Fundamentals of Accounting by Kalpesh Kothari

Fundamentals
of Accounting
to help with
Financial Analytics for Managerial Decisions
BUSM4741
Week 1 Webinar, Class C
Friday 12 July, 8:30 pm AEST
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About Me
Kalpesh Kothari
Email: Kalpesh.Kothari@rmit.edu.au
LinkedIn: https://www.linkedin.com/in/kalpeshkothari/
Education: Chartered Accountant (Australia 2005 & India 1996);
Bachelor of Commerce (India – 1993)
Professional
Experience:
Academia
CA ANZ - Examiner & Focus Session Facilitator at CA Program
Monash University, RMIT etc. - Tutor
Public Practice
Commerce &
Industry
Virtual CFO, ERP Consulting, Tax, Audit, Investment advisory
Career Coach, Executive Coach and Small Business Coach
MNCs such as Bristol-Myers Squibb, Carrier Air-Conditioning,
Leica Microsystems, Huhtamaki Packaging, etc.
NFPs for Australian Red Cross, Monash Health, St Vincent de
Paul, Scope etc.
2

What is Accounting?
Language
Science
Art
3

Purpose of Accounting?
Financial Information
Advice
Decision-making
4

Users of financial information
Prospective
owners
Lenders
Employees
Suppliers
Customers
Government
Owners
Managers
5

Process of Accounting
Source
documents
Evidence of
transaction
Details of
transaction
Recording
Journal
entries
(Balance)
Ledger
accounts
(Balance)
Reporting
Trial
Balance
• Income
Statement
• Balance
Sheet
• Statement of
Cash flows
Advice /
Decision
Course of
corrective
action
Decisions
on
resource
allocation
6

Accounting Assumptions
Accounting Entity
Going concern
Reporting period
Accrual basis
7

Qualitative characteristics
of Accounting Reports
Qualitative
characteristics
Relevance
Faithful
representation
Comparability Timeliness Understandability
Verifiability
8

3 GOLDEN Rules of Accounting
Personal accounts
• DEBIT the Receiver
• CREDIT the Giver
Real accounts
• DEBIT what comes in
• CREDIT what goes out
Nominal accounts
• DEBIT all expenses & losses
• CREDIT all incomes & gains
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Accounting Matrix
DEBIT
CREDIT
Balance
Sheet
ASSETS
LIABILITIES
Income
Statement
EXPENSES
INCOMES
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Accounting Equation
Accounting
Equation
Assets
External
LIABILITIES
Liabilities
Internal
OWNERS’
Equity
Balance
Sheet
Contributed
CAPITAL
Retained
EARNINGS
Income
Statement
Incomes
Expenses
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