Operational accounting 2

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Operational accounting 2

  1. 1. Basic Accounting Principles
  2. 2. Why does it need principle? Measurement of performance Based on an unique platform  Formation of the rules of games
  3. 3. Impact to the Finance Department Has to follow the rules of games in recording transactions and reporting For statutory reporting For banking relationships For gaining credit from suppliers Thus internally, needs the collaboration from other departments
  4. 4. The rules of game - restrictions Law (法, 实施细则,暂行条例) Listing rules (上市条例) Accounting standards (会计准则)  GAAP(Generally Accepted Accounting Principle)  IAS (International Accounting Standards)  IFRS (International Financial Reporting Standards) Accounting principles (会计原则) Accounting policies (会计政策) Accounting concept (会计概念)
  5. 5. Accounting concept  entity concept (企业个体概念 )  quantifiable concept (数量表达概念 )  stable monetary measures concept (货币稳定概念)  historical cost concept ( )  going concern principle ( )  consistency principle ( )  prudence concept ( )  realisation concept ( )  matching concept ( )  accrual concept ( )  materiality concept ( )
  6. 6. Major Accounting Concepts Business entity (企业个体 ) Going concern ( ) Consistency ( ) Matching ( ) Accrual ( ) Prudence ( ) Revenue recognition ( )
  7. 7. Business entity concept Company is just an individual “legal person” Separate the pocket of the owner and the business For the business itself: asset = liabilities + capital
  8. 8. Revenue recognition Customer expressed the intention to Take possession At a fixed price Delivery has occurred Transfer of ownership and risk Services have been rendered Time of payment is irrelevant
  9. 9. Matching: revenue and cost Record in the same period Sales of the month Cost for the sales Expenses for the period Provision What is the cost and expense o Goods/Service received? o Invoice received? o Cash paid out? What is the sales o Money from customer? o Sales tax considered?
  10. 10. Record as costs or expenses  Paid – money paid  Payable – invoice received, not pay  Accrual – invoice not receive  Provision – risk of payment for event happened
  11. 11. Accrual and Provisions Who has the appropriate information Goods/Services received but not invoiced Risks of being charged in future •Finance ? •You ?
  12. 12. Collaboration Help Finance in recording appropriate costs and expenses Help yourself in measuring your performance Because everyone looks at the financial information only

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