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To advance the theory and practice of accountancy in all its aspects.To recruit, educate, train and assess by means of examination or otherwise a body of members skilled in these areas.To preserve at all times the professional independence of accountants in whatever capacities they may be serving.To maintain high standards of practice and professional conduct by all its members.To do all such things as may advance the profession of accountancy in relation to public practice, industry, commerce, education and the public service.35

The Malaysian Accounting Standards Board (MASB) is established under the Financial Reporting Act 1997 (the Act) as an independent authority to develop and issue accounting and financial reporting standards in Malaysia.

The MASB, together with the Financial Reporting Foundation (FRF), make up the frameworks for financial reporting in Malaysia. These frameworks comprises an independent standard-setting structure with representation from all relevant parties in the standard-setting process, including preparers, users, regulators and the accountancy profession.

issue new accounting standards as approved accounting standards and to review, revise or adopt existing accounting standards as approved accounting standards;36

3Definition of accounting.Purposes of accounting, users of accounting information, fields of accounting, accounting professional bodies, ethics and regulationsTypes of businessCharacteristics of qualitative accounting informationAfter completing this chapter, you should be able to:34Explain what accounting is.Objective 1045Accounting an information system that provides reports to stakeholders about the economic activities and condition of a business.056.it is a process Identifying Recording Communicating

67Objective 20Purposes of accounting, fields of accounting, accounting professional bodies, ethics and regulations78.to whom the information for?The stakeholder.is a person or entity having an interest in the economic performance and well-being of a business.89Financial accounting is primarily concerned with the recording and reporting of economic data and activities for a business.Managerial accounting uses both financial accounting and estimated data to aid management in running day-to-day operations and in planning future operations.09Financial versus Managerial Financial AccountingFormat has to follow established standards of reporting format

Foreign the information (report) is meant for foreign users e.g LHDN, SC, Banks

Managerial AccountingManagement intended users are the management of the entity10Types of AccountantsPrivate AccountantsAccountants employed by a business firm or a not-for-profit organization

Public AccountantsAccountants and their staff who provide services on a fee basis

e.g. Big 4, medium and small size accounting firms.11Ernst & YoungKPMGPricewaterhouseCoopersDelloitte121213Ethics?.. are the moral principles that guide the conduct of individuals. right or wrong acceptable or not standards of good or bad behaviour01314Why? our actions are watched and judged as right or wrong, honest or dishonest, and fair or bias. it has impact on society and others. communicate credible economic information activities. 1415Describe the types of business and forms of business organizationObjective 31-101516 Service Business ServiceLes Copaque EntertainmentMalaysia Airlines System (MAS) TransportationMaybank Corporation Financial servicesSeri Malaysia Hospitality and lodgingPWC Auditing1-1Types of Businesses01617Merchandising Business ProductGiantGeneral merchandiseAmazon.comInternet books, music, videoToy R UsToysPensonicConsumer electronicsCheetahApparelTypes of Businesses1-101718Manufacturing Business ProductGeneral Motors CorporationCars, trucks, vansNokiaCell phonesAcerPersonal computersAdidasAthletic shoes and apparelF & N CompanyBeveragesSamsungStereos and televisionsTypes of Businesses1-101819ProprietorshipPartnershipCorporationLimited liability companyCommon Forms of Business Organizations01920Proprietorship

owned by one individual,

more than 70% of business organizations in Malaysia are organized by proprietorships, easy and low cost of organizing,

financial resources are limited to the owners resources, and

commonly used by small businesses such as hardware stores, laundries, restaurants, and grocery shop.02021 Partnership

owned by two or more individuals

about 10% of business organizations in Malaysia are organized by partnerships,

combine the skills and resources of more than one person, and

like proprietorships, small local businesses such as automotive repair shops, music stores, beauty salons, and clothing stores may be organized as partnerships.02122Corporation

organized under state or federal statutes as a separate legal taxable entity generates 90% of the total dollars of business receipts received. comprises only 20% of the business organizations in Malaysia. ownership is divided into shares of stock, sold to shareholders (stockholders) able to obtain large amount of resources by issuing stock. is used only by large businesses. 02223 Limited liability company (LLC) @ Sdn Bhd

combines attributes of a partnership and a corporation in that it is organized as a corporation.

can elect to be taxed as a partnership

a popular alternative to a partnership

has tax and liability advantages to the owners.02324The process by which accounting provides information to business stakeholders is as follows:Identify stakeholders.

Assess stakeholders information needs.

Design the accounting information system to meet stakeholders needs.

Record economic data about business activities and events.

Prepare accounting reports for stakeholders.024252531Who uses the accounting information? External users

Investors to make decisions whether to buy, hold, or sell their share in the company.

Tax authority check for companys tax compliance. E.g. LHDN

Security Commission (SC) to make sure that company is operating within the prescribed rules.

Customers observe whether company continues to maintain product quality and warranty and then decide whether to continue supporting its products.

Labour union want to know whether company can afford to give pay raises or benefits.

Economic planners to forecast economic activities.03132231-1

03233

.the end!Comparison or differences enterprise (sole trader & partnership) with private limited company (Sdn. Bhd) in MalaysiaA private limited company advantages and disadvantages compared with retaining Enterprise extends beyond purely tax advantages. A private limited company will limit your liabilities for the debts of company. Here we summarise some of the advantages for help you decide should you convert your enterprise into a private limitedcompany:- 1. Liabilities of OwnerEnterprise UnlimitedThere is no distinction between business and personal money for self employed or partnership as all business debts & risks are the owners' personal responsibility.Sdn Bhd limitedAdvantages are that the company is a separate corporate body and liability for payment of debts stops with the private limited company, the owners, shareholders are not personally liable. 2. Taxes rateEnterprise Personal TaxNot subject to income tax. The Profits made are added to the sole proprietor or partners' Personal income tax and the owner or partners are liable for this profit under personal income tax. Sdn Bhd Corporate TaxOnly subject to the 20% & 25% corporation tax rate (for small middle size company)

3. FlexibilityEnterprise less flexibleSole proprietor or partners (resident individual) is taxed on his chargeable income at graduated rates from 2% to 26% after the deduction of tax relief.Sdn Bhd more flexible (advantages)Personal incomeAdvantages come from the flexibility of being able to vary the mix of your personal income. You can determine how much you want to take out as salary, director's fees, bonus, dividend or benefits-in-kind and how much you want to leave in the company.

38Tax IncentivesThere is the chance to enjoy tax incentives such as investment tax allowance, reinvestment allowance, pioneer status and others which only for company.Personal Income 26% Tax RateThe advantages increase where net taxable profit is above the self employment upper earnings limit as money can be left in the business and therefore only subject to the 20% & 25% corporation tax rate (for small middle size company) thereby avoiding the sole proprietor or partners 26% tax rate. Another possibility is to distribute the shares among family members to reduce the risk of 26% tax.Deductible ExpensesPotentially small issues but there differences in the accounting treatment of deductible expenses such as charitable donations, entertaining expenses and use of home as office. A private limited company advantages consist of being able to claim such expenses as valid business expenses which would not be claimable in the sole trader basic accounts as treated as personal not business.

39Employment income for family membersYour wife and family members as staff or directors, making company's income into their income. As you can control the company, this flexibility can create the most tax-efficient way.Benefits-in-kindCertain benefits-in-kind, e.g. motor car can taking advantage of prescribed scales. Many benefits are taxed on a more favourable basis for employees, including directors, than for the Enterprise.EPF or approved schemesFor Contributions to EPF to give tax deductions for both employer and employee contributions, As Enterprise, your relief is limited to the available to an employee.