Accounting business learn and use on the spot

Author: Yang Chengxian
Publisher:
Publish Date: 2006-09-01
Features: Before studying any issue, it is necessary to make some relevant assumptions, which are accepted or agreed upon by everyone. The purpose is to limit this science to a certain environment and context. Otherwise, the research on this issue would be like a tree without roots or a spring without water, resulting in no meaningful outcome. Accounting research is no exception. Accounting has established relatively scientific basic premises during its development and, based on these premises, has established fundamental theories and accounting systems. In February 2006, the Ministry of Finance issued a new "Basic Standards of Enterprise Accounting" (to be implemented from January 1, 2007), which stipulates that accounting has four basic premises:
(1) Accounting Entity
An accounting entity refers to the object of accounting services or, in other words, the spatial scope and boundaries of the and activities that accountants adopt for accounting. For example, a company is an accounting entity, and a department within that company can also be an accounting entity. The premise of the accounting entity requires accountants to account for and supervise only the economic activities of the entity they belong to. It should be noted that the accounting entity is not equivalent to the legal entity (legal person). A legal person can be an accounting entity, but an accounting entity is not necessarily a legal person.
(2) Going Concern
Going concern refers to the assumption that an accounting entity will continue its operations in the foreseeable future based on normal business policies and predetermined business objectives. That is, in the foreseeable future, the accounting entity will not go bankrupt or liquidate, the assets it holds will operate normally, and the debts it owes will be repaid normally. If the accounting entity is a spatial boundary, then going concern is a temporal boundary. The main significance of the going concern premise lies in: it allows accounting principles to be based on non-liquidation, thereby providing a foundation for solving many common asset valuation and revenue recognition issues.
(3) Accounting Period
To obtain accounting information in a timely manner and better conduct accounting and supervision, it is necessary to reasonably divide accounting periods. The so-called accounting period refers to artificially dividing a company's business operations into several equal time intervals to recognize the income, expenses, and profits of a certain accounting period, and to recognize the assets, liabilities, and owner's equity at the end of a certain accounting period, and to prepare financial accounting reports. Accounting periods are divided into annual, semi-annual, quarterly, and monthly periods, all determined according to the Gregorian calendar. The most common accounting period is one year, and an accounting period determined by one year is called an accounting year. The main significance of this basic premise lies in: defining the time segment of accounting information, laying a theoretical and practical foundation for accounting principles such as the accrual basis and distinguishing between revenue-expenditure and capital-expenditure.
(4) Monetary Measurement
Monetary measurement refers to using money as a unified unit of measurement in accounting. The accounting of enterprises uses the Chinese yuan as the accounting base currency; enterprises whose business transactions are mainly in foreign currency can select one of the currencies as the accounting base currency, but the financial accounting reports prepared shall be translated into Chinese yuan. P3-4