FINANCIAL ACCOUNTING 2, ZIMBABWE
PURPOSE
In Financial Accounting 1, the student obtained a sound background in order to deal with the basic accounting aspects and principles. In Financial Accounting 2, more specific topics are addressed so that the student will be competent to prepare and present the financial statements of different business enterprises.
RECOMMENDED TEXTBOOKS (SOURCE)
1. Business Accounting II by Wood: Longmans
2. Group Statements (latest edition), by Cilliers, Rossouw & Faul: Butterworths.
3. Rapid Results College publication
SUPPLEMENTARY TEXTBOOKS
Selected Questions in Accounting (Intermediate), by Cairns, Dickinson and Sanders: Juta
1993.
Corporate Reporting by Everingham: Juta & Co
SYLLABUSSECTION ONE – PARTNERSHIPS (20%)
OBJECTIVE
After studying the section on partnerships, the student must be able to:
1. make the necessary adjustments in the books when a new partner is admitted;
2. make the necessary adjustments in the books when an existing partner retires
3. take into account whether a goodwill account is used or not in (a) and (b)
4. make the entries in the books of account when a partnership is dissolved or converted
into a company
5. prepare accounts from incomplete records
LEARNING OUTCOMES
To reach the above-mentioned objectives, the following learning outcomes should be mastered:
1.1 Admitting a new partner:
1.1.1 with cash, assets and liabilities brought in by a new partner.
1.1.2 revaluation of assets.
1.1.3 working of all aspects of goodwill.
1.1.4 changes in profit-sharing ratio
1.2 Retirement of a partner
1.2.1 goodwill aspects
1.2.2 revaluation
1.3 Dissolution of partnership:
1.3.1 sale of assets, including piecemeal selling off
1.3.2 settling liabilities
1.3.3 take-over of items by partner
1.3.4 applying the Garner vs Murray rule
1.3.5 piecemeal dissolution with immediate distribution of cash
1.4 Preparing accounts from incomplete records.
1.5 Converting a partnership into either a company.
SECTION TWO – COMPANIES (30%)
OBJECTIVE
After students have studied the on companies, they should be able to –
1. enter transactions for a company in the journal and general ledger;
2. enter transactions for the redemption of preference shares and debentures in the
journal and ledger;
3. prepare final accounts and financial statements for publication as well as internal use.
LEARNING OUTCOMES
The following learning outcomes should be mastered to enable students to reach these objectives
2.1 Issue of shares and debentures:
2.1.1 at discount.
2.1.2 at premium.
2.1.3 at par.
2.1.4 deferred expenses.
2.2 Underwriting share issues for a commission.
2.3 Capitalisation (bonus) issues and rights issues.
2.4 Conversion of shares:
2.4.1 conversion of par value shares into shares without par value.
2.4.2 conversion of shares without par value into shares with par value.
2.5 Redemption of preference shares:
2.5.1 by new issues.
2.5.2 ex profits.
2.6 Redemption of debentures:
2.6.1 at term end.
2.6.2 by instalments.
2.7 Financial accounts and financial statements:
2.7.1 internal use.
2.7.2 for publication in accordance with requirements of the Companies Act and
regulations, and IAS 1.
2.7.3 cash flow statement (IAS 7).
2.8 Manufacturing companies:
2.8.1 production cost statement.
2.8.2 final accounts and financial statements.
2.8.3 for internal use.
2.8.4 for publication.
2.9 Buying a business – including a partnership.
SECTION 3 SHORT-TERM BUDGETING (15%)
OBJECTIVE
After studying the section on short-term budgeting, the students should be able to
1. explain the importance of short-term budgets for planning, decision-making and
control purposes;
2. explain and apply the concept of limiting factors in short-term budgeting;
3. distinguish between the master budget and functional budgets.
LEARNING OUTCOMES
The following learning outcomes should be mastered by students
3.1 appreciation of the economic rationale of short-term budgeting
3.2 appreciation of the distinction between profits and cash in the context of short-term budgeting
3.3 ability to draw up the master budget and functional budgets from a given set of data
SECTION FOUR – A COMPANY WITH WHOLLY-OWNED SUBSIDIARIES (10%)
OBJECTIVE
After studying this section, the student should be able to –
1. prepare consolidated accounts for a holding company with fully owned-subsidiaries;
2. compile the consolidated income statement;
3. compile the consolidated cash flow statement;
4. compile the consolidated balance sheet
LEARNING OUTCOMES
The following learning outcomes should be mastered –
4.1 Consolidation at date of acquisition.
4.2 Consolidation after date of acquisition.
4.3 Inter-company transactions:
4.3.1 balance sheet items
4.3.2 income statement items.
4.4 Profit in stock in the books of the holding company or in the books of the subsidiary.
SECTION FIVE – BRANCH ACCOUNTS (15%)
OBJECTIVE
After studying this section the student should be able –
1. understand the accounting differences between a branch that is and is not an independent
branch, and a foreign branch; and
2. make the necessary entries in the books of accounts of all three types of branches
LEARNING OUTCOMES
The student should master the following concepts to reach these objectives –
5.1 Non-independent branch:
5.1.1 Stock supplied at cost price.
5.1.2 Stock supplied at selling price.
5.2 Independent branch.
5.3 Foreign branches (IAS 21).
SECTION SIX – LONG TERM CONSTRUCTION PROJECTS (4%)
OBJECTIVE
After studying this section, the student should show a sound knowledge of the guidelines contained in IAS 11 pertaining to how transactions on contracts be handled. The taxation implications can be ignored.
LEARNING OUTCOMES
To enable the student to reach the above-mentioned objective, the following concepts must be mastered:
6.1 completed contract method;
6.2 percentage-of-completion method.
SECTION SEVEN – INSTALMENT SALES (3%)
OBJECTIVE
After studying the above-mentioned section, the student should be able to apply IAS 17 to:
1. show a sound knowledge of the Hire Purchase Act [Chapter 14:09]
2. make the necessary entries in the various books of account
LEARNING OUTCOMES
The following concepts should be mastered to enable the student to reach the objectives mentioned
7.1 books of buyer.
7.2 books of seller.
SECTION EIGHT – JOINT VENTURES AND CONSIGNMENT ACCOUNTS (3%)
OBJECTIVE
After studying the above-mentioned section, the student should be able to apply IAS 31 and generally accepted accounting practices to:
1. make the necessary entries and adjustments in the books of account of a joint venture
2. make the entries and adjustments in the books of account for consignment account
LEARNING OUTCOMES
The student should master the following concepts relating to all parties involved to reach the objectives –
8.1 where separate sets of books of account are kept.
8.2 where no separate sets of books are kept.
EXAMINATION:
All the questions are compulsory and no multiple choices will be asked. A three-hour
paper will be set with a total of 100marks. A non-programmable calculator may be used.
---oooOOOooo---