Chapter 1

ACCOUNTING IN BUSINESS
(Service company)

TỔNG QUAN VỀ NGUYÊN LÝ KẾ TOÁN

TRONG DN DỊCH VỤ

© 2009 The McGraw-Hill Companies, Inc.,

All Rights Reserved
Learning objectives

After this chapter, students should be able to :

1. Understand the nature of accounting information.
2. Identify Assets, Liabilities and Equity. Explain the
accounting equation and analyze how
transactions impact the accounting equation
3. Understand the four core Financial statements
 LET’S START!!!

• WHAT IS ACCOUNTING?

• WHO USE IT?

• HOW TO DO?
 DEFINITION OF ACCOUNTING

Accounting is a processAccounting
of

Phân loại Ghi chép Truyền đạt thông tin

McGraw‐Hill/Irwin Slide 2
 LET’S START!!!

• WHAT IS ACCOUNTING?

• WHO USE IT?

• HOW TO DO?
 USERS OF ACCOUNTING INFORMATION

External users of accounting Internal users of accounting

information are not directly information are those directly
involved in running the involved in managing and
organization operating an organization

McGraw‐Hill/Irwin Slide 3
 USERS OF ACCOUNTING
INFORMATION

External Users Internal Users

Managerial accounting (kế toán quản trị)

Financial accounting (Kế toán tài
provides information needs for internal
chính) provides external users with
decision makers.
financial statements.

McGraw‐Hill/Irwin Slide 4
 LET’S START!!!

• WHAT IS ACCOUNTING?

• WHO USE IT?

• HOW TO DO?
 ETHICS - A KEY CONCEPT

Beliefs that Accepted standards

distinguish right from wrong of good and bad
from wrong behaviour

McGraw‐Hill/Irwin Slide 7
 HOW TO DO?

• PRINCIPLES AND ASSUMPTIONS

OF ACCOUNTING
• ACCOUNTING EQUATION
• THE BALANCE SHEET
• PRACTICE: TRANSACTION
ANALYSIS
 HOW TO DO?

• PRINCIPLES AND ASSUMPTIONS

OF ACCOUNTING
• ACCOUNTING EQUATION
• THE BALANCE SHEET
• PRACTICE: TRANSACTION
ANALYSIS
 PRINCIPLES AND ASSUMPTIONS
OF ACCOUNTING

Matching

McGraw‐Hill/Irwin Slide 7
 ACCRUAL BASIS VS.CASH BASIS
CƠ SỞ KT DỒN TÍCH VÀ CƠ SỞ KT TIỀN MẶT

Accrual Basis Cash Basis

Cơ sở dồn tích Cơ sở tiền mặt

Revenues are
Revenues are recognized when
recognized when cash is received and
earned and expenses expenses recorded
are recognized when when cash is paid.
incurred.
Not GAAP
Accounting

McGraw‐Hill/Irwin Slide 3
 PRINCIPLES AND ASSUMPTIONS
OF ACCOUNTING

Revenue Recognition Principle

Nguyên tắc ghi nhận doanh thu
Cost Principle – Historical cost
Nguyên tắc giá gốc hay Giá vốn lịch sử
1. Recognize revenue when it is earned.
Accounting information is based on
2. Proceeds need not be in cash. actual cost. Actual cost is
3. Measure revenue by cash received considered objective.
plus cash value of items received.

Matching Principle Full Disclosure Principle

Nguyên tắc phù hợp Nguyên tắc công khai
A company must record its expenses A company is required to report the
incurred to generate the revenue details behind financial statements
reported. that would impact users’ decisions.

McGraw‐Hill/Irwin Slide 11
 PRINCIPLES AND ASSUMPTIONS
OF ACCOUNTING

Now Future
Going-Concern Assumption Monetary Unit Assumption
Nguyên tắc tiếp tục hoạt động Nguyên tắc Thước đo tiền tệ
Reflects assumption that the business Express transactions and events in
will continue operating instead of
monetary, or money, units.
being closed or sold.

Business Entity Assumption

Nguyên tắc thực thể kinh doanh Time Period Assumption
Nguyên tắc kỳ kế toán
A business is accounted for
Presumes that the life of a company can
separately from other business
be divided into time periods, such as
entities, including its owner.
months and years.
McGraw‐Hill/Irwin Slide 12
 HOW TO DO?

• PRINCIPLES AND ASSUMPTIONS

OF ACCOUNTING
• ACCOUNTING EQUATION
• THE BALANCE SHEET
• PRACTICE: TRANSACTION
ANALYSIS
 THE ACCOUNTING EQUATION
Accounting Equation
Assets = Liabilities + Owner Equity
Tài sản Vốn nợ Vốn chủ sở hữu

WHAT WE HAVE? WHO OWNS IT?

(DESTINATION) (SOURCE)
Assets are resources a company Liabilities are creditors’ claims
owns or controls. on assets

Equity is the owner’s claim on

assets
 HOW TO DO?

• PRINCIPLES AND ASSUMPTIONS

OF ACCOUNTING
• ACCOUNTING EQUATION
• THE BALANCE SHEET
• PRACTICE: TRANSACTION
ANALYSIS
BALANCE SHEET

ASSETS Liabilities Equity

Current Current Capital

Assets liabilities Contributions

Non-current Non-current Retained

Assets liabilities Earnings

Treasury
Stocks
 BALANCE SHEET – ASSETS
Cash Highly • Current assets are expected
Liquid to be sold, collected, or used
Short-term
investment within one year or the
company’s operating cycle.
Account
receivable
Current Assets • Long-term investments are
Inventory expected to be held
ASSETS

Supplies
• Tangible fixed assets are
Prepaid assets used to produce or
expense sell products and services.
Long-term
investment
• Intangible fixed assets are
Non-current long-term resources used to
Tangible Assets
Assets Less produce or sell products and
Intangible Liquid services and that lack
Assets physical form.
 BALANCE SHEET – LIABILITIES
Account Payables Shortest Due
Note Payables
date • Current liabilities
are obligations due
Salary Payables
within the longer of
Tax Payables one year or the
Current liabilities company’s
Interest Payable
operating cycle
Accrual Expense
Liabilities

Unearned Revenue • Non-current

Current proportion liabilities are
of LT debt obligations not due
Long-term Loans
within the longer of
one year or the
Non-current Bonds company’s
liabilities
Deferred income Longest Due operating cycle.
taxes date
 EQUITY: BASIC ACCOUNTS

Examples of revenue accounts are Examples of expense accounts are

Sales, Commissions Earned, Advertising Expense, Store Supplies
Professional Fees Earned, Rent Expense, Office Salaries Expense,
Revenue, and Interest Revenue Office Supplies Expense, Rent Expense,
Utilities Expense, and Insurance
Expense
 HOW TO DO?

• PRINCIPLES AND ASSUMPTIONS

OF ACCOUNTING
• ACCOUNTING EQUATION
• THE BALANCE SHEET
• PRACTICE: TRANSACTION
ANALYSIS
TRANSACTION ANALYSIS
CHAP 1
 TRANSACTION ANALYSIS
This section uses the accounting equation to analyze selected transactions and
events of FastForward, a start-up consulting (service) business, in its first
month of operations.
Remember that each transaction and event leaves the equation in balance and
that assets always equal the sum of liabilities and equity.

1. A company invests $30,000 cash to start a consulting

business.
2. Purchased supplies paying $2,500 cash.
3. Purchased equipment for $26,000 cash.
4. Purchased Supplies of $7,100 and on account.
5. Provided consulting services receiving $4,200 cash.
 TRANSACTION ANALYSIS
6. Paid $1,000 rent to the landlord of the building where its facilities
are located.
7. Paid the biweekly $700 salary of the company’s only employee
8. Provided consulting services of $1,600 on account and rents its
test facilities for $300 on account to a podiatric services center.
9. The client in transaction 8 (the podiatric center) paid $1,900 to
FastForward
10. Paid CalTech Supply $900 cash as partial payment for its earlier
$7,100 purchase of supplies (transaction 4)
11. The owner of FastForward withdrew $200 cash for personal use.
 TRANSACTION ANALYSIS

McGraw‐Hill/Irwin Slide 32
FINANCIAL STATEMENTS
 FINANCIAL STATEMENTS
BÁO CÁO TÀI CHÍNH
Let’s prepare the Financial Statements reflecting
the transactions we have recorded.

1.Income Statement
2.Statement of Owner’s Equity
3.Balance Sheet
4.Statement of Cash Flows

McGraw‐Hill/Irwin Slide 33
 INCOME STATEMENT
Báo cáo kết quả hoạt động kinh doanh của DN dịch vụ

FastForward
Income Statement
For Month Ended December 31, 2009

Revenues:
Consulting revenue $ 5,800
Net income is the
Rental revenue 300 difference between
Total revenues $ 6,100
Expenses: Revenues and
Rent expense 1,000 Expenses.
Salaries expense 700
Total expenses 1,700
Net income $ 4,400

The income statement describes a company’s revenues

and expenses along with the resulting net income or
loss over a period of time due to earnings activities.
McGraw‐Hill/Irwin Slide 34
 STATEMENT OF OWNER’S EQUITY
Báo cáo thay đổi trong vốn chủ sở hữu
FastForward
Income Statement
For Month Ended December 31, 2009 The net income of $4,400
Revenues: increases Owner's Equity
Consulting revenue $ 5,800
Rental revenue 300 by $4,400.
Total revenues $ 6,100
Expenses:
Rent expense 1,000
Salaries expense 700
Total expenses 1,700
Net income $ 4,400 FastForward
Statement of Owner's Equity
For Month Ended December 31, 2009
C, Taylor, Capital December 1, 2009 $ -
Plus: Investment by ower $ 30,000
Net income 4,400
34,400
Less: Withdrawals by owner 200
C. Taylor, Capital, December 31, 2009 $ 34,200

McGraw‐Hill/Irwin Slide 35
 BALANCE SHEET
Bảng cân đối kế toán
The Balance Sheet describes a company’s financial
position at a point in time.

FastForward
Balance Sheet
December 31, 2009

Assets Liabilities & Equity

Cash $ 4,800 Accounts payable $ 6,200
Supplies 9,600 Total liabilities 6,200
Equipment 26,000 Equity
C. Taylor, Capital 34,200
Total assets $ 40,400 Total liabilities and equity $ 40,400

McGraw‐Hill/Irwin Slide 36
 STATEMENT OF CASH FLOWS
Báo cáo lưu chuyển tiền tệ
FastForward
Statement of Cash Flows
For Month Ended December 31, 2009

Cash flows from operating activities:

Cash received from clients $ 6,100
Cash paid for supplies (3,400)
Cash paid for rent (1,000)
Cash paid to employees (700)
Net cash provided by operating activities $ 1,000
Cash flows from investing activities:
Purchase of equipment (26,000)
Net cash used in investing activities (26,000)
Cash flows from financing activities:
Investment by owner 30,000
Withdrawal by owner (200)
Net cash provided by financing activities 29,800
Net increase in cash $ 4,800
Cash balance, December 1, 2009 -
Cash balance, December 31, 2009 $ 4,800
McGraw‐Hill/Irwin Slide 37
 STATEMENT OF CASH FLOWS
Báo cáo lưu chuyển tiền tệ
FastForward
Cash flows from operating activities: Statement of Cash Flows
Cash received from clients For Month Ended$ 6,100 Operating Activities
December 31, 2009
Cash paid for supplies (3,400) – Hoạt động kinh
Cash paid for rent (1,000) doanh: Involve
Cash paid to employees (700) using resources to
Net cash provided by operating activities $ 1,000 research, develop,
Cash flows from investing activities: and purchase,
Purchase of equipment (26,000) produce, distribute,
Net cash used in investing activities (26,000) and market
Cash flows from financing activities:
Investment by owner 30,000
Withdrawal by owner (200)
Net cash provided by financing activities 29,800
Net increase in cash $ 4,800
Cash balance, December 1, 2009 -
Cash balance, December 31, 2009 $ 4,800

McGraw‐Hill/Irwin Slide 37
 STATEMENT OF CASH FLOWS
Báo cáo lưu chuyển tiền tệ
FastForward
Cash flows from operating activities: Statement of Cash Flows
Cash received from clients For Month Ended$ 6,100December 31, 2009
Cash paid for supplies (3,400)
Cash paid for rent (1,000)
Cash paid to employees (700)
Net cash provided by operating activities $ 1,000
Investing Activities -
Cash flows from investing activities:
Purchase of equipment (26,000) Hoạt động đầu tư: Are
Net cash used in investing activities (26,000) the acquiring and
Cash flows from financing activities:
Investment by owner
disposing of
30,000
Withdrawal by owner (200) resources (assets)
Net cash provided by financing activities 29,800 that an organization
Net increase in cash $ 4,800
Cash balance, December 1, 2009 -
uses to acquire and
Cash balance, December 31, 2009 $ 4,800 sell its products or
services.

McGraw‐Hill/Irwin Slide 37
 STATEMENT OF CASH FLOWS
Báo cáo lưu chuyển tiền tệ
FastForward
Cash flows from operating activities: Statement of Cash Flows
Cash received from clients For Month Ended$ 6,100December 31, 2009
Cash paid for supplies (3,400)
Cash paid for rent (1,000)
Cash paid to employees (700)
Net cash provided by operating activities $ 1,000
Cash flows from investing activities:
Purchase of equipment (26,000) Financing Activities –
Net cash used in investing activities (26,000) Hoạt động tài chính:
Cash flows from financing activities:
Investment by owner Provide the means
30,000
Withdrawal by owner (200) organizations use to pay
Net cash provided by financing activities 29,800 for resources such as
Net increase in cash $ 4,800
Cash balance, December 1, 2009 - land, buildings, and
Cash balance, December 31, 2009 $ 4,800 equipment to carry out
plans

McGraw‐Hill/Irwin Slide 37
Qualitative Characteristics of Financial Statements
ĐẶC ĐIỂM CỦA THÔNG TIN KẾ TOÁN

RELEVANCE
• Affects the decision of its users
Thích hợp, phù • Nature & Materiality
hợp

RELIABILITY • Is trusted by users

• Faithful presentation; substance over
Đáng tin cậy form; Neutrality, Prudence, Completeness

COMPARABILITY • Is helpful in contrasting information of

Có thể so sánh organizations
 END OF CHAPTER 1

McGraw‐Hill/ Slide 40
END OF CHAPTER 1
After several months of planning, Jasmine Worthy started a haircutting business called
Expressions. The following events occurred during its first month of business.

a. On August 1, Worthy invested $3,000 cash and $15,000 of equipment in Expressions.

b. On August 2, Expressions paid $600 cash for furniture for the shop.
c. On August 3, Expressions paid $500 cash to rent space in a strip mall for August.
d. On August 4, it purchased $1,200 of equipment on credit for the shop.
e. On August 5, Expressions opened for business. Cash received from haircutting services in
the first week and a half of business (ended August 15) was $825.
f. On August 15, it provided $100 of haircutting services on account.
g. On August 17, it received a $100 check for services previously rendered on account.
h. On August 17, it paid $125 cash to an assistant for hours worked during the grand
opening.
i. Cash received from services provided during the second half of August was $930.
j. On August 31, Worthy made a $900 cash withdrawal from the company for personal use.

McGraw‐Hill/ Slide 40
END OF CHAPTER 1

Requirement:
1. Arrange the following asset, liability, and equity titles in a table:
Cash; Accounts Receivable; Furniture; Store Equipment; Note Payable; J. Worthy,
Capital; J. Worthy, Withdrawals; Revenues; and Expenses.
Show the effects of each transaction using the accounting equation.

2. Prepare an income statement for August.

3. Prepare a statement of owner’s equity for August.

4. Prepare a balance sheet as of August 31

McGraw‐Hill/ Slide 40