1.Introduction to Accounting.ppt

1、2020/10/13,1,Unit OneIntroduction to Accounting,2,2020/10/13,Study Targets: To describe the information System of Accounting To describe the profession of Accounting To describe the equation of Accounting To describe financial Statement To describe professional Ethics in Accounting,3,2020/10/13,1.1

2、Accounting is a system of gathering, summarizing, and communicating financial information for a business, government, or other organizations.,4,2020/10/13,The functions of accounting system:, Interpret and record the effects of business transactions Classify the effects of similar transactions to ma

3、nagement and reports (interior use) Summarize and communicate the information to decision-makers (exterior use),5,2020/10/13,The purposes of accounting system: Provide information for managers and outsiders to use in decision-making, also: produce operating documents protect the companys assets prov

4、ide data for company tax return provide the basis for reimbursement of costs by clients or customers prepare documents of private information,6,2020/10/13,1.2 Accounting and Its ProfessionHistory of Accounting:Origin: China, Babylonia, Greece and Egyptthe 15th century: “double-entry-system”the found

5、ation of the modern accounting the 18th century: cost accounting the 19th century: independent audit American Institute of Certified Public Accountant (AICPC) Chinese Institute of Certified Public Accountant (CICPC) computer revolution: software,7,2020/10/13,Three categories of accountants private a

6、ccountants-work for an employer; serve accounting, budgeting, internal auditing public accountants-work for many clients; serve auditing, management advisory, tax service government accountants-work for federal, provincial and municipal agencies; serve auditing tax return, accumulating financial inf

7、ormation,8,2020/10/13,Three main fields and not-for-profit agencies of account practice: financial accounting managerial accounting tax accounting not-for-profit accounting,9,2020/10/13,What activities do accountants perform? Financialstatement preparation, statement analysis, auditing, consulting,

8、planning Managerialcost accounting, budgeting, internal auditing, management consulting Taxationpreparation, planning, investigations, consulting Accounting-relatedlenders, consultants, analysts, traders, managers, directors, underwriters, planners, appraisers,10,2020/10/13,1.3 Accounting Equation A

9、ccounting elements: Assets Liabilities Owners equity Revenue Expense profit,11,2020/10/13,Assets = Liabilities + Owners Equity The equation between the total amount of assets and source amount owned by an enterprise wont be change. The total amount of assets will always equal to the claim rights of

10、these assets by creditors and owners equity The above is the fundamental accounting equation, accounting for the common quantitative relation among the three accounting elements of assets, liabilities and equity.,12,2020/10/13,Revenue Expense = Profit Assets=Liabilities+Owners Equity+(Revenue- Expen

11、se) Or: Assets= Liabilities+ Owners Equity+ profit Profit Tax = Retained Earning (Retained Earning is an item in owners equity.) At the end of an accounting year, the equation restores to: Assets = Liabilities + Owners Equity,13,2020/10/13,1.4 Four Principal Financial Statements Income Statementa su

12、mmary of the revenue and expenses for a specific period of time Statement of Owners Equitya summary of the changes in the owners equity that have occurred during a specific period of time. Balance Sheeta list of the assets, liabilities, and owners equity at a specific date. Statement of Cash Flowsa

13、summary of the cash receipts and cash payments for a specific period of time.,14,2020/10/13,1.5 Professional Ethics in Accounting Integrity have a duty to report favorable as well as unfavorable information refrain from taking actions to undermine legitimate and ethical objectives not take unfair ad

14、vantage of information act in the interests not only of their clients but of other indirect users disassociate from any attempts to disclose misleading information,15,2020/10/13,Confidentiality have a duty to refrain from disclosing confidential information Competence have a duty to perform their professional duties according to high ethical standards stay current with changes in the profession not abuse power have an ethical oblig