中央财经大学会计专业英语教程课件

中央财经大学会计专业英语教程English in Accounting ProfessionSeptember, 2009中央财经大学会计专业英语教程Part Financial Accounting中央财经大学会计专业英语教程 Chapter 1. Financial Accounting Conceptual Framework 中央财经大学会计专业英语教程What is Accounting?Accounting is the art of interpreting, measuring and communicating the results of economic activities.Accounting has often been called the language of business.The use of accounting information is not limited to the business world.中央财经大学会计专业英语教程Chapter SkeletonLearning Objectives: Define accounting, financial accounting, and financial statement. Describe and prepare a balance sheet; define assets, liabilities, and owners equity. Explain the accounting bases and assumptions. Describe the accounting principles and measurement bases and qualitative characteristics of financial accounting information.中央财经大学会计专业英语教程1.1 The purpose of Accounting and Financial ReportingAccounting may be described as the process of identifying , measuring, recording, and communicating economic information to permit informed judgments and decisions by users of that information.The origins of accounting are generally attributed to the work of Luca Pacioli, an Italian Renaissance mathematician.中央财经大学会计专业英语教程There are many types of accounting information:Financial AccountingManagerial AccountingTax Accounting 中央财经大学会计专业英语教程Financial Accounting refers to information describing the financial resources, obligations, and activities of an economic entity(either an organization or an individual).Financial Accounting information is designed primarily to assist investors and creditors in deciding where to place their scarce investment resources.A business is an organzation in which basic resources(inputs).The objective of most business is to maximize profits.中央财经大学会计专业英语教程 What is the role of financial accounting in business?The simplest answer is that financial accounting provides information for managers to use in operating the business. In addition, financial accounting provides information to other stakeholders to use in assessing the economic performance and the condition of the business.中央财经大学会计专业英语教程Identify stakeholders (Internal: Owners, managers, employees, etc. External: Customers, creditors, government, etc.)Assess stakeholders informational needs.Design the accounting information system to meet stakeholders needsPrepare accounting reports for stakeholders.Record economic data about business activities and eventsIllustration 1-1. Financial Accounting Information and the Stakeholders of a Business中央财经大学会计专业英语教程Financial Reporting: supplying general-purpose financial information about a business to people outside the organization.Financial Statement: the principal means of reporting general-purpose financial information to the persons outside a business organization is a set of accounting reports.The users of the Financial Statement: the persons receiving these reports.中央财经大学会计专业英语教程A complete set of financial statements includes: A balance sheet, showing at a particular point of time(a specific date) the financial position of the company by indicating the resources that it owns, the debts that it owes, and the amount of the owners equity(investment) in the business.An income statement, including the profitability of the business over the preceding years(or a particular time period).A statement of cash flows, summarizing the cash receipts and cash payments of the business over the same time period covered by the income statements.中央财经大学会计专业英语教程The statement of cash flow reports the cash effects of a companys perations during a period its investing transactions its financing transactions the net increase or decrease in cash during the period the cash amount at the end of the period中央财经大学会计专业英语教程In addition , a complete set of financial statements usually includes several pages of notes, containing additional information which accountants believe is useful in the interpretation of the financial statements.The basic purpose of financial statements is to assist users in evaluating the financial position, profitability, and future prospects of a business.The information communicated to the external users in financial reporting is based on standards that establish CAS(Chinese Accounting Standards).中央财经大学会计专业英语教程Objectives of Financial reportingThe objectives are to provide information that:Is useful to those making investment and credit decisions;Is helpful in assessing future cash flowsIndentifies the economic resources(assets), the claims to those resources(liabilities), and the changes in those resources and claims.中央财经大学会计专业英语教程1.2 Accounting basis and Accounting AssumptionsTwo types of accounting basisCash-basis accounting Accrual-basis accounting中央财经大学会计专业英语教程Cash BasisIs the method of bookkeeping that records financial events based on cash flow and cash position. Revenue is recognized when cash is received and expense is recognized when cash is paid.Two types of cash-basis accounting exist: Strict cash-basis modified cash-basis中央财经大学会计专业英语教程Accrual-BasisRecords financial events based on economic activity rather than financial activity.Revenue is recorded when it is earned and realized, regardless of when actual payment is received.Expenses are “matched” revenue regardless of when they are actually paid.Accrual accounting is required by CAS and other financial accounting standards like GAAP, IFRS,etc.中央财经大学会计专业英语教程ComparisonA simple ExampleOther considerations中央财经大学会计专业英语教程Accounting AssumptionsCAS treats the following as the fundamental accountingassumptions:EntityContinuityPeriod of TimeMonetary Unit中央财经大学会计专业英语教程1.3 Financial Accounting Principles and Measurement Bases中央财经大学会计专业英语教程Financial accounting principles Cost PrincipleRevenue Recognition PrincipleMatching PrincipleFull disclosure Principle中央财经大学会计专业英语教程Cost PrincipleThe cost principle states that assets should be recorded at their cost. Cost is the values exchanged at the time something is acquired.Cost is reliable. The values exchanged at the time something is acquired generally can be objectively measured and can be verified.中央财经大学会计专业英语教程Revenues Recognition PrincipleThe revenue recognition principle dictates that revenue be recognized in the accounting period in which it is earned.Accountants follow the approach of “let expenses follow revenue”.The nature of expenses: costs are the source of expenses. Costs that will generate revenues obly in the current accounting period are expensed immediately.中央财经大学会计专业英语教程Unexpired costs become expenses in two ways 1. Cost of goods soled. 2. Operating expenses. Revenues Recognition Principle中央财经大学会计专业英语教程Cost IncurredAssetExpensesProvides future benefitsProvides no apparent futureProvides future benefits Unexpired Expired Cost CostBenefits DecreaseIllustration 1-2. Expense Recognition中央财经大学会计专业英语教程Matching PrincipleOnce the economic life of a business has been divided into artificial time periods, the revenues recognition and matching principles can be applied. This one assumption and two principles thus provide guidelines as to when revenues and expenses should be reported.中央财经大学会计专业英语教程Time Period AssumptionThe economic life of any business can be divided into artificial time periodsRevenue Recognition PrincipleMatching PrincipleRevenue recognized in the accounting period in which it is earned.Expenses matched with revenues in the period when efforts are expensed.中央财经大学会计专业英语教程Full disclosure PrincipleThis principle requires that circumstances and events that make a difference to financial statement users be disclosed.中央财经大学会计专业英语教程Financial Accounting Measurement basesMarket Value(Fair Value)Historical CostNet Realizable ValueCurrent Value(Present Value)中央财经大学会计专业英语教程Market ValueMarket value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.中央财经大学会计专业英语教程Historical CostThe economic activities and resourced of a company initially are measured by the exchange price of a ttransaction at the time the transaction occurs. Usually the exchange price(the historical cost ) is retained in the accounting records as the value of an item until the item is consumed, sold, or liquidated and removed from the records.中央财经大学会计专业英语教程Net Realizable ValueA method of determining the present value of a troubled asset to its present owner may be based on the assumption that the asset will be held for a period of time and sold at some future date.With regards to inventory, net realizable value(NRV) is the estimated selling price selling price in the ordinary course of business minus any cost to complete and to sell the goods.Net realizable value is also associated with accounts receivable.中央财经大学会计专业英语教程Current Value(Present Value)Is the value on a given date of a future payment or series of future payments, discounted to reflect the time value of money and other factors such as investment risk.中央财经大学会计专业英语教程1.4 Qualitative Characteristics of Accounting Information中央财经大学会计专业英语教程PervasiveConstraintUser-SpecificQualityOverall qualityPrimaryDecision-SpecificQualitiesIngredients of Primary QualitiesSecondary andInteractive QualityThreshold forRecognitionAdditional Consideration Illustration 1-4 Hierarchy of Qualitative Characteristics of Accounting InformationAccounting InformationBenefits CostsPVFVTVRFN Comparability (Including Consistenc) MaterialityUnderstandabilityDecision UsefulnessRelevanceReliabilityConservatism中央财经大学会计专业英语教程Illustration 1-4 presents a hierarchy of the qualititative characteristics of accounting information. This section presents an overview of the hierarchy, after which we define and discuss the components in detail.The hierarchy is bounded by three constraints.To be useful, accounting information must have each of the qualitative characteristics, at least to a minimum degree.中央财经大学会计专业英语教程UnderstandabilityAccounting information should be understandable to users who have a reasonable knowledge of business and economic activities and who are willing to study the information which reasonable diligence.中央财经大学会计专业英语教程Decision UsefulnessIs the overall qualitative characteristic to be used in judging the quality of accounting information.中央财经大学会计专业英语教程RelevanceAccounting information is relevant if it can make a difference in a decision by helping users predict the outcomes of past, present ,and future events or confirm or correct prior expectations. To be relevant, accounting information should have either predictive or feedback value, or both. In addition, it should be timely.中央财经大学会计专业英语教程ReliabilityAccounting information is most useful when it is reliable as well as relevant. Reliable information is reasonably free from error and bias, and faithfully represents what is inteded to represent.Accounting information is verifiable when measurers can form a consensus that the selected method has been used without error or bias.中央财经大学会计专业英语教程ReliabilityAccounting information has representational faithfulness when there is a relationship between the reported accounting measurements or descriptions and the economic resources, the obligations and the transactions and events causing changes in these items.中央财经大学会计专业英语教程Comparability and ConsistencyA secondary qualitative characteristic of accounting information is comparability, and including consistency.Comparability is not considered a primary quality of useful information, like relevance and reliability, because it must evolve more than one item of information and is the interactive quality of the relationship between two or more items of information.中央财经大学会计专业英语教程Consistency means conformity from period to period, with accounting policies and procedures remaining unchanged.Comparability and Consistency中央财经大学会计专业英语教程Constraints to the HierarchyBenefit/ Cost ConstraintMateriality ConstraintConservatism