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ACCOUNTING IN BUSINESS
Chapter 1
© 2009 The McGraw-Hill Companies, Inc.,
All Rights Reserved
C1
IMPORTANCE OF ACCOUNTING
Accounting
Identifying
Select transactions and events
Recording
Input, measure and classify
Communicating
Prepare, analyze and interpret
McGraw-Hill/Irwin
Slide 2
USERS OF ACCOUNTING INFORMATION
会计信息的使用者
C2
External Users
•Lenders
•Consumer Groups
•Shareholders •External Auditors
•Governments •Customers
McGraw-Hill/Irwin
Internal Users
•Managers
•Sales Staff
•Officers/Directors •Budget Officers
•Internal Auditors •Controllers
Slide 3
USERS OF ACCOUNTING
INFORMATION
C2
External Users
Financial accounting provides
external users with financial
statements.
财务会计
McGraw-Hill/Irwin
Internal Users
Managerial accounting provides
information needs for internal
decision makers.
管理会计
Slide 4
ETHICS - A KEY CONCEPT
道德
C4
Identify ethical
concerns
 Analyze
options
Use personal
Consider all good
ethics to
and bad
recognize ethical
consequences.
concern.
McGraw-Hill/Irwin
 Make ethical
decision
Choose best
option after
weighing all
consequences.
Slide 5
GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES公认会计准则
C5
Financial accounting practice is governed by concepts
and rules known as generally accepted accounting
principles (GAAP).
Relevant Information
相关
Affects the decision of its users.
Reliable Information
可靠
Is trusted by users.
Comparable
Information
可比较
Is helpful in contrasting
organizations.
McGraw-Hill/Irwin
Slide 6
C5
SETTING ACCOUNTING PRINCIPLES
制定会计准则
Financial Accounting Standards Board
is the private group that sets both
broad and specific principles.
财务会计准则委员会
The Securities and Exchange Commission is the
government group that establishes reporting requirements
for companies that issue stock to the public.
证券交易委员会
The International Accounting Standards Board (IASB)
issues International Financial Reporting Standards that
identify preferred accounting practices to create harmony
among accounting practices of different countries.
国际会计准则委员会
McGraw-Hill/Irwin
Slide 7
PRINCIPLES AND ASSUMPTIONS OF
ACCOUNTING会计假设和原则
C5
Revenue Recognition Principle
收入确认
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.
Matching Principle 配比
A company must record its expenses
incurred to generate the revenue reported.
McGraw-Hill/Irwin
Cost Principle 成本
Accounting information is based on
actual cost. Actual cost is
considered objective.
Full Disclosure Principle 充分揭示
A company is required to report the
details behind financial statements
that would impact users’ decisions.
Slide 8
PRINCIPLES AND ASSUMPTIONS OF
ACCOUNTING
C5
Now
Future
Going-Concern Assumption
持续经营
Reflects assumption that the business
will continue operating instead of
being closed or sold.
Business Entity Assumption
会计主体
A business is accounted for
separately from other business
entities, including its owner.
McGraw-Hill/Irwin
Monetary Unit Assumption 货币单位
Express transactions and events in
monetary, or money, units.
Time Period Assumption 会计分期
Presumes that the life of a company can
be divided into time periods, such as
months and years.
Slide 9
FORMS OF BUSINESS ENTITIES
企业形式
Sole
Proprietorship
McGraw-Hill/Irwin
Partnership
Corporation
Slide 10
CHARACTERISTICS OF BUSINESSES
Characteristic
Proprietorship Partnership Corporation
Business entity
yes
yes
yes
Legal entity
no
no
yes
Limited liability
no*
no*
yes
Unlimited life
no
no
yes
Business taxed
no
no
yes
One owner allowed
yes
no
yes
* Proprietorships and partnerships that are
set up as LLCs provide limited liability.
McGraw-Hill/Irwin
Slide 11
SARBANES-OXLEY (SOX)
Congress passed the Sarbanes-Oxley Act to help curb financial abuses at
companies that issue their stock to the public. Management must issue a report
stating that internal control are effective. Auditors must verify the effectiveness of
internal controls.
Company
Alleged Accounting Abuses
Enron
WorldCom
Fannie Mae
Adelphia Communications
AOL Time Warner
Xerox
Bristol-Myers Squibb
Nortel Networds
Inflating income, hid debt, and bribed officials
Understated expenses to inflate income and hid debt
Inflated income
Understated expenses to inflate income and hid debt
Inflated revenues and income
Inflated income
Inflated revenues and income
Understated expenses to inflate income
McGraw-Hill/Irwin
Slide 12
A1
EXPANDED ACCOUNTING EQUATION会计等式
Assets
Owner Capital
=
_
Liabilities
Owner
Withdrawals
+
+
Revenues
Equity
_
Expenses
Owner's Equity
McGraw-Hill/Irwin
Slide 13
P1
FINANCIAL STATEMENTS财务报表
Let’s prepare the Financial Statements reflecting
the transactions we have recorded.
1.Income Statement
2.Statement of Owner’s Equity
3.Balance Sheet
4.Statement of Cash Flows
McGraw-Hill/Irwin
Slide 14
END OF CHAPTER 1
McGraw-Hill/Irwin
Slide 15