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Chapter 1 - Lecture notes 1

Should be same regardless of lecturer
Course

Introduction to Financial Accounting (ACCT1101)

762 Documents
Students shared 762 documents in this course
Academic year: 2018/2019
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MK
Ma Ki
The University of Hong Kong
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Chapter 1 ACCOUNTING IN BUSINESS PowerPoint Authors: Susan Coomer Galbreath, Ph., CPA Charles W. Caldwell, D.B., CMA Jon A. Booker, Ph., CPA, CIA Cynthia J. Rooney, Ph., CPA Winston Kwok, Ph., CA Copyright © 2015 by McGraw-Hill Education (Asia). All rights reserved. 1-2 C1 IMPORTANCE OF ACCOUNTING Accounting Identifying Select transactions and events Recording Input, measure and classify Communicating Prepare, analyze and interpret 1-4 C2 USERS OF ACCOUNTING INFORMATION External Users Financial accounting provides external users with financial statements. Internal Users Managerial accounting provides information needs for internal decision-makers. 1-5 C3 ETHICS - A KEY CONCEPT Ethics Beliefs that distinguish right from wrong Accepted standards of good and bad behavior 1-7 C4 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Financial accounting practice is governed by concepts and rules known as generally accepted accounting principles (GAAP). Relevant Information Affects the decision of its users. Reliable Information Is trusted by users. Comparable Information Is helpful in contrasting organizations. 1-8 C4 INTERNATIONAL STANDARDS The International Accounting Standards Board (IASB), an independent group (consisting of 16 individuals from many countries), issues International Financial Reporting Standards (IFRS) that identify preferred accounting practices. IASB 1 - 10 C4 PRINCIPLES AND ASSUMPTIONS OF ACCOUNTING Revenue Recognition Principle 1. Recognize revenue when it is earned. 2. Proceeds need not be in cash. 3. Measure revenue by cash received plus cash value of items received. Expense Recognition or Matching Principle A company must record its expenses incurred to generate the revenue reported. Cost Principle Accounting information is based on actual cost. Actual cost is considered objective. Full Disclosure Principle A company is required to report the details behind financial statements that would impact users’ decisions. 1 - 11 C4 ACCOUNTING ASSUMPTIONS Now Future Going-Concern Assumption Reflects assumption that the business will continue operating instead of being closed or sold. Monetary Unit Assumption Express transactions and events in monetary, or money, units. Business Entity Assumption Time Period Assumption A business is accounted for separately from other business entities, including its owner. Presumes that the life of a company can be divided into time periods, such as months and years. 1 - 13 C4 CORPORATION Owners of a corporation or company are called shareholders (or stockholders). Shareholders are not personally liable for corporate acts. When a corporation issues only one class of shares, we call it ordinary shares (or common stock). 1 - 14 A1 TRANSACTION ANALYSIS AND THE ACCOUNTING EQUATION Accounting Equation Assets = Liabilities + Equity 1 - 16 A1 LIABILITIES Accounts Payable Notes Payable Creditors’ claims on assets Taxes Payable Wages Payable 1 - 17 A1 EQUITY Owner’s Claims on Assets 1 - 19 P1 TRANSACTION ANALYSIS The accounting equation MUST remain in balance after each transaction. Assets = Liabilities + Equity

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Chapter 1 - Lecture notes 1

Course: Introduction to Financial Accounting (ACCT1101)

762 Documents
Students shared 762 documents in this course

University: The University of Hong Kong

Was this document helpful?
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
Winston Kwok, Ph.D., CA
Chapter 1
ACCOUNTING IN BUSINESS
Copyright © 2015 by McGraw-Hill Education (Asia). All rights reserved.

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