中央财经大学会计专业英语教程Chapter 1

中央财经大学会计专业英语教程

English in Accounting Profession September, 2009

中央财经大学会计专业英语教程

Part Ⅰ 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 Accounting Managerial Accounting Tax 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

Illustration 1-1. Financial Accounting Information and the Stakeholders of a BusinessIdentify stakeholders (Internal: Owners, managers, employees, etc. External: Customers, creditors, government, etc.) Assess stakeholders’ informational needs.

Prepare accounting reports for stakeholders.

Record economic data about business activities and events

Design the accounting information system to meet stakeholders’ needs

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 o

wns, 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 ① the cash effects of a company’s perations during a period ② its investing transactions ③ its financing transactions ④ the net increase or decrease in cash during the period ⑤ 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 flows Indentifies 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 basis Cash-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

Comparison A simple Example Other considerations

中央财经大学会计专业英语教程

Accounting AssumptionsCAS treats the following as the fundamental accounting assumptions: Entity Continuity Period of Time Monetary Unit

中央财经大学会计专业英语教程

1.3 Financial Accounting Principles and Measurement Bases

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