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THIRD-TERM SCHEME OF WORK FOR SS2 FINANCIAL ACCOUNTING LESSON NOTE

Financial Accounting Scheme of Work for SS2 Third Term

SCHEME OF WORK

WEEK 1: ACQUISITION/PURCHASE OF BUSINESS

WEEK 2: PURCHASE OF BUSINESS- FORMAT PREPARATION OF NEW BUSINESS ACCOUNT

WEEK 3: COMPANY AMALGAMATION

WEEK 4: COMPANY FORMATION

WEEK 5: NIGERIAN FINANCIAL SYSTEM

WEEK 6: TYPES OF SHARES

WEEK 7: PREPARATION OF ACCOUNTS FOR THE ISSUE OF SHARES

WEEK 8: LOAN CAPITAL-DEBENTURE TYPES

WEEK 9: CAPITAL MARKET- REQUIREMENTS FOR ENLISTING IN THE CAPITAL MARKET

WEEK 10: COMPANY FORMATION

 Below are the 2022 complete SS2 Financial Accounting Third Term Lesson Note 

Financial Accounting Lesson Note SS2 Third Term

WEEK 1 

Acquisition/Purchase of Business

What is Acquisition of Business?

Business Acquisition is the process of buying a company to build on the strengths or weaknesses of the company making the purchase. It can also be defined as a corporate action in which a company acquires ownership of another company by buying most, if not all of the other company’s ownership stakes. This thus enables the acquiring company to assume control of the newly-purchased company. An acquisition occurs when a buying company obtains more than 50% ownership in a target company. As part of the exchange, the acquiring company often purchases the target company’s stock and other assets, which allows the acquiring company to make decisions regarding the newly acquired assets without the approval of the target company’s shareholders. Acquisitions can be paid for in cash, in the acquiring company’s stock or a combination of both. To learn more, Click here.

WEEK 2

Purchase of Business- Format Preparation of new Business Account

Introduction

Purchase of business is the process of acquisition of old business by a company. Promoters can acquire a business and sell it to another company at a profit. The persons who sells the business to another company is called the “vendor”. The money paid by the purchaser is called “purchase price”, the purchase of a business must involve an agreement between the parties.

In the purchase of a business,the assets,name and connection of the business will be taken over, hence, goodwill must be paid for. A revaluation of assets and liabilities will be required, the amount paid to acquire the business is known as the consideration. The excess of the purchase consideration over the net value of the asset is called” goodwill”, if on the other hand,the purchase consideration is lower than the net assets,the purchaser has gained the advantage of “capital reserve”. To learn more, Click here.

WEEK 3

 Company Amalgamation

What is Company Amalgamation? 

Amalgamation is the blending of two or more existing companies into one company. For example, if two existing companies such as Dangote Flour and Flour Mill Plc go into liquidation to form a new company Dan Flour Mill,  it will be a perfect example of amalgamation.

Amalgamation can also be defined as the combination of one or more companies into a new entity. An amalgamation is distinct from a merger because neither of the combining companies survives as a legal entity; a completely new entity is formed to house the combined assets and liabilities of both companies. This sense of the term amalgamation has generally fallen out of popular use, and the terms “merger” or “consolidation” are often used instead. To learn more, Click here.

WEEK 4

Company Formation

Introduction to Company Formation

Company Formation is all about the process of founding (i.e., incorporating) a new business enterprise. It is also sometimes called company registration. Company Formation can also be defined as the procedures undertaken to register a business enterprise as a limited company and give it a legal status. In other words, a business becomes a distinct legal entity as soon as it is incorporated. Please note [therefore] that when a business enterprise is incorporated, it becomes an individual ‘person’ in the eyes of the law. Incorporated businesses are completely separate from their owners in terms of finances, liabilities, contractual agreements, and ownership of property and assets. The constitution of the Federal Republic of Nigeria does not view unincorporated businesses (such as sole traders) as distinct legal entities. Therefore, there is no separation between a sole trader business and its owner in terms of finances, assets and liabilities. To learn more, Click here.

WEEK 5 

Nigerian Financial System

What is Financial System?

A financial system is a conglomerate of various markets, instruments, operators, and institutions that interact within an economy to provide financial services such as resource mobilization and allocation, financial intermediation and facilitation of foreign exchange transactions to exchange foreign trade. The financial system in a market economy is comprised of both of monetary and non-monetary claims (i.e., served debt and equity). Places, institutions or communication systems provide a market where financial claims can be bought and sold. Specialists such as brokers and underwriters who aid in the direct transfer of funds from surplus to deficit units. To learn more, Click here.

WEEK 6

Types of Shares

Definition of Shares

Shares can be defined as the units of capital or ownership of a limited liability company,it is the division of the company’s ownership into numerous equal parts.i.e the interest which a shareholder has in the company. A company cannot commence business until it raises by selling to the public for subscription.

Types of Shares

1. Ordinary shares: These carry no special rights or restrictions.  They rank after preference shares as regards dividends and return of capital but carry voting rights (usually one vote per share) not normally given to holders of preference shares (unless their preferential dividend is in arrears).Some companies create more than one class of ordinary shares.  To learn more, Click here.

WEEK 7 

Preparation of Accounts for Issue of Shares

Introduction

As seen in the previous lecture on shares Here, there are three classes of shares namely- shares issued at par, shares issued at premium and shares issues at discounts. In this lecture, we shall now discuss the procedures for preparing the accounts for these various classes of shares. Read on below-

Preparation of Account for Issue of Shares at Par

A company may issue shares at their face value or at a price other than the face value. When shares are issued at a price equal to their face value it is termed as shares issued at par. When issue price of a share is more than its face value, it is known as shares issued at a premium. To learn more, Click here.

WEEK 8 

Loan Capital-Debenture Types

What is Loan Capital?

Loan Capital is the part of a company’s capital that is not equity capital but earns a fixed rate of interest instead of dividends, and must be repaid within a specified period; irrespective of the company’s financial position. Loan capital may be obtained from a bank or finance company in the forms of long-term loans, or from debt-equity investors in the form of debentures or preferred stock (preference shares). It is usually secured by a fixed and/or floating charge on the company’s assets. Unlike debt capital, it does not include short-term loans (such as overdraft). To learn more, Click here.

WEEK 9

Capital Market- Requirements for Enlisting in the Capital Market

 What is a Capital Market?

A capital market is any financial market in which long-term debts and equity-backed securities are traded (i.e., bought and sold). These securities are typically  Capital markets are defined as markets in which money is provided for periods longer than a year. Capital markets channel the wealth of savers to those who can put such wealth to long-term productive use; such as companies or even governments making long-term investments. The capital is typically overseen by financial regulators or monitors such as the Nigerian Securities and Exchange Commission (SEC). To learn more, Click here.

WEEK 10  

Company Formation

Procedure for the formation of a Company

During the formation of a Limited Liability Company, the following procedures must be followed-

  1. The first step is to get the promoters; they are individuals who conceive he idea of a company and undertake to fulfill all legal requirements of the venture.
  2. The following documents will be filled with the registrar of companies. These are memorandum and article of association and statement of nominal capital.
  3. The document are stamped and logged with the registrar of companies for verification
  4. When the registrar of companies receives and approves the necessary documents the registrar issues a certificate of incorporation. To learn more, Click here.

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