Download materi Introduction to Accounting

Financial Accounting Fundamentals

John J. Wild

Third Edition

           

Chapter 01

Introducing Financial Accounting

Conceptual Chapter Objectives

C1: Explain the purpose and importance of
accounting.

C2: Identify users and uses of accounting.

C3: Explain why ethics are crucial to
accounting.

C4: Explain generally accepted accounting  principles and define and apply
several accounting principles.

C5: Appendix 1B – Identify and describe the
three major activities of organizations.

Analytical Chapter Objectives

A1: Define and interpret the accounting
 equation and each of its components.

A2: Compute and interpret return on assets.

A3: Appendix 1A – Explain the relation
 between return and risk.

Procedural Chapter Objectives

P1: Analyze business transactions using the accounting equation.

P2: Identify and prepare basic financial statements and explain how they interrelate.

Importance of Accounting

Accounting Activities

Users of Accounting Information

Users of Accounting Information

Opportunities in Accounting

Accounting Jobs by Area

Ethics—A Key Concept

Guidelines for Ethical Decisions

Generally Accepted Accounting Principles

Setting Accounting Principles

Principles and Assumptions          of Accounting

Business Entity Forms

Sarbanes-Oxley Act

   In response to a number of publicized accounting scandals (Enron, WorldCom, Tyco, ImClone), Congress passed the Sarbanes-Oxley Act (also called SOX) in 2002 to help curb financial abuses at companies that issue their stock to the public. The act requires that public companies apply both accounting oversight and stringent internal controls. The desired results include more transparency, accountability, and truthfulness in reporting transactions.

Accounting Equation

Assets

Liabilities

Equity

Expanded Accounting Equation

Transaction Analysis

   Business activities can be described in terms of transactions and events. External transactions are exchanges of value between two entities, which yield changes in the accounting equation. Internal transactions are exchanges within any entity; they can also affect the accounting equation. Events refer to happenings that affect an entity’s accounting equation and can be reliably measured. Transaction analysis is defined as the process used to analyze transactions and events.

Transaction Analysis

Transaction Analysis

Transaction Analysis

Transaction Analysis

Transaction Analysis

Transaction Analysis

Transaction Analysis

Now, let’s look at transactions involving revenue, expenses and dividends.

Transaction Analysis

Transaction Analysis

Transaction Analysis

Financial Statements

    Let’s prepare the Financial Statements reflecting the transactions we have recorded.

Income Statement

Statement of Retained Earnings

Balance Sheet

Statement of Cash Flows

Return on Assets (ROA)

End of Chapter 01