note 001 Basic ConceptsAccounting Equation Financial account 财务会计 教学课件.ppt

Introduction “accounting is the process of identifying, measuring, summarizing and communicating economic information to permit informed judgments and decisions by users of the information.” “accounting is the process of recording, classifying and summarizing of business transactions and business events in monetary terms and interpreting the result.” Importance of Accounting Accounting Activities Users of Accounting Information Users of Accounting Information Business Entity Forms Generally Accepted Accounting Principles Accounting Assumption Separate Business Entity Going Concern Monetary Unit Time Period Consistency Separate Business Entity Every businesses are regarded as a single entity for accounting purposes. The business is viewed as a separate entity from its owner, creditors or stakeholders. Therefore, any personal transaction does not included in the business transaction. Going Concern This concept assumes that the business is a permanent venture and will not be wound up in the foreseeable future. Enable the assets to be recorded at the historical cost with a depreciation. Monetary Unit A business asset is reported in the balance sheet only if its value can be measured in money terms with a reasonable degree precision. Time Period Business activities can be divided into specific period such as monthly, quarterly or annually. Purpose : Report business activities for decision making Enables comparison of business performance over time The financial reporting will be based on the accordance period. Companies adopt a year as their accounting period (but the accounting period is not necessarily a calendar year) Consistency Once a particular accounting method has been adopted and applied, it should be followed consistently in subsequent periods. Accounting Principles Historical Cost Principle Objectivity Principle Revenue Recognition Principle Matching Principal Full Disclosure Principle The Historical Cost Principle This assumption emphasizes tha