会计审计专业英语 (2)

2-4 Monetary Unit Assumption
In financial accounting, an entity's transactions are recorded in the accounts in the monetary unit of the country in which it is operating. However, in general, financial statements are presented in the currency of the country where the reports are published. The use of money as a unit of account does create some difficulties. In the first place, transactions must be expressed in money terms before they can be recorded in the accounts. This assumption means that many important aspects of a morden business's operations cannot be embody in the financial statements.
Kபைடு நூலகம்y Terms
business entity (会计主体) double-entry accounting system (复式记账法) going concern assumption (持续经营假设) company failures (经营失败) accounting period assumption (会计分期假设) operating results (经营成果) financial position (财务状况)
keytermsbusinessentity会计主体doubleentryaccountingsystem复式记账法goingconcernassumption持续经营假设companyfailures经营失败accountingperiodassumption会计分期假设operatingresults经营成果financialposition财务状况monetaryunitassumption货币计量假设accrualbasisaccounting权责发生制cashbasisofaccounting收付实现制accountingconvention会计惯例adjustingentries调整分录separeteentityassumptiongoingconcernassumptionaccountingperiodassumptionmonetaryunitassumptionaccountingassumptionaccountingassumptionsarethebasicfoundationuponwhichourgenerallyacceptedaccountingrests
Accounting Period Assumption
Monetary Unit Assumption
2-1 Separete Entity Assumption
Separate entity assumption means that the enterprise can be accounted for and reported independent of its owners and other stakeholders.
When it is clear that an assumption of continued existence would result in misleading financial reports, then the assumption is not made.
2-3 Accounting Period Assumption
Review and Discussion Questions
1. What does separate entity assumption imply to accounting? How to identify an accounting entity?
2. What does accounting-period assumption means? What problems in accounting perspective does it cause?
3. Is monetary unit assunption essential to accounting? What difficulities may accountants encounter in applying monetary unit assumption?
4. What is the basic requirement of accrual basis of accounting?
3. Describe going concern assumption.
4. Describe monetary assumption and explain the difficulties that the assumption creates.
5. State time-period assumption and specify the problems it may bring about.
Under cash basis accounting, revenue is not recorded until received in cash; expenses are assigned to the period in which cash payment is made.
2-5 Accrual Basis Accounting
monetary unit assumption (货币计量假设)
accrual basis accounting (权责发生制) cash basis of accounting (收付实现制)
accounting convention (会计惯例)
adjusting entries (调整分录)
Accounting Assumption
Accounting assumptions are the basic foundation upon which our generally accepted accounting rests.
Separete Entity Assumption
Going Concern Assumption
The accounting entity identified as the smallest unit of activity with a self-contained accounting system.
2-2 Going Concern Assumption
The financial statements are normally prepared on the assumption that an entity is a going concern and will continue in operation for the foreseeable future.
A key to the proper application of the accrual basis of accounting is to ensure that all revenue and expense transactions that occcurred during the period are recognizedand recorded regardless of when the associated cash flows take place. The cash basis of accounting dose not give a good picture of profitability. It ignores revenues earned but uncollected and expenses incurred but unpaid.
The accounting period assumption requires that changes in a business's financial position be reported over a series of shorter time periods. Although the reporting reporting period varies, one year is the standard. The accounting period assumption does, however, lead to difficulties. First, it should be realized that the shorter the reporting period the greater the need for estimates and judgement. Second, financial reports for short periods may provide misleading impressions of the long-run prospects for the firm.
Secondly, the value of money is not constant over time.
2-5 Accrual Basis Accounting
Using the accrual basis of accounting means that revenues, expenses and other changes in assets, liabilities, and owners' equity are accounted for in the period in which the economic event takes place, not necessarily when the cash inflows and outflows take place.
5. Which assumption is not appropriate in a country that suffers triple-digit annual inflation?
This is not an assumption of perpetual life, but rather that the business will continue in operation long enough to recover or use up its assets and repay its outstandingliabilities.
Unit 2 Accounting Assumptions
Learning Objectives
After studying this unit, you should be able to:
1. Define accounting assumption. 2. Explain separate entity assumption.