ACC1701: Accounting for Decision Makers - 1)Accounting in Business

1-1: What is the aim of accounting?

The main aims of accounting (the language of the business world) are to Identify, Record, and Communicate Economic Information about a Business Organization

1-2: External and Internal Users of Accounting Information

Example External Users

• Tax Authorities

• Customers

• Competitors

• Investors/ Shareholders

• Creditors - To gauge if the organization can pay debt eventually

• Suppliers - To gauge if the organization can pay for supplies eventually Regulator - To assess fairness in the financial market

Example Internal Users

• Managers - To plan for operations

• Employees - To gauge opportunity for pay/ promotion etc

1-3: Types of Accounting

Financial Accounting - External Users (財務会計)
Managerial Accounting - Internal users (管理会計)
Tax Accounting - Tax Authorities

1-4: Types of Business Entities

• Sole Proprietorship (Single Owner) - Unlimited Liability

• Partnership (2 or more Partners) - Unlimited Liability

• Corporation (Owned by many shareholders) - Limited Liability

1-5: Financial Accounting Standards around the world

Global🌎

IASB (International Accounting Standards Board) sets up IFRS (International Financial Reporting Standards)

Singapore🇸🇬

ASC (Accounting Standards Council for Singapore) sets up FRS(Financial Reporting Standards )

日本🇯🇵

日本では日本独自の会計基準(IFRSと3点で異なる)を使用しています。
①原則主義(🌎) vs 細則主義(🇯🇵)
②資産負債アプローチ(🌎) vs 収益費用アプローチ（🇯🇵）
③公正価値評価（🌎）vs 取得原価主義（🇯🇵）

1-6: Qualitative Characteristics of Accounting Information

• Relevance - Gives numbers that users need for decisions

• Predictive - Can predict future outcomes

• Confirmatory - Can confirm with past evaluations

• Faithful Representation - Provides a fair, true, and neutral view

• Neutrality -  supported by prudence and caution

• Comparability - Compare to other companies and accounting years 

• Verifiability - How accurate and correct the information and numbers are

• Timeliness - up-to-date information up

• Understandability - Information that is easy to understand 

1-7: Auditor

Independent certified public accountant who examines and verifies the financial statements prepared by a corporation's management

1-8: Dual Entry System Journal Entry

• Each transaction affects two or more accounts

• Each transaction has at least one Debit(借方) and one Credit(貸方)

• The debit and credit add up to the same number

1-9: Accrual Accounting vs Cash Accounting