03

Unit- Introduction to Accounting

1: 1.1. Evolution of Accounting
1.2. Accounting Theory & Conceptual Framework
1.3. Significance of Accounting?
1.4. Accounting Information System(AIS)
1.5. Basic Accounting Model
1.6. Financial Statements
1.7. Characteristics of Financial Statements
1.8. Constraints on Relevant and Reliable Information
1.9. Users of Accounting Information
1.10. Major Fields of Accounting

Unit-2: Recording, Year-end Adjustments, and Financial Statements

2.1 Business Events and Business Transactions
2.2 Evidence and Authentication of Transactions
2.3 Recording Process
2.4 Journal and Posting in the Ledger
2.5 Balancing the Accounts
2.6 Chart of Accounts
2.7 Limitations of Trial Balance
2.8 Concept of Accruals and Deferrals
2.9 Need for Adjusting Entries
2.10 Prepaid Expenses

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 2.11 Accrued Expenses
2.12 Accrued Incomes
2.13 Depreciation
2.14 Adjusted Trial Balance
2.15 Work Sheet
2.16 Closing Entries
2.17 Preparation of Financial Statements

Unit-3: Accounting for Trading Organizations

3.1 Difference Between Manufacturing and Merchandising Organizations
3.2 Merchandizing Activities
3.3 Accounting for Purchases
3.4 Accounting for Sales and Inventory
3.5 Returns, Allowances, and Discounts
3.6 Merchandise Reporting
3.7 Work Sheet for Merchandising Concern
3.8 Adjusting Entries
3.9 Closing Entries
3.10 Cost of Goods Sold Statement, Income Statement, and Balance Sheet

Unit-4: Cash, Accounts Receivable, and Temporary Investments

4.1 Cash
4.1.1 Cash Management
4.1.2 Internal Control Over Cash
4.1.3 Cash Receipts and Disbursements
4.1.4 Reconciling the Bank Statements
4.1.5 Impress Petty Cash System
4.1.6 Statement of Cash Flows
4.2 Accounts Receivable
4.2.2 Uncollectible Accounts
4.2.3 Write-Off Methods
4.2.4 Estimation of Credit Losses
4.2.5 Management of Accounts Receivable
4.2.6 Techniques to Minimize Credit Losses
4.2.7 Evaluating the Quality of Accounts Receivable
4.2.8 Notes Receivable and Interest Charges
4.2.9 Credit Card Sales
4.2.10 Credit Risk
4.3 Short Term Investments
4.3.1 Purchases of Marketable Securities
4.3.2 Recognition of Investment Revenue
4.3.3 Adjusting Marketable Securities to Market Value
4.3.4 Reporting Investment Transaction

Unit-5: Accounting Information System

5.1. Forms of Business

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 5.2. Introduction to Accounting Information System (AIS)
5.3. Manual, Computerized, and Computer Based AIS
5.4. Using an AIS to Add Value to Business
5.5. Future Role of the AIS
5.6. Elements and Procedures of AIS
5.7. Development of an Accounting Information System
5.8. Special Journals
5.9. Subsidiary Ledgers
5.10. Special Journals and Posting Process

Unit-6: Accounting for Inventory & Plant Assets

6.1. Inventory Systems
6.2. Types of Inventories
6.3. Identifiable Costing Method
6.4. Cost Flow Assumptions (LIFO, FIFO. etc.)
6.5. Weighted and Moving Average Method
6.6. Lower of Cost or Market (LCM)
6.7. Net Realizable Value
6.8. Advantages and Disadvantages of Cost Flow Assumptions
6.9. Accounting for Property: Plant, and Equipment
6.10. Property, Plant, and Equipment
6.10.1. Cost of Property, Plant, and Equipment
6.10.2. Subsequent Expenditure
6.11. Depreciation
6.11.1. Depreciation Methods
6.11.2. Acquisition of Plant Assets
6.11.3. Disposal 6.11.4. Trade-In
6.11.5. Intangible Assets and Amortization
6.11.6. Wasting Assets and Depletion

Unit-7: Partnership
7.1 Partnership: Advantages and Disadvantages
7.2 Partnership Deed
7.3 Accounts of Partnership
7.4 Closing the Partnership Accounts at Year-End
7.5 Partnership Profits and Income Taxes
7.6 Dividing Partnership Net Income
7.7 Dissolution of Partnership
7.8 Liquidation of Partnership

Unit-8: Corporations
8.1 Corporations: Advantages and Disadvantages
8.2 Stockholders' Equity and Dividends
8.3 Rights of Common and Preferred Stockholders
8.4 Issuance, Face Value, Book Value, and Market Value of Stocks
8.5 Donated Capital
8.6 Continued and Discontinued Operations
8.7 Changes in Accounting Policies
8.8 Earning Per Share (EPS)
8.9 Stock Split and Repurchase
8.10 Statement of Stockholders Equity

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 8.11 Statement of Retained Earnings
8.12 Statutory Books
8.13 Financial Statements

Unit-9: Special Type of Liabilities

9.1 Bonds
9.2 Bond Interest
9.3 Accounting for Bonds Payable
9.3.1. Issue At Par
9.3.2. Discount
9.3.3. Premium
9.4 Year-End Adjustments for Bond Interest Expense
9.5 Bond Sinking Fund
9.6 Investment in Corporate Securities
9.7 Short-term and Long-term Investment
9.8 Investment in Marketable Securities
9.9 Accounting for Marketable Securities
9.10 Sale of Investment
9.11 Accounts of Holding Companies and Non Profit Accounting
9.12 Accounting for Parent, Subsidiary, and Affiliates
9.13 Recording Inter Company Transactions
9.14 Methods of Accounting for Consolidations
9.14.1. Consolidated Balance Sheet
9.14.2. Consolidated Income Statements
9.14.3. Other Consolidated Financial Statements
9.15 Accounting of Payroll

Recommended Books:
Williams, J. R., Haka, S. F., Benner, M. S., Haka, S., & Carcello, J. (2011). Financial and
Managerial Accounting (l6th ed.). New York: McGraw Hills Inc.

Romney, M. B., & Steinbart, P. J. (2011). Accounting Information Systems (12 th ed.).
USA: Pearson Education.

Meigs, M. (20 1 0). Financial Accounting (15th ed.). New York: McGraw Hills Inc.

Kaluza, J. (2009). Accounting: A Systems Approach (8th ed.). New York: McGraw Hills
Inc.
Wallis, K. (2007). Accounting: A Modern Approach (8th ed.). New York: McGraw Hills
Inc.

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