2.elements of accounting

Accounting Stages
Ting Wang
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The purpose and users of Accounting

Accounting is the language of business. its purpose to provide useful information to a variety of users so they can make informed decisions. Accounting Users Owners Managers Creditiors Government Customers Employees competitors
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2. Liabilities (负债)
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Showed on Balance Sheet
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Liabilities: A liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. 所谓负债，是指由于过去的交易或事项所引 起的公司、企业的现有债务，这种债务需要 企业在将来以转移资产或提供劳务加以清偿， 从而引起未来经济利益的流出。
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Introduction of T Account

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T Account It records of financial transactions over a period of time, such as money paid, borrowed or owed, and which resembles letter T. 3 Parts of a T account The name of the account and the account number. The Debit side (left side, Dr) The Credit side (right side, Cr)
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1. Assets (ance Sheet
Assets: An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise.
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思考题
1. 2. 3.
下面几项可以被确认为资产的有： 向外单位以经营租赁方式租入的资产 ； 本单位已经报废的机器设备； 本单位新购入的机器设备。
资产的判断标准：
a) • b) •
Costs or value of a certain resource can be measured by organizations reliably. 该资源的成本或价值能够可靠计量。 It can bring future benefits to organizations. 能给组织带来未来经济利益。
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Stage 3: Analysis and Interpretation
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Analysis Calculation of various ratios
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Interpretation Reflect the business performance over a period of time Assist financial users to make their decisions.
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Three Stages of Financial Accounting

Stage 1: Identifying and Recording

Stage 2: Classifying and Measuring Stage 3: Analysis and Interpretation
Expenses 费用 (Costs and Expenses/Expenditures) Profit 利润
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Elements of Accounting
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Learning Objectives
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Review T Account, Debit side and Credit side. To have an understanding of the definition of Five Types financial accounts. To introduce you two fundamental accounting equations. Use examples to practice the understanding of elements of accounting.
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资产是企业拥有和控制的能够用货币计量，并 能够给企业带来未来经济利益的经济资源。
Assets Characteristics It results from past transactions or events. It can be controlled and measured by organizations. It can bring future benefits to organizations.
a.
应付票据
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3. Owner’s Equity (所有者权益）
Showed on Balance Sheet
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Owners’ Equity: Owners’ equity refers to the economic benefits to which the owners are entitled in the enterprise’s assets, of which the amount is the balance between assets and liabilities. 企业所有者对净资产的要求权。

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Stage 1: Identifying and Recording

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Identify what? Source documents To determine the important transaction for a business Principle of Recording Double book-keeping system (double entry) Every transaction will affect two accounts, and the value will the equality.
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Classification of Liability

One category of Liability
Current Liability/Long –term Liability Account Receivable 应收账款 流动负债/长期负债 属于资产类 • Current Liabilities: these liabilities are reasonably expected to be liquidated within a year. such as wages, taxes, accounts payable, etc. • Long-term Liabilities: these liabilities are reasonably expected not to be liquidated within a year. Such as long-term bonds, notes payables, long-term leases, etc.
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T Account

Assets and Expenses
Debit Credit

Liabilities,Income and O.E
Debit
Credit
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5 Elements of Accounting

Assets (资产) Liabilities (负债) Owner’s Equity (所有者权益) Revenue (收入) Expenses (费用)
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Classifications of Assets

a. b. •
Two categories of Assets
Fixed Assets/Current Assets 固定资产/流动资产 Tangible Assets/Intangible Assets 有形资产/无形资产 Fixed Assets: is a term used in accountancy for assets and property which cannot easily be converted into cash. such as property, plant, and equipment (PP&E), Current Assets: A balance sheet account that represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business. Such as cash, accounts receivable, inventory, etc. Tangible Assets: it denotes assets which have physical substance, such as land, a building, or a machine. Intangible Assets: this term is used to describe assets which are used in the operation of the business but no physical substance.
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5 Elements of Accounting
1. 2. 3. 4. 5.
Assets Liabilities Owner’ s Equity Revenues
资产 负债 所有者权益 收入
Represents financial conditions of a business Represents trading performance of a business
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Liabilities Characteristics
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It comes from past transactions or events of organizations. It must be paid off at someday in the future. The settlement of liability occurs the transfer of assets and provision of services in the future.
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T Account

Assets and Expenses
Debit Credit

Liabilities,Income and O.E
Debit Credit
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Stage 2: Classifying and Measuring

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Classifying Classify accounts into: Profit & Loss account (shows the profit made by a business) Balance Sheet (shows how much the business is worth) Cash Flow statement (shows the cash movement of a business)