The document discusses key concepts in accounting including: - The purpose and importance of accounting is to identify, record, and communicate an organization's business activities. - Accounting has both internal and external users that use financial information for various purposes such as managers, investors, creditors, and regulators. - Ethics are crucial in accounting to ensure information is trusted, which demands standards of good behavior and distinguishing right from wrong. - Accounting principles like GAAP and IFRS govern financial accounting and require information to have relevance and faithful representation. - The accounting equation forms the basis for analyzing business transactions and maintains the balance between assets, liabilities, and equity.

1. 1-1
Accounting in Business
Chapter 1
Wild, Kwok, Venkatesh and Shaw
Fundamental Accounting Principles
3rd Edition
Wild, Kwok, Venkatesh and Shaw
Fundamental Accounting Principles
3rd Edition
Copyright ©2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill. 2
Chapter 1 Learning Objectives
CONCEPTUAL
C1 Explain the purpose and importance of accounting.
C2 Identify users and uses of, and opportunities in, 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
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
P1 Analyze business transactions using the accounting equation.
P2 Identify and prepare basic financial statements and explain how they interrelate.
© McGraw Hill
Explain the purpose and
importance of accounting.
3
Learning Objective C1
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1 - 4
Importance of Accounting
For example, the sale
by Apple of an iPhone.
Keep a chronological
log of transactions.
Prepare reports such as
financial statements.
4
Learning Objective C1: Explain the purpose and importance of accounting.
Accounting is an information and measurement system that identifies,
records, and communicates an organization’s business activities.
Exhibit
1.1
© McGraw Hill
các nguyên tắc kế toán chung được chấp nhận (GAAP)
accounting equation: phương trình kế toán
lợi nhuận trên tài sản
báo cáo tài chính (financial reporting)
prepare financial statements: lọc báo cáo tài chính
three steps of accounting
what should
be recorded,
what should
not
to the injustice users
who will use financial statements: manager (internal), [customer, investor, shareholder, government, tax regulator, bank/creditor] (external)
divide into 2 groups: internal (individual inside the company) users - external users

2. 1-2
5
Learning Objective C2
Identify users and uses of, and
opportunities in, accounting.
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Users of Financial Information
6
Learning Objective C2: Identify users and uses of, and opportunities in, accounting. © McGraw Hill
• Lenders
• External auditors
• Shareholders
• Regulators
• Customers
• Research and development managers
• Purchasing managers
• Human resource managers
• Marketing managers
• Production managers
• Distribution managers
1 - 7
Ex1-2/p.27, 28
7
1 - 8
Opportunities in Accounting
(self-reading)
Accounting information is in all aspects of our lives. When
we earn money, pay taxes, invest savings, budget
earnings, and plan for the future, we use accounting.
8
Learning Objective C2: Identify users and uses of, and opportunities in, accounting.
Exhibit
1.2
© McGraw Hill
(creditors)
(investor)
(authority, government)
two popular external: creditor, investor --> highest benefits
2. creditor
6. government
7. service manager

3. 1-3
9
Learning Objective C3
Explain why ethics
are crucial to accounting
(self-reading)
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Ethics – A Key Concept
For information to be useful, it must be trusted. This
demands ethics in accounting. Ethics are beliefs that
distinguish right from wrong. They are accepted standards of
good and bad behavior.
10
Learning Objective C3: Explain why ethics are crucial to accounting.
Exhibit
1.3
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Fraud Triangle
Three factors push a person to commit fraud: opportunity,
pressure, and rationalization.
11
Learning Objective C3: Explain why ethics are crucial to accounting.
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Exhibit
1.4
12
Learning Objective C4
Explain generally accepted
accounting principles and
define and apply several
accounting principles.
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4. 1-4
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Generally Accepted
Accounting Principles (GAAP)
Financial accounting is governed by concepts and rules
known as generally accepted accounting principles
(GAAP). GAAP wants information to have relevance
and faithful representation.
Financial accounting is governed by concepts and rules
known as generally accepted accounting principles
(GAAP). GAAP wants information to have relevance
and faithful representation.
Learning Objective C4: Explain generally accepted accounting principles and define and apply several accounting principles.
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1 - 14
International Standards
Our global economy demands comparability in accounting reports.
Our global economy demands comparability in accounting reports.
International Accounting
Standards Board (IASB)
Issues International Financial
Reporting Standards (IFRS)
International Financial
Reporting Standards (IFRS)
Identifies preferred
accounting practices
Learning Objective C4: Explain generally accepted accounting principles and define and apply several accounting principles.
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1 - 15
Principles, Assumptions and
Constraint
General principles are the
assumptions, concepts, and
guidelines for preparing financial
statements.
Specific principles are detailed rules
used in reporting business
transactions and events.
Exhibit
1.5
Learning Objective C4: Explain generally accepted accounting principles and define and apply several accounting principles.
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Accounting Principles
Measurement Principle
(Cost Principle)
Accounting information is based on
actual cost. Information based on
cost is considered objective.
Expense Recognition Principle
(Matching Principle)
A company records its expenses
incurred to generate the revenue
reported.
Full Disclosure Principle
A company reports the details behind
financial statements that would impact
users’ decisions in the notes to the
financial statements.
Revenue Recognition Principle
1. recognize revenue when goods or
services are provided to customers
and
2. at an amount expected to be received
from the customer.
Learning Objective C4: Explain generally accepted accounting principles and define and apply several accounting principles.
16
© McGraw Hill
ASSB: cơ quan ban hành chuẩn mực kế toán
FASB: financial accounting standard board (ủy ban chuẩn mực kế toán tài chính) --> issue GAAP
IASB: international accounting standard board (ủy ban chuẩn mực kế toán quốc tế) --> issue IFRS (international financial reporting standard) (Vietnam adopts)
(nguyên tắc kế toán chung được thừa nhận)
GAAP: US adopt
(giả định)
(ràng buộc)
ghi chép nghiệp vụ
lọc báo cáo tài chính
measurement principles: nguyên tắc đo lường
record revenue when the goods are delivered, although we haven't received cash
--> note receivables
(nguyên tắc phù hợp)

5. 1-5
1 - 17
Accounting Assumptions
Monetary Unit Assumption
Transactions and events are
expressed in monetary, or money,
units.
Business Entity Assumption
A business is accounted for
separately from other business
entities, including its owner.
Time Period Assumption
The life of a company
can be divided into time periods,
such as months and years.
Going-Concern Assumption
The business is presumed to
continue operating instead of being
closed or sold.
Learning Objective C4: Explain generally accepted accounting principles and define and apply several accounting principles.
17
© McGraw Hill
Accounting Constraint
Cost-benefit
Only information with benefits of
disclosure greater than their cost
need to be disclosed.
Materiality
Only information that would
influence the decisions of a
reasonable person need to be
disclosed.
Learning Objective C4: Explain generally accepted accounting principles and define and apply several accounting principles.
18
© McGraw Hill
Qualitative Characteristics
19
Exhibit
1.6
© McGraw Hill
EX 1-6/P.28
20
no evidence (bankruptcy,
discontinuation) --> keep going
continuing condition accounting, discontinuing condition accounting
vd: event cannot record: satisfaction, health
đọc trước tài liệu

6. 1-6
1 - 21
21
Define and interpret the
accounting equation and each
of its components.
Learning Objective A1
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Business Transaction and Accounting
The Accounting Equation
Expanded Accounting Equation:
Liabilities Equity
Assets = +
Learning Objective A1: Define and interpret the accounting equation and each of its components.
22
© McGraw Hill
Net income
1 - 23
EX 1-7, 1-8/P.29
23
1 - 24
24
Analyze business transactions
using the accounting equation.
Learning Objective P1
© McGraw Hill
phương trình mở rộng

7. 1-7
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25
Transaction 1:
Investment by Owner
The accounts involved are:
Chas Taylor invests $30,000 cash to
start a business named FastFoward.
Learning Objective P1: Analyze business transactions using the accounting equation.
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26
Transaction 1
Chas Taylor invests $30,000 cash to start
the business, Fast Forward.
Learning Objective P1: Analyze business transactions using the accounting equation.
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1 - 27
27
The accounts involved are:
Transaction 2:
Purchase Supplies for Cash
Company purchases supplies by
paying $2,500 cash.
Learning Objective P1: Analyze business transactions using the accounting equation.
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1 - 28
28
Transaction 2
Company purchases supplies by paying
$2,500 cash.
Learning Objective P1: Analyze business transactions using the accounting equation.
© McGraw Hill
Cash
+ 30000
Taylor, capital
+ 30000
=
Cash (asset) giảm
Supplies (asset) tăng
Supplies (công cụ dụng cụ)
Cash
+ 2,500
- 2,500
--> chỉ tác động bên trái, không tác động bên phải

8. 1-8
1 - 29
29
The accounts involved are:
Transaction 3:
Purchase Equipment for Cash
Purchases equipment for $26,000 cash.
Learning Objective P1: Analyze business transactions using the accounting equation.
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30
Transaction 3
Purchases equipment for $26,000 cash.
Learning Objective P1: Analyze business transactions using the accounting equation.
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31
The accounts involved are:
Transaction 4:
Purchase Supplies on Credit
Purchases supplies of $7,100 on credit.
Learning Objective P1: Analyze business transactions using the accounting equation.
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32
Transaction 4
Purchases Supplies of $7,100 on credit.
Learning Objective P1: Analyze business transactions using the accounting equation.
© McGraw Hill
Cash (asset)
Equipment (asset)
Equipment Cash
- 26,000
+ 26,000
on credit = not yet paid
in cash (khoản chưa trả)
Accounts payable: nợ phải trả cho người bán (thuộc liabilities)
Accounts payable
+ 7,100
Supplies
=
+ 7,100

9. 1-9
1 - 33
33
Transaction Analysis: Revenues,
Expenses and Withdrawals
Now, let’s look at transactions involving
revenues, expenses and withdrawals.
Learning Objective P1: Analyze business transactions using the accounting equation.
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34
The accounts involved are:
Transaction 5:
Provide Services for Cash
Provides consulting services to a customer
and receives $4,200 cash right away.
Learning Objective P1: Analyze business transactions using the accounting equation.
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35
Transaction 5
Provides consulting services to a customer
and receives $4,200 cash right away.
Learning Objective P1: Analyze business transactions using the accounting equation.
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1 - 36
36
The accounts involved are:
Transactions 6 and 7:
Payment of Expenses in Cash
Pays rent of $1,000 and
salaries of $700 to employees.
Learning Objective P1: Analyze business transactions using the accounting equation.
© McGraw Hill
Cash (assets) increase
Revenue (equity) increase
Cash
+ 4,200
Revenue
+ 4,200
=
Cash
(trả)

10. 1-10
1 - 37
37
Transactions 6 and 7
Pays rent of $1,000 and
salaries of $700 to employees.
Learning Objective P1: Analyze business transactions using the accounting equation.
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38
The accounts involved are:
Transaction 8:
Provide Services and Facilities for Credit
Provides consulting services of $1,600 and rents
facilities for $300 to a customer for credit.
Learning Objective P1: Analyze business transactions using the accounting equation.
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39
Transaction 8
Provides consulting services of $1,600 and rents
facilities for $300 to a customer for credit.
Learning Objective P1: Analyze business transactions using the accounting equation.
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40
The accounts involved are:
Transaction 9:
Receipt of Cash from Accounts Receivable
Client in transaction 8 pays $1,900 for
consulting services.
Learning Objective P1: Analyze business transactions using the accounting equation.
© McGraw Hill
Cash
- 1,700 - 1,700 (equity)
= Equity
for credit: not yet received cash for the customer (
Receivable
accounts receivable: tiền phải thu khách hàng (thuộc asset)
+ 1,900
Revenue
+ 1,900 (equity)

11. 1-11
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41
Transaction 9
Client in transaction 8 pays $1,900 for consulting services.
Learning Objective P1: Analyze business transactions using the accounting equation.
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1 - 42
42
The accounts involved are:
Transaction 10:
Payment of Accounts Payable
FastForward pays $900 as partial payment for
supplies purchased in transaction 4.
Learning Objective P1: Analyze business transactions using the accounting equation.
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1 - 43
43
Transaction 10
FastForward pays $900 as partial payment for supplies
purchased in transaction 4.
Learning Objective P1: Analyze business transactions using the accounting equation.
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1 - 44
44
The accounts involved are:
Transaction 11:
Withdrawal of Cash by Owner
Owner withdraws $200 cash for personal use.
Learning Objective P1: Analyze business transactions using the accounting equation.
© McGraw Hill

12. 1-12
1 - 45
45
Transaction 11
Owner withdraws $200 cash for personal use.
Learning Objective P1: Analyze business transactions using the accounting equation.
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46
Summary of Transactions
Learning Objective P1: Analyze business transactions using the accounting equation.
Exhibit
1.7
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1 - 47
EX 1-12/p.30
47
1 - 48
48
Identify and prepare basic
financial statements and explain
how they interrelate.
Learning Objective P2
© McGraw Hill

13. 1-13
1 - 49
Financial Statements
Learning Objective P2: Identify and prepare basic financial statements and explain how they interrelate.
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50
Exhibit 1.8: Financial Statements
and Their Links
Learning Objective P2: Identify and prepare basic financial statements and explain how they interrelate.
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1 - 51
51
Compute and interpret return
on assets.
(self-reading)
Learning Objective A2
© McGraw Hill
1 - 52
Return on Assets
Return on assets (ROA) is stated in ratio form as net
profit divided by the average total assets invested.
Net Profit
Average total assets
Return on assets =
Learning Objective A2: Compute and interpret return on assets.
Exhibit
1.10
Where Average total assets = (Beginning total assets + Ending total assets) / 2
52
Exhibit
1.9
© McGraw Hill
4
(IS)
báo cáo kết
quả hđ kdoanh
(SCE)
báo cáo
thay đổi vốn
chủ sở hữu
(BS)
(SSP)
bảng cân
đối kế toán báo cáo lưu chuyển tiền tệ (SCF)
End.Capital = Begin. Capital + Owner investment (owner, capital) - Owner withdrawals + Net income
(+ net profit or - net loss)
cash only
cash inflows: positive amount
cash outflows: negative amount
phải
theo
thứ
tự
khi
trình
bày financial statements
Net profit: $4,400
Net loss: $ (4,400)
dấu - dùng ( ) trong
kế toán
Plus: net profit
Less: net loss

14. 1-14
1 - 53
53
Learning Objective A3
Appendix 1A
Explain the relation
between return and risk.
(self-reading)
© McGraw Hill
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Appendix 1A
Return and Risk Analysis
Many different
returns may be
reported.
ROA
Interest return on
savings accounts.
Interest return on
corporate bonds.
Risk is the uncertainty about
the return we will earn.
The lower the risk, the lower our expected return.
Learning Objective A3: Explain the relation between return and risk.
Exhibit
1A.1
54
© McGraw Hill
1 - 55
55
Learning Objective C5
Appendix 1B
Identify and describe the
three major activities of
organizations.
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Activities of Organizations
Learning Objective C5: Identify and describe the three major activities of organizations.
Exhibit
1B.1
56
© McGraw Hill

15. 1-15
1 - 57
Financing Activities
One of the three major types of business activities:
Financing activities provide the means organizations use to
pay for assets such as land, buildings, and equipment.
 Owner financing—resources contributed by the owner
along with any profit the owner leaves in the organization.
 Nonowner financing—resources loaned by creditors
(lenders).
Learning Objective C5: Identify and describe the three major activities of organizations.
57
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Investing Activities
One of the three major types of business activities:
Investing activities are the acquiring and disposing of
resources (assets) that an organization uses to acquire and
sell its products or services.
 Assets—invested amounts.
 Liabilities—creditors’ claims.
 Equity—owner’s claim.
Learning Objective C5: Identify and describe the three major activities of organizations.
58
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Operating Activities
One of the three major types of business
activities:
Operating activities involve using resources to
research, develop, purchase, produce, distribute, and
market products and services.
Learning Objective C5: Identify and describe the three major activities of organizations.
59
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END OF CHAPTER 1