Accounting Coursework

8/12/2019 Accounting Coursework

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UGANDA MANAGEMENT INSTITUTE

POST GRADUATE DIPLOMA IN PUBLIC ADMINISTRATION

MODULE: Financial Accounting and Management

Sn Name Regit!ation Num"e! Email Add!e Signatu

1 Owacha Ongom Florence 13/DPAM/EVE/077

2 Isingoma Raphael 13/DPAM/EVE/07 Isingoma200!"#ahoo$com

3 %#ar&'& (&r& 13/DPAM/EVE/003

) *em+a+a,i Doreen 13/DPAM/EVE/0!0! *emigisa Ai-ah 13/DPAM/EVE/0).

*&sasira Enoc 13/DPAM/EVE/0

#UESTION

Dicu t$e !egulato!% &!ame'o!( o& &inancial !e)o!ting &o! an% o!gani*ation o& %ou!

c$oice in Uganda and e+)lain $o' accounting conce)t, P!inci)le and Con-ention

in&luence t$e )!e)a!ation o& &inancial tatement &o! t$at o!gani*ation.

1
mailto:[email protected]:[email protected]:[email protected]


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Int!oduction

Financial acco&ning is he process o' i-eni'#ing meas&ring an- comm&nicaing economic

in'ormaion o ohers so ha he# ma# mae -ecisions on he +asis o' ha in'ormaion an- assess

he sewar-ship o' he eni#s managemen$

Inernaional Financial Reporing an-ar-s 4IFR5 are -esigne- as a common glo+al lang&age

'or +&siness a''airs so ha compan# acco&ns are &n-ersan-a+le an- compara+le across

inernaional +o&n-aries$ 6he# are a conse&ence o' growing inernaional sharehol-ing an-

ra-e an- are paric&larl# imporan 'or companies ha ha8e -ealings in se8eral co&nries$ 6he#

are progressi8el# replacing he man# -i''eren naional acco&ning san-ar-s$ 6he r&les o +e

'ollowe- +# acco&nans o mainain +oos o' acco&ns which is compara+le &n-ersan-a+le

relia+le an- rele8an as per he &sers inernal or e9ernal$

IFR +egan as an aemp o harmoni,e acco&ning across he E&ropean :nion +& he 8al&e o'

harmoni,aion &icl# ma-e he concep araci8e aro&n- he worl-$ 6he# are someimes sill

calle- +# he original name o' Inernaional Acco&ning an-ar-s 4IA5$ IA were iss&e-

+eween 1;73 an- 2001 +# he %oar- o' he Inernaional Acco&ning an-ar-s


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In he a+sence o' a an-ar- or an Inerpreaion ha speci'icall# applies o a ransacion

managemen m&s &se is >&-gmen in -e8eloping an- appl#ing an acco&ning polic# ha res&ls

in in'ormaion ha is rele8an an- relia+le$ In maing ha >&-gmen IA .$11 re&ires

managemen o consi-er he -e'iniions recogniion crieria an- meas&remen conceps 'or

asses lia+iliies income an- e9penses in he IFR Framewor$ 6his ele8aion o' he imporance

o' he ?IFR@ Framewor was a--e- in he 2003 re8isions o IA .$

For he sae o' an+ic %an :gan-a which is +eing &se- as a case s&-# in his regar- applies

he =AAPs in is 'inancial reporing mechanism ha is g&i-e- +# he Insi&e o'


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ha is less han mare price$ In he secon- case 4ii5 +eca&se +&siness has an inenion o carr# on

is operaions he asse sho&l- +e 8al&e- ongoing concern +asis here+# 8al&e o' each 8ehicle

sho&l- +e 7000 in he +alance shee o' he +&siness

Im)o!tance o& Going conce!n Conce)t

I ser8es as he +asis 'or he preparaion o' 'inancial saemen since 'inancial saemens are

highl# in'l&ence- +# he conin&i# or -isconin&i# o' a +&siness$ 6he calc&laion o' -epreciaion

e9penses are a''ece- +# he esimaion o' s&ccess'&l '&&re operaion o' a +&siness$ In case o'

an+ic %an is going o -isconin&e is operaions asses nee- o +e 8al&e- a +rea&p 8al&e

which is commonl# less han he mare 8al&e o' asses$

II. Acc!ual Conce)t

An acco&ning concep &n-er which re8en&es an- coss or e9penses are recor-e- as he# are

earne- or inc&rre- an- he# are no recor-e- when mone# is recei8e- or pai-

E/AMPLE I' an+ic %an ac&ires mone# on cre-i i sho&l- recor- his ransacion a he

-ae o' ac&isiion no he ime o' pa#men o' mone# i owes an- same reamen wih re8en&es

is e9pece-$ In anoher e9ample wherein an+ic %an has o pa# 2000 as elephone prepai-

charges +& a he en- o' acco&ning perio- +&siness has onl# &se- he ser8ice 'or !00 an-

remaining 1!00 peraining o he ne9 #ear ha is reae- as a c&rren asse$ In his case

+&siness has o recor- onl# !00 as e9pense +eca&se i has inc&rre- onl# ha amo&n o'

e9penses$ an+ic %an sells Mone# on cre-i 'or 200$ In his si&aion i sho&l- recor- ha

200 as income e8en ho&gh an+ic %an is sill &npai- 'or he sale o' Mone#

Im)o!tance o& Acc!ual Conce)t

I helps -eermine he r&e an- 'air 'inancial per'ormance an- posiion o' an eni# since real

e9penses an- incomes are co&ne- regar-less o' he -ae as o when was mone# pai- or recei8e-

Accr&al concep g&i-es he calc&laion o' r&e ne income or loss 'or an acco&ning perio-$

Accr&al +asis o' acco&ning helps managemen o' an+ic %an o e8al&ae an- anal#,e he r&e

'inancial posiion o' he +&siness$ 6here+# i helps managemen o pre-ic he '&&re 'inancialposiion o' an+ic %an

T$e unde!l%ing aum)tion o& Acc!ual Bai

6his principle means ha he e''ecs o' ransacions anoher e8ens are recogni,e- as he#

occ&r an- no as cash or is e&i8alen is recei8e- or pai-$

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III. Conitenc% Conce)t

6his principle re&ires ha once a paric&lar acco&ning meho- or +ase has +een selece- an-

+ecome a polic# i m&s +e applie- conin&o&sl# 'rom #ear o #ear$6o mainain consisenc# he

presenaion an- classi'icaion o' iems in acco&ns or in he 'inancial saemens sho&l- sa#

same 'rom one perio- o anoher acco&ning perio-$

E/AMPLE I is an acco&ning principle ha 'i9e- asses will +e -epreciae- o8er heir &se'&l

li'eG an+ic %an is 'ree o &se an# meho- o' -epreciaion o -epreciae is asses$ I' an+ic

%an selecs sraighHline -epreciaion meho- i is ass&me- ha an+ic %an will 'ollow his

meho- o' -epreciaion in he s&+se&en acco&ning perio-s as well$ An# change in he meho-

o' -epreciaion will res&l in inconsisenc# an- a''ec ne pro'i o' he compan#$

I0. Mate!ialit% Conce)t

Accor-ing o maeriali# concep or principle all MA6ERIA I6EM sho&l- +e -isclose- in he

'inancial saemens$ In'ormaion a+o& an iem is maerial i' is omission or missaemen co&l-

in'l&ence he 'inancial -ecision o' he &sers aen on he +asis o' ha in'ormaion$

E/AMPLE an+ic %an has p&rchase- paper pins 'or !$ ince his iem is immaerial i

co&l- +e reae- as e9penses in income saemen an- compan# wo&l- no show his iem as an

asse in +alance shee e8en ho&gh compan# nows he 'ac ha paper pins will +e &se- more

han one #ear or an acco&ning perio-

0. O&&etting Conce)t

Accor-ing o his concep an eni# canno o''se asses an- lia+iliies agains each oher &nless

o''seing re&ire- +# acco&ning =AAPs$ =ain losses an- e9penses arising 'rom same or

similar ransacions an- hese ransacions are no maerial

E/AMPLE E9ample o' o''seing can +e regar-e- as when an+ic %an se o'' -e+or agains

same cre-ior +eca&se is -e+or an- cre-ior is a same personG here'ore i is permie- o some

e9en$ Cowe8er an+ic %an canno o'' se a -e+or wih some oher cre-iors0I. P!udence Conce)t

6he pr&-ence concep implies ha an+ic %an sho&l- incl&-e a -egree o' ca&ion in he

e9ercise o' >&-gmens nee-e- &n-er he con-iion o' &ncerain#$ In oher wor-s asses an-

incomes sho&l- no +e o8ersae- while lia+iliies an- e9penses sho&l- no +e &n-ersae-$

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Pr&-ence is ca&ion e9ercise- while preparing acco&ns an- 'inancial saemens$ Cowe8er i is

no permie- o creae secre or hi--en reser8es &sing pr&-ence as >&si'icaion

E/AMPLE i' s&ppose an+ic %an sare- ra-ing on an&ar# 1 an- sol- Mone# cosing

!0000 on cre-i an- a he en- o' he #ear acco&ns recei8a+le was )0000$ an+ic %an

esimae- ha i is less liel# o ge pai- 'rom some -e+ors who owe -e+s amo&ning o !000

o& o' )0000 recei8a+le$ an+ic %an is now going o creae a pro8ision 'or -o&+'&l -e+s o'

!000$ ales will +e shown in income saemen a he '&ll 8al&e i$e$ 10000 +& he pro8ision

'or -o&+ '&ll -e+s will +e e9pense- o& in income saemen$ ince ha !000 is &ncerain o +e

reali,e- in he 'orm o' cash pr&-ence concep signi'ies ha !000 sho&l- no +e incl&-e- in he

income o' he compan#$

0II. Su"tance o-e! &o!m Conce)t

&+sance o8er 'orm in-icaes ha ransacions or iems sho&l- +e presene- in con'ormi# wih

heir s&+sance an- economic reali# no merel# on heir legal 'orm

E/AMPLE an+ic %an go a 8ehicle on lease$ (ow an+ic %an is &sing ha 8ehicle o

ranspor is Mone# o he c&somers an- geing economic +ene'is in he 'orm o' income$ ince

he 8ehicle is in he conrol o' compan# an+ic %an nee-s o show 8ehicle in is +alance shee

as an asse conrar# o he 'ac ha compan# is no he legal owner o' he 8ehicle

0III. Rele-ance Conce)t

Accor-ing o his concep in'ormaion in he 'inancial saemens sho&l- +e rele8an$ 6he

in'ormaion is rele8an i' i a''ecs he -ecision maing o' he &sers

(oe ha same in'ormaion co&l- +e rele8an o one repor +& irrele8an o anoher repor

E/AMPLE A &ser o' 'inancial saemen has wo alernai8es o 'inance an+ic %an +ing

shares or +on-s o' he compan#$ an+ic %an sho&l- presen in'ormaion in 'inancial saemens

in s&ch a wa# ha i can help &ser in his -ecision$ In oher wor-s compan# sho&l- pro8i-e &ser

wih rele8an in'ormaion o help he &ser in -ecisionHmaing

I/. O"1ecti-it% Conce)t

6his principle agiaes ha Financial in'ormaion sho&l- +e ne&ral an- +ias 'ree$ In'ormaion

m&s +e 'ree 'rom +ias o +e relia+le$ (e&rali# is los i' he 'inancial saemens are prepare- so

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as o in'l&ence or a''ec he &ser o mae a -ecision in or-er o ge a pre-eermine- o&come or

res&l$

/. Relia"ilit% Conce)t

In'ormaion wo&l- +e relia+le when i is 'ree 'rom errors +ias an- i is complee$ :sers o'

'inancial saemens ass&me ha 'inancial saemens ha8e +een a&-ie- which implies ha he#

are acc&rae an- +ias 'ree$ 6here'ore an+ic %an sho&l- -o&+le chec an- ge a&-ie- heir

'inancial saemens +e'ore p&+licaion

/I. T$e Mone% meau!ement Conce)t

Accor-ing o his principle acco&ns will onl# +e prepare- 'or hose iems o which a monear#

8al&e can +e assigne- E/AMPLE In he +alance shee asses anoher iems are presene- in

some monear# 8al&e i$e$ machiner# an- plan J !00000

Im)o!tance o& Mone% meau!ement Conce)t

Implemenaion o' his concep res&ls in &ni'ormi# o' 'inancial saemens prepare- +# -i''eren

companies i' all o' hem are 'ollowing he same monear# &ni 4s&ch as -ollar5$ 6his concep

helps acco&nans o -eermine maeriali# o' an iem i$e$ wheher an iem worh reporing in

'inancial saemens or no

/II. 2ito!ical cot Con-ention

6his implies ha ransacions are recor-e- a original cos a he ime when he# are occ&rre-$

E/AMPLE A%<


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ha ransacion an- we can sa# ha increase in Firms e&ipmens 4Asse5 an- -ecrease in cash

4Asse5 o' 'irm

Im)o!tance o& Dualit% Conce)t

Repro-&cion o' acco&ns 'rom incomplee recor- is possi+le -&e o he 'ac ha commercial

acco&ning is -one on he +asis o' -o&+le enr# s#sem an- here are alwa#s high chances ha

one aspec o' he 'inancial ransacions wo&l- +e a8aila+le o an+ic %an which can +e &se- o

pro-&ce acco&ns an- 'inancial saemens$ D&ali# or Do&+le enr# s#sem helps race o& errors

an- misaes in recor-ing he ransacions or economic e8ens in he +oos o' acco&ns$

Implemenaion o' -o&+le enr# s#sem helps i-eni'# -i''eren #pe 'inancial 'ra&-s

em+e,,lemens an- misappropriaions +eca&se recor-ing a ransacion wice in he +oos o'

acco&ns maes i -i''ic&l o commi misappropriaion

/I0. Se)a!ate Entit% Conce)t o! Buine entit% conce)t

6his concep 'orms he +asis o' acco&ning principles or conceps$ I implies ha 'or acco&ning

Kan+ic %an is reae- in-epen-enl# 'rom he Owners$ 6his means ha alho&gh an#hing

owne- +# an+ic %an +elongs o he owner4s5 o' an+ic %an an- an#hing owe- +# an+ic

%an is pa#a+le +# he owner4s5 +& 'or acco&ning p&rpose we ass&me ha an+ic %an is

in-epen-en o' is owners

E/AMPLE I' an+ic %an p&rchases a machine or piece o' e&ipmenG i will own an- o+ain

+ene'is 'rom ha E&ipmen$ iewise i' an+ic %an +orrows mone# 'rom Ksomeone i will

ha8e o repa# he mone#$ 6his someone incl&-es e8en owner o' he +&siness$

Im)o!tance o& Buine entit% conce)t o! Se)a!ate Entit% Conce)t

%&siness eni# concep is signi'ican since i 'orms a +ase or 'o&n-aion 'or oher acco&ning

conceps or principles$ %&siness eni# concep helps -eermine he r&e an- 'air 8iew or 'inancial

posiion o' an+ic %an +# maing an+ic %an as an in-epen-en eni# which implies ha

personal proper# o' owners -oes no ge co&ne- while preparing he 'inancial saemens$ I is

help'&l in -eermining he r&e 'ig&re o' pro'i or loss 'or an acco&ning perio- since ownerspersonal e9penses an- re8en&es are o8erlooe-

Concluion

In -rawing &p acco&ning saemens wheher he# are e9ernal B'inancial acco&nsB or inernall#

'oc&se- Bmanagemen acco&nsB a clear o+>eci8e has o +e ha he acco&ns 'airl# re'lec he

r&e Bs&+sanceB o' he +&siness an- he res&ls o' is operaion$ 6he heor# o' acco&ning has

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here'ore -e8elope- he concep o' a "true and fair view"$ 6he r&e an- 'air 8iew is applie- in

ens&ring an- assessing wheher acco&ns -o in-ee- porra# acc&rael# he +&siness aci8iies$ 6o

s&ppor he applicaion o' he Br&e an- 'air 8iewB acco&ning has a-ope- cerain conceps an-

con8enions which help o ens&re ha acco&ning in'ormaion is presene- acc&rael# an-

consisenl#$

Re&e!ence

Inernaional Acco&ning an-ar-s %oar- 420075 Inernaional Financial Reporing an-ar-s

2007 4incl&-ing Inernaional Acco&ning an-ar-s 4IA4m55 an- Inerpreaions as a 1 an&ar#

20075 e9is(e9is I%( 1H)22)H1.13H.

Original e9s o' IA/IFR I< an- IFRI< a-ope- +# he

Documents

Accounting Coursework