ĐH MỞ BÀI GIẢNG Introduction to Accounting ønd Business TRƯỜNG ĐẠI HỌC MỞ BÀI GIẢNG GIÁO TRÌNH

• Describe the nature of a business • Explain the role of accounting in business • Describe the profession of accounting • Summarise the development of accounting principles and relat

• Describe the nature of a business

• Explain the role of accounting in business

• Describe the profession of accounting

• Summarise the development of accounting principles and

relate them to practice

• State the accounting equation and define each element of

the equation

• Apply accounting equation in recording for business

• In general, a business is an organisation in

which basic resources (inputs) are assembled

and processed to provide goods or services

(outputs) to customers

• Each business has its own objective!!!

Trading

7

Service

Types of Business Organisation

Providing Information to Stakeholders

1

Internal/External Stakeholders

4

2

Accounting Information System

3 Design the AIS

Identify stakeholders

Assess their information needs

Record economic

data about business activities

• External:

– Bank / Creditor – Tax authority

Stakeholders’ information needs

• Managers? Cash flow / costing…

* Accountants follow GAAP in preparing reports By this,

these reports could be compared from one business to another

15

GAAP

Accounting concepts developed from GAAP

 Business Entity Concept

Business entity

• Means that the owner and the business are

treated as separate entities An entity is an organisation or a system

E.g.?

17

Historical cost

• Means that transactions are recorded using

the cost at the point of transaction

occurrence This cost is called the historical

cost or original cost

E.g.?

Accounting Period

• Means that financial statements of the

business are prepared for a period of time, either a month, a quarter or a year

E.g.?

19

Going concern

• Means when we record the transactions of a

business, we assume that the business will continue to operate for the foreseeable future

E.g.?

Consistency

• Means that accountant tries to prepare the

financial statement of the business on the same basis every year

E.g.?

21

Materiality

• Information is material if its omission or

misstatement could influence the economic decisions of users taken on the basis of the financial statements (IASB Framework)

E.g.?

Materiality is relative to the size and particular circumstances of individual companies

• With 2 points: records should be stated in

terms of money & currency is stable or

constant and that any insignificant effect of inflation is ignored

E.g.?

23

Accounting equation

Assets = Liabilities + Owner’s Equity

* All business transactions can be stated in terms of changes in the elements of

the accounting equation

Assets

• Resources controlled by the business

25

• Cash

• Money in bank account

• Property, Plant and Equipment

Owner’s Equity

• Owner’s right to the asset of the business

29

• Contributed capital investment (owner’s capital)

• Owner’s withdrawals (drawing)

• Retained earnings

• Purchase a machine by cash

• Borrow money from your family

• Sell goods to customer and receive cash

the Accounting Equation

ASSET = LIABILITY + OWNER’S EQUITY

• Property & Equipment

• Long Term Liabilities

Financial Statement (FS)

• Profit and loss statement

• Statement of owner’s equity

Statement of owner’s equity

Statement of cash flows

 Events after reporting date

 Transactions with related parties

How do they linked together?

Profit and loss statement

Statement of owner’s equity Balance sheet

Statement of cash flows Notes of FS

41

Homework for Ch.1

• Multiple choice (p.23)