會(huì)計(jì)概念英文名詞解釋講課稿

1、會(huì)計(jì)概念英文名詞解釋Session 1 Definitions and Elements of Financial StatementsYou will need to learn these underlined terms for the midterm!I. In come stateme nt - “video ” of reve nu es, expe nses, gain s, lovsesa period of timea. Basic definitions:Reve nue -n crease in equity (and associated in crease in as

2、sets an d/or decrease in liabilities) earned from the sale of goods or provisi on of services to customers; it is measured on a gross basis as the amount of assets to be received.Expense -decrease in equity (and associated decrease in assets and/or in crease in liabilities) created by sale of goods,

3、 ren deri ng of services or passage of time; it is measured on a gross basis as the amount of assets con sumed.Gai n in crease in equity result ing from sell ing assets or recog nizing the in crease in value of assets (or decrease in value of liabilities); it is measured on a net basis as the positi

4、ve differe nee betwee n curre nt value and amount recorded on the bala nee sheet.Loss -decrease in equity result ing from selli ng assets or decrease in value of assets (or in crease in value of liabilities); it is measured on a net basis as the n egative differe nee betwee n curre nt value and amou

5、nt recorded on the bala nee sheet.Accounting period - the time period between consecutive balanee sheets for which a firm prepares an in come stateme nt and stateme nt of cash flows (e.g., an annual report has a 12-m onth acco un ti ng period and a quarterly stateme nt has a 3-m onth acco un ti ng p

6、eriod).b. Elements:Sales - revenue from selling goods or providing services to customers, which is reported as the top line on the in come stateme nt.Cost of Goods Sold or Cost of Sales labor, material, and overhead costs directly related to provid ing goods or services.Gross Profit is the differe n

7、ee betwee n Sales Reve nue and Cost of Goods Sold, which represe nts the profit that is available to cover all of the other expe nses on the in come stateme nt.Operating Expenses are expenses related to the ordinary operating activities of the firm of provid ing goods or services to customers or gai

8、ns and losses related to operating assets like PPE.Operat ing Profit or In come equals gross profit minus operati ng expe nses.Other Nonoperating Revenue and Expense are items related to FINANCING activities (i.e., interest expense) and INVESTING activities (i.e., i nterest in come and gains and los

9、ses on inv estme nts).In come Before Tax equals operati ng profit minus other in come and expe nse.Tax expe nse equals a GAAP based measure of the gover nment charges on in come.Net In come equals in come before tax minus tax expe nse.c. In come stateme nt accou nts are called TEMPORARY ACCOUNTS bec

10、ause amounts accumulate for a defi ned period of time and are the n zeroed out whe n the bala nee is tran sferred to retai ned earnin gs. Annual in come stateme nt amounts represe nt the total reve nues or expenses for a 12 month period called the fiscal year.II. Bala nee sheet “ sn apshot ofassets,

11、 liabilities, stockholderspdin tequity at atimea. Basic DefinitionsOperating cycle - average time it takes to go from cash to goods and services sold to customers and the n back to cash collected from customers.b. Elements:Asset: resource the firm con trols because of a past tran sacti on or eve nt

12、that provides expected future ben efits.Current asset: asset a firm expects to convert to cash, sell, or con sumewith in the Ion ger of one year or an operat ing cycle.Noncurrent asset: asset not classified as curre nt.Liability: creditor ' s claims or obligatidhat represents a probable future e

13、cono mic sacrifice of assets or services based on a past tran sacti on or eve nt.Curre nt liability : obligati on a firm expects to pay within the Ion ger of one year or an operati ng cycle.Noncurrent liability:liability not classified as current.Shareholders ' equityieasure of financing provide

14、d by owners of the firm that capturesowners 'residual claim on assets of the firm after satisfying liabilities.Reta ined earnings: cumulative net in come minus divide nds over the life of the firm.Reta ined earnings are a source of financing. Whe n earnings exceed the divide nds paid out to shar

15、eholders, it in creases equity or the owner' s claim on the firm.There is NOT a corresponding cash fund” in the asset section equal to the bala nee in retai ned earnin gs. Chan ges in retai ned earnings are a fun cti on of net in come and divide nds declared, which may or may not corresp ond to

16、cha nges in cash.Dividends: distributio n of cash to the owners of the firm.c. Bala nee sheet accou nts are called PERMANENT ACCOUNTS because the amounts accumulate year after year. The ending balanee from the previous year becomes the beg inning bala nee for the n ext year. For example, ending cash

17、 amount in 2011 will be the begi nning cash amount in 2014, that is the n adjusted for 2014 in flows and outflows to determ ine the 2014 cash amou nt.d. Basic accounting equation:ASSETS = LIABILITIES + STOCKHOLDERS' EQUITYThe powerful implicati on is inv estme nts in assets can be finan ced with

18、 either DEBT or EQUITY!Assets are resources and liabilities and equity represe nt the claims on those resources.III. Stateme nt of Reta ined Earnings (in cluded in Stateme nt of Shareholders Equity) prese nts a “video ofthe cha nge in retai ned earnin gfrom net in come and divide nds duri ng the per

19、iod .IV. Statement of Cash Flows - “video ofthe sources and uses of casbver a periodof time that expla ins the cha nge in the cash bala nee on the bala nee sheet.a. Operati ng -core operati ons and items related to measureme nt of net in comeb. Investing- firms INVEST in assets so includes asset tra

20、nsactions:i. buy and sell property plant and equipmentii. buy and sell inv estme ntsc. Financing - firms FINANCE with debt and equity so includes debt and equity tran sacti onsi. borrow and pay back nonoperating debtii. issue and repurchase stockiii. pay divide ndsd. Format+Net Operat ing Cash Flow+

21、 Net Inv est ing Cash Flow+ Net Financing Cash Flow=Change in Cash for the PeriodBeg inning Cash from Last Year+/- Change in Cash for the Period=Ending Cash for This YearBala nee Sheet Acco unt Name Defin iti onsAn acco unt accumulates the in creases and decreases that occur for a sin gle item. GAAP

22、does not provide an all-i nclusive list of acceptable acco unt n ames so their usage varies by firm.Separate accounts are reported if they are material or crucial to understanding firm performa nee. For example, some firms divide in terest reve nue and in terest expe nse into separate acco unts whil

23、e other firms comb ine them into one net acco unt.You will receive credit in exams as long as the name is potentially used in practice and accurately describes and correctly classifies an account as asset, liability, or shareholders ' equity. It is acceptable, but not required, to use more speci

24、fic account names like prepaid rent for prepaid expe nse.The follow ing list of acco unt n ames are com monly used.Assets:Cash -currency or balances in checking accounts, CDs, or money market accounts available to meet current obligations. Highly liquid short-term investments with less than90 days t

25、o maturity and little risk of value changes are called "cash equivalents" and in cluded in the cash acco unt.Short-term in vestme nt or marketable securities-curre nt value of in vestme nts inanother firm 's debt or equity securities that can be quickly sold for cash.Acco unts receivab

26、le-am ount due from customers for goods and services already delivered.Gross acco unts receivable is the amount owed. Net acco unts receivable is the amount expected to be collected after subtract ing an allowa nee for un collectible acco un ts.Notes receivable -am ount to be received from an outsid

27、e en tity formalized with a note or lending agreeme nt that specifies in terest and payme nt terms.Inven tory -raw materials, work in process (products started but not fini shed), and fini shed goods available for sale to customers.Prepaid expe nses -asset recog ni zed whe n cash paid in adva nee of

28、 whe n future expe nses will be in curred.Long-term investments-nvestments in bonds or equity securities expected to be held forthe Ion g-term.Property, pla nt, and equipme nt (gross)-origi nal cost to obta in and put into servicebuildi ngs, la nd, and equipme nt.Accumulated depreciati on a contra o

29、r offsett ing acco unt with the cumulative amount of the cost of property, pla nt and equipme nt assig ned to depreciati onexpe nse.Property, plant and equipment (net)-original cost minus accumulated depreciation.Intan gible assets -items like pate nts and copyrights that provide future ben efit but

30、 do not have physical substa nee. Intan gible assets are only recog ni zed whe n they are purchased from an outside source. For example, if a firm purchases a pate nt from ano ther compa ny the cost is show n as an asset. However, if a firm does research that results in a pate nt, those research cos

31、ts are in cluded in R&D expe nse and an asset is only recog ni zed for the legal and registrati on fees to obta in the pate nt.Goodwill -purchase price of an acquired compa ny minus the market value of the ide ntifiable assets minus liabilities of that company. The market values of both tangible

32、 and intangible assets are considered in the calculation of identifiable assets. Goodwill is ONLY recognized whe n one compa ny purchases ano ther compa ny at a premium for thi ngs like future pote ntial, market power, and quality of workforce that are not considered“dentifiable assets. ”Liabilities

33、:Acco unts payable -am ount owed to suppliers for inven tory or other goods or services purchased on credit.Other payables or accrued expe nses-am ounts owed for expe nses that have already bee nrecog ni zed like in terest, taxes, salaries, and rent.Short-term loans payable or notes payable-obligati

34、ons formalized with a note or lendingagreement that specify interest and payment terms and are due within the next year.Curre nt maturities of Ion g-term debt- the porti on of Ion g-term debt expected to be paid within the next year.Un ear ned reve nue or adva nces from customer - liability in curre

35、d because cash was received from customers in adva nee of whe n reve nue is ear ned so the firm has an obligati on to deliver goods or services to the customer.Lon g-term debt (Notes, Loa ns Bon ds, or Mortgage Payable) -obligati ons formalized with a note or lending agreeme nt expected to be paid m

36、ore tha n 1 year later.Shareholders Equity:Com mon stock at par-par or stated value of total stock issued over the life of the firm.Common stock has voting rights. Note that par value has legal significanee but no real econo mic sig nifica nee.For example, in some legal jurisdict ions par value can

37、play arole in distributions to stockholdersin the case of liquidation. However, par value doesnot relate to the market value of the stock. Some legal jurisdictions, including Texas, allow no par value stock.Additi onal paid in capital- total amount of cash received above par value whe n thestock was

38、 issued, aggregated over the life of the firm. Note that some firms in clude the par value and additional paid in capital in one“ommon stock ” account. Also, notethat additional paid in capital is reduced for certain stock option and treasury stock tran sact ions.Example: Issue 10,000 shares of $1 p

39、ar value com mon stock for $5 per share. The shareholders' equity sect ion will appear as follows: Com mon stock at par$10,000Additio nal paid in capital $40,000Preferred stock - amount of cash the firm received for stock givi ng the holder a prefere nee relative to com mon shareholders in terms

40、 of divide nds and cash received if the firm is liquidated.Treasury stock - repurchase price of stock that was issued and the n repurchased by the firm and held internally. Notice that treasury stock reduces shareholders ' equity because it reduces the equity claimed by OUTSIDE shareholders.Reta

41、 ined earnings-cumulative net in come minus divide nds over the life of the firm.Accumulated Other Comprehe nsiveIn come - gainsand losses that bypass thein come stateme nt and flow directly to the shareholders ' equity, accumulated over the life of the firm.In come Stateme nt Acco unt Name Defi

42、n iti onsRevenueIn terest in come -in terest earned on debt in vestme nts.ExpensesCost of goods sold or cost of sales revenue -labor, material and overhead costs directly related to providing goods and services. It is recognized only for the goods or services delivered duri ng the period. For exampl

43、e, a manu facturi ng firm in cludes manu facturi ng salaries and depreciati on on manu facturi ng equipme nt in the inven tory acco unt and the n in cost of goods sold whe n the inven tory is sold to customers.Assume TI has 20 inven tory items available for sale that cost $1000 each, and they sell 5 of these items for $1600 each. The in come stateme nt would show sales rev