Kế toán, kiểm toán - Chapter 1: Accounting in Business

Chapter 1ACCOUNTING IN BUSINESSIdentifyingSelect transactions and eventsRecordingInput, measure and classifyCommunicatingPrepare, analyze and interpretIMPORTANCE OF ACCOUNTINGAccountingC 1USERS OF ACCOUNTING INFORMATIONExternal UsersLendersShareholders GovernmentsConsumer GroupsExternal AuditorsCustomersInternal UsersManagersOfficers/DirectorsInternal AuditorsSales StaffBudget OfficersControllersC 2External UsersFinancial accounting provides external users with financial statements.Internal UsersManagerial accounting provides information needs for internal decision-makers.C 2USERS OF ACCOUNTING INFORMATIONOPPORTUNITIES IN ACCOUNTINGC 2ACCOUNTING JOBS BY AREAC 2Beliefs that distinguish right from wrongAccepted standards of good and bad behaviorETHICS - A KEY CONCEPTC 3C 3ETHICS - A KEY CONCEPTFinancial accounting practice is governed by concepts and rules known as generally accepted accounting principles (GAAP).GENERALLY ACCEPTED ACCOUNTING PRINCIPLESRelevant InformationAffects the decision of its users.Reliable InformationIs trusted by users.Comparable InformationIs helpful in contrasting organizations.C 4The Securities and Exchange Commission is the government agency that establishes reporting requirements for companies that issue stock to the public.SETTING ACCOUNTING PRINCIPLESFinancial Accounting Standards Board is the private group that sets both broad and specific principles. The International Accounting Standards Board (IASB) issues International Financial Reporting Standards that identify preferred accounting practices to create harmony among accounting practices of different countries. C 4INTERNATIONAL STANDARDSThe International Accounting Standards Board (IASB), an independent group (consisting of 16 individuals from many countries), issues International Financial Reporting Standards (IFRS) that identify preferred accounting practices.IASBC 4INTERNATIONAL STANDARDSC 4PRINCIPLES AND ASSUMPTIONSOF ACCOUNTINGCost PrincipleAccounting information is based on actual cost. Actual cost is considered objective.Revenue Recognition PrincipleRecognize revenue when it is earned.Proceeds need not be in cash.Measure revenue by cash received plus cash value of items received. Matching PrincipleA company must record its expenses incurred to generate the revenue reported.Full Disclosure PrincipleA company is required to report the details behind financial statements that would impact users’ decisions.C 4ACCOUNTING ASSUMPTIONSMonetary Unit AssumptionExpress transactions and events in monetary, or money, units.Business Entity AssumptionA business is accounted for separately from other business entities, including its owner.Time Period AssumptionPresumes that the life of a company can be divided into time periods, such as months and years.NowFutureGoing-Concern AssumptionReflects assumption that the business will continue operating instead of being closed or sold.C 4FORMS OF BUSINESS ENTITIESSole ProprietorshipPartnershipCorporationC 4* Proprietorships and partnerships that are set up as LLCs provide limited liability. CHARACTERISTICS OF BUSINESSES**C 4END OF CHAPTER 1