TOPIC 2

TOPIC 2. Accounting Concept and Practice. Accounting A Malaysian Perspective5e.

[Audio] Today, we will discuss LO1 and LO2, which focus on understanding and explaining Generally Accepted Accounting Principles (GAAP) from a Malaysian perspective. LO1 involves having a thorough understanding of GAAP, which are used to guide the accounting profession and ensure consistency and transparency in financial reporting. As a higher education institution, it is crucial for us to have a comprehensive understanding of these principles in order to produce well-equipped accounting graduates. Moving on to LO2, we will explain GAAP and its application in different accounting scenarios. This involves clear communication of the principles and their identification in financial statements, which is vital for making informed business decisions. Our aim is to provide an in-depth understanding of GAAP and its application in the Malaysian context. Let's continue exploring the world of accounting together..

[Audio] In today's presentation, we will be discussing the topic of Accounting Concept and Practice, specifically focusing on the Malaysian perspective. It is important to follow generally accepted accounting principles (GAAP) to prepare accurate financial reports. These principles provide a common framework for financial reporting and ensure consistency and comparability among companies. In the United States, the Financial Accounting Standards Board (FASB) is responsible for setting accounting principles in collaboration with the Securities and Exchange Commission (SEC). The SEC, a U S government agency, oversees the financial disclosures of publicly traded companies to inform investors about their financial health and performance. However, different countries have their own set of accounting principles, which is why the International Accounting Standards Board (IASB) was established. In Malaysia, the Financial Reporting Foundation has adopted the IASB's International Financial Reporting Standards with modifications to suit the local context, promoting consistency and comparability in financial reporting among Malaysian companies. In conclusion, following GAAP is crucial for providing reliable financial reports and becomes even more significant as we continue to globalize. That concludes slide number 3 out of 12..

[Audio] Today, we will be discussing the role of the Malaysian Accounting Standards Board (MASB) in the development and implementation of accounting principles and concepts from a Malaysian perspective. Accounting principles and concepts are the foundation for financial reporting and are constantly evolving, influenced by authoritative bodies such as the MASB. The MASB, as the primary accounting standard-setting body in Malaysia, has four main functions. These include issuing new accounting standards to keep up with the changing business landscape, reviewing and adopting existing standards to ensure consistency and comparability in financial reporting, contributing to the international development of financial reporting, and seeking public consultation in the determination of standards. The MASB is dedicated to continuously improving the quality of financial reporting in Malaysia by monitoring and evaluating the effectiveness of its standards and making necessary updates. In conclusion, the contributions of the MASB are critical in the development and implementation of accounting principles and concepts, ensuring comprehensive and reliable financial reporting in Malaysia..

[Audio] Topic 2: Accounting Concept and Practice" In this presentation, we will be discussing the standard framework of guidelines for financial accounting in Malaysia. These guidelines, known as accounting standards, are necessary for businesses to follow in order to maintain consistency and accuracy in their financial reporting. These standards are set and enforced by the Malaysian Institute of Accountants (MIA), in accordance with international practices and regulations. The MIA's accounting standards, known as the Malaysian Financial Reporting Standards (MFRS), are based on the International Financial Reporting Standards (IFRS) and cover various aspects of financial reporting. These standards are crucial in ensuring transparency and accuracy in financial statements, which in turn influences the trust and confidence of stakeholders in a company's financial performance. By adhering to these standards, companies are able to accurately and transparently report their financial performance, providing stakeholders with vital information to make informed decisions. In conclusion, accounting standards in Malaysia play a critical role in providing a consistent and reliable framework for financial reporting, ultimately contributing to the integrity and credibility of a company's financial statements. Thank you for listening. Please stay tuned for more information in the upcoming slides..

[Audio] In this section, we will discuss the key concepts of recognition, measurement, and disclosure in accounting. These concepts, also known as the Conceptual Framework, guide companies in reporting their financial information accurately. The first concept is the economic entity assumption, which requires separating personal and business finances to ensure transparency. The going concern assumption states that a company will continue to operate in the future, important for decision-making. The monetary unit assumption requires recording all transactions in a common currency for easier analysis. The periodicity assumption divides financial information into specific time periods for easier tracking of performance. The accrual principle records transactions in the period they occur for accurate financial representation. Moving on to measurement principles, the revenue recognition principle recognizes revenue when it is earned, not when received. This reflects the company's true performance. The expense recognition principle records expenses in the period they are consumed for accurate financial obligations. Lastly, the full disclosure principle emphasizes transparency by including all relevant and material information in financial statements..

[Audio] Our presentation on Topic 2: Accounting Concept and Practice - A Malaysian Perspective will discuss the basic assumptions in accounting and how they impact a company's financial statements. Slide 7 out of 12 focuses on these assumptions, which serve as guiding principles for accurate financial reporting. The first assumption is the Economic Entity concept, which separates a company's financial records from personal finances and other business units to maintain an unbiased representation. The second assumption is the Going Concern concept, which assumes a company will continue operating in the foreseeable future, allowing for long-term planning and commitments. The Monetary Unit concept states that money is the common unit for business transactions, and financial information is recorded and reported in a single currency. The Periodicity concept divides a company's economic activities into specific time periods for more organized and systematic recording and reporting. The Accrual Basis of Accounting records financial transactions when they occur, ensuring accuracy and timeliness. In conclusion, these basic assumptions shape a company's financial statements and provide an accurate picture of its financial position. Thank you for listening, and please stay tuned for our next topic..

[Audio] Today, our presentation will focus on Accounting Concept and Practice from a Malaysian perspective. We will be discussing financial statements and the assumption of a going concern, specifically for slide number 8 out of 12. Financial statements serve as a crucial tool for companies to communicate their financial performance to stakeholders. They are prepared under the belief that the company will continue to operate in the foreseeable future, ensuring that it can fulfill its current responsibilities. This assumption has significant implications in accounting, as it justifies the recording of non-current assets at their historical cost and the systematic allocation of depreciation over the useful life of an asset. However, if a company intends to liquidate its operations, the going concern assumption is set aside and the financial statements are prepared on a different basis to reflect the company's liquidation value rather than its going concern value. In conclusion, the going concern assumption is a fundamental principle in accounting and greatly affects the preparation of financial statements. It is important for companies to assess their ability to continue operating and communicate this to stakeholders through their financial statements. Thank you for your attention, and we hope this presentation has provided a better understanding of the going concern assumption in accounting. This concludes our presentation for today. Thank you..

[Audio] We have now reached slide number 9 of our presentation on Accounting Concept and Practice. This slide will cover the concepts of recognition, measurement, and disclosure in accounting. These concepts are crucial in understanding how financial statements are prepared and the value of their elements. Measurement is the process of determining the monetary amounts at which the elements of financial statements are recognized and carried. This is reflected in the statement of financial position and statement of profit or loss and other comprehensive income. Each item in the financial statement is assigned a specific monetary value. There are two main measurement bases used in accounting: historical cost and current value. Historical cost is the original cost of an asset at the time of acquisition, including any additional costs incurred to bring it into its present condition. On the other hand, current value is the amount an asset can be sold for in the current market. The choice of measurement basis can significantly impact the financial statements. For instance, using historical cost may lead to lower asset values and profits, while using current value may result in higher asset values and profits. In summary, measurement is the process of assigning a monetary value to the elements of financial statements. It can be done using either the historical cost or current value as the measurement basis. Let's move on to the next slide..

[Audio] We will be discussing the basic principles of measurement in accounting. The first principle is historical cost, which looks at the cost and transaction costs associated with acquiring or creating an asset or taking on a liability. Over time, historical cost is adjusted to reflect the asset's consumption or liability's fulfillment. The second principle is current value, which uses updated information to reflect the conditions at the measurement date. Different bases, such as fair value, value in use, fulfillment value, and current cost, can be used. These principles have their own advantages and limitations, with historical cost being more objective and easy to use and current value being more relevant and reflective of current market conditions. The purpose of measurement should also be considered when selecting the appropriate principle, with historical cost being more suitable for long-term investments and current value being more relevant for short-term assets. It is important to understand these principles as they allow for accurate financial reporting and informed business decisions. Please stay tuned for our final slide on "Accounting Concept and Practice: A Malaysian Perspective.

[Audio] Today, we will be discussing the basic principles of revenue recognition, expense recognition, and full disclosure. First, let's talk about revenue recognition. A company has a performance obligation when it agrees to provide a service or sell a product to its customers. This means the company has a responsibility to fulfill that obligation. Revenue is recognized when the performance obligation is satisfied. Moving on to expense recognition, it is essential for a company to record expenses in the correct period and match it with the revenue it relates to. This allows for accurate financial reporting and provides a true picture of the company's financial health. Expenses should be recognized in the same period as the revenue to which they relate. Lastly, we have full disclosure, which emphasizes the importance of providing sufficient information to influence the judgment and decision of an informed user. It is crucial for companies to be transparent and disclose all relevant information for investors and other stakeholders to make informed decisions. In conclusion, understanding the basic principles of revenue recognition, expense recognition, and full disclosure is crucial for a company's financial stability and credibility. Let's move on to our final slide and wrap up our presentation..

[Audio] As we reach the final slide of our presentation on accounting concepts and practices, we will discuss the important concept of cost constraint. Cost constraint is a principle that limits the information provided in financial reporting. This means that companies must carefully consider the costs of providing certain information versus the benefits that can be derived from it. This principle plays a significant role in decision-making, as companies must weigh the benefits against the costs in order to justify the need for a specific measurement or disclosure. The costs to be considered include the collection, processing, and verification of information, as well as the dissemination of that information to stakeholders. These costs can add up quickly and have a significant impact on the decision to provide certain information. It is also important to note that the omission of information can impose costs on the users of financial information as they seek alternative sources. Therefore, companies must carefully consider the costs associated with providing or not providing certain information. Even rule-making bodies and governmental agencies use cost-benefit analysis before implementing new informational requirements, allowing them to thoroughly assess the costs and benefits before making a final decision. Ultimately, the principle of cost constraint is a crucial factor in the field of accounting. Companies must carefully weigh the costs and benefits of providing certain information before making a decision. Thank you for your attention and participation in our presentation..