中央财经大学会计专业英语教程Chapter1.ppt
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1、English in Accounting Profession September, 2009,Part Financial Accounting,Chapter 1. Financial Accounting Conceptual Framework,What is Accounting?,Accounting is the art of interpreting, measuring and communicating the results of economic activities. Accounting has often been called the language of
2、business. The use of accounting information is not limited to the business world.,Chapter Skeleton,Learning Objectives: Define accounting, financial accounting, and financial statement. Describe and prepare a balance sheet; define assets, liabilities, and owners equity. Explain the accounting bases
3、and assumptions. Describe the accounting principles and measurement bases and qualitative characteristics of financial accounting information.,1.1 The purpose of Accounting and Financial Reporting,Accounting may be described as the process of identifying , measuring, recording, and communicating eco
4、nomic information to permit informed judgments and decisions by users of that information. The origins of accounting are generally attributed to the work of Luca Pacioli, an Italian Renaissance mathematician.,There are many types of accounting information: Financial Accounting Managerial Accounting
5、Tax Accounting,Financial Accounting refers to information describing the financial resources, obligations, and activities of an economic entity(either an organization or an individual). Financial Accounting information is designed primarily to assist investors and creditors in deciding where to plac
6、e their scarce investment resources. A business is an organzation in which basic resources(inputs). The objective of most business is to maximize profits.,What is the role of financial accounting in business? The simplest answer is that financial accounting provides information for managers to use i
7、n operating the business. In addition, financial accounting provides information to other stakeholders to use in assessing the economic performance and the condition of the business.,Identify stakeholders (Internal: Owners, managers, employees, etc. External: Customers, creditors, government, etc.),
8、Assess stakeholders informational needs.,Design the accounting information system to meet stakeholders needs,Prepare accounting reports for stakeholders.,Record economic data about business activities and events,Illustration 1-1. Financial Accounting Information and the Stakeholders of a Business,Fi
9、nancial Reporting: supplying general-purpose financial information about a business to people outside the organization. Financial Statement: the principal means of reporting general-purpose financial information to the persons outside a business organization is a set of accounting reports. The users
10、 of the Financial Statement: the persons receiving these reports.,A complete set of financial statements includes: A balance sheet, showing at a particular point of time(a specific date) the financial position of the company by indicating the resources that it owns, the debts that it owes, and the a
11、mount of the owners equity(investment) in the business. An income statement, including the profitability of the business over the preceding years(or a particular time period). A statement of cash flows, summarizing the cash receipts and cash payments of the business over the same time period covered
12、 by the income statements.,The statement of cash flow reports the cash effects of a companys perations during a period its investing transactions its financing transactions the net increase or decrease in cash during the period the cash amount at the end of the period,In addition , a complete set of
13、 financial statements usually includes several pages of notes, containing additional information which accountants believe is useful in the interpretation of the financial statements. The basic purpose of financial statements is to assist users in evaluating the financial position, profitability, an
14、d future prospects of a business. The information communicated to the external users in financial reporting is based on standards that establish CAS(Chinese Accounting Standards).,Objectives of Financial reporting,The objectives are to provide information that: Is useful to those making investment a
15、nd credit decisions; Is helpful in assessing future cash flows Indentifies the economic resources(assets), the claims to those resources(liabilities), and the changes in those resources and claims.,1.2 Accounting basis and Accounting Assumptions,Two types of accounting basis Cash-basis accounting Ac
16、crual-basis accounting,Cash Basis,Is the method of bookkeeping that records financial events based on cash flow and cash position. Revenue is recognized when cash is received and expense is recognized when cash is paid. Two types of cash-basis accounting exist: Strict cash-basis modified cash-basis,
17、Accrual-Basis,Records financial events based on economic activity rather than financial activity. Revenue is recorded when it is earned and realized, regardless of when actual payment is received. Expenses are “matched” revenue regardless of when they are actually paid. Accrual accounting is require
18、d by CAS and other financial accounting standards like GAAP, IFRS,etc.,Comparison A simple Example Other considerations,Accounting Assumptions,CAS treats the following as the fundamental accounting assumptions: Entity Continuity Period of Time Monetary Unit,1.3 Financial Accounting Principles and Me
19、asurement Bases,Financial accounting principles,Cost Principle Revenue Recognition Principle Matching Principle Full disclosure Principle,Cost Principle,The cost principle states that assets should be recorded at their cost. Cost is the values exchanged at the time something is acquired. Cost is rel
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