FINANCIAL ACCOUNTING IN

BUSINESSES

Copyright: Faculty of Accounting- Academy of

Finance 1
 INTRODUCTION
1. Learning materials:

• “Financial Accounting”(in Vietnamese), by Ngo The Chi,

Truong Thi Thuy, published by Finance Publisher
• “Financial Accounting” (in English), Mai Ngoc Anh, Nguyen
Thi My Trinh, Finance Publisher
• Vietnamese Law on Accounting (2015)
• Vietnamese Accounting Standards
• Vietnamse Accounting System (according to Circular 200/2014
by Ministry of Finance and others relating regulations)
• Other legal documents in Taxes, business, security market,…

Copyright: Faculty of Accounting-

Academy of Finance 2
 INTRODUCTION

2. Contents:
Part 1:
1. Overview of financial accounting in businesses
2. Accounting for Cash, Raw materials, tools and supplies
3. Accounting for Fixed assets
4. Accounting for Payrolls and related compensations
5. Accounting for manufacturing expenses and cost of finished
goods
6. Accounting for Sales transactions and business result
7. Financial statements

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Academy of Finance 3
 INTRODUCTION

2. Contents

Part 2:
1. Accounting for foreign currency transactions
2. Accounting for Liabilities and Equity
3. Further issues in preparing Financial statements

Copyright: Faculty of Accounting-

Academy of Finance 4
 INTRODUCTION
2. Contents

Part 3:
1. Accounting for Investment property and leased Assets
2. Accounting for Financial investments
3. Consolidated financial statements

Copyright: Faculty of Accounting- Academy of

Finance 5
 Chapter 1
OVERVIEW OF FINANCIAL ACCOUNTING IN BUSINESSES

CONTENTS:

1.1 Overview about accounting.

1.2 Basic accounting concepts and principles.

1.3 Contents of financial accounting in businesses

1.4 Contents of Accounting works.

Copyright: Faculty of Accounting- Academy of
Finance 6
1.1 Overview about accounting
1.1.1. Definitions of Accounting
1.1.2. Classifications of Accounting
1.1.3. Roles and requirements of accounting information
1.1.4. Role of Accounting

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Finance 7
 1.1.1. Definitions of Accounting

Definition of accounting from IFAC

Definition of accounting from IACP

Definition of accounting from AAA

Definition of accounting from Vietnamese Accounting Law

Copyright: Faculty of Accounting- Academy of

Finance (***) 8
 1.1.1. Definitions of Accounting
Common views:
-Accounting means the work of collecting, processing,
checking, analyzing and providing economic and
financial information.
- Accounting information is in forms of value;
-Accounting information provided for user’s decisions.

(***)

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 1.1.2. Classifications of Accounting

Single- Entry
Accounting
Based on how
to enter
records

Double-Entry
Accounting

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Finance 10
 1.1.2. Classifications of Accounting

General
accounting
Based of level
of accounting
information

Detail
accounting

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Finance 11
 1.1.2. Classifications of Accounting

Financial
accounting
Based on
purposes of
accounting
information
Managerial
accounting

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Finance 12
 1.1.3. Roles and requirements of accounting
information
The purpose of financial accounting information is that provides
to present and potential users, who use that information to
make decisions.
Stockholders

Different
group of users
Other stakeholders

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Finance 13
 1.1.3. Roles and requirements of accounting
information

requirements of accounting information (Accounting Law,

VAS 01)

Integrity Comparability
Objectivity Completeness
(Neutrality) Understandability

Timeliness

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 1.1.4 Role of Accounting

Article 4 (Accounting Law)

1. Collecting, processing accounting information and data
according to subjects and contents of accounting works,
accounting standards and accounting regime.
2. Inspecting, supervising revenues, expenditures, debts;
inspecting the management, use of assets and sources of assets;
discovering and preventing violations against regulations on
finance and accounting.
3. Analyzing accounting information and data; advising,
proposing solutions for resolving administrative requirements
and making of economic, financial decisions of the accounting
unit.
4. Providing accounting information and data as prescribed by
law.
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Finance 15
1.2 Basic accounting concepts and principles.

1.2.1 Basic accounting concepts

1.2.2. Financial statements’ elements
1.2.3. Basic accounting principles

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Finance 16
 1.2 Basic accounting concepts and principles
1.2.1 Basic accounting concepts

 Accounting entity

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Finance 17
 1.2 Basic accounting concepts and principles
1.2.1 Basic accounting concepts

 Accounting currency
Accounting currency is the currency used in keeping records and in
presenting the financial statements.

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Finance 18
 1.2 Basic accounting concepts and principles
1.2.1 Basic accounting concepts

 Accounting period
-Accounting period means a period of time fixed from the time an
accounting entity commences to post entries in accounting books
until the time it ends the posting of entries in accounting books and
closes them in order to prepare financial reports
-Accounting period: Usually one year, may be quarterly, can be the
same as calendar year

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Finance 19
 1.2 Basic accounting concepts and principles
1.2.2 Financial statements’ elements

ASSETS which is controlled by the

enterprise
An asset is
future economic benefits
a resource are expected to flow to the
enterprise

The entity has an exclusive right to control the

benefit

Recognition It is probable that future economic benefits associated

with the asset will flow to the enterprise
criteria
The cost of the asset to the enterprise can be
measured reliably

The benefit must arise from some past

transaction or event 20
20
Copyright: Faculty of Accounting- Academy of
Finance
 1.2 Basic accounting concepts and principles
1.2.2 Financial statements’ elements
Liabilities
Arising from past events
A present
obligation
Outflow from the entity of resources
embodying economic benefits

Recognition The liability must be capable of reliable

criteria measurement in monetary terms

It is more likely than not that an outflow of

resources will occur

The obligation arises from some past

transaction or event
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 1.2 Basic accounting concepts and principles
1.2.2 Financial statements’ elements

Equity

Equity = Total Assets - Total Liabilities

The contributed capital

Equity Retained Earnings

Others: Reserves,
Funds,...
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Finance 22
 1.2 Basic accounting concepts and principles
1.2.2 Financial statements’ elements
Income & Revenue
increases in economic benefits…..

As a result of ordinary activities and other

events of the enterprise during the accounting
period in the form of inflows or enhancements
of assets or decreases of liabilities that result in
Recognition increases in equity.
criteria

Reliable measurement

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Finance 23
 1.2 Basic accounting concepts and principles
1.2.2 Financial statements’ elements
Expenses
Decreases in economic benefits…

The form of outflows or depletions of assets or

incurrences of liabilities that result in decreases
in equity
Recognition
criteria Reliable measurement

Recognised expenses have to be matched with

revenues recorded
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Copyright: Faculty of Accounting- Academy of

Finance
 1.2 Basic accounting concepts and principles
1.2.3. Basic accounting principles

7.Consistency
1. Going concern

2. Accrual basis
Basic
accounting 6. Materiality
=> Earning
management principles

3. (Historical) Cost 5. Prudence

4. Matching

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Finance 25
 1.2 Basic accounting concepts and principles
1.2.3. Basic accounting principles
1. Going concern
2. Accrual basis
3. (Historical) Cost
Contents?
4. Matching
5. Prudence
Applications?
6. Materiality
7.Consistency

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 1.3 Contents of financial accounting in
businesses
Accounting subjects with respect to business operations shall comprise:

Accounting for Cash

Accounting for Materials, Tools and Supplies
Accounting for Fixed Assets, Investment properties, leased
Assets
Accounting for Payrolls and Compensation
Accounting for manufacturing costs
Accounting for Financial Investments
Accounting for Revenue, Cost of goods sold, income, expenses
and the business result
Accounting for Liabilities and Equity
Financial Statements
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Finance 27
 1.4 Contents of Accounting works
1.4.1. Requirements for Accounting works in business

1-Compliance with regulation of Law on accounting

2-Compliance with Accounting standards, regulation on

Finance and Accounting.
3- Compliance with business’ regulations and characteristics

4- Consideration of costs and benefits

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 1.4.2 Contents of Accounting works
The approach of Accounting process

1. Collecting, processing accounting information and data

according to subjects and contents of accounting works,
accounting standards and accounting regime.
2. Analyzing accounting information and data; advising, proposing
solutions for resolving administrative requirements and making
of economic, financial decisions of the accounting unit.
3. Providing accounting information and data as prescribed by law
4. Organize and manage scientific research into accounting and
application of information technology to accounting works;
5. Carry out inspection, settle complaints and denunciations,
and take actions against violations against regulations of law
on accounting

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 1.4.2 Contents of Accounting works
The approach of Accounting works

1. Accounting regime
2. Accounting records
3. Accounts
4. Accounting books
5. Accounting inspection
6. Financial Statements
7. Application of information technology to accounting
works

Mentioned in other Accounting subjects

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 1.4.2 Contents of Accounting works
The approach of Accounting works

1. Accounting records
What are Accounting records?

Further reading: Section 1, Chapter II, Law on

accounting No 88/2015/QH 13

The cicular No. 200/2014/TT-BTC

Copyright: Faculty of Accounting- Academy of

Finance 31
 1.4.2 Contents of Accounting works
The approach of Accounting works
2. Accounts

Further reading: Section 2, Chapter II, Law on

accounting No 88/2015/QH 13

The cicular No. 200/2014/TT-BTC, Article 9

Chart of accounts prescribed in Appendix 1, the

cicular No. 200/2014/TT-BTC: Included 76 Accounts
and 150 Sub-accounts.

Copyright: Faculty of Accounting- Academy of

Finance 32
 1.4.2 Contents of Accounting works
The approach of Accounting works
2. Accounts
Assets = Liabilities + Equity

Acounts Acounts Acounts

type No 1, 2 type No 3 type No 4

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Finance 33
 1.4.2 Contents of Accounting works
The approach of Accounting works
2. Accounts
Result = Income + Expenses

Acounts Acounts Acounts

type No 9 type No 5, 7 type No 6,8

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 Assets (1,2) Liabilities,Equity(3,4)

+ - (4) - +

Basic
(1) (3)
transactions
Liabilities,Equity(3,4)
Assets (1,2)
- +
+ -

(2)

Assets (1,2) Expenses(6,8) Result(9) Income(5,7) Assets (1,2)

+ - + - (5) + -
-
(7) Trasfer E Transfer I
Liabilities,Equity(3,4 Liabilities,Equity(3,4)
+ (6)
- (8) - +
Gain Loss

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Finance 35
 1.4.2 Contents of Accounting works
The approach of Accounting works
3. Accounting books

Further reading: Section 2, Chapter II, Law on

accounting No 88/2015/QH 13

The cicular No. 200/2014/TT-BTC, Article 9

Accounting books prescribed in Appendix 4, the

cicular No. 200/2014/TT-BTC: Included Ledgers or
Journals (All are optional)

Copyright: Faculty of Accounting- Academy of

Finance 36
 1.4.2 Contents of Accounting works
The approach of Accounting works
4. Financial statements

Further reading: Section 3, Chapter II, Law on

accounting No 88/2015/QH 13

The cicular No. 200/2014/TT-BTC, Article 9

Financial statements prescribed in Appendix 2, the

cicular No. 200/2014/TT-BTC: Included 4
statements

Copyright: Faculty of Accounting- Academy of

Finance 37
 1.4.2 Contents of Accounting works
The approach of Accounting works
4. Financial statements

Financial statements prescribed in Appendix 2, the

cicular No. 200/2014/TT-BTC, included 4 statements
as belows: (Annual and Interim FSs)

- Balance sheet Form NoB 01 - DN

- Income statement Form NoB 02-DN
- Cash flow statement Form No 03 - DN

- Notes to the Financial Statements Form No 09 - DN

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 GOOD LUCK!

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Finance 39