財(cái)務(wù)報(bào)表分析(英文版)

1、精品A. Measuring Business Incomea. explainwhyfinancialstatementsarepreparedattheendoftheregular accounting period.Major Financial Statements:Thebalancesheet:providesa snapshotofthefirmsfinancialcondition.The income statement: reports on the performance of the firm.Thestatementofcashflows:reportsthecas

2、hreceiptsandcashoutflows classified according to operating, investment and financingactivities.Thestatementofstockholdersequity:reportstheamountsandsources of changes in equity from transactions with owners.The footnotesofthefinancialstatements:allowuses toimproveassessment of the amount, timing and

3、 uncertainty of the estimatesreported in the financial statements.The most accurate way to measure the results of enterprise activity wouldbe to measurethemat thetimeof theenterpriseseventualliquidation.Business, government, investors, and various other user groups, however,感謝下載載精品cannotwaitindefini

4、telyforsuchinformation.Ifaccountantsdidnotprovide financial information periodically, someone else would.Theperiodicityortimeperiodassumptionsimplyimpliesthattheeconomicactivitiesofanenterprisecanbedividedintoartificialtimeperiods.Thesetimeperiodsvary,butthemostcommonaremonthly,quarterly, and yearly

5、.Theinformationmustbereliableandrelevant.Thisrequiresthatinformationmustbe consistentandcomparableovertimeandalsobeprovided on a timely basis. The shorter the time period, the more difficultit becomes to determine the proper net income for the period. A monthsresultsare usuallyless reliablethana qua

6、rtersresults,anda quartersresultsare likelyto be less reliablethana yearsresults.Investorsdesireand demand that information be quickly processed and disseminated; yetthe quicker the information is released, the more it is subject to error. Thisphenomenonprovidesaninterestingexampleofthetrade-offbetw

7、eenrelevance and reliability in preparing financial data.In practice, financial reporting is done at the end of the accountingperiod. Accounting periods can be any length in time. Firms typicallyusetheyearastheprimaryaccountingperiod.The12-month感謝下載載精品accounting period is referred to as the fiscal y

8、ear. Firms also reportfor periods less than a year (e.g. quarterly) on an interim basis.Accounting period must be of equal length. Financial statements arepreparedattheendoftheregularaccountingperiodtoallowcomparison across time.User CommentsPosted by Jeanette 2003-10-25 14:15:45.same period - allow

9、 comparisionbasicassumptioninpreparingfinancialstatementsis -thefirmwillcontinue in operation,- going concern,assigning revenue - expenses - base on matching principlePosted by GiGi 2004-01-29 06:25:01.remember that there are 4 types of financial statementsb. explain why the accounts must be adjuste

10、d at the end of each period.Why?Mostexternaltransactionsarerecordedwhentheyoccur.Theemploymentofanaccrualsystemmeansthatnumerous感謝下載載精品adjustments are necessary before financial statements are preparedbecause certain accounts are not accurately stated.Someexternaltransactionsmightnotevenseemliketran

11、sactionsandarerecognizedonlyat the end of theaccountingperiod.Examples include unrecorded revenues and credit purchase.Someeconomicactivitiesdonotoccurastheresultofexternaltransactions.Examplesincludedepreciationandthe expirationofprepaid expenses.Timing:Often a transactionaffectstherevenueorexpense

12、s oftwoor more accounting periods. The related cash inflow or outflow doesnotalwayscoincidewiththeperiodinwhichtheserevenueorexpenseitemsarerecorded.Thus, theneedforadjustingentriesresults from timing differences between the receipt or disbursementof cash and the recording of revenue or expenses. Fo

13、r example, if wehandletransactionson a cashbasis, onlycashtransactionsduringthe year are recorded. Consequently, if a companys employees arepaid every two weeks and the end of an accounting period occurs inthemiddleofthesetwoweeks,neitherliabilitynorexpensehasbeenrecorded forthelastweek. To bringthe

14、 accountsup todatefor the preparation of financial statements, both the wage expenseand the wage liability accounts need to be increased.感謝下載載精品A necessary step in the accounting process, then, is the adjustment of allaccounts to an accrual basis and their subsequent posting to the generalledger.Adj

15、ustingentriesarethereforenecessarytoachievea propermatching of revenues and expenses in the determination of net income forthe current period and to achieve an accurate statement of the assets andequities existing at the end of the period.Adjustment principlesThe revenue recognition principleThe mat

16、ching principleWhat to adjust?Each adjusting entry affects both a real account (assets, liability, or ownersequity) and a nominal or income statement account (revenue or expense).The four basic types of adjusting entries are:1. deferred expenses that benefits more than one period: for example, prepa

17、id expenses (e.g. prepaid insurance, rent) are expenses paid in advance and recorded as assets before they are used or consumed. When these assets are consumed, expenses should be recognized: adebit to an expense account and a credit to an asset account.感謝下載載精品Another exampleis depreciation.The cost

18、of along-termasset isallocated as an expense over its useful life. At the end of each perioddepreciation expense is recorded through an adjusting entry: a debitto a depreciationexpenseaccountand a credittoan accumulateddepreciationaccount (acontraaccountusedtototalthe pastdepreciation expenses on sp

19、ecific long-term assets).2. accrued expenses that incurred but not yet paid or recorded: examples are employee salaries and interest on borrowed money. Atthe end of the accounting period, the accrued expense is recordedthrough an adjusting entry: a debit to an expense account (i.e. Salaries Expense)

20、 and a credit to a liability account (i.e. Salaries Payable).3. accrued revenues that earned but not yet received or recorded: alsocalledunrecordedrevenues.Examplesincludeinterestrevenues,rentrevenues,etc. Suchrevenuesaccumulatewiththepassingoftime, but the firm may have not received the payment or

21、billed theclient. An adjusting entry should be: a debit to an asset account (i.e.Accounts Receivable) and a credit to a revenue account (i.e. InterestRevenue).感謝下載載精品4. unearned revenues that are revenues received in cash before delivery of goods/services: examples are magazine subscription fees, cu

22、stomer deposits for services. These revenues are not earned yetand thus should be recorded as liabilities. An adjusting entry should be: a debit to a liability account (i.e. Unearned Revenue) and a credit to a revenue account (i.e. Revenue).User CommentsPosted by GiGi 2004-01-29 06:26:22.accrual sys

23、tem! definitionPosted by Gina 2004-02-03 22:17:33.accrualbasedaccountingrecognizesthe impact ofa business event asitoccurs, regardless of whether transaction affected cashPosted by Gina 2004-02-03 22:20:20.RevenuePrinciple:basis forrecordingrevenues(ie tellswhentorecordrevenue and the amounts).Match

24、ingPrinciple:basisforrecordingexpensis(iedirectiontoIDallexpensesduringtheperiod,measurethem,and matchthemagainsttherevenues earned in that period).感謝下載載精品c. explainwhy the accrualbasisofaccountingproducesmore usefulincome statements and balance sheets than the cash basis.Revenueis something earned

25、through the sale of goods or services. Notall cash receipts are revenues; for example, cash received through a loan isnot revenue. Expensesare the cost of goods or services used to generaterevenues. Not all cash payments are expenses; for example, cash dividendspaid tostockholdersarenot expenses. Ne

26、tincomeisthedifferencebetweenrevenues andexpenses.It isreportedon theincomestatement,and is the focus in evaluating a firms profitability.Mostcompaniesuse theaccrualbasisaccounting, recognizingrevenuewhenitis earned(thegoodsare soldortheservicesperformed)andrecognizing expenses in the period incurre

27、d, without regard to the time ofreceipt or payment of cash. Net income is revenue earned minus expensesincurred.Under the strictcash basis accounting, revenue is recorded only when thecash is received and expenses are recorded only when the cash is paid. Netincomeis cash revenueminuscash expenses.Th

28、e matchingprincipleis感謝下載載精品ignoredhere,resultinginconformitywithgenerallyacceptedaccountingprinciples.Todays economyisconsiderablymorelubricatedbycreditthanby cash.And the accrual basis, not thecash basis,recognizesallaspectsofthecreditphenomenon.Investors,creditors,and other decision makers seekti

29、melyinformationaboutan enterprisesfuturecashflows.Accrualbasisaccountingprovidesthisinformationbyreportingthecash inflowsandoutflows associated with earnings activities as soon as these cash flows canbe estimatedwithan acceptabledegreeofcertainty.Receivablesandpayablesareforecastersoffuturecashinflo

30、wsandoutflows.Inotherwords,accrualbasisaccountingaidsinpredictingfuturecashflowsbyreportingtransactionsandothereventswithcash consequencesatthetimethetransactionsandeventsoccur,rather than when the cash isreceivedandpaid.Accrualaccountinggenerallyprovidesabetterindication of performance than cash ba

31、sis of accounting since it increasesthe comparability of income statements and balance sheets across periods.B. Financial Reporting and Analysis感謝下載載精品a. defineeachassetandliabilitycategoryonthebalancesheetandprepare a classified balance sheet.Think of thebalance sheetas a photo of the business at a

32、 specific point intime.Itpresentstheassets,liabilities,andtheequityownershipofabusiness entity as of a specific date.Assets are the economic resources controlled by the firm.Liabilitiesare thefinancialobligationsthatthefirmmustfulfillinthe future. Liabilities are typically fulfilled by payment of ca

33、sh. Theyrepresentthesourceoffinancingprovidedtothefirmbythecreditors.Equity Ownershipis the owners investments and the total earningsretained from the commencement of the firm. Equity represents thesource of financing provided to the firm by the owners.Balancesheetaccountsareclassifiedso thatsimilar

34、itemsaregroupedtogethertoarriveatsignificantsubtotals.Furthermore,thematerialisarranged so that important relationships are shown.The table below indicates the general format of balance sheet presentation:感謝下載載精品Balance Sheet ClassificationsAssetsLiabilities and Owners EquityCurrent AssetsCurrent li

35、abilitiesLong-term investmentsLong-term debtProperty, plan and equipmentOwners equityIntangible assetsCapital stockOther assetsAdditional paid-in capitalRetained earningsCurrent Assets:They are cash and other assets expected to be converted into cash, sold, orconsumed either in one year or in the op

36、erating cycle, whichever is longer.Theoperatingcycleistheaveragetimebetweentheacquisitionofmaterialsandsuppliesandtherealizationofcash throughsales oftheproductforwhichthematerialsandsupplieswereacquired.Thecycleoperates from cash through inventory, production, and receivables back tocash. Wherether

37、eare severaloperatingcycles withinone year, theone-感謝下載載精品year period is used. If the operating cycle is more than one year, the longerperiod is used.Current assets are presented in the balance sheet in order of liquidity. Thefive major items found in the current asset section are:Cash: valued atits

38、stated value.Cashrestrictedforpurposeotherthan payment of current obligations or for use in current operationsshould be excluded from the current asset section.Marketablesecurities:Alsoreferredtoasmarketablesecurities.Valued at cost or lower of cost and market.Accountsreceivables:amountsowedtothefir

39、m byits customersfor goodsand servicesdelivered.Valuedattheestimatedamountcollectible.Inventories:Productsthatwillbe soldinthenormalcourse ofbusiness.Prepaid expenses: they are expenditures already made for benefits(usuallyservices)tobereceivedwithinoneyearortheoperatingcycle,whicheverislonger.Typic

40、alexamplesareprepaidrent,advertising, taxes, insurance policy, and office or operating supplies.They are reported at the amount of un-expired or unconsumed cost.Long-Term Investments:感謝下載載精品Often referred to simply as investments, they are to be held for many years,and are not acquiredwith the inten

41、tion of disposing of them in the nearfuture.Investmentsinsecuritiessuchas bonds,commonstock,orlong-term notes that management does not intend to sell within one year.Investments in tangible fixed assets not currently used in operations,such as land held for speculation.Investmentssetasideinspecialfu

42、ndssuchasasinkingfund,pension fund, or plant expansion fund. The cash surrender value oflife insurance is included here.Investments in non-consolidated subsidiaries or affiliated companies.Property, Plant, and Equipment:They are properties of a durable nature used in the regular operations ofthebusi

43、ness.Withtheexceptionofland,mostassetsareeitherdepreciable (such as building) or consumable.Intangible Assets:They lack physical substance and usually have a high degree of uncertaintyconcerningtheirfuturebenefits.Theyincludepatents,copyrights,franchises,goodwill,trademarks,tradenames,secretprocesse

44、s,and感謝下載載精品organizationcosts.Generally,alloftheseintangiblesarewrittenoff(amortized) to expense over 5 to 40 years.Other Assets:They vary widely in practice. Examples include deferred charges (long-termprepaidexpenses),non-currentreceivables,intangibleassets,assetsinspecial funds, and advances to s

45、ubsidiaries.Current Liabilities:They are obligations that are reasonably expected to be liquidated eitherthrough the use of current assets or the creation of other current liabilitieswithin one year or within the operating cycle, whichever is longer. They arenotreportedin any consistentorder.A typic

46、alorderis: Notespayable,accountspayable,accrueditems(e.g.accruedwarrantycosts,compensationandbenefits)incometaxespayable,currentmaturitiesoflong-term debt, etc.The excess of total current assets over total current liabilities is referred toas working capital. It represents the net amount of a compan

47、ys relativelyliquid resources; that is, it is the liquid buffer, or margin of safety, availableto meet the financial demands of the operating cycle.感謝下載載精品Long-Term LiabilitiesTheyareobligationsthatare notreasonablyexpectedtobeliquidatedwithin the normal operating cycle but, instead, at some date be

48、yond thattime.Bondspayable,notespayable,deferredincometaxes,leaseobligations,andpensionobligationsarethemostcommonlong-termliabilities. Generally they are of three types:Obligationsarisingfromspecificfinancingsituations,suchasissuance of bonds, long-term lease obligations, and long-term notespayable.Obligationsarisingfromthe ordinaryoperationsof theenterprisesuch as pension obligations and deferred income tax liabi