8/3/2019 AC101-M8 Chapter 1

1/20

1-1

8/3/2019 AC101-M8 Chapter 1

2/20

1-2

LECTURE1

Instructor: Keo Sopheak

8/3/2019 AC101-M8 Chapter 1

3/20

1-3

8/3/2019 AC101-M8 Chapter 1

4/20

1-4

KNeny(Accounting) KWCakareFVIGtsBaaNkmkt;RtanigraykarN_BIRBwtikarN_esdkicrbs;GgPaBmYyedIm,ICYyeGayGkeRbIR)as;Btman sMerccit)an RtwmRtUv .skmPaBTaMg bIya:g

The accounting process includesthe bookkeeping function.

8/3/2019 AC101-M8 Chapter 1

5/20

1-5

There are two broad groups of users of financialinformation: internal users and external users.

Management

HumanResourcesMarketing

Finance

Internal Users

8/3/2019 AC101-M8 Chapter 1

6/20

1-6

IRS

LaborUnions

SEC

Investors

Creditors

Customers

External Users

8/3/2019 AC101-M8 Chapter 1

7/20

1-7

kareFVIeGayskmPaBmYymansg;daKWRtUvvinicyBIPaBxus bRtUvesaHRtg; bminesaHRtg;yutiFm bminyutiFm ehAfa RkmsIlFm .Standard-setting bodies determine these guidelines:

Securities and Exchange Commission (SEC)

Financial Accounting Standards Board (FASB)

International Accounting Standards Board (IASB)

8/3/2019 AC101-M8 Chapter 1

8/20

1-8

Ethics are the standards of conduct by which one'sactions are judged as:

a. right or wrong.b. honest or dishonest.

c. fair or not fair.

d. all of these options.

Question

Ethics in Financial Reporting

8/3/2019 AC101-M8 Chapter 1

9/20

1-9

Monetary Unit include in the accounting records onlytransaction data that can be expressed in terms of money.

Economic Entity requires that activities of the entity be

kept separate and distinct from the activities of its owner andall other economic entities.

Proprietorship.

Partnership. Corporation.

Forms of BusinessOwnership

8/3/2019 AC101-M8 Chapter 1

10/20

1-10

Proprietorship Partnership Corporation

Owned by two ormore persons.

Often retail andservice-typebusinesses

Generally

unlimitedpersonal liability

Partnershipagreement

Ownershipdivided into

shares of stock Separate legal

entity organizedunder statecorporation law

Limited liability

Generally ownedby one person.

Often smallservice-typebusinesses

Owner receives

any profits,suffers anylosses, and ispersonally liablefor all debts.

Forms of Business Ownership

8/3/2019 AC101-M8 Chapter 1

11/20

1-11

A business organized as a separate legal entity under statelaw having ownership divided into shares of stock is a

a. proprietorship.b. partnership.

c. corporation.

d. sole proprietorship.

Question

Generally Accepted Accounting Principles

8/3/2019 AC101-M8 Chapter 1

12/20

1-12

Assets Liabilities

Owners

Equity= +

8/3/2019 AC101-M8 Chapter 1

13/20

1-13

Assets Liabilities OwnersEquity=

+

Resources a business owns.

Provide future services or benefits.

Cash, Supplies, Equipment, etc.

Assets

8/3/2019 AC101-M8 Chapter 1

14/20

1-14

Assets Liabilities OwnersEquity=

+

Claims against assets (debts and obligations).

Creditors - party to whom money is owed.

Accounts payable, Notes payable, etc.

Liabilities

8/3/2019 AC101-M8 Chapter 1

15/20

1-15

Assets Liabilities OwnersEquity=

+

Ownership claim on total assets.

Referred to as residual equity.

Investment by owners and revenues (+)

Drawings and expenses (-).

Owners Equity

8/3/2019 AC101-M8 Chapter 1

16/20

1-16

Revenuesresult from business activities entered into for thepurpose of earning income.

Common sources of revenue are: sales, fees, services,

commissions, interest, dividends, royalties, and rent.

Illustration 1-6

Owners Equity

8/3/2019 AC101-M8 Chapter 1

17/20

1-17

Expenses are the cost of assets consumed or services used inthe process of earning revenue.

Common expenses are: salaries expense, rent expense,

utilities expense, tax expense, etc.

Illustration 1-6

Owners Equity

8/3/2019 AC101-M8 Chapter 1

18/20

1-18

Balance SheetIncome StatementStatement of Owners EquityStatement of Cash Flows

Note Disclosure

8/3/2019 AC101-M8 Chapter 1

19/20

1-19

Which of the following financial statements is prepared asof a specific date?

a. Balance sheet.b. Income statement.

c. Owner's equity statement.

d. Statement of cash flows.

Financial Statements

Question

8/3/2019 AC101-M8 Chapter 1

20/20

1-20