Principle of Accounting

Principle of Accounting
Chapter 1: Introduction to accounting and business
1. Nature of business and accounting

- A bussiness is an organization in which basic resources (inputs), such as materials and
labor, are assembled and processed to provide goods and services (output) to
customers. Businesses come in all sizes with the main objective is to earn a profit.
- Apply to non-profit and profit organizations
 Types of bussiness
- Service business
- Merchandising business
- Manufacturing business
 Role of accounting in business
- Accounting is an information system providing reports to users about the economic
activities and condition of a business
- The process of providing information: two groups (internal users and external users)
5 steps:
+ Identify Users: Internal (managers & employees), External (investors, creditors,
customers, government) Người sử dụng báo cáo tài chình là ai?
+ Assess Users’ Information Needs, Họ cần những thông tin gì? Liên quan đến hoạt
động tài chính, doanh thu bán hàng nhằm đề ra kế hoạch cho kinh doanh sắp tới
+ Design accounting system, depend on your purpose of business.
+ Record Economic data. Ghi nhân các dữ liệu kinh tế = Hoạch toán để hệ thống hoá
các dữ liệu.
+ Prepare Accounting Reports. Chuẩn bị báo cáo tài chính
- 2 kinds of accounting
+ Financial accounting (tài chính kế toán): for external users, need to follow
accounting rules, những người này xem bctc để xem tình hình hiện tại của công ty như
thế nào
+ Managerial accounting (kế toán quản trị): for internal users, flexible based on nature
of companies, để quản trị công ty hiệu quả hơn, linh hoạt hơn, tuỳ thuộc vào situation
of company
 Nhiều loại cho các mục đích sử dụng khác nhau.
 Role of ethics in accounting and business
- Ethics are moral principle that guide the conducts of individuals.
+ Trustworthy information, useful for decision making
+ Fraud  No one willing to invest or loan money to the business.
- The objective of accounting is to provide relevant, timely information for users
decision making
- The conceptual framework
+ Professional Competence and Due care
+ Integrity
+ Objectivity
+ Confidentiality
+ Professional Behavior
+ Independence
2. Generally Accepted Accounting Principle (GAAP)

- Financial accounting follow GAAP in preparing reports and make reports among
companies comparable.
 Term “Business entity concept”
- The business entity concept limits the economic data in an accounting system to data
related to the activities of the business. (Khái niệm thực thể kinh doanh giới hạn dữ
liệu kinh tế trong hệ thống kế toán liên quan đến các hoạt động của doanh nghiệp.)
 Form of business entity
- Proprietorship is owned by one individual
- Partnership is owned by two or more individuals
- Corporation is organized under state or federal statutes as a separate legal taxable
entity.
- Limited liability company (LLC) combines the attributes of a partnership and a
corporation.
 Cost concept
- Accounting amounts are recorded at their cost or purchased price.
- Mình chỉ ghi vào sổ kế toán con số mình mua.
- The cost concept also involves the objectivity and unit of measure concepts
- The objectivity concept requires that the amounts recorded in the accounting records
be based on objective evidence (only the final agreed-upon amount is objective
enough to be recorded in the accounting records).
- The unit of measure concept requires that economic data be recorded in dollars.
3. The accounting equation

- The resources owned by a business are its assets
- The debts of the business are liabilities
- The rights of the owners to their assets are owner’s equity.
Assets = Liabilities + Owner’s Equity
Accounting element: 5 components
+ Assets: tài sản được sở hữu bởi doanh nghiệp
+ Liabilities: tất cả các khoản nợ của doanh nghiệp
+ Equity (Capital): quyền sở hữu của ông chủ với tài sản của doanh nghiệp.
+ Income
+ Expense
4. Business transactions and the accounting equation
- Business transactions are economic event or condition that directly changes an entity’s
financial position or its results of operations (Các giao dịch kinh doanh là các sự kiện
hoặc điều kiện kinh tế làm thay đổi trực tiếp tình hình tài chính của một đơn vị hoặc
kết quả hoạt động của nó)
- All business transactions can be stated in terms of changes in the elements of the
accounting equation.
 Types of Transaction:
Assets = Liabilities + Owner’s Equity
 Extend Accounting Equation
Asset = Liabilities + Owner investment – Drawing + Revenue – Expense
Original equity (Retained Earning) Net Income
Drawing: tài khoản rút vốn, khi chủ doanh nghiệp rút equity ra thì drawing tăng
- Retained Earning: lợi nhuận giữ lại, Sẽ có 2 trường hợp với doanh thu của công ty, 1
là lấy lợi nhuận chia hết cho cổ đông, 2 là cổ đông kh cần nhận cổ tức, lời sẽ được đưa
lại làm xoay vòng vốn.
- Revenue from providing services is recorded as fees earned
- Revenue from the sale of merchandise is recorded as sales
- Other examples of revenue include rent, which is recorded as rent revenue (renting
the building), and interest, which is recorded as interest revenue (put money into the
bank, lent other person).
- An account receivable is a claim against a customer, which is an asset. You already
give customer good or service but the customer dont give you money nhưng nó đã
thành 1 giao dịch. Nên mình sẽ ghi nhận nó là 1 khoản phải thu  account
receivable.
- Asset used in earning revenue are called expenses. Tài sản sử dụng để tạo ra doanh
thu  chi phí
Transaction A: Cash in bank: $25,000
Asset. = Lia + Equity
Cash in bank incr = Contribution (Account) vốn incr
$25,000. $25,000
Transaction B: Land incr, cash in bank decr
Land incr. Cash in bank incr
$20,000 $20,000
Transaction C: payables incr, supplies incr
Supplies incr Payable incre
$1,350 $1,350
Transaction D: sales incr, cash incr
Asset = Lia + Equity
Cash incr. Sale incr
$7,500. $7,500
Transaction E: Expenses incr, Cash decr
Cash decr. Expense (Wage, Rent,….) incre
$3,650. $3,650
- Asset: Là các nguồn được sở hữu bởi công ty, có giá trị và mình sử dụng tài trị để hoạt
động kinh doanh và tạo ra doanh thu.
+ Current asset (tài sản ngắn hạn): receivables (khoản phải thu), cash in hand, cash in
bank
+ Non – current asset (tài sản dài hạn): Land, Van, Building, Machine, …
Homework:
1.3.
Assets: motor vehicle, land, amount owed to us by customer (account receivable), inventory of
goods held for sale, bank overdraft
Liabilities: amount owed to customer by us (account payable), bank overdraft
Bank overdraft: 1 khoản thấu chi. Ví dụ, một doanh nghiệp có thể thấy rằng họ dự kiến sẽ thiếu
hụt tiền mặt 15.000 bảng trong một tháng do trả lương và nhà cung cấp. Nếu ngân hàng cho
phép, cơ sở thấu chi có thể được sử dụng để tạm thời vay mượn tiền mặt từ ngân hàng.
1.4.
Liabilities: Trade payables, Bank overdraft, Loan from bank.
Assets: Computers, Buildings, Inventory, Cash in bank, Trade receivable, Vans.
1.5.
Asset Liabilities
Trade receivables Loan from K.Jones
Office furniture Bank overdraft
Delivery Van Trade payables
Computer equipment
Machinery
Cash in hand
Warehouse
1.6.
Asset Liabilities
Trade receivables Trade payables
Cash in bank Loan from building society
Fixtures and fittings: văn phòng phẩm
Inventory: hàng tồn kho
Premises: toàn bộ máy móc, nhà xưởng
Equipment
Computers
1.11.
(a) Cheque: ngân phiếu, séc, tấm séc tương ứng với tài khoản trong ngân hàng của doanh
nghiệp.
Cash in bank decr, Payables decr
C, Bought goods on time: mua hàng chưa trả tiền
Assets Liabilities Capital
A Bank decr Payables decr
B Cash decr
Fixtures incr
C Good incr Payables incr
D Cash incr Contribution incr
E Cash decr
Receivable incr
F Receivable decr
Cash incr
G Supplies decr Payable decr
H Cash in bank decr

Office computer incr
ASSETS = LIABILITIES + OWNER’S EQUITY
SAU TẤT CẢ CÁC TRANSACTION, EQUATION KHÔNG ĐỔI
Assets Liabilities Capital
A Vans incr Payables incr
B Cash decr Payables decr
C Good incr
Cash in bank decr
D Cash incr Contribution incr
E Good incr
Receivable decr
F Good incr Payables incr
G Cash decr Drawing incr
H Cash in bank decr Payable decr
Creditor: chủ nợ
5. Financial statement in proprietorship companies

- The accounting reports providing information for users are called financial statements.
(Báo cáo tài chính)
- A proprietorship has 4 primary financial statements
 Income statement (Statement of Profit or Loss, State of Profit or loss): a summary of the
revenue and expenses for a specific period of time, such as a month or a year, based on
matching concept. Bảng báo cáo kết quả hoạt động kinh doanh.
- Revenue – Expenses = Net Income/Net profit/Earnings
- Expenses > Revenue  Negative earnings  Net loss
- Nếu chi phí lớn hơn doanh thu  Lỗ
- Nếu chi phí nhỏ hơn doanh thu  Lãi
 Statement of owner’s equity: a summary of a changes in the owener’s equity that have
occured during a specific period of time, such as a month or a year.
- It is prepared after the income statement because the net income or net loss for the
period must be reported in this statement.
- It is prepared before the balance sheet since the amount of owner’s equity at the end of
the period must be reported on the balance sheet.
 Balance sheet (statement of financial position): a list of the assets, liabilities, and
owner’s equity as of a specific date, usually at the close of the last day of a moth or a
year. Bảng cân đối kế toán.
- Assets = Liabilities + Owner’s equity
- The asset and liability amounts are taken from the last line of income statement
- The equity is taken from the last line of the statement of owner’s equity
- Form of balance sheet: account form  basic format of the accounting equation
Assets Liabilities
Owner’s equity
 Statement of cash flows: a summary of the cash receipts and cash payments for a specific
period of time, such as a month or a year
- The statement of cash flow reports the changes of cash in operating activities,
investing activities, and financing activities.
+ Cash flow from operating activities: summary of cash receipts and cash payments
from operations.
+ Cash flow from investing activities: reports the cash transactions for the acquisition
and sale of relatively permanent assets.
+ Cash flow from financing activities: reports the cash transactions related to cash
investments by the owner, borrowings, and withdrawalsby the owner.

Principle of Accounting

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Principle of Accounting

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Principle of Accounting

Chapter 1: Introduction to accounting and business

1. Nature of business and accounting

2. Generally Accepted Accounting Principle (GAAP)

3. The accounting equation

Assets Liabilities Capital

A Bank decr Payables decr

H Cash in bank decr

ASSETS = LIABILITIES + OWNER’S EQUITY

SAU TẤT CẢ CÁC TRANSACTION, EQUATION KHÔNG ĐỔI

Assets Liabilities Capital

A Vans incr Payables incr

B Cash decr Payables decr

H Cash in bank decr Payable decr

5. Financial statement in proprietorship companies

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