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CH 01 - International Accounting - Lecture Note - Guiding Transactions Analysed

The document provides an overview of accounting including definitions, types of businesses, accounting principles and assumptions, and how to analyze transactions. It discusses key accounting concepts like the accounting equation and how to apply debit and credit rules when journalizing accounting entries.

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17 views

CH 01 - International Accounting - Lecture Note - Guiding Transactions Analysed

The document provides an overview of accounting including definitions, types of businesses, accounting principles and assumptions, and how to analyze transactions. It discusses key accounting concepts like the accounting equation and how to apply debit and credit rules when journalizing accounting entries.

Uploaded by

Trung Liên Đệ
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTERNATIONAL

ACCOUNTING
[email protected]
1. WHAT IS ACCOUNTING?
• ACCOUNTING IS THE LANGUAGE OF THE BUSINESSES.
 We should start with some vocabularies (=accounts name!)
FULL TYPICAL CHART OF ACCOUNTS
• Guidance for self-learning
2. TYPES OF BUSINESSES
• PROPRIETORSHIP (SOLE TRADER)
• PARTNERSHIP
• CORPORATION
(Classified according to equity/capital-contributing
structure)
3. Accounting branches
• Financial accounting
• Managerial accounting
• Tax accounting
• Others (Audit, Finance, Internal control, Government,
Forensics…)
4. Accounting users
• Internal
• External
5. Basic principles & assumptions
underlying financial accounting
• Basis:
1. Accrual
2. Cash
• Measurement Principles
1. HISTORICAL COST PRINCIPLE
2. CURRENT COST (textbook: FAIR VALUE PRINCIPLE)
• Assumptions:
1. MONETARY UNIT ASSUMPTION (in scope of textbook)
2. ECONOMIC ENTITY ASSUMPTION (in scope of textbook)
3. Going concern assumption
4. Accounting Period Assumption
 Regulated in the document so-called “IASB Conceptual Framework” under
international accounting practice.
TAKE NOTES
• Unlike the other languages, accounting language use
currency unit to measure/evaluate value of things. It
means, every account attached with a number.
• We have an equation to remember/learn:
Total assets = Total liabilities + Equity (basic
accounting equation)
6. Expansion accounting equation
• Total assets = Total liabilities + Share capital + Retained
earnings + Revenues – Expenses
• Why study accounting equation?
•  b/c we have to use accounting equation to analyse the
transactions/activities within businesses/companies.
• Total assets = Total liabilities + Share capital +
Retained earnings + Revenues – Expenses
• Understand:
• Cash + Receivables + investments + plant assets +
intangibles assets….= Payables (AP, insuarance
payables, rent payables, interest payables….) + Share
capital + retained earnings + Revenues - Expenses
Why do we have to analyse transactions
of companies?
• Ans:
• b/c we want to record transactions approriately  b/c we
want to show the accurate financial results of companies
 b/c that is the way a company talks their language to
the users (shareholders, investors, gov, cus, employees,
creditors..)
How to analyse transactions?
• Guidelines:
1. Read through the transactions  pick out the
transactions with monetary measurements to account
only.
2. Try to find the accounts affected in those
transactions( u do it quick by experience!!!).
3. Guess/judge whether the accounts affected in step 2
are moving up (increase) or moving (decrease) 
apply Debit/Credit rules.
DEBIT & CREDIT RULES
TYPES INCREASED DECREASED NORMAL BALANCES
BY BY
Assets DEBIT CREDIT DEBIT
Liabilities CREDIT DEBIT CREDIT
Equity CREDIT DEBIT CREDIT
Revenues CREDIT DEBIT CREDIT (before closing)/
NONE (to the next period)
Expenses DEBIT CREDIT DEBIT (before closing)/
NONE (to the next period)
Examples E 1-6/chapter 1

1. Yes  Cash and Common stock/share capital  Cash up


(increase); Share capital increase
2. YES  Cash & Rent expenses - Cash decrease, rent ex
increase
3. YES  Equipment and Cash  Equipment increase, Cash
decrease
4. Hint: Perform + services = companies incur the
revenues/provide revenues or services to the others.
3/ Equipments, Accounts payable
Dr Equipments
Cr Accounts payable
4/ Accounts receivables, Services revenues
Dr Accounts receivables
Cr Services revenues
5. YES. CASH DECREASE & DIVIDENDS DECREASE
6. YES. CASH INCREASE & RECEIVABLES DECREASE (ONE ASSET
INCREASE, THE OTHER ASSET HAS TO BE DECREASED TO KEEP
THE ACCOUNTING EQUATION BALANCED!!!).
7. YES. ADVERTISING EXPENSES INCREASE; ACCOUNTS PAYABLE
INCREASE
NOTE: Sometime “on account/on credit” are receivables = when we have the
rights to receive money. However, “on account/on credit” are payables = when
we have the obligations to pay money.
8. YES. EQUIPMENT INCREASE, CASH DECREASE.
9. YES. REVENUES INCREASE, CASH IN = INCREASE!
6/ Dr Cash
Cr Accounts receivables
7/ Dr Advertising expenses
Cr Accounts payable
8/ Dr Equipments
Cr Cash
9/ Dr Cash
Cr Services revenues
7. Journalize transactions (định khoản/
ghi bút toán nhật ký)
• Journalize (dinh khoan) = Applying debit and credit rules
in booking entries
•  How to journalise? What are entries?
Debit (DR) An Account(s) X
Credit (CR) An Account(s) X
Debit amounts = Credit amounts
NOTE: Declared and paid dividends:
• In theory, chap 1 - 4:
Dr Dividends
Cr Cash
Understand:
Step 1: Declaration of dividends (công bố trả cổ tức)
Dr RE
Cr Dividends payable
Step 2: Payment of dividends:
DR Dividends payable
Cr Cash
COURSEWORK
• BOOK JOURNAL ENTRIES:
COURSEWORK
• BOOK JOURNAL ENTRIES:
COURSEWORK
• BOOK JOURNAL ENTRIES:
COURSEWORK
• Finding the unknown:

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