会计专业英语课件.ppt

English in Accounting ProfessionSeptember, 20091会计专业英语Part Ⅰ Financial Accounting2会计专业英语 Chapter 1. Financial Accounting Conceptual Framework 3会计专业英语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.4会计专业英语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.5会计专业英语1.1 The purpose of Accounting and Financial ReportingAccounting 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.6会计专业英语There are many types of accounting information:Financial AccountingManagerial AccountingTax Accounting 7会计专业英语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.8会计专业英语 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.9会计专业英语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 events10会计专业英语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.11会计专业英语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.12会计专业英语The statement of cash flow reports① the cash effects of a company’s perations during a period② its investing transactions③ its financing transactions④ the net increase or decrease in cash during the period⑤ the cash amount at the end of the period13会计专业英语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).14会计专业英语Objectives of Financial reportingThe objectives are to provide information that:Is useful to those making investment and credit decisions;Is helpful in assessing future cash flowsIndentifies the economic resources(assets), the claims to those resources(liabilities), and the changes in those resources and claims.15会计专业英语1.2 Accounting basis and Accounting AssumptionsTwo types of accounting basisCash-basis accounting Accrual-basis accounting16会计专业英语Cash BasisIs 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-basis17会计专业英语Accrual-BasisRecords 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.18会计专业英语ComparisonA simple ExampleOther considerations19会计专业英语Accounting AssumptionsCAS treats the following as the fundamental accountingassumptions:EntityContinuityPeriod of TimeMonetary Unit20会计专业英语1.3 Financial Accounting Principles and Measurement Bases21会计专业英语Financial accounting principles Cost PrincipleRevenue Recognition PrincipleMatching PrincipleFull disclosure Principle22会计专业英语Cost PrincipleThe 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.23会计专业英语Revenues Recognition PrincipleThe 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.24会计专业英语Unexpired costs become expenses in two ways 1. Cost of goods soled. 2. Operating expenses. Revenues Recognition Principle25会计专业英语Cost IncurredAssetExpensesProvides future benefitsProvides no apparent futureProvides future benefits Unexpired Expired Cost CostBenefits DecreaseIllustration 1-2. Expense Recognition26会计专业英语Matching PrincipleOnce 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.27会计专业英语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.28会计专业英语Full disclosure PrincipleThis principle requires that circumstances and events that make a difference to financial statement users be disclosed.29会计专业英语Financial Accounting Measurement basesMarket Value(Fair Value)Historical CostNet Realizable ValueCurrent Value(Present Value)30会计专业英语Market ValueMarket 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 arm’s –length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.31会计专业英语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.32会计专业英语Net Realizable ValueA 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.33会计专业英语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.34会计专业英语35会计专业英语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 UsefulnessRelevanceReliabilityConservatism36会计专业英语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.37会计专业英语UnderstandabilityAccounting 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.38会计专业英语Decision UsefulnessIs the overall qualitative characteristic to be used in judging the quality of accounting information.39会计专业英语RelevanceAccounting 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.40会计专业英语ReliabilityAccounting 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.41会计专业英语ReliabilityAccounting 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.42会计专业英语Comparability and ConsistencyA 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.43会计专业英语Consistency means conformity from period to period, with accounting policies and procedures remaining unchanged.Comparability and Consistency44会计专业英语Constraints to the HierarchyBenefit/ Cost ConstraintMateriality ConstraintConservatism45会计专业英语。