 DATA vs.

INFORMATION
+Data: raw (daily transaction)
+ Info: translated (more refined)

 3 basic activities in accounting:

+ identify: select economic events (transaction)
+ record: record, classify and summarize => bookeeping
+ communicate: prepare accounting reports; analyze and interpret for users (internal + external)
the economic events of an organization to the interested users

 Ethics in Financial Reporting:

+ What is the ethical situation?
+ Who are the people affected (benefited/harmed)?
=> Solution
=> Read more about: “Recent financial scandals include:  Enron, WorldCom, HealthSouth, AIG, and
other companies.”
 Forms of Business Ownership:
 + Proprietorship: single ownership - receive all profits, suffer all losses, personally liable for all debts
<unlimited personal liability>
+ Partnership: more capitals, shared workload, shared risk <unlimited personal liability>
=> Partnership agreement: avoid conflict (General partner: Operate the company together)/( Limited
partner: Only funding and wait for profit, no operating)
+ Corporation: Ownership divided into shares of stock => Shareholders

 Basic Accounting Equation:

Assets = Liabilities + Owner’s Equity
bên assets thêm equipment => bên capital + ????)
 Owner’s Equity = C - D + R - E
( C: Capital
  D: Drawings
  R: Revenues => is recorded when the service is finished
  E: Expenses)
 Assets:
+ Cash
+ Supplies (short-term < 12 months)
+ Equipment (long-term > 12 months) 
+ Prepaid Ensurance
+ Account Receivable (khoản phải thu)
 Liabilities:
+ Notes Payable (Notes always come with interest)

 4 financial statements: (this course: focus on the first 3)

 Income statement
 Owner’s equity statement
 Balance sheet
 Statement of Cash

 ASSETS
- Check can sometimes be treated as cash
- Accounts Receivable
- Supplies: Nguồn cung (< 12 tháng)
- Prepaid Insurance: Bảo hiểm trả trước
- Equipment ( > 12 tháng)
 Liabilities
- Notes Payable + Accounts Payable ( + interest)
- Unearned Service Revenue: Doanh thu chưa thực hiện
- In assets table cash and payable usually go first
What’s in the Balance Sheet?
+ Heading (?): Name of company, type of statement, accounting period (snapshot statement (?) = báo cáo tại một
thời điểm cụ thể)
+ Double - ruled : chỗ có 2 gạch dưới => signal: this is the end number, nothing will be changed Have to use
commas (,) to indicate thousands No different colours (utilities: water, electricity, telephones …)
+ Assets: CASH and ACCOUNT RECEIVABLE always go first
+ Liability: Sắp xếp theo maturity? (nợ nào cần trả trước thì ghi trước)