Kế toán, kiểm toán - Chapter 1: Accounting and business

Chapter 1Accounting and BusinessCopyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin1-*What are the Basic Functions of Business?MarketingProducts, pricing, promotion, distributionHuman resourcesJobs, people, salaries, benefitsProduction and operationsPlanning, directing, controlling, evaluatingFinanceCapital maintenanceAccounting and information systemsInformation infrastructure1-*How do the Functions Use Accounting Information?MarketingPricing, distribution costsHuman resourcesPay and fringe benefits, hiring costsProduction and operationsProduction costs—actual and budgetedFinanceCost of borrowing, benefits expected1-*How has Business Evolved?Sole proprietorshipOne ownerPartnershipTwo or more ownersCorporationMany ownersMerchandisingBuy and sell productsServiceProvide serviceManufacturingMake and sell products1-*How has Accounting Evolved?Determination of wealthWhat am I worth todayDetermination of incomeHow has my wealth changedOn-going successHow is the business doing1-*What are the Characteristics of Business Today?Customer-focused operationsGlobal marketsProducts, labor, and capitalAdvanced manufacturing and communicationseBusinessB2B and B2CHybrid organizational structures1-*What are the Basic Concepts of Accounting?Business entityKeep business and personal records separateMonetary unitMaintain business records in currencyGoing concernBusiness will continue past the current periodPeriodicityProfits/losses must be determined periodically1-*What are the 5 Basic Elements of Accounting?AssetRight to use resources with future benefitLiabilityObligation to transfer resources in the future to suppliers of goods and servicesOwners’ equityNet assets belong to ownersRevenues (accrual basis)Amounts earned from providing goods and servicesExpenses (accrual basis)Amounts incurred in an attempt to generate revenues1-*What is GAAP and the IFRS?Generally Accepted Accounting PrinciplesInternational Financial Reporting standardsFinancial Accounting Standards BoardCurrent rule-making body in U.S.International Accounting Standards BoardCurrent rule-making body internationally1-*What are the Concepts Statements?Concepts Statement #1Useful information for decision makingConcepts Statement #2Characteristics of accounting informationConcepts Statement #3 (superceded)Concepts Statement #4Objectives for nonbusiness organizationsConcepts Statement #5Financial statementsConcepts Statement #6Elements of financial statementsConcepts Statement #7Estimating value of future cash flows1-*What Makes Information Useful?RelevanceCapable of making a differenceReliabilityDependableBenefits > CostsBenefits derived must be greater than costMaterialityLarge enough to have an impact on a decision1-*What are the 4 Basic Financial Statements and Auditors’ Report?Income statementIndicates revenues less expenses = net income for a period of timeStatement of cash flowsIndicates cash inflows and outflows from operating, investing, and financing activities for a period of timeStatement of owners’ equityIndicates changes in owners’ equity for a period of time1-*Financial Statements ContinuedBalance sheetIndicates the ending balances of assets, liabilities, and owners’ equity at a point in timeAuditor’s reportIndicates whether the company followed GAAP when preparing its financial statements1-*What are the Purposes of the Ratios?Current ratioRelationship between current assets and current liabilitiesDebt to equity ratioRelationship between liabilities and owners’ equityReturn on salesRelationship between net income and sales