Some basic knowledge about accounting:
- Accouting is a study of the concepts and techniques used in such reporting. - Accounting information serve for each entity with particular task: Taxing authorities, stockholders, workers and potential employess, … - Definition of accouting: the art of recording, classifying, summarizing, interpreting.
1. Fields of accounting
❖ Based on recording methods:
Accounting information is deal with in 2 systems:
+ single entry book – keeping: only debit or credit
+ double entry book – keeping: both debit and credit.
❖ Based on fields of accounting:
a. Public accounting (CPA & its services):
It is a professional service rendered by a Certified Public Accountant and his employees to the public for fee. Most common services: auditing, management advisory services, tax services - Auditing: the principal service. In audting, including : + Firstly, carefully examines, tests, and checks the accuracy of the reports and the financial data form which these reports were taken. + Then, expresses auditor’s opinion on the fairness of the audited reports. - Management advisory services: including:
+ designing, installing, improving of the firm’s general accouting system and other system deemed necessary (thấy rằng cần thiết) for controlling and distributing manufacturing costs + giving advice on financial planning, budgeting, forecasting, and inventory control. - Tax services: including preparation and filing of income tax returns. Note that:
+ If CPA firm appointed CPA go to company to audit: the objective of CPA is that checking GAAP is followed without recommend. + If company hire CPA to audit their company, the purpose of audting of CPA is that: ▪ Checker
▪ Improvement, help this company to do accounting system. b. Private accounting
▪ It is an accounting job done in private business enterprises. ▪ The number of accountants in the firm depends on: the size and the needs of the business. ▪ Accountants in private firm may or may not be a CPA. However, the controller or the head of the department is usually a CPA Most common kinds of private accounting: 8
- General accounting: including
+ recording transactions
+ preparing financial reports
for the use of the management, owners, creditors, government units, and other interested parties. - Cost accounting: determining, controlling costs particularly those costs in producing a product or service - Budgeting:
+ providing management a plan for future operations
+ after this plan has been applied, summaries and reports comparing the actual accomplished with the plan are provided. - Internal accounting:
+ checking the records prepared and maintained in each department or branch. + seeing that the established accounting procedures are being followed throughtout the year. - Government accounting: government officials rely on accumulated accounting data. + Accountants are responsible for the accumulation of these data + checking and auditing the income, payroll, and tax returns submitted to the government. - Acounting Education: Faculty members in Accounting in various colleges and universities are CPA. - International Accounting: concerned with the transactions and special problems of multinational business organizations in their dealtings in the international trade. - Social Accounting: involves the measurement of social costs and benefits.
2. Users of Accounting information
❖ External Users:
- External users: (sometimes called outsiders) include all individuals, businesses, and other entities that are not managers or officers of the company, or not part of the company’s management. - Including: potential and current owners, creditors (bankers and bondholders), government units, and the general public. - External users have limitations on their...