Reflections On The Definition Of Accounting Elements In China

Accounting elements are the concretion of accounting objects, the cornerstone of accounting basic theory research, and the core of accounting standards construction.

Whether the definition of accounting elements is scientific and reasonable directly affects the quality of accounting practice.

In 1993, on the basis of international accounting standards and American accounting standards, combined with the actual situation of China at that time, we put forward the definition of six major accounting elements in the enterprise accounting standards, which played a positive role in guiding the construction of our basic norms and accounting practice. However, with the development of China's market economy, the emergence of new economic business forms and the introduction of specific guidelines in China, the definition of accounting elements in the basic norms has shown more and more limitations, which is not conducive to the construction of specific criteria and guidance to accounting practice, and the revision of the definition of accounting elements is the general trend.

This article attempts to discuss this.

The definition of accounting elements must be defined as the basis for confirmation and measurement, especially for the confirmation.

As a basic accounting concept, the definition of factors must be placed in the conceptual framework of financial accounting. It must conform to the objectives of financial reporting and the quality characteristics of financial accounting information, and be subject to accounting assumptions, accounting objects and so on.

The concepts must be consistent and closely related.

If we leave the whole conceptual framework to study the definition, we will consider the definition of accounting elements. We believe that the definition of accounting elements should follow the following basic principles: (1) scientific nature, that is, the definition of accounting elements must embody their essential characteristics; (2) consistency, that is, the definition of accounting elements should be consistent in logic; (3) popularization, the definition of accounting elements should be fluent, semantically fluent, consistent with Chinese habits and easy to be accepted by the vast number of Accountants in China.

Two, our accounting factor system can not be too many or too few accounting elements.

More, it is easy to be confused with accounting accounts; less, it is difficult to cover all the contents of the current accounting statements, not integrity.

China's current accounting element system is composed of 6 accounting elements, such as assets, liabilities, owner's equity, income, expenses and profits.

The accounting element system of international accounting standards is composed of 7 Accounting elements, such as assets, liabilities, owners' equity, income, profits, expenses and losses. The accounting elements defined in the US FASB are 10 assets, liabilities, owners' equity (net assets), income, expenses, owner's investment, owner's distribution, comprehensive income, profits and losses.

No matter how many accounting elements there are, as long as its system is rigorous and logical, it can satisfy the requirements of accounting recognition and measurement, which is a reasonable accounting element system.

From the perspective of China's accounting elements system, according to the Provisional Regulations on the management of enterprise financial accounting reports (Draft for Soliciting Comments), the specific accounting standards of enterprises, income and the accounting standards for enterprises, the definition of income and expenses is narrowly defined, excluding gains and losses.

This will lead to the difference between profit and income and expenses. The relationship between accounting elements should be destroyed. What is more serious is that the accounting element system can not provide a theoretical basis for the recognition and measurement of investment income, extra business income and some generalized costs.

There are two solutions to this contradiction. One is the adoption of international accounting standards and the broad definition of income and expenses in Australia and other countries, so that they cover the contents of gains and losses; two, the two accounting elements of "gains" and "losses" are added, and the "profit" element is deleted.

We believe that from the current situation in China, it is appropriate to adopt the first option.

In contrast to the definition of "income" in the basic norms and the definition of "income" in the specific accounting standards of enterprises, income, although the income criterion does not include extra business income, it has greatly expanded the income extension of the basic norms. If we can amend the definition of income criteria, it will be easier for our accountants to accept than the concept of "gains" and "losses".

As for the subjects of these accounting elements, the international accounting standard adopts the "enterprise" while the US adopts the "specific subject".

We believe that, since it is the basic concept of accounting, the foothold should be higher. It should not only be an enterprise, but should include all types of enterprises and non-profit organizations. Moreover, the subject of accounting elements should be consistent with the assumption of the accounting entity, while the accounting entity is sometimes inconsistent with the legal entity as an enterprise. Especially with the development of fund accounting, the main body of accounting and the main body of enterprises are separated.

Therefore, we believe that the definition of these accounting elements can be used as the subject of a specific subject.

Three, how to construct the accounting elements of our country? Based on the above ideas, the following six major accounting elements in China are discussed one by one.

(1) assets.

The most important definition of accounting elements is the definition of assets.

The "assets" in accounting is the concept of "economic resources" in economics. It is because of these resources that there will be problems of the sovereignty of resources and the problems of the inflow and outflow of these resources, and the problems of owners' rights, liabilities, income, expenses and so on.

At the same time, the definition of assets is the core of the internal organic connection of all accounting elements. For example, the American Financial Accounting Standards Board (FASB) defines the connotation of the assets as "future economic interests". This "future economic interest" becomes the common basis of all accounting elements: income is the inflow of future economic interests; the cost is the outflow of future economic interests; liabilities are the obligations of the future economic benefits to bear.

Therefore, the scientific definition of assets is the key to establishing a scientific and reasonable accounting element system.

How do we define assets? How do we define assets? We think that we must first consider the basic characteristics of assets before considering how to express them in Chinese.

The US FASB defines assets as: "assets are possible future economic interests acquired or controlled by specific entities because of past pactions or events".

The definition of assets in Australia is basically the same as that in the United States. The difference is that it emphasizes that assets are "controlled by enterprises" rather than "acquired".

International accounting standards and New Zealand also believe that assets are "controlled by enterprises", but the international accounting standards believe that the connotation of assets is "economic resources", while New Zealand considers it to be "service potential".

Although the statements vary from country to country, they basically reveal the basic characteristics of assets, just as the three characteristics of the assets declared in the US financial accounting concept announcement.

First, assets contain future economic benefits, among which the future economic benefits are shown as an ability to bring future cash flows to enterprises; second, enterprises can obtain economic benefits from assets or control others to gain such benefits; third, pactions or other matters that cause enterprises to gain such interests and control others to obtain such interests have occurred.

The definition of assets in China's basic norms is that assets are economic resources that can be measured or measured by money in the enterprise, including all kinds of property, creditor's rights and other rights.

Comparatively speaking, this definition does not point out the essence of assets, and the three kinds of property, creditor's rights and other rights can not be juxtaposed.

When we amend the definition of assets, the three characteristics of assets summarized by American FASB can be used as a reference for us to define assets, but we can not copy them.

1, about the connotation of assets.

The United States, Australia and other countries believe that the connotation of assets is "possible future economic interests". Our country, Canada and the International Accounting Standards Committee think that the connotation of assets is "economic resources".

The definition of assets is defined as the future economic interests too abstract, and the future economic interests are not created by single assets in most cases. How to allocate the future economic interests between different assets, accounting items and assets that are recognized as assets are not yet recognized as assets, such as intellectual property rights, human resources, self created goodwill and so on.

Moreover, assets can bring economic benefits, but economic benefits are not necessarily assets, such as stable and excellent customer groups, extensive and efficient sales network, etc.

On the contrary, assets are a resource. The resources controlled by enterprises must be the assets of enterprises. From this point of view, it is more scientific to regard assets as "resources".

Because understanding the meaning of assets as "economic interests" will confuse interests and generate interests.

But merely understanding "resources" is not enough, and it is difficult to provide basis for confirmation of certain special businesses. For example, when assets recoverable value is less than book value, impairment of assets should be accounted for, because the future economic benefits generated by the economic resources will be reduced, though resources are still there.

Therefore, we believe that "whether or not to include future economic interests" should be a core criterion for judging assets as assets, and also a basis for defining liabilities, income and expenses.

Therefore, the connotation of assets should be "resources with future economic interests".

2, about the right of a specific subject to assets.

The right relationship between a specific subject and the "economic resources" as an asset is another substantive issue of the concept of assets. The US FASB considers it to be "acquired or controlled". The accounting standards for enterprises in our country think it is "owned or controlled", and the other countries and the international accounting standards committee consider it to be "control".

We believe that if the connotation of assets is understood as "economic resources", resources are "possessed or controlled" rather than "acquired or controlled".

"Ownership" naturally has the "control" right, and it is duplicated to have "ownership" and "control" side by side, and there is no connection between the assets of an enterprise and whether it owns the ownership of the asset.

We believe that only the actual "control" of enterprises is the basic characteristics of assets. A typical example is financial leasing.

As a lessor, it has legal ownership of leasehold during the period of financing lease, but the risks and rewards related to the leased property have been pferred to the lessee. The lessor has no actual control over the leased property and is not recognized as an asset on its balance sheet, while the tenant has no ownership of the leased property but has control rights and is recognized as an asset on the balance sheet.

Therefore, as described in the thirty-eighth page of asset econometrics, "the actual control right of assets recognition" has objective basis, and the confirmation of assets by actual control right is a scientific idea of asset recognition and a reasonable symbol of asset recognition.

Moreover, in China's accounting practice, the term "control" has been unable to avoid, and other specific criteria such as investment have been quoted.

Therefore, we believe that the right of a specific subject to assets is "control".

3, about the source of assets.

Most countries believe that assets are derived from the results of past pactions and events, that is to say, accountants only reflect historical information.

In the revision of the definition of assets, is it necessary to retain this restriction? We believe that "past pactions and matters" can be deleted.

Because: (1) from the development history of accounting, accounting objects have gone through the movement of commodities (WG - W...

) simple value movement (G W G...

And value added movement (G - W - G)...

The process of accounting is not only limited to the past value added movement, but also to the future value added movement, which is bound to make the definition of assets no longer confined to past pactions or events.

(2) from the newly published International Accounting Standards No. thirty-ninth - financial instruments: recognition and measurement, it is emphasized that "due to past pactions and events" has no meaning, as long as the contracts have been signed, risks and rewards have been generated or pferred, and related assets and liabilities can be identified.

If we continue to retain the restrictions of "past pactions and events", it will be difficult for any derivative financial instruments and future events to be included in the balance sheet. Once the development of financial accounting in the future breaks through the realization principle, "past pactions and events" will be broken.

(3) from the perspective of accounting practice in most countries, the purpose of "the result of past pactions or events" is now defined in the definition of assets, which is merely a further explanation of the source of resources and more of an explanatory element.

Since assets are the economic resources controlled by enterprises, relevant pactions or events must have occurred, and there seems to be no need for duplication.

Therefore, we propose that it is not necessary to explain its source in the definition of assets.

In addition, the definition of assets in China's basic norms also has the meaning of "monetary measurement".

"Can be measured in money" (to be exact, should be "reliable measurement of money") is the accounting recognition and measurement.