会计学原理-英文版-第21版--第一章Accounting-in-Bussiness.ppt

1、Accounting in Business,Chapter 1,Accounting in Business,C1,Importance of Accounting,C1,For example, the sale by Apple of an iPhone.,Keep a chronological log of transactions.,Prepare reports such as financial statements.,Users of Financial Information,C1,Accounting is called the language of business

2、because all organizations set up an accounting information system to communicate data to help people make better decisions. Accounting serves many users who can be divided into two groups: external users and internal users.,Opportunities in Accounting,Accounting information is in all aspects of our

3、lives. When we earn money, pay taxes, invest savings, budget earnings, and plan for the future, we use accounting.,Ethics A Key Concept,C3,The goal of accounting is to provide useful information for decisions. For information to be useful, it must be trusted. This demands ethics in accounting. Ethic

4、s are beliefs that distinguish right from wrong. They are accepted standards of good and bad behavior.,Fraud Triangle,C3,Three factors must exist for a person to commit fraud: opportunity, pressure, and rationalization.,Envision a way to commit fraud with a low perceived risk of getting caught,Fails

5、 to see the criminal nature of the fraud or justifies the action,Must have some pressure to commit fraud, like unpaid bills,Generally Accepted Accounting Principles (GAAP),C4,Financial accounting is governed by concepts and rules known as generally accepted accounting principles (GAAP). GAAP aims to

6、 make information relevant, reliable, and comparable.,Relevant information affects decisions of users.,Reliable information is trusted by users.,Comparable information is helpful in contrasting organizations.,International Standards,C4,In todays global economy, there is increased demand by external

7、users for comparability in accounting reports. This demand often arises when companies wish to raise money from lenders and investors in different countries.,Differences between U.S. GAAP and IFRS are decreasing as the FASB and IASB pursue a convergence process aimed to achieve a single set of accou

8、nting standards for global use.,International Accounting Standards Board (IASB) An independent group (consisting of individuals from many countries), issues International Financial Reporting Standards (IFRS),International Financial Reporting Standards (IFRS) Identify preferred accounting practices,C

9、onceptual Framework and Convergence,C4,Principles and Assumptions of Accounting,C4,General principles are the basic assumptions, concepts, and guidelines for preparing financial statements. General principles stem from long-used accounting practices.,Specific principles are detailed rules used in re

10、porting business transactions and events. Specific principles arise more often from the rulings of authoritative groups.,Accounting Principles,C4,Cost Principle Accounting information is based on actual cost. Actual cost is considered objective.,Matching Principle A company must record its expenses

11、incurred to generate the revenue reported.,Full Disclosure Principle A company is required to report the details behind financial statements that would impact users decisions.,Accounting Assumptions,C4,Proprietorship, Partnership, and Corporation,Here are some of the major attributes of proprietorsh

12、ips, partnerships, and corporations:,C4,SarbanesOxley (SOX),Congress passed the SarbanesOxley Act to help curb financial abuses at companies that issue their stock to the public. SOX requires that these public companies apply both accounting oversight and stringent internal controls. The desired res

13、ults include more transparency, accountability, and truthfulness in reporting transactions.,C4,Dodd-Frank Wall Street Reform and Consumer Protection Act,The Act was designed to: promote accountability and transparency in the financial system, put an end to the notion of “too big to fail,” protect th

14、e taxpayer by ending bailouts, and protect consumers from abusive financial services.,Transaction Analysis and the Accounting Equation,The Accounting Equation,Expanded Accounting Equation:,A1,P1,Transaction Analysis,Transaction 1 On December 1, Chas Taylor personally invests $30,000 cash in FastForw

15、ard and deposits the cash in a bank account opened under the name of FastForward.,The accounts involved are: (1) Cash (asset) (2) Owner Capital (equity),P1,Transaction Analysis,Transaction 2 FastForward uses $2,500 of its cash to buy supplies of brand name footwear for performance testing over the n

16、ext few months.,The accounts involved are: (1) Cash (asset) (2) Supplies (asset),P1,Transaction Analysis,Transaction 3 FastForward spends $26,000 to acquire equipment for testing footwear. This is an exchange of one asset, cash, for another asset, equipment. The equipment is an asset because of its

17、expected future benefits from testing footwear.,The accounts involved are: (1) Cash (asset) (2) Equipment (asset),P1,Transaction Analysis,Transaction 4 Taylor decides more supplies of footwear and accessories are needed. These additional supplies total $7,100, but as we see from the accounting equat

18、ion, FastForward has only $1,500 in cash. Taylor arranges to purchase them on credit from CalTech Supply Company.,The accounts involved are: (1) Supplies (asset) (2) Accounts Payable (liability),P1,Transaction Analysis,Transaction 5 In one of its first jobs, FastForward provides consulting services

19、to a powerwalking club and immediately collects $4,200 cash.,The accounts involved are: (1) Cash (asset) (2) Revenues (equity),P1,Transaction Analysis,Transaction 6 and 7 FastForward pays $1,000 rent and the biweekly $700 salary of the companys only employee.,The accounts involved are: (1) Cash (ass

20、et) (2) Expenses (equity),P1,Transaction Analysis,Transaction 8 FastForward provides consulting services of $1,600 and rents its test facilities for $300 to a podiatric services center. The center is billed for the $1,900 total. This transaction results in a new asset, called accounts receivable, fr

21、om this client.,The accounts involved are: (1) Accounts Receivable (asset) (2) Revenues (equity),P1,Transaction Analysis,Transaction 9 The podiatric center pays $1,900 to FastForward 10 days after it is billed for consulting services.,The accounts involved are: (1) Cash (asset) (2) Accounts Receivab

22、le (asset),P1,Transaction Analysis,Transaction 10 FastForward pays CalTech Supply $900 cash as partial payment for its earlier $7,100 purchase of supplies, leaving $6,200 unpaid.,The accounts involved are: (1) Cash (asset) (2) Accounts Payable (liability),P1,Transaction Analysis,Transaction 11 The o

23、wner of FastForward withdraws $200 cash for personal use.,The accounts involved are: (1) Cash (asset) (2) Withdrawals (equity),Summary of Transactions,P1,Financial Statements,The four financial statements and their purposes are: Income statement describes a companys revenues and expenses along with

24、the resulting net income or loss over a period of time due to earnings activities. Statement of owners equity explains changes in equity from net income (or loss) and from any owner investments and withdrawals over a period of time. Balance sheet describes a companys financial position (types and am

25、ounts of assets, liabilities, and equity) at a point in time. Statement of cash flows identifies cash inflows (receipts) and cash outflows (payments) over a period of time.,P2,Income Statement,The income statement describes a companys revenues and expenses along with the resulting net income or loss

26、 over a period of time due to earnings activities.,P2,Statement of Owners Equity,Net income from the income statement.,The statement of owners equity reports information about how equity changes over the reporting period.,P2,Balance Sheet,The balance sheet describes a companys financial position at

27、a point in time.,P2,Statement of Cash Flows,P2,Global View,Basic Principles Neither U.S. GAAP nor IFRS specifies particular account names nor the detail required. IFRS does require certain minimum line items be reported in the balance sheet along with other minimum disclosures that U.S. GAAP does no

28、t. On the other hand, U.S. GAAP requires disclosures for the current and prior two years for the income statement, statement of cash flows, and statement of retained earnings (equity), while IFRS requires disclosures for the current and prior year. Still, the basic principles behind these two system

29、s are similar.,Global View,Transaction Analysis Both U.S. GAAP and IFRS apply transaction analysis identically as shown in this chapter. Although some variations exist in revenue and expense recognition and other principles, all of the transactions in this chapter are accounted for identically under

30、 these two systems. It is often said that U.S. GAAP is more rules-based whereas IFRS is more principles-based. The main difference on the rules versus principles focus is with the approach in deciding how to account for certain transactions. Under U.S. GAAP, the approach is more focused on strictly following the accounting rules; under IFRS, the approach is more focused on a review of the situation and how accounting can best reflect it.,Global View,Financial Statements Both U.S. GAAP and IFRS prepare the same four basic financial statements. To illustrate, a conden