FAC1502: Study Unit 1 – The Nature of Accounting Theory, Principles, Accounting Policy, Practice and Procedures

Don’t let the heading of this chapter intimidate you! I’m going to cover it using basic examples and discussions! The understanding you gain from these lectures will really benefit you in the coming chapters.

Before we start…

Look at what the bookkeeping/accounting function in a company does. We’ll be covering a lot of these steps in this module
(I’ve made a picture to help visualise the information better)
Now to the syllabus

Download these slides for this Study Unit (SU) before you proceed with the lectures.


Lecture 1: What is Accounting all about? (VIDEO)

Break-down of the accounting definition:

  • Orderly and systematic
  • Identify and record monetary values

Lecture 2: Reporting Results to Users, for Individuals and Businesses (VIDEO)

The definition of Accounting:
  • Accounting isn’t just for businesses
  • Reporting of financial information
  • Providing financial information to users

Lecture 3: What types of Businesses need Accounting? (VIDEO)

Different Ownership Structures and Types of Businesses.

Lecture 4: Who are the Users of Financial Information? (VIDEO)

This video also covers the following topics:

  • The difference between Management Accounting and Financial Accounting
  • Internal vs external users

Lecture 5: Important Background to Financial Statements (VIDEO)

This video covers the following topics:

  • The AFS
  • The objective of the AFS
  • The usefulness of the AFS

Lecture 6A: The Conceptual Framework Basics (INFOGRAPHIC)

I’ve created an infographic to try explain what the Conceptual Framework is… take a look at it before you watch the video.

Lecture 6B: The Conceptual Framework (VIDEO)

The qualitative characteristics:
  • Relevance
  • Faithful representation
Further, enhancing characteristics:
  • Comparability
  • Verifiability
  • Understandability
  • Timeliness

Lecture 7: The Going Concern Basis (VIDEO)

 Note: ‘Concern’ in Going Concern can be used as another word for ‘business’!

Your financial information is presented on the assumption that your business will continue in the next 12 months.


An introduction to what the Financial Statements include

Financial Statements:

  • Statement of Profit or Loss and other Comprehensive Income
  • Statement of Financial Position
  • Statement of Changes in Equity
  • Statement of Cashflows

Lecture 9: Format of Statement of Profit or Loss and Other Comprehensive Income and the Statement of Financial Position (VIDEO)

Take a look at the formats, you’ll be spending a lot of time preparing these! We’ll be going into more detail on these in Study Units to come.

A basic format of the Statement of Profit and Loss and Other Comprehensive Income
  • Make sure you can recreate this format for exams. The heading, and account names are very important to get right

Lecture 10: Introduction to the Elements of the Financial Statements (VIDEO)

The elements of the Financial Statements
  • These form the main ‘categories’ of how the information is presented. You will study these in a lot more detail in the next few study units

Lecture 11: What is the purpose of FinAcc 1A? (VIDEO)

This video is an introduction and covers the following topics:

What is the purpose of FinAcc 1A:

  • Highlighting the importance of financial information
  • Teaches you processes to create financial information
  • Teaches you how to prepare financial statements for others

Lecture 12: How should I study for FinAcc 1A and what’s in it? (VIDEO)

Be careful of approaching FAC1502 as a theory subject!

An overview of the chapters indicates how they fit into the subject.