CERTIFIED ACCOUNTANT

ACCA QUALIFICATION

2011-03-17T09:59:00.000-07:00

ACCA QUALIFICATION

Certificate of Achievement

Students are awarded a Certificate of Achievement if they achieve a pass mark of 85% or above for individual passes in Papers F1, F2 and F3.

Fundamentals Level Certificate

Students are awarded a Fundamentals Level Certificate when they have successfully completed all of the exams in the Fundamentals level of the ACCA Qualification (Papers F1– F9).

Professional Level Certificate

Students are awarded a Professional Level Certificate when they have successfully completed all of the exams in the Professional level of the ACCA Qualification (P1–P3 and any two of the Options papers P4, P5, P6 and P7).

ACCA Qualification Levels

Level 1: Certificate Level: Knowledge Module ( 3 subjects)

Level 2: Fundamental Level: Skills Module (6 subjects)

Level 3: Professional Level: Professional Module (5 subjects)

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Total : 14 Subjects

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Knowledge Module

F1 Accountant in Business

F2 Management Accounting

F3 Financial Accounting

Skills Module

F4 Corporate and Business Law

F5 Performance Management

F6 Taxation

F7 Financial Reporting

F8 Audit and Assurance

F9 Financial Management

Professional Module Essentials

P1 Professional Accountant

P2 Corporate Reporting

P3 Business Analysis

Options Any two From Four Papers

P4 Advanced Financial Management

P5 Advanced Performance Management

P6 Advanced Taxation

P7 Advanced Audit & Assurance

Eligibility:

either +2 or above 21 years

If +2: start with F1,F2,F3 …..etc

If above 21 years of age, without having any qualification: MMA (equivalent to F2) ,

MFA(equivalent to F3), then F1, then F4, F5, etc

If 10th , but above 21 yrs: Same as above

If 10th, but below 21 years: Take CAT route

Practical Experience requirement before or during or after ACCA Exams: 3 years.

Time limits

You have 10 years from the date you registered to complete the ACCA exams.

If you registered before 31 December 2006 and were transferred to the existing syllabus in August 2007, you will have been given a further ten years to complete the ACCA exams, ie you will have until June 2017 to complete.

However, this does not apply to the completion of the BSc Honours Degree in Applied Accounting awarded by Oxford Brookes University (OBU). You will need to complete the degree within ten years of your initial registration date with ACCA.

IAS 10 Events after the Reporting Period

2011-03-12T08:50:00.000-08:00

IAS 10 Events after the Reporting Period (summary):

The objective of this Standard is to prescribe:

(a) when an entity should adjust its financial statements for events after the reporting period; and

(b) the disclosures that an entity should give about the date when the financial statements were authorised for issue and about events after the reporting period.

The Standard also requires that an entity should not prepare its financial statements on a going concern basis if events after the reporting period indicate that the going concern assumption is not appropriate.

Events after the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. Two types of events can be identified:

(a) those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period); and

(b) those that are indicative of conditions that arose after the reporting period (non-adjusting events after the reporting period).

An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period.

An entity shall not adjust the amounts recognised in its financial statements to reflect non-adjusting events after the reporting period. If non-adjusting events after the reporting period are material, non-disclosure could influence the economic decisions of users taken on the basis of the financial statements. Accordingly, an entity shall disclose the following for each material category of non-adjusting event after the reporting period:

(a) the nature of the event; and

(b) an estimate of its financial effect, or a statement that such an estimate cannot be made.

If an entity receives information after the reporting period about conditions that existed at the end of the reporting period, it shall update disclosures that relate to those conditions, in the light of the new information.

**This extract has been prepared by IASC Foundation staff and has not been approved by the IASB.

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

2011-03-12T08:16:00.000-08:00

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (summary):

The objective of this Standard is to prescribe the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors. The Standard is intended to enhance the relevance and reliability of an entity’s financial statements, and the comparability of those financial statements over time and with the financial statements of other entities.

Accounting policies

Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.

When an IFRS specifically applies to a transaction, other event or condition, the accounting policy or policies applied to that item shall be determined by applying the IFRS and considering any relevant Implementation Guidance issued by the IASB for the IFRS.

In the absence of a Standard or an Interpretation that specifically applies to a transaction, other event or condition, management shall use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable.

In making the judgement management shall refer to, and consider the applicability of, the following sources in descending order:

(a) the requirements and guidance in IFRSs dealing with similar and related issues; and

(b) the definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses in the Framework.

An entity shall select and apply its accounting policies consistently for similar transactions, other events and conditions, unless an IFRS specifically requires or permits categorisation of items for which different policies may be appropriate.

If an IFRS requires or permits such categorisation, an appropriate accounting policy shall be selected and applied consistently to each category.

An entity shall change an accounting policy only if the change:

(a) is required by an IFRS; or

(b) results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity’s financial position, financial performance or cash flows.

An entity shall account for a change in accounting policy resulting from the initial application of an IFRS in accordance with the specific transitional provisions, if any, in that IFRS.

When an entity changes an accounting policy upon initial application of an IFRS that does not include specific transitional provisions applying to that change,or changes an accounting policy voluntarily, it shall apply the change retrospectively.However, a change in accounting policy shall be applied retrospectively except to the extent that it is impracticable to determine either the period-specific effects or the cumulative effect of the change.

Change in accounting estimate

The use of reasonable estimates is an essential part of the preparation of financial statements and does not undermine their reliability. A change in accounting estimate is an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset, that results from the assessment of the present status of, and expected future benefits and obligations associated with, assets and liabilities. Changes in accounting estimates result from new information or new developments and, accordingly, are not corrections of errors. The effect of a change in an accounting estimate, shall be recognised prospectively by including it in profit or loss in:

(a) the period of the change, if the change affects that period only; or

(b) the period of the change and future periods, if the change affects both.

Prior period errors

Prior period errors are omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:

(a) was available when financial statements for those periods were authorised for issue; and

(b) could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements.

Such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.

Except to the extent that it is impracticable to determine either the period-specific effects or the cumulative effect of the error, an entity shall correct material prior period errors retrospectively in the first set of financial statements authorised for issue after their discovery by:

(a) restating the comparative amounts for the prior period(s) presented in which the error occurred; or

(b) if the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and equity for the earliest prior period presented.

Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions of users taken on the basis of the financial statements.

**This extract has been prepared by IASC Foundation staff and has not been approved by the IASB.

IAS 7 Statement of Cash Flows

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IAS 7 Statement of Cash Flows (summary) :

The objective of this Standard is to require the provision of information about the historical changes in cash and cash equivalents of an entity by means of a statement of cash flows which classifies cash flows during the period from operating, investing and financing activities.

Cash flows are inflows and outflows of cash and cash equivalents. Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Information about the cash flows of an entity is useful in providing users of financial statements with a basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to utilise those cash flows. The economic decisions that are taken by users require an evaluation of the ability of an entity to generate cash and cash equivalents and the timing and certainty of their generation.

The statement of cash flows shall report cash flows during the period classified by operating, investing and financing activities.

Operating activities

Operating activities are the principal revenue-producing activities of the entity and other activities that are not investing or financing activities. Cash flows from operating activities are primarily derived from the principal revenue-producing activities of the entity. Therefore, they generally result from the transactions and other events that enter into the determination of profit or loss.

The amount of cash flows arising from operating activities is a key indicator of the extent to which the operations of the entity have generated sufficient cash flows to repay loans, maintain the operating capability of the entity, pay dividends and make new investments without recourse to external sources of financing.

An entity shall report cash flows from operating activities using either:

(a) the direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or

(b) the indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.

Investing activities

Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. The separate disclosure of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources intended to generate future income and cash flows.

The aggregate cash flows arising from obtaining and losing control of subsidiaries or other businesses shall be presented separately and classified as investing activities.

Financing activities

Financing activities are activities that result in changes in the size and composition of the contributed equity and borrowings of the entity. The separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of capital to the entity.

An entity shall report separately major classes of gross cash receipts and gross cash payments arising from investing and financing activities.

Investing and financing transactions that do not require the use of cash or cash equivalents shall be excluded from a statement of cash flows. Such transactions shall be disclosed elsewhere in the financial statements in a way that provides all the relevant information about these investing and financing activities.

Foreign currency cash flows

Cash flows arising from transactions in a foreign currency shall be recorded in an entity's functional currency by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the cash flow.

The cash flows of a foreign subsidiary shall be translated at the exchange rates between the functional currency and the foreign currency at the dates of the cash flows.

Unrealised gains and losses arising from changes in foreign currency exchange rates are not cash flows. However, the effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency is reported in the statement of cash flows in order to reconcile cash and cash equivalents at the beginning and the end of the period.

Cash and cash equivalents

An entity shall disclose the components of cash and cash equivalents and shall present a reconciliation of the amounts in its statement of cash flows with the equivalent items reported in the statement of financial position.

An entity shall disclose, together with a commentary by management, the amount of significant cash and cash equivalent balances held by the entity that are not available for use by the group.

**This extract has been prepared by IASC Foundation staff and has not been approved by the IASB.

IAS 2 Inventories

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IAS 2 Inventories (summary) :

The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the amount of cost to be recognised as an asset and carried forward until the related revenues are recognised. This Standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.

Inventories shall be measured at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories shall be assigned by using the first-in, first-out (FIFO) or weighted average cost formula. An entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature or use, different cost formulas may be justified. However, the cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects shall be assigned by using specific identification of their individual costs.

When inventories are sold, the carrying amount of those inventories shall be recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories shall be recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, shall be recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

** This extract has been prepared by IASC Foundation staff and has not been approved by the IASB.

IAS 1 Presentation of Financial Statements

2011-03-12T06:17:00.000-08:00

IAS 1 Presentation of Financial Statements (summary) :

This Standard prescribes the basis for presentation of general purpose financial statements to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.

A complete set of financial statements comprises:

(a) a statement of financial position as at the end of the period;

(b) a statement of comprehensive income for the period;

(d) a statement of cash flows for the period;

(e) notes, comprising a summary of significant accounting policies and other explanatory information; and

(f) a statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.

An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so.

An entity shall present a complete set of financial statements (including comparative information) at least annually.

An entity shall clearly identify the financial statements and distinguish them from other information in the same published document.

IAS 1 requires an entity to present, in a statement of changes in equity, all owner changes in equity. All non-owner changes in equity (ie comprehensive income) are required to be presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income are not permitted to be presented in the statement of changes in equity.

An entity shall disclose, in the summary of significant accounting policies or other notes, the judgements, apart from those involving estimations.

An entity shall disclose information about the assumptions it makes about the future, and other major sources of estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

An entity shall disclose information that enables users of its financial statements to evaluate the entity’s objectives, policies and processes for managing capital. **This extract has been prepared by IASC Foundation staff and has not been approved by the IASB

RISK:

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What is RISK?

nRisk can be considered “good”—that is, when the results are better than expected (higher returns)—or “bad”—that is, when the results are worse than expected (lower returns)

nStand-alone risk—risk of an investment if it was held by itself, or alone

nA probability distribution summarizes each possible outcome along with the chance, or probability, that the outcome will occur

We know that an investment is risky if more than one future outcome is possible—that is, there are two or more possiblepayoffs associated with the investment

Portfolio risk—risk of an investment when it is combined in a portfolio with other investments

In finance we define risk as the chance that something other than what is expected occurs—that is, variability of returns

2011-03-05T00:24:00.000-08:00

Assets are things that the company owns. They are the resources of the company that have been acquired through transactions, and have future economic value that can be measured and expressed in dollars. Assets also include costs paid in advance that have not yet expred, such as prepaid advertising, prepaid insurance, prepaid legal fees, and prepaid rent.

Look at the basic accounting equation:

ASSETS = OWNER'S EQUITY + LIABILITIES
Examples of asset accounts that are reported on a company's balance sheet include:

Cash
Petty Cash
Temporary Investments
Accounts Receivable
Inventory
Supplies
Prepaid Insurance
Land
Land Improvements
Buildings
Equipment
Goodwill
Bond Issue Costs
Etc.

Usually these asset accounts will have debit balances.

Contra assets are asset accounts with credit balances. (A credit balance in an asset account is contrary—or contra—to an asset account's usual debit balance.) Examples of contra asset accounts include:

Allowance for Doubtful Accounts
Accumulated Depreciation-Land Improvements
Accumulated Depreciation-Buildings
Accumulated Depreciation-Equipment
Accumulated Depletion
Etc.

OWNER'S EQUITY ( OE )

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Owner's Equity—along with liabilities—can be thought of as a source of the company's assets. Owner's equity is sometimes referred to as the book value of the company, because owner's equity is equal to the reported asset amounts minus the reported liability amounts.

Owner's equity may also be referred to as the residual of assets minus liabilities. These references make sense if you think of the basic accounting equation:

Assets = Liabilities + Owner's Equity

and just rearrange the terms:

Owner's Equity = Assets – Liabilities

"Owner's Equity" are the words used on the balance sheet when the company is a sole proprietorship. If the company is a corporation, the words Stockholders' Equity are used instead of Owner's Equity. An example of an owner's equity account is Mary Smith, Capital (where Mary Smith is the owner of the sole proprietorship). Examples of stockholders' equity accounts include:

Common Stock
Preferred Stock
Paid-in Capital in Excess of Par Value
Paid-in Capital from Treasury Stock
Retained Earnings
Etc.

Stockholders' equity accounts will normally have credit balances.

Contra owner's equity accounts are a category of owner equity accounts with debit balances. (A debit balance in an owner's equity account is contrary—or contra—to an owner's equity account's usual credit balance.) An example of a contra owner's equity account is Mary Smith, Drawing (where Mary Smith is the owner of the sole proprietorship). An example of a contra stockholders' equity account is Treasury Stock.

LIABILITIES

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Liabilities are obligations of the company; they are amounts owed to creditors for a past transaction and they usually have the word "payable" in their account title. Along with owner's equity, liabilities can be thought of as a source of the company's assets. They can also be thought of as a claim against a company's assets. For example, a company's balance sheet reports assets of $100,000 and Accounts Payable of $40,000 and owner's equity of $60,000. The source of the company's assets are creditors/suppliers for $40,000 and the owners for $60,000. The creditors/suppliers have a claim against the company's assets and the owner can claim what remains after the Accounts Payable have been paid.

Liabilities also include amounts received in advance for future services. Since the amount received (recorded as the asset Cash) has not yet been earned, the company defers the reporting of revenues and instead reports a liability such as Unearned Revenues or Customer Deposits.
Examples of liability accounts reported on a company's balance sheet include:

Notes Payable
Accounts Payable
Salaries Payable
Wages Payable
Interest Payable
Other Accrued Expenses Payable
Income Taxes Payable
Customer Deposits
Warranty Liability
Lawsuits Payable
Unearned Revenues
Bonds Payable
Etc.

These liability accounts will normally have credit balances.

Contra liabilities are liability accounts with debit balances. (A debit balance in a liability account is contrary—or contra—to a liability account's usual credit balance.) Examples of contra liability accounts include:

Discount on Notes Payable
Discount on Bonds Payable
Etc.

Certified Information Security Manager (CISM)

2011-03-04T07:31:00.000-08:00

Certified Information Security Manager (CISM) is a certification for information security managers awarded by ISACA (formerly the Information Systems Audit and Control Association). To gain the certifications, individuals must pass a written examination and have at least five years of information security experience with a minimum three years of information security management work experience in particular fields.

The intent of the certification is to provide a common body of knowledge for information security management. The CISM focuses on information risk management as the basis of information security. It also includes material on broader issues such as how to govern information security managing incidents. as well as on practical issues such as developing and managing an information security program and

The point of view in the certification is that of widely accepted cross-industry best practices, where information security gets its justification from business needs. The implementation includes information security as an autonomous function inside wider corporate governance.

The CISM certifications tends to be sought after by both CIAS and CISSP certification communities. ISACA created the CISM to help foster a better fusion between IT auditing and information security perspectives.

Certified Information Systems Auditor (CISA)

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Certified Information Systems Auditor (CISA) is a professional certification for information technology audit professionals sponsored by ISACA, formerly the Information Systems Audit and Control Association. Candidates for the certification must meet requirements set by ISACA.

The CISA certification was established in 1978 for several reasons:

Develop and maintain a tool that could be used to evaluate an individual's competency in conducting information system audits.
Provide a motivational tool for information systems auditors to maintain their skills, and monitor the success of the maintenance programs.
Provide criteria to help aid management in the selection of personnel and development.

The first CISA examination was administered in 1981, and registration numbers have grown each year. As of 2010, over 79,000 candidates worldwide have earned the CISA designation since its inception.^[1] It is one of the few certifications formally approved by the US Department of Defense in their Information Assurance Technical category (DoD 8570.01-M). In 2009, SC Magazine named the CISA designation winner of the Best Professional Certification Program.

Requirements

Candidates for a CISA certification must pass the examination, agree to adhere to ISACA's Code of Professional Ethics, submit evidence of a minimum of five years of professional IS auditing, control, or security work, and abide by a program of continuing professional education.
Substitutions and waivers of such experience may be obtained as follows:

A maximum of one year of information systems experience, or one year of financial or operational auditing experience can be substituted for one year of information systems auditing, control, or security experience.
60 to 120 completed college semester credit hours (the equivalent of an Associate or Bachelor degree) can be substituted for one or two years, respectively, of information systems auditing, control or security experience.
A bachelor's or master's degree from a university that enforces the ISACA sponsored Model Curricula can be substituted for one year of information systems audit, control, assurance or security experience. To view a list of these schools, please visit www.isaca.org/modeluniversities. This option cannot be used if three years of experience substitution and education waiver have already been claimed.
A master’s degree in information security or information technology from an accredited university can be substituted for one year of experience. This option cannot be used if three years of experience substitution and educational waiver have already been claimed.
Two years as a full-time university instructor in a related field (e.g., computer science, accounting, information systems auditing) can be substituted for one year of information systems auditing, control or security experience.

Examination

The exam consists of 200 multiple-choice questions that must be answered within 4 hours. Candidate scores are reported as a scaled score. A scaled score is a conversion of a candidate's raw score on an exam to a common scale. ISACA uses and reports scores on a common scale from 200 to 800. For example, the scaled score of 800 represents a perfect score with all questions answered correctly; a scaled score of 200 is the lowest score possible and signifies that only a small number of questions were answered correctly. A candidate must receive a score of 450 or higher to pass the exam. As of 2011, the exam will cover 5 Content Areas:

The Process of Auditing Information Systems
Governance and Management of IT
Information Systems Acquisition, Development and Implementation
Information Systems Operations, Maintenance and Support
Protection of Information Assets

The exam is offered in 12 languages at more than 200 locations worldwide in June and December.

Chartered Financial Analyst (CFA)

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The Chartered Financial Analyst (CFA) designationute is an international professional certification offered by the CFA institute (formerly AIMR) to financial analyst who complete a series of three exams. To become a CFA Charterholder candidates must pass each of three six-hour exams, possess a bachelor's degree from an accredited institution (or have equivalent education or work experience) and have 48 months of qualified, professional work experience. CFA charterholders are also obligated to adhere to a strict Code of Ethics and Standards governing their professional conduct.

The CFA is a qualification for finance and investment professionals, particularly in the fields of investment managment and financial analysis of stocks, bonds and their derivative assets. The program focuses on portfolio management and financial analysis, and provides a generalist knowledge of other areas of finance.

Requirements

The basic requirements for participation in the CFA Program include holding or being in the final year of a university degree (or equivalent as assessed by CFA Institute), or having four years of qualified, professional work experience in an investment decision-making process. To obtain the charter, however, a candidate must have completed a university degree (or equivalent) and four years of qualified, professional work experience, in addition to passing the three exams that test the academic portion of the CFA program.

Candidates generally take one exam per year over three years (assuming a pass on the first attempt). Fees as of December 2009 for all three exams range from $710 to $955, depending on the date on which the candidate registers to take the exam, plus an additional $400 to $480 for program enrollment for new members

What is the difference between reserve and provision?

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In the U.S. the use of the word reserve has been discouraged for several decades. In its place, the accounting profession has recommended the use of words such as allowance, accumulated, or provision. For instance, many years ago the contra account to a plant asset may have been titled Depreciation Reserve. To some readers, that name implied that cash had been set aside to replace the asset. To better communicate reality, the accounting profession recommended a more descriptive title such as Accumulated Depreciation. Similarly, the contra account to Accounts Receivable may have been titled Reserve for Bad Debts. Again, that title could imply that money was set aside. To avoid misinterpretation, the accounting profession suggested Allowance for Bad Debts or Provision for Bad Debts.

The word provision might appear in the title of a contra account as we just noted. In addition, provision will occasionally appear in the title of an expense account, such as Provision for Income Taxes.

TYPES OF ACCOUNTS:

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Types of accounts

Asset accounts: represent the different types of economic resources owned by a business, common examples of Asset accounts are cash, cash in bank, building, inventory, prepaid rent, goodwill, accounts receivable
Liability accounts: represent the different types of economic obligations by a business, such as accounts payable, bank loan, bonds payable, accrued interest^.
Equity accounts: represent the residual equity of a business (after deducting from Assets all the liabilities) including Retained Earnings and Appropriations.examples include Sales, Service revenue and Interest Income^.
Expense accounts: represent the company's expenditures to enable itself to operate. Common examples are electricity and water, rentals, depreciation, doubtful accounts, interest, insurance.
Contra accounts : from the term ciccia, meaning to deduct, the value of which are opposite the 5 above mentioned types of accounts. For instance, a contra-asset account is Accumulated depreciation. This label represents deductions to a relatively permanent asset like Building.

RETAINED EARNING

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How to Calculate Retained Earnings?

The formula to calculate retained earnings is quite simple. The figure is calculated by adding the net profits (less dividends paid) to the beginning retained earning balance from a previous period:

Retained Earnings (RE) = Beginning RE + Net Income – Dividends

If there is a net loss and it is larger than the beginning retained earnings, there will be what is called negative retained earnings.

TYPES OF DEPRECIATION METHODS :

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What is Depreciation?

Depreciation is the reduction in the book value of an asset due to usage over a period of time. In other words, it is the reduction in the economic usefulness of the asset, or the calculation of wear and tear, that may have occurred to the asset. This is also done to report the actual value to tax authorities.
The present value of the asset, i.e., after deducting the depreciation amount, is recorded in the books. To calculate, one needs to take into account the economic life and the expected value or scrap value of the asset after its use in the business is over.
The calculation is non-cash expense that is estimated or forecasted. This process occurs at the end of the financial year and the amount is shown in both the balance sheet and the income statement. This article discusses some of the most common methods of calculating depreciation.

Straight Line Method of Depreciation

This is the simplest, and most commonly used, form of depreciation calculation and refers to reduction of the value as per a constant rate. The graph formed by assets that are depreciated by the straight-line depreciation method is a straight downward-slanting line. The depreciation value is calculated by taking the original, purchase, or historical price, less the scrap value, and dividing it by the useful years or the number of years that the asset would be in use in the business. The rate of depreciation remains constant as a fixed expense throughout the years. This type of depreciation method is useful for those assets in which the usage remains uniform or consistent. Unfortunately, it dos not take into account the fact that all assets do not deteriorate equally.

Reducing Balance Method of Depreciation

This method is commonly known as the written down value method or the sum of the year’s method. In this method, the asset is depreciated at a consistent rate annually. This depreciation method takes into consideration an accelerated rate of depreciation. This is useful for those assets in which a higher value is lost during the beginning years of usage. By following this method, the cost of the asset is spread over the most productive years of its life. To calculate, one needs to add up the sum of all year’s digits and divide it by the length of the useful life. This number is the rate at which the asset must be depreciated until the end of the asset life. The only flaw of this method is that it does not take into account the scrap or residual value of the asset.

Declining Balance Method of Depreciation

This depreciation method is also known as accelerated depreciation method and is similar to the reducing balance method. In this method too, the asset loses most of its value in the beginning of its life. The rate of depreciation is calculated by taking into consideration the number of years it would serve the business. The number 100 would be divided by the number of years. This rate of depreciation would be the rate at which the asset would depreciate during its life.

Double Declining Balance Method of Depreciation

The declining balance method can be slightly twisted into the double declining balance method of depreciation. To calculate the depreciation amount using this method, the accountant would have to calculate the amount using the straight-line method. Once they calculate the total percentage of the asset that needs to be depreciated in the first year, the percentage would have to be multiplied by the remaining balance each year. After some time, the value would be lower than the straight-line rate. This is the point when the double declining method would have to be discontinued and the straight-line would be used until the asset is used.

Unit of Production Method of Depreciation

This depreciation calculation method refers to an association between the asset's ability to do work during its useful life and the decline in the worth of the asset. Unfortunately, this depreciation method does not take into account the expected years of the asset but takes into account the measurable units of use. The units could be anything, including number of items produced or hours used for machinery, number of kms travelled by vehicles, etc. Thus, the depreciation is calculated by the actual usage of the asset.

TYPES OF AUDIT REPORT :

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1 - Unqualified Opinion report

The most frequent type of report is referred to as the Unqualified Opinion, and is regarded by many as the equivalent of a “clean bill of health” to a patient,which has led many to call it the Clean Opinion, but in reality it is not a clean bill of health. This type of report is issued by an auditor when the financial statements presented are free of material misstatements and are represented fairly in accordance with the Generally Accepted Accounting Principles (GAAP), which in other words means that the company’s financial condition, position, and operations are fairly presented in the financial statements. It is the best type of report an auditee may receive from an external auditor.

2 - Qualified Opinion report

A Qualified Opinion report is issued when the auditor encountered one of two types of situations which do not comply with generally accepted accounting principles, however the rest of the financial statements are fairly presented. This type of opinion is very similar to an unqualified or “clean opinion”, but the report states that the financial statements are fairly presented with a certain exception which is otherwise misstated. The two types of situations which would cause an auditor to issue this opinion over the Unqualified opinion are:

Single deviation from GAAP – this type of qualification occurs when one or more areas of the financial statements do not conform with GAAP (e.g. are misstated), but do not affect the rest of the financial statements from being fairly presented when taken as a whole. Examples of this include a company dedicated to a retail business that did not correctly calculate the depreciation expense of its building. Even if this expense is considered material, since the rest of the financial statements do conform with GAAP, then the auditor qualifies the opinion by describing the depreciation misstatement in the report and continues to issue a clean opinion on the rest of the financial statements.

Limitation of scope - this type of qualification occurs when the auditor could not audit one or more areas of the financial statements, and although they could not be verified, the rest of the financial statements were audited and they conform GAAP. Examples of this include an auditor not being able to observe and test a company’s inventory of goods. If the auditor audited the rest of the financial statements and is reasonably sure that they conform with GAAP, then the auditor simply states that the financial statements are fairly presented, with the exception of the inventory which could not be audited.

3 - Adverse Opinion report

An Adverse Opinion is issued when the auditor determines that the financial statements of an auditee are materially misstated and, when considered as a whole, do not conform with GAAP. It is considered the opposite of an unqualified or clean opinion, essentially stating that the information contained is materially incorrect, unreliable, and inaccurate in order to assess the auditee’s financial position and results of operations. Investors, lending institutions, and governments very rarely accept an auditee’s financial statements if the auditor issued an adverse opinion, and usually request the auditee to correct the financial statements and obtain another audit report.
Generally, an adverse opinion is only given if the financial statements pervasively differ from GAAP. An example of such a situation would be failure of a company to consolidate a material subsidiary.

4 - Disclaimer of Opinion report

A Disclaimer of Opinion, commonly referred to simply as a Disclaimer, is issued when the auditor could not form, and consequently refuses to present, an opinion on the financial statements. This type of report is issued when the auditor tried to audit an entity but could not complete the work due to various reasons and does not issue an opinion. The disclaimer of opinion report can be traced back to 1949, when the Statement on Auditing Procedure No. 23: Recommendation Made To Clarify Accountant’s Representations When Opinion Is Not Expressed was published in order to provide guidance to auditors in presenting a disclaimer

How to calculate Goodwill ?

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Goodwill:

1- Calculate the goodwill arising on acquisition. Ascertain the price paid to acquire the new business, and from this deduct the net assets that you acquired. Obtain a copy of the latest balance sheet for the acquired business to confirm that the value of the net assets is correct. The difference between these assets and the consideration you have paid will be the initial goodwill that must be recognized in your financial statements.

2- Recognize the goodwill as an asset in your balance sheet by making a debit entry to a goodwill code in your general ledger. Make the corresponding credit entry to a suitable equity account, reflecting the fact that you have purchased a new business. Add a new line for goodwill right at the top of your balance sheet, above the total for tangible assets.

3- Review your goodwill on an annual basis. International Financial Reporting Standards require companies to assess goodwill for impairment at least annually. Determine whether the goodwill continues to bring as much benefit to your business as when you first recognized it. If not, you need to recognize an impairment. Deduct the amount you currently value your goodwill at from the amount originally recognized in the financial statements. The difference is the impairment loss and must be accounted for by a credit entry to reduce the carrying value of goodwill and a corresponding debit entry to take the loss to your income statement.

What is difference between Job Costing & process cocting?

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Job Costing:

Cost accountants accumulate cost information differently depending on the type of costing system used. Job costing systems incorporate the use of job cost sheets. Each job cost sheet lists the quantity and cost of materials used on the job, the labor hours and labor rates invested in the job and applies an overhead rate to the job. At the completion of the job, the cost sheet totals the cost of the materials, labor and overhead to determine the total cost of that particular job.

Process Costing:

Process costing systems create bills of materials for each product. The bill of material uses an average quantity and cost for each material based on the total materials used and the number of units produced. The bill of material calculates the labor cost by totaling the labor hours multiplied by the labor rates and dividing this amount by the total units produced. An overhead rate is applied to each unit. The material, labor and overhead costs are totaled to attain a total unit cost.

Certified Treasury Professional (CTP)

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Certified Treasury Professional (CTP) :

It is a certification awarded by the Association for Financial Professionals (AFP) of Bethesda, Maryland to individuals who meet eligibility criteria and demonstrate current competency standards measured through the CTP examination.
Once a CTP, certificants must abide by the CTP Standards of Ethical conduct and must enhance their level of knowledge and skills by earning and reporting a prescribed number of continuing finance and business education credits every three years. The credential can be revoked by the Certification Committee of AFP for unethical behavior or by failure to earn and report continuing education credits.

Before 1986, the AFP awarded the Certified Cash Manager (CCM) and beginning in 2003 the CCM certification was phased into the current CTP to reflect the expanding role of treasury within corporate finance.
As of August 2008, 19,198 individuals have earned the credential.

you do not need to be a member of the AFP in order to register for the examination or to acquire CTP certification, but you will pay a higher fee to take the exam than members.

Certified Internal Auditor (CIA)

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Certified Internal Auditor (CIA)

The CIA (Certified Internal Auditor) is the primary professional designation offered by The IIA. The CIA designation is a globally recognizedcertification for internal auditors and is a standard by which individuals may demonstrate their competency and professionalism in the internal audit field.
Earning the CIA qualification is intended to demonstrate a professional knowledge of the internal audit profession. CIAs are required to take continuing education courses.
Many CIAs today are senior internal audit managers, Vice Presidents, Directors and Chief Audit Executives in top global MNC companies driving internal audit functions in their respective companies

CIA REQUIRMENTS :

1- CIA candidates must hold a bachelor’s degree (or higher degree)
2- Candidates must exhibit high moral and professional character and must submit a Character Reference Form Signed by a CIA, CGAP, CCSA, CFSA or the candidate's supervisor.
3- Candidates must obtain a minimum of 24 months of internal auditing experience or its equivalent. A Masters degree can substitute for 12 of the required 24 months.

What is CPE Credit?

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CPE is the abbreviation for continuing professional education. Continuing professional education credit, which is abbreviated as CPE credit, is granted to each of the successful candidates of a CPE credit program and is based on an hour of instruction. In fact, each hour of instruction during the CPE credit program is a session of a duration of 50 minutes.
Each of the candidates who have enrolled themselves in ant of the CPE credit programs are entitled to one CPE credit for every 50 minutes of instruction. Therefore each of the candidates will earn eight credits for each full day of class that they attend, which is a total of eight CPE credits for 400 minutes (in other words, a duration of six hours and 40 minutes). Continuing professional education credit, which is abbreviated as CPE credit, is not automatically granted to any of the candidates. They must possess the certificate that states that they have successfully completed the courses.

Certified Management Accountant ( CMA )

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CMA:

The CMA (Certified Management Accountant)

is the advanced professional certification specifi-

cally designed to measure the accounting and

financial management skills that drive business

performance. Achieving the CMA credential

demonstrates your mastery of financial planning,

analysis, control, and decision support, as well

as professional ethics.

There are two parts to the CMA exam, consisting of four hours each, which can be taken in any order.

The exam is structured as follows:

By focusing only on advanced accounting and financial management skills, the exam is rigorous

yet responsive to the needs of the marketplace and time-constrained professionals.

PART I
Financial Planning, Performance
and Control
· Planning, budgeting, and forecasting
· Performance measurement
· Cost management
· Internal controls
· Professional ethics

PART II
Financial Decision Making
· Financial statement analysis
· Corporate fi nance
· Decision analysis and risk management
· Investment decisions
· Professional ethics

CMA Requirements:

1- Bachelor's degree from an accredited college or university
2- Foundational knowledge of economics, basic statistics, and fi nancial accounting
3- Two continuous years of professional experience
4- For certifi ed CMAs: 30 hours of CPE credits, including two hours of ethics, and annual IMA Membership are required to maintain active status

* Please note that Professionals with a CMA earn nearly $30,000 more in average total annual compensation than noncertifi ed peers ( based on IMA annual salary survey 2009 ).

Certified Public Accountant ( CPA )

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TODAY WE'LL DISCUSS (CPA) CERTIFICATION,

Certified Public Accountant (CPA) is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA. Individuals who have passed the Exam but have not either accomplished the required on-the-job experience or have previously met it but in the meantime have lapsed their continuing professional education are, in many states, permitted the designation "CPA Inactive" or an equivalent phrase. In most U.S. states, only CPAs who are licensed are able to provide to the public attestation (including auditing) opinions on financial statements. The exceptions to this rule are Arizona, Kansas, North Carolina and Ohio where, although the "CPA" designation is restricted, the practice of auditing is not.
Many states have a lower tier of accountant qualification (below that of CPA), usually entitled "Public Accountant" (with designatory letters "PA"). However the majority of states have closed the designation "Public Accountant" to new entrants, with only about 10 states continuing to offer the designation. Many PAs belong to the National Society of (Public) Accountants.
Many states prohibit the use of the designations "Certified Public Accountant" or "Public Accountant" (or the abbreviations "CPA" or "PA") by a person who is not certified as a CPA or PA in that state. As a result, in many circumstances, an out-of-state CPA is restricted from using the CPA designation or designatory letters until a license or certificate from that state is obtained.
Texas additionally prohibits the use of the designations "accountant" and "auditor" by a person not certified as a Texas CPA, unless that person is a CPA in another state, a non-resident of Texas, and otherwise meets the requirements for practice in Texas by out-of-state CPA firms and practitioners

CPA exam

Main article: Uniform Certified Public Accountant Examination

In order to become a CPA in the United States, the candidate must sit for and pass the Uniform Certified Public Accountant Examination (Uniform CPA Exam), which is set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. The CPA was established in law on April 17, 1896.^[2]
Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically the requirement is a U.S. bachelors degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional 1 year study. This requirement for 5 years study is known as the "150 hour rule" and has been adopted by the majority of state boards, although there are still some exceptions (e.g.California). This requirement mandating 150 hours of study has been adopted by 45 states.
The Colorado State Board of Accountancy allows Chartered Certified Accountants (ACCA), together with Chartered Accountants from eligible jurisdictions (Australia, South Africa, Canada, Ireland, India, New Zealand) automatic eligibility to sit for the Uniform CPA Exam as a Colorado candidate. As of December 9, 2009, ACCA members are not automatically eligible to sit for the Uniform CPA Exam.
Certain overseas qualified accountants seeking to become U.S. CPAs may be eligible to sit for the International Qualification Examination as an alternative to the Uniform CPA Exam.
The Uniform CPA exam tests general principles of state law such as the law of contracts and agency (questions not tailored to the variances of any particular state) and some federal law as well.^[3]

Other licensing and certification requirements

Although the CPA exam is uniform, licensing and certification requirements are imposed separately by each state's laws and therefore vary from state to state.
State requirements for the CPA qualification can be summed up as the Three Es—Education, Examination and Experience. The Education requirement normally must be fulfilled as part of the eligibility criteria to sit for the Uniform CPA and the Examination component is the Uniform CPA itself. Some states have a two tier system whereby an individual would first become certified as a CPA—usually by passing the CPA exam. That individual would then later be eligible to be licensed once a certain amount of work experience is accomplished. Other states have a one tier system whereby an individual would be certified and licensed at the same time when both the CPA exam is passed and the work experience requirement has been met.
Two-tier states include Alabama, Florida, Illinois, Montana, and Nebraska. The trend is for two-tier states to gradually move towards a one-tier system. Since 2002, the State Boards of Washington and South Dakota have ceased issuing CPA "certificates" and instead issue CPA "licenses," and Illinois plans to follow suit in 2012.^[4]
A number of states are two-tiered, but require work experience for the CPA certificate, such as Ohio.

Work experience requirement

The experience component varies from state to state:

The two-tier states generally do not require work experience for a CPA certificate (it is required for a license to practice).
Some states, such as Colorado and Massachusetts, will waive the work experience requirement for those with a higher academic qualification compared to the state's requirement to appear for the Uniform CPA
The majority of states still require work experience to be of a public accounting nature. However an increasing number of states, including Oregon, Virginia, Georgia and Kentucky will accept experience of a more general nature in the accounting area. This allows persons to obtain the CPA designation while working for a corporation's finance function.
The majority of states require work experience to be verified by a licensed CPA. This can cause difficulties for applicants based outside the United States. However, some states such as Colorado and Oregon will accept work experience certified by a Chartered Accountant as well.

Ethics

Over 40 of the state boards now require applicants for CPA status to complete a special examination on ethics, which is effectively a Fourth E in terms of requirements to become a CPA. The majority of these will accept the AICPA self-study Professional Ethics for CPAs CPE course or another course in general professional ethics. Many states, however, require that the ethics course include a review of that state's specific rules for professional practice.

Continuing Professional Education (CPE)

CPAs are required to take continuing education courses in order to renew their license. Requirements vary by state but the vast majority require 120 hours of CPE every 3 years with a minimum of 20 hours per calendar year. The requirement can be fulfilled through attending live seminars, webcast seminars, or through self-study (textbooks, videos, online courses, all of which require a test to receive credit). As part of the CPE requirement, most states require their CPAs to take an ethics course during every renewal period. Again, ethics requirements vary by state but the courses range from 2–8 hours.

Inter-state practice

An accountant is required to meet the legal requirements of any state in which they want to practice. Also, the term "practice of public accounting" and similar terms are given definitions PA status under reciprocity to a CPA licensed in another state. CPAs from other states with less stringent educational requirements may not be able to benefit from these provisions. This does not affect those CPAs who do not plan to offer services directly to the public. Moreover, most states would grant the temporary practicing rights to a CPA of another state.

AICPA membership

The CPA designation is granted by individual state boards, not the American Institute of Certified Public Accountants (AICPA). Membership in the AICPA is not obligatory for CPAs, although some CPAs do join. To become a full member of AICPA, the applicant must hold a valid CPA certificate or license from at least one of the fifty-five U.S. state/territory boards of accountancy; some additional requirements apply.

UPDATE on AICPA membership: AICPA members approved a proposed bylaw amendment to make eligible for voting membership individuals who previously held a CPA certificate/license or have met all the requirements for CPA certification in accordance with the Uniform Accountancy Act (UAA). The AICPA announced its plan to accept applications from individuals meeting these criteria, beginning no later than January 1, 2011. Individuals eligible to join as regular members are those who hold or previously held a CPA certificate/license/permit that was not revoked because of disciplinary action or those who meet the UAA requirements of 150 hours of college/graduate education passed the uniform CPA examination and have at least 1 year of experience. This opens up regular membership to individuals who chose not to apply for a license or permit because they are not employed in public practice (e.g. business, industry, education, and government).