西方财务会计1课件

1、西 方 财 务 会 计WESTERN FINANCIAL ACCOUNTINGChapter 1The Financial Accounting Conceptual Framework And The Accounting Equation1.1 ACCOUNTINGA service activity - Provide useful information about economic entities to interested partiesAnd a measurement-communication activity- The usefulness of accounting i

2、nformation depends on effective measurement of the economic activities and effective communication of those measurements to users of that information.Accounting information and decision makersAccountinginformationFinancial accounting ManagementAccountingExternalDecisionmakersInternal Decision makers

3、1.2 COMPARISON BETWEEN FINANCIAL AND MANAGEMENT ACCOUNTINGManagement Accounting - The process of developing and reporting accounting information for internal users who have direct access to the information preparing.1.2 COMPARISON BETWEEN FINANCIAL AND MANAGEMENT ACCOUNTINGFinancial Accounting - The

4、 process of developing and reporting financial information for external users who do not have direct access to the information preparing which should be in accordance with General Accepted Accounting Principles (GAAP). GAAPGenerally accepted accounting principles are the measurement rules used to de

5、velop the information in financial statement.They are those guidelines which indicate how to report economic events.They consist of a number of concepts,principles and procedures.Generally Accepted Accounting PrinciplesThe Securities and Exchange Commission (SEC) has the authority to determine the f

6、inancial statements to be provided to stockholders and the measurement rules applied in producing the statements.The Financial Accounting Standards Board (FASB) is currently recognized as the group responsible for establishing GAAP.The Conceptual FrameworkThe Financial Accounting Standards Board (FA

7、SB) issues Statements of Financial Accounting Concepts.These statements constitute the conceptual framework of accounting.1.3 THE FASBS FINANCIAL ACCOUNTING CONCEPTUAL FRAMEWORK1.3-1 Objectives of the Conceptual FrameworkThe Framework is to be the foundation for building a set of coherent accounting

8、 standards and rules. The Framework is to be a reference of basic accounting theory for solving emerging practical problems of reporting.1.3-2 Overview of the Conceptual Framework - Three levels of objectives elements and principlesThe first level consists of objectives.The second level explains fin

9、ancial elements and characteristics of information.The third level incorporates recognition and measurement criteria.Level I. Basic Objectives of FinancialReportingTo provide information:about economic resources, the claims on those resources and changes in them that is useful to those making invest

10、ment and credit decisions, such as present and future investors, creditors in assessing future cash flows;And to individuals who reasonably understand business and economic activities.Level II. Basic Elements And Qualitative Characteristics of Accounting informationLiabilities: Probable future sacri

11、fices of economic benefitsEquity: Residual or ownership interestInvestment by Owners: Increases in net assetsDistributions to Owners: Decreases in net assetsComprehensive Income: Changes in equity from non-owner sourcesRevenues: Inflows from entitys ongoing operationsExpenses: Outflows from entitys

12、ongoing operationsGains: Increases in equity from incidental transactionsLosses: Decreases in equity from incidental transactionsAssets: Probable future economic benefits(i) Elements in Financial StatementsElements in financial statementsRevenuesExpenses income statementGainsLossesComprehensive inco

13、meAssetsLiabilities balance sheetOwners equityInvestment by the ownersDistributions to ownersREVENUESRevenues are the gross increases in owners (stockholders) equity that result from operating the business.Generally, revenues result from the sale of merchandise, the performance of services, the rent

14、al of property, or the lending of money.Revenues usually result in an increase in an asset.EXPENSESExpenses are the decreases in owners (stockholders) equity that result from operating the business.They are the cost of assets consumed or services used in the process of earning revenue.Examples of ex

15、penses include utility expense, rent expense, supplies expense, and tax expense.When revenues exceed expenses, net income results.When expenses exceed revenues, a net loss results.Gains and losses(con.)Gains: increase in equity from incidental or peripheral transactions not associated with the compa

16、nys major or central lines of business, e.g. gain from disposal of fixed asset.Gains and lossesLosses: decrease in equity from incidental or peripheral transactions not associated with the companys major or central lines of business,e.g. loss from disposal of fixed asset.ASSETSAssets are resources o

17、wned by a business.They are things of value used in carrying out such activities as production, consumption and exchange.The common characteristics possessed by all assets is the capacity to provide future services or benefits to the entities that use them.LIABILITIESLiabilities are claims against a

18、ssets.They are existing debts and obligations.Most claims of creditors attach to total enterprise assets rather than to the specific assets provided by the creditor.Owners equityClaim on net assetsOwners equity = total assets - total liabilities Different OE Proprietorship and partnership: Capital (

19、subdivisions: Capital; Drawing) Corporation: Stockholders equity (subdivisions: Paid-in capital; Retained earnings)Investments by OwnersRevenuesOwners EquityDrawingExpensesINCREASES AND DECREASES INOWNERS EQUITYINCREASEDECREASEInvestments by StockholdersRevenuesStockholders EquityDividends toStockho

20、ldersExpensesINCREASES AND DECREASES INSTOCKHOLDERS EQUITYINCREASEDECREASE(ii). Qualitative Characteristics of Accounting Information1. Primary qualities are Relevance and Reliability of accounting information.Relevance of information means “information capable of making a difference in a decision c

21、ontext.”The information must be timely to be relevant.The information should have predictive value: (be helpful in making predictions about ultimate outcomes of past, present and future events).The information should have feedback value (helps users to confirm prior expectations.)Information is reli

22、able, when it can be relied on to represent the true, underlying situation.To be reliable, information must be:* verifiable * faithful, and* neutral2. Secondary characteristics are: comparability and consistency of reported information.For information to be comparable, it must be:1) measured and rep

23、orted in a similar manner for different enterprises.2) useful in the allocation of resources to the areas of greatest benefit.3) useful to users in identifying real differences between enterprises.Accounting information is consistent, if the same accounting principles are applied in a similar manner

24、 from one period to the next.Accounting principles may be changed, if the change results in better reporting.If principles are changed, the justification for, and the nature and effect of the change, must be disclosed.Level III. Recognition and Measurement Criteria(I).Environmental Assumptions 1. Ec

25、onomic Entity Assumption An economic entity can be any organization or unit in society. The business is distinct from :(1) its owners and (2) all other economic entities. A business enterprise may be organized as solo proprietorship, partnership and corporation.Solo-proprietorshipA business owned by

26、 one person.The owner is often the manager/operator of the business.Small service-type businesses or small retail stores.Solo-proprietorshipUsually only a limited amount of money (capital) is necessary to start in business, and the owner receives any profits, suffers any losses, and is personally li

27、able for all debts of the business.PartnershipWhen a business is owned by two or more persons (partners) .When a partnership is created, there should be an agreement setting forth such terms as initial investment of each partner, duties of each partner, division of profits or losses, and settlement

28、to be made upon death or withdrawal of a partner. PartnershipEach partner generally has unlimited personal liability for the debts of the partnership.The partnership affairs must be kept separate from the personal activities of the partners.CorporationA business organized as a separate legal entity

29、under state corporation law and its ownership divided into transferable shares of stock is called a corporation.The holders of the shares enjoy limited liability; they are not personally liable for the debts of the corporate entity.2. Going Concern AssumptionThe business is assumed to continue indef

30、initely unless terminated by owners.The basis of recording financial elements is historical accounting.Liquidation accounting (based on liquidation values) is not followed unless so indicated.3.Monetary Unit (Unit Of Measurement)Money is the common unit of measure of economic transactions.Use of a m

31、onetary unit is relevant, and simple to understand.4.Time Period Assumption(to be explained in Chapter 2)2222(iii). Implementation Principles1.Cost Principle (Historical Cost Principle)Transaction is recorded at its acquisition price.It is not changed to reflect market price. The principle applies t

32、o assets and liabilities.Users of financial statements may find current fair value information to be useful as well.A “mixed attribute” system reports historical cost, fair value, and lower of cost or market values applied to inventory valuation (to be explained in Chapter 7).2. Revenue Recognition

33、PrincipleRevenue is recognized when it is earned or realizable, the sellers major task has completed and the amount can be objectively determined.24243. The Matching PrincipleExpenses in one period are matched to revenues of the same period so as to determine the profit in the cureent period appropr

34、iately. 4. The Full Disclosure PrincipleFinancial statements must report what a reasonable person would need to know to make an informed decision.Disclosure may be made: within the body of the financial statements, as notes to those statements, or as supplementary information. Implementation Constra

35、ints 1. Cost-Benefit Relationship * The cost of providing information should not outweigh the benefit derived. * Costs and benefits are not always obvious or quantifiable. * Sound judgment must be used in providing information.2. Materiality refers to an items importance to a firms overall financial

36、 operations.3. Industry PracticesThe nature of some industries may sometimes require departures from basic accounting theory.If application of accounting theory results in statements that are not comparable or consistent, then industry practices must examined for possible explanations. 4. Conservati

37、sm suggests that the preparer, when in doubt, choose a conservative solution.This solution will be least likely to overstate assets and income.Conservatism does not suggest that net assets or net income be deliberately understated.1.4 The Accounting Equation And TransactionsThe Accounting Equation:

38、Assets = Liabilities + Owners EquityTransactions are the economic events of the enterprise.They may be identified as external or internal.1 External transactions involve economic events between the company and some outside enterprise or party.2 Internal transactions are economic events that occur en

39、tirely within one company.TRANSACTION ANALYSISRex Nelson decided to open a computer programming company which named as Softroom.He invested $150,000 cash in the business.TRANSACTION ANALYSIS TRANSACTION 1There is an increase in the asset Cash, $15,000, and an equal increase in the stockholders equit

40、y, R. N. Capital, $150,000.TRANSACTION ANALYSIS TRANSACTION 1 SOLUTION(1) +150,000 = + 150,000 CapitalAssets=Liabilities+Owners EquityR. NelsonCashCapitalTRANSACTION ANALYSIS TRANSACTION 2Softroom purchased computer equipment for $70,000 cash.Cash is decreased $70,000 and the asset Equipment is incr

41、eased $70,000.TRANSACTION ANALYSIS TRANSACTION 2 SOLUTION=+ 70,000=(2) -70,000 + 70,000 Assets=Liabilities+R. N. CapitalCash+EquipmentOld Bal. 150,000 150,000New Bal. 80,000 150,000Owners EquitySoftroom purchased computer paper and other supplies expected to last several months from Adam Supply Comp

42、any for $16,000 on credit.TRANSACTION ANALYSIS TRANSACTION 3Adam Supply CompanySoftroom, Inc.The asset Supplies is increased $16,000 and the liability Accounts Payable is increased by the same amount.TRANSACTION ANALYSIS TRANSACTION 3 SOLUTION+=+(3) + 16,000 + 16,000 Assets=Liabilities+Owners Equity

43、AccountsR.N. CapitalCash+Supplies+Equipment=Payable+Old Bal.80,00070,000150,000New Bal.80,000 16,000+70,000 16,000150,000Softroom received $12,000 cash from customers for programming services it has provided.TRANSACTION ANALYSIS TRANSACTION 4SoftroomCash is increased $12,000 and R. N. Capital is inc

44、reased $12,000.Assets=Liabilities+Stockholders EquityAccountsCash+Supplies+Equipment=Payable+Old Bal. 80,00016,00070,00016,000150,000New Bal. 92,000+16,000+70,000=16,000+162,000R.N. CapitalTRANSACTION ANALYSIS TRANSACTION 4 SOLUTION(4) +12,000 +12,000 Service Revenue Softroom received a bill for $2,

45、500 from the Daily News for advertising the opening of its business but postponed payment of the bill until a later date.SoftroomDailyNewsBillTRANSACTION ANALYSIS TRANSACTION 5Accounts Payable is increased $2,500, and R. N. Capital is decreased $2,500.TRANSACTION ANALYSIS TRANSACTION 5 SOLUTIONAsset

46、s=Liabilities+AccountsCash+Supplies+Equipment=Payable+Old Bal.92,00016,0070,000 16,000162,000New Bal.92,000+16,000+70,000=18,500+ 159,500Stockholders EquityR.N. Capital + 2,500 -2,500 Advertising ExpenseSoftroom provided programming services of $35,000 for customers.Cash amounting to $15,000 was rec

47、eived from customers, and the balance of $20,000 was billed to customers on account.SoftroomBillTRANSACTION ANALYSIS TRANSACTION 6TRANSACTION ANALYSIS TRANSACTION 6 SOLUTION Assets = Liabilities + Owners Equity Cash + A/R + Supplies + Equipment = Accounts Payable + R.N Capital Old bal. 92,000 16,000 70,000 18,500 159,500+15000 +20000 +35,000 Service RevenueCash was increased $15 000;Accounts Receivable was increased $20 000;and Capital was increased $35000Expenses paid in cash for September were store rent, $6,000, salaries of employees, $9,000, and utilities, $2