Ontario Grade 11 BAF3M Financial Accounting Fundamentals (Grade 11, University/College Preparation)
Chapters: 2
1. Advanced Accounting Practices
1 The Accounting Cycle for a Merchandising Business · 2 Accounting for Sales Tax · 3 Computer Applications in Accounting
- Accounting for a Merchandising Business – A merchandising business buys finished goods and sells them again for more. Its special accounts are Inventory, Purchases, Sales, Sales Returns, Discounts, Freight-in and Cost of Goods Sold (COGS). Stock is tracked with a perpetual system (updated at every sale) or a periodic system (counted at year end). COGS = opening inventory + net purchases − closing inventory. Net sales − COGS = gross profit; gross profit − operating expenses = net income.
- Accounting for Sales Tax – Sales tax is money a business collects from customers for the government. It is not income: it goes into a liability account, Sales Tax Payable. With a value-added tax (GST, VAT, HST) the business also gets back the tax it paid on its own purchases (input tax credit), so it remits only the difference. With a single-stage retail sales tax (like a provincial or state sales tax) it simply passes on all the tax it collected.
- Computerised Accounting System (CAS): Features, Parts and Software Types – A computerised accounting system (CAS) records business deals on a computer. You enter a voucher once and the software posts it, totals it and prints ledgers and statements. A CAS has six parts: hardware, software, people, procedure, data and connectivity. Accounting software may be ready-made, customised or tailored.
2. Internal Control Procedures
1 Internal Control Procedures · 2 Financial Analysis · 3 Decision Making
- Internal Control in Accounting – Internal control is the set of rules and checks a business uses to protect its assets, keep records accurate and make people follow policy. Key elements: separate duties, approve transactions, lock up assets, use numbered documents, check records against reality (cash counts, bank reconciliations), and use budgets and independent audits.
- Accounting Ratios: Liquidity, Solvency, Activity and Profitability – A ratio compares two related numbers from the financial statements. Liquidity ratios check if short-term debts can be paid; solvency ratios check long-term safety; activity (turnover) ratios check how fast assets are used; profitability ratios check how much profit each rupee earns.
- Introduction to Accounting – Accounting is the language of business. It identifies money events, records them, classifies and summarises them, and then gives the results to the people who need them — owners, managers, banks, investors and the government.