Week 4 FA Lecture BB
Week 4 FA Lecture BB
Week 4 FA Lecture BB
Financial Accounting
Lecture week 4
Finance & Accounting for Management (FAM)
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Key Accounting Concepts
• Financial transactions are accounted for on an accruals
basis and NOT a cash received/paid basis
Expenses:
• Purchases relating to the contract are paid at the end of the quarter
£150,000 per quarter
• Salaries for employees working for this customer are paid monthly,
£30,000 per month
• Other expenses are paid monthly, £10,000 per month
• Cost of the project work is £60,000 and is paid in month the work is
carried out
Cash vs. Profit
£000’s CASH PROFIT/LOSS
Jan Feb Mar Total Jan Feb Mar Total
Contract 300 300 100 100 100 300
Project RECEIPTS 0 REVENUE 50 50
Total 300 0 0 300 100 100 150 350
”
obsolescence.
Two approaches:
1. The Straight Line Method
2. The Diminishing Balance Method
Straight Line Method
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Next Steps this week…
Complete the activities in the menu labelled Week 4: Financial Accounting
= Watch the Cash Flow Statement video
= Explore the Sky Annual Report sections (do not read all of it!)
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Looking ahead to week 5…
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