Lecture 1 Introduction to Accounting

Accounting

Process of recording, classifying, analysing, interpreting and communicating financial information.

Purpose of Accounting

To provide useful information for decision making.

Useful Accounting Information

Readily obtained, up to date, accurate and easy to understand.

Internal Users

Owners, managers, department heads and employees.

External Users

Investors, banks, suppliers, government, customers and the public.

Management Uses Accounting Information For

Planning, controlling, decision making and performance evaluation.

Investors Use Accounting Information For

Evaluating risk and return and deciding whether to buy, hold or sell investments.

Banks Use Accounting Information For

Approving loans and setting lending terms.

Suppliers Use Accounting Information For

Assessing ability to pay and deciding credit terms.

Government Uses Accounting Information For

Taxation and compliance purposes.

Business Entity Concept 企业个体概念

The business is separate from its owner. 公司和老板是分开的个体。

Business Entity Example

Owner's personal groceries are not business expenses. 老板私人开销不是公司开销。

Business Entity Importance

Prevents mixing personal and business transactions. 避免混淆个人与公司的交易。

Going Concern Concept 持续经营概念

The business is expected to continue operating in the foreseeable future. 企业预计在可预见的未来会继续持续经营。

Going Concern Example

Equipment is recorded as an asset and depreciated over its useful life. 设备被记录为资产，并在其使用年限内计提折旧。

Going Concern Importance

Assets are valued based on continued use rather than forced sale. 资产是按照持续使用价值来计量，而不是按照被迫出售的价值来计量。

Accrual Basis Concept 应计制概念

Record income when earned and expenses when incurred. 收入在赚取时确认，费用在发生时确认。

Accrual Basis Example

Service provided in December but paid in January is recorded as December revenue. 12月提供的服务即使在1月才收到款项，仍应记录为12月收入。

Accrual Basis Importance

Profit reflects actual performance for the period. 利润能够真实反映该期间的经营表现。

Historical Cost Concept 历史成本概念

Assets are recorded at their original purchase cost. 资产按照原始购买成本记录。

Historical Cost Example

Equipment purchased for RM20,000 is recorded at RM20,000. 以RM20,000购买的设备记录为RM20,000。

Historical Cost Importance

Cost is objective and verifiable. 成本数据客观且可以验证。

Prudence 谨慎性原则

Avoid overstating assets and income or understating liabilities and expenses. 避免高估资产和收入，或低估负债和费用。

Prudence Example

Recognise allowance for doubtful debts. 确认坏账准备AFDD

Prudence Importance

Prevents overstatement of financial performance. 防止高估企业的财务表现。

Consistency 一致性原则

Use the same accounting methods from one period to another. 不同会计期间采用相同的会计方法。

Consistency Importance

Improves comparability and reliability. 提高财务资料的可比较性和可靠性。

Materiality 重要性原则

Focus on information important enough to influence decisions. 关注足以影响决策的重要信息。

Materiality Example

A RM25 stapler may be expensed immediately instead of being depreciated. RM25的订书机可直接列为费用，而无需折旧。

Materiality Importance

Keeps accounting practical and efficient. 使会计处理更实际及更有效率。

Duality 双重性原则

Every transaction has two effects on the accounting equation. 每项交易都会对会计方程式产生两个影响。

Duality Example 1 (Buy equipment for cash)

Buy equipment for cash: Equipment increases, Cash decreases. 以现金购买设备：设备增加，现金减少。

Duality Example 2 (Buy inventory on credit)

Buy inventory on credit: Inventory increases, Accounts Payable increases. 赊购存货：存货增加，应付账款增加。

Revenue Recognition Principle 收入确认原则

Revenue is recognised when earned, not when cash is received. 收入应在赚取时确认，而不是在收到现金时确认。

Revenue Recognition Example 1 (Credit sales)

Credit sales are recognised when goods or services are delivered. 赊销应在商品交付或服务完成时确认收入。

Revenue Recognition Example 2 (Payment in advance)

Advance payments are recorded as unearned revenue until services are provided. 预收款在服务提供前记录为未赚取收入（Unearned Revenue）。

Revenue Recognition Importance

Ensures profit is reported in the correct accounting period. 确保利润记录在正确的会计期间。

Accounting Equation

Assets = Liabilities + Equity.

Sole Proprietorship

A business owned by one owner.

Sole Proprietorship Liability

Unlimited liability.

Partnership

A business owned by two or more partners.

Partnership Liability

Usually unlimited liability.

Private Limited Company (Sdn Bhd)

A separate legal entity owned by shareholders.

Company Liability

Limited to the amount invested in shares.

Advantage of a Company

Limited liability and perpetual succession.

Perpetual Succession

The company continues to exist even if ownership changes.

Sole Proprietorship Owners

One owner.

Partnership Owners

Two or more partners.

Private Limited Company Owners

One or more shareholders.

Public Limited Company (Berhad)

A company that can raise funds from the public.

Lowest Compliance Requirement

Sole Proprietorship.

Highest Compliance Requirement

Public Limited Company (Berhad).

Main Difference Between Sole Proprietorship And Company

Sole proprietorship has unlimited liability while a company has limited liability.

Main Benefit Of Limited Liability

Owners only lose the amount invested in the company.

Five Elements Of Accounting

Assets, Liabilities, Equity, Revenue and Expenses.