International accounting

1. WHAT IS ACCOUNTING?
• ACCOUNTING IS THE LANGUAGE OF THE
BUSINESSES.
🡪 We should start with some vocabularies!
 2. TYPES OF BUSINESSES
• PROPRIETORSHIP (SOLE TRADER)
• PARTNERSHIP
• CORPORATION
(Classified according to equity/capital-
contributing structure)
 3. Accounting branches
• Financial accounting
• Managerial accounting
• Tax accounting
• Others (Audit, Finance, Internal control,
Government, Forensics…)
 4. Accounting users
• Internal
• External
 5. Basic principles & assumptions
underlying financial accounting
• Basis:
1. Accrual
2. Cash
• Measurement Principles
1. HISTORICAL COST PRINCIPLE
2. CURRENT COST (textbook: FAIR VALUE PRINCIPLE)
• Assumptions:
1. MONETARY UNIT ASSUMPTION (in scope of textbook)
2. ECONOMIC ENTITY ASSUMPTION (in scope of textbook)
3. Going concern assumption
4. Accounting Period Assumption
🡪 Regulated in the document so-called “IASB Conceptual Framework” under international
accounting practice.
• PLANT ASSETS = FIXED ASSETS = TANGIBLE
ASSETS = TANGIBLE NONCURRENT ASSETS:
TSCD HH
• ACCUMULATED DEPRECIATION = KHAU HAO
TICH LUY
• COMMON STOCK = SHARE CAPITAL: CO PHAN
PHO THONG
• CO TUC TRA BANG TIEN = CASH DIVIDENDS
• TREASURY STOCK : CO PHIEU QUY
 TAKE NOTES
• Unlike the other languages, accounting language
use currency unit to measure/evaluate value of
things. It means, every account attached with a
number.
• We have an equation to remember/learn:
Total assets = Total liabilities + Equity (basic
accounting equation)
 Expansion accounting equation
• Total assets = Total liabilities + Share capital +
Retained earnings + Revenues – Expenses
• Why study accounting equation?
• 🡪 b/c we have to use accounting equation to
analyse the transactions/activities within
businesses/companies.
• Total assets = Total liabilities + Share capital +
Retained earnings + Revenues – Expenses
• Understand:
• Cash + Receivables + investments + plant assets +
intangibles assets….= Payables (AP, insuarance
payables, rent payables, interest payables….) + Share
capital + retained earnings + Revenues - Expenses
Why do we have to analyse transactions of companies?

• Ans:
• b/c we want to record transactions approriately 🡪
b/c we want to show off the accurate financial
results of companies 🡪 b/c that is the way a
company talks their language to the users
(shareholders, investors, gov, cus, employees,
creditors..)
 How to analyse transactions?
• Guidelines:
1. Read through the transactions 🡪 pick out the transactions
with monetary measurements to account only.
2. Try to find the accounts affected in those transactions( u
do it quick by experience!!!).
3. Guess/judge whether the accounts affected in step 2 are
moving up (increase) or moving (decrease)
 Examples E 1-6/chapter 1

1. Yes 🡪 Cash and Common stock/share capital 🡪 Cash up (increase);

Share capital increase
2. YES 🡪 Cash & Rent expenses -🡪 Cash decrease, rent ex increase
3. YES 🡪 Equipment and Cash 🡪 Equipment increase, Cash decrease
4. Hint: Perform + services = companies incur the revenues/provide
revenues or services to the others.
YES 🡪 ACCOUNTS RECEIVABLE 🡩 & REVENUES 🡩
5. YES. CASH DECREASE & DIVIDENDS DECREASE
6. YES. CASH INCREASE & RECEIVABLES DECREASE (ONE ASSET INCREASE,
THE OTHER ASSET HAS TO BE DECREASED TO KEEP THE ACCOUNTING
EQUATION BALANCED!!!).
7. YES. ADVERTISING EXPENSES INCREASE; ACCOUNTS PAYABLE INCREASE
NOTE: Sometime “on account/on credit” are receivables = when we have the
rights to receive money. However, “on account/on credit” are payables = when
we have the obligations to pay money.
8. YES. EQUIPMENT INCREASE, CASH DECREASE.
9. YES. REVENUES INCREASE, CASH IN = INCREASE!
 COURSEWORK
• Apply 3 step guidelines for those exercises:
- Do we take care the transactions or not?
- If yes, how many accounts affected?
- Identify the movements of each accounts
(inCre/decre)
- 🡪 Ex 1-7, P1-1A, P1-2A, P1-4A