LOG
TRƯỜNG ĐẠI HỌC KINH TẾ - ĐẠI HỌC ĐÀ NẴNG
CHAPTER 1
- INTRODUCTION TO ACCOUNTING-
LEARNING OBJECTIVES
LO1 Explain the essence and role of Accounting;
LO2 Identify Users of Accounting information.
Identify Accounting profession oportunities and
LO3
the important of accounting ethic
LO4 Compare financial accounting with management
accounting ;
LO5
Describe accounting process
Identify and explain the General Accepted
LO6
Accounting Principles (GAAP);
WHAT IS ACCOUNTING?
v “Accounting is the process of identifying,
measuring, recording, and communicating
information to permit informed judgements and
decisions by users of the information.”
-American Accounting Assiciation (AAA)-
v The Accounting system: the flow of information:
Accountants
Business prepare report to
People make
transactions show the result of
decisions
occur business
operations
Who use accounting information?
Users of reports Purpose
Stockholders To know their profit, risk capital
Government legal purposes of tax calculations, collect state and
a country-level data
Banker to evaluate potential lenders determine the
External
borrower’s ability to meet scheduled payments.
This evaluation includes a projection of future
operations, which is based on accounting
information.
Competitors to launch a new strategy, building and equipment
to purchase, how much merchandise inventory to
keep on hand..etc..
Employees to manage their bank accounts, to evaluate job
prospects, to make investments and to decide
Internal
whether to continue or change a job/position.
Managers to plan, to evaluate the firm performance and
manage risks, to build a new strategy, to make a
decision...
.......
Financial accounting -
Management accounting
Financial Accounting Management Accounting
accounting information is used for accounting information is used for
outside of organizations inside of organizations
Must follow various of accounting law, Not required by laws or any accounting
accounting standards.... standard.
Look to the past to examine financial Look to the future with forecasting
results-> historically focused
Use money measurement Use many different measurements
Accounting Profession
vPublic accountants: Serve the general
public as Government agencies, non-
profit organizations, State audit...
vPrivate accountants: General accounting,
accountants....
v Tax accounting
v Accounting consulting
Accounting career paths
Accounting
Audit Taxation
Career
Paths
Managerial
Accounting Consulting
Financial
Planning/acc
ounting
Accounting ethic
v Accounting ethics refers to the principles
and values that govern the behavior of
accountants in their professional
practice.
v Accounting ethics include integrity,
objectivity, confidentiality, and
professional competence.
=> help to maintain the trust of
stakeholders in the financial information
provided by accountants.
Accounting ethic-Integrity
v Accountants should always act with
integrity, honesty and objectivity. They
should avoid conflicts of interest, disclose
any potential conflicts, and act in the best
interests of clients.
Accounting ethic-Objectivity
v Accountants should be impartial and
unbiased in their professional
judgements. They should not allow
personal interests or relationships to
influence their decisions or actions
Accounting ethic-confidentiality
v Accountants have access to sensitive
financial information and should maintain
the confidentiality of this information.
They should not disclose confidential
information to unauthorized parties or
use it for personal gain.
Accounting ethic-Professional competence
vAccountants should maintain their
professional competence through
ongoing education and training. They
should only provide services that they
are qualified to provide and should not
make misrepresentations about their
qualifications or experience.
Accounting process
Identifying Recording Communicating
How do
What information
What do accountants accountants record accounting provided,
collect? financial how, who?
=========== transactions? ==========================
Identify, copy, reflect ============ Financial reports are
financial and According to timeframe used to generate,
monetary transactions and object, financial analyse, explain and
based on accounting transactions disseminate finanical
documents are tracked, evaluated, information.
and saved
Generally Accepted Accounting principles
Business Going
entity concern
concept
An organization or a The resources needed to
section of an organization continue
that stand apart from other operating indefinitely
organizations and until it provides evidence
individuals as a separate to the contrary
economic unit
Generally Accepted Accounting principles
Monetary Accounting
unit period
An accounting period
Only transactions is a span of time
that can be during the fiscal
expressed in or calendar year in
which accountants
monetary terms
perform functions
are to be recorded (Month, quater, year..)
Generally Accepted Accounting principles
The trading and
profit and loss
account should only
include the income
earned and expenses
incurred for the
current financial year
Accrual
basic
Accounting
Generally Accepted Accounting principles
Assets and The revenue
services that are should be reported
acquired should and recorded at the
be recorded at time when
goods/service are
their actual cost
realised
Historical Revenue
Cost Recognition
Generally Accepted Accounting principles
Transactions
should always
be recorded in
Matching the same (or
consistent) way.
A business must
keep a record of
expenses along Consistency
with earned
revenues .
Generally Accepted Accounting principles
If there is
uncertainty in a
potential financial
estimate, a company
should err on the
side of caution and
Materiality
report the most
conservative amount
Focus on
transactions that are
Conservatism involving important
information on
Financial- reporting
