Chapter 2: Concepture Framework

A/ Overview accounting process

B/ GAAP generally accepted accounting principles
A/ Overview accounting process
identifying => measuring => recording => communicating
a1/ identifying economic transactions
Events >< Economic transactions
* Eg1: purchased new equipment on 1/Jan/2021 with cash:
Purchase price
Freight in
Installment
* Eg 2: Opened new business on 15/Mar/2021
Past event
Important?
How much?
* Eg 3: Shareholders' meeting held on 30 Apr 2021
Past event
Important?
How much?
* Eg 4: intend to acquire new building in Nov/2021 in Saigon, $3,000,000
Building
Future event
Classification of economic transactions
=> External transactions: related two acounting entities
B business purchase RM from A business
B borrowed money from Vietcombank
 => Internal transaction: within one accounting entity
B business: issued RM for production
calculate depreciation expense
Invoice, voucher system used to copy all economic transactions

a2/ Measuring
Reasons
Physical measurement
Chairs
Tables
Computer
projector

Time measurement
A employee
B employee
C employee
Problems
Power of money, inlfation
Foreign currency
a3) Recording
Invoice, voucher system => General Journal => General Ledger => Trial
to journalize
T-accounts
a4) Communicating
To prepare FSs
 Income statement, P&L, Statement of financia
Balance sheet (B/S), Statement of fiancial po
Cash flows statement (CFS), Statement of ca
Statement of change in OE (Statement of RE
Notes to FSs
To provide FSs to users
Accounting = Recording

B/ GAAP generally accepted accounting principles

b1/ Users of FSs
Internal Users
Management at
different levels

Who are they?

Which information do they need for making
decisions?
Is FSs important to them? How?
b2) GAAP
Why GAAP needed for accounting?
communicating

n/2021 with cash: => economic transaction

100,000 Past event
500 Cost = ? 101,500
1,000 Cash decreased 101,500, equipment increa
=> not economic transaction

Apr 2021 => not economic transaction

ov/2021 in Saigon, $3,000,000

10,000,000 => 13,000,000 10 Sept 2021

unting entities
chase RM from A business
ney from Vietcombank
nting entity
ued RM for production
culate depreciation expense
economic transactions

urement How much is it invested?

50 units 1,000
25 units 2,000
1 unit 1,000
1 unit 1,200
5,200
Salary & Employees' benefit
26 days 13,000
15 days 7,500
20 days 500*20 - penalty

nal => General Ledger => Trial balance => Adjusted trial balance => FSs
to post Adjusting entries
ent, P&L, Statement of financial performance, Statement P, L & other comprehensive in
(B/S), Statement of fiancial position/Picture
ement (CFS), Statement of cash flows
hange in OE (Statement of RE)

External Users
Banks & Other credit
organizations current ratio = Current assets/current liabilities
Govermental agencies
Investors Price sharesProfitability
Dividend
Gross profit % = Gross profit/Net sales
Employee (Trade unions)
Community....

ion do they need for making

nt to them? How?
conomic transaction

objective
1,500, equipment increased 101,500
ot economic transaction

ot economic transaction

ept 2021
e => FSs
other comprehensive income

rrent liabilities
Chapter 3: Accounting information system
Source documents (invoice, voucher) => Journal => Led
to journalize to post

A/ Review of T letter account

Definition: a basic device for summary data
name of accounts
(cash, bank,
General structure material....)
Left side
Debit (Dr)

Specific structure
A = L + OE = L + Common stocks
A + Expenses + Dividends = L + C

Cash
Dr

Increases

Normal balance: XXX

contra account
 Methods of recording on accounts
Single entry: example operating le
Double entry
at least 1 account rec
total DR = total CR
Simple double entry:
Example: Purchase

Compound double en
Example: Purchase

Exercise 3.1
B/ Journal, Ledger
General Journal
Organized by order
Format (slide 29)

General Ledger
Organized by individual account
Format (slide 29)
capital
44,000

5,100
49,100

Service revenue
1,100
2,300

3,400

Unearned service R
3,200

3,200
C/ Worksheet
Trial Balance
Trial balance
Items
Dr Cr
Cash 33,630
A/R 1,100
Supplies 580
Equipment 14,000
Computer 5,100
A/P 700
Unearned service R 3,200
capital 49,100
Service revenue 3,400
Office rent expense 600
Salary expense 1,160
Insurance expense 110
Supplies expense 120 _____
Total 56,400 56,400
 Journal => Ledger => worksheet (....) => FSs
ze to post to make adjusting entries
to make closing entries

of accounts
ash, bank,
aterial....)
Right side
Credit (Cr)

Common stocks + Revenue - Expenses - Dividends (drawings)

vidends = L + Common stocks + Revenue

Cash A/P
Cr Dr Cr
><
Decreases Decreases Increases

Normal balance: XXX

a account
Provision for
Doubtful Debt
 decreasincreases

Normal balance: XXX

Acc deprecition

decreasincreases

Normal balance: XXX

ple operating lease of $10,000 Dr leased asset 10,000

st 1 account recorded in Dr, at least 1 account recorded in Cr

DR = total CR
e double entry: (only 2 accounts used)
mple: Purchased merchandise on credit $10,000
Dr Merchandise 10,000
Cr A/P ###
ound double entry: (at least 3 accounts used)
mple: Purchased merchadise $10,000, of which $6,000 paid with cas
Dr Merchandise 10,000
Cr Cash 6000
Cr A/P 4000
 To post
End bal = Beg + Increases - Decreases
idual account

Cash Equipment
2/9 30,000 2/9 14,000
12/9 3,200 600 7/9
17/9 2,300 110 21/9
30/9 1160 30/9
NB 33,630 NB 14,000

A/P Supplies
11/9 700 3/9 700
17/9

NB 700 NB 580
A/R Office rent expense
11/9 1,100 7/9 600
12/9

NB 1,100 NB 600
Salary expense Insurance expense
30/9 1,160 21/7 110
NB 1,160 NB 110

Supplies expense Computer

30/9 120 30/9 5,100

NB 120 NB 5,100
ds (drawings)

nce: XXX
corded in Cr

6,000 paid with cash, the remaining amount will be paid in 10 days
Equipment

Supplies
120 30-Sep

ce rent expense

urance expense
Computer
d in 10 days