Introduction
I.
Learning objectives
After completing this session, students should be able to
(1) understand the course objectives and requirements;
(2) define accounting and gain a basic idea of history of accounting;
(3) understand the differences between accounting/accountant and
bookkeeping/bookkeeper;
(4) distinguish public accounting from private accounting
(5) understand the differences between financial accounting and managerial
accounting;
(6) achieve some knowledge of different accounting organizations in the
world.
II. Course notes
1.
A brief introduction to the course
(1) Explain course description and requirements to the students;
(2) Give tentative syllabus to the students;
Remind the students of the stationary needed: Ruler (draw lines), calculator
(doing computation ), pencil (easy to correct the mistakes), rubber
2.
Defining accounting
“The language of business” is a major course for students of business. The
acceleration of change in our society has contribute to increasing complexities in
this language, which is used in recording , summarizing ,reporting and interpreting
basic economic data for individual, business, governments and other entities.
So ,accounting play a very important role in our economic and social system.
(Studying accounting is something like studying math, if you grasp some
general skills, methods and principles, you will find it easier to make further study,
to some degree, studying accounting is easier than studying language.)
Accounting can be defined as follows: (Refer to textbook p.1)
会计是通过对经济信息进行确认、计量、报告，来帮助信息使用着作出正
确决策的一种过程
3. An outline of the history of Accounting
1) Prelude [prelju:d] period of accounting in the primitive society
low productivity —very simple accounting method
A. Chinese used to tie knots on a rope, each knot presented a certain event or
Introduction-1
a certain amount of things
B. Egyptian making marks on the mud wall to count
2) Birth of bookkeeping—a real beginning of accounting in its sense
Bookkeeping is the recording of business data in a prescribed manner,
which came into being with the advanced development of productivity.
A. Single-entry bookkeeping: Zhou dynasty 月计 岁会 —— calculate the
results each monthly and totalized the results yearly, only record the
economic data once involving one account ( the type of record
traditionally used for the purpose of recording individual transaction )
B. double-entry bookkeeping (born in 1297 )
With the development of business esp in Italy(textbook P3，Paragraph3 ),
monk Luca Pcioli (Italian) :Father of accounting ,publish his book AD 1494
Summa de Arithmetica(数学大全)
The fundamental accounting equation (very important ,core of
accounting ,be introduced later)
3）Bookkeeping developed into accounting after Industrial Revolution, Accounting
which is closely related to production was developed into a social science ( in
Britain)
debit and credit (study it later) basic elements of double-entry account
4) since 1960s (accounting was developed as a separate science ,esp in 1957 )
American economy flourished requesting the development of accounting since
then ,accounting was developed as a science of management: computerization
of accounting and stronger control of the law
Supplement :“true and fair view” 中文翻译
Authority: all transactions are official and above board. 中文翻译
Accurate: all information provided is accurate, e.g. sales invoices give full
details of vat, discount, and amounts payable 中文翻译
Complete: there should be no missing dockets in the accounting system. （所
有的交易都已经记录）If the accounts hold the above qualities, they are likely
to give a true picture. 中文翻译
5) Present status: five major school
A. British school
ACCA, stresses facts with great influence on accounting system in
Hongkong（Used to be one of the colonies of UK）
About ACCA 英国注册会计师协会
ACCA (the Association of Chartered Certified Accountants) is the largest
and fastest-growing international accountancy body, with over 300,000
Introduction-2
（30 万） students and members in 160 countries. ACCA has an
extensive network of over 70 staffed offices and other centres around the
world.
The Chartered Association of Certified Accountants was build in 1984 to
reflect the fact that, a decade earlier, it had been granted a Royal Charter
of Incorporation. In 1996 ACCA became the Association of Chartered
Certified Accountants (ACCA). Our Members, who are known as
Chartered Certified Accountants, are employed in industry, financial
services, the public sector, or in public practice. With statutory
recognition in the UK and Ireland we have the authority to license our
members to work as registered auditors. In the UK, we also authorise our
members to undertake insolvency (破产业务)work. Outside the UK,
B. American school
见《会计英语》P22-P23
AICPA, ( abbreviation of American Institute of Certified Public
Accountants)
Professional organization which sets professional requirements for
CPA ,eg sets auditing standards. the membership of the AICPA is
restricted CPA
APB(abbr American Accounting Board from1959)
FASB( Financial Accounting standards Board)in 1973 which is
presently the dominant body in the development of accounting
principles— GAAP ,一般公认会计原则， the rules that govern how
accountants measure, process ,and communicate financial information 指
导会计去计量，处理并交流财务信息的规范 that has great influence in
the west(in Taiwan)
SEC (Securities and Exchange Commission)
IRS (Internal Revenue Service)
AAA(American Accounting Association)
IASC(International Accounting Standards committee)
C.
Latin school(France ,Italy)
Serving Taxation ,emphasizing financial income of corporation and
individuals
D. North-European( Scandinavian) school
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Company-oriented, protecting interest of company
E. Socialist School
Planned economy —protecting national property, not much attention to
cost and earnings , so long as no corruption.
Chinese: Accounting principle issued by ministry of finance
Difference between the AS and GFR
Items
Accounting Standards for
General Financial
Business Enterprise
Rules for Business
Enterprise
Scope
Corporation company
All kind of enterprise
content
Abstract standards without
specific entries
international-oriented
2001 ,WTO, GER was
modified and is more united
with AS
Specific entries,
available to Chinese
condition
Being Modified every
year , nearer to the
international standards
unification
Harmonization of the different accounting standards in the word 《会计
英语》P20
4 Some important definition
1) Accounting transaction 会计项目
an event that has a direct effect on the operation of an economic unit and can
be expressed in terms of money.
对某个单位的经营产生直接影响的，并且可以用货币进行计量的活动。
(Buying goods, payment of services.)
3) Accounting(definition from AAA, mentioned early)
elemnts
item
identifying
measuring
explain
What effect the How much
transaction
should this
cause
transaction
be recorded
Example:Borro Increase
the The amount
wing money to amount of cash of money
buy goods
and goods , borrowed ,t
increase
the he cost of
liability
goods
communicating
What do the results
mean? How to reflect
the
transaction
competently
Be
reflected
in
financial statements
in the form helpful
for decision-making
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3) Account :
the basic summarizing device of accounting is the account, which is the
detailed record of the changes that have occurred in financial situations during a
period of time.
它是在一定时期内详细登记某单位财务的变动情况的相关科目。
4) accounting entity 会计实体
accounting entity is based on the applicability of accounting to individual
economic units in society. 会计实体即微观社会中，应用会计的各种经济个体
Business entity : profit-seeking unit , basic forms :sole proprietorship 个人制 ,
partnership 合伙制 and corporation
Non- for-profit units: schools charities and hospitals and social clubs, individual
persons and family units.
5.
Difference between bookkeeping and accounting
bookkeeping
The recording of transaction
small segment of accounting
accounting
,only a Bookkeeping, tax work and financial
forecast, design the system of records,
preparation and interpretation of reports
The work can be handled by mechanical It is an art, need much larger high level
and electronic equipment
of knowledge and analytical skill ,and
conceptual understanding
6. Classifications of Accounting
1) According to the scope of accounting activity and responsibility
A. private accounting: accountants employed by a particularly business firms
are said to be engaged in private accounting, perhaps he is chief
accountant or controller or financial vice-president.
There is an organization called IMA (Institute of Management Accounting,
which is an affiliate of the National Association of accountants) grants the
certificate in management accounting CMA (Certified management
accountant)
B. public accounting : accountants who render accounting services on a fee
basis and staff accountants employed by them are said to be engaged in
public accounting. In public accounting, an accountant may practice as an
individual or as a member of a public accounting firms
CPA—Certified public accountants, the development of corporations also
created a new social need—the need for an independent party (auditor) to
provide some assurance that management’s financial representations were
reliable. The auditor (public accountant) is independent of the enterprise
for which he performs services. Auditing is a kind of profession just like
Introduction-5
doctor and attorney, auditors who have gotten the professional certificate
can be called CPA.
To be a CPA, one needs: candidate past examination: accounting theory,
accounting practice, auditing and business law. Three years experience in
public accounting or in employment considered equivalent work
experience and continuing professional education
Four international foreign owned accounting firms:
KPMG: WWW.KPMG.COM
PWC: WWW.PRICEWC.COM
Ernst&Yong: www.ey.com
Deloitte&Touche: www.dt.com
Andersen has been bankrupt due to the Enron event in 2001
:
C.
Both of them have long been recognized as excellent training for top
managerial responsibilities. Many executive positions in government and
in industry are held by men and women with education and experience in
accounting
2) purpose of accounting
A. financial accounting: records the transactions of a business entity and
summarizes them in accordance with accounting principles and company
law
B. managerial accounting: to provide information that helps managers plan,
evaluate company activities and make business decision
Financial accounting
Managerial accounting
Object
External
users(make Internal users (routine
decision)
planning and evaluation)
The degree to use of Prepared Abiding to Useful to management,
GAAP
GAAP
allow the deviation from
GAAP
Details of information
Highly
summarized Very
detailed
form
information (department
operating cost)
The
types
of Monetary information
Emphasis
on
information
non-monetary
information(the quality
of the output )
Presenting the results of Emphasis
on
the
past transaction
future(involving
estimate the costs and
the benefits of future
transactions)
Similarities: managers make significant use of financial accounting
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report ,and external users occasionally request financial information that is
generally considered appropriate for internal users.
7.
Approach to study accounting
Use a business as an example, accounting knowledge and methods in next
chapters
1) step by step : patient
2) accounting is a very practical science, with fictitious business as an
example P11
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