Introduction to Accounting for Managers
Introduction+to+Management+Accounting+(16th+Edition) 答案
Chapter 17Understanding and AnalyzingConsolidated Financial Statements LEARNING OBJECTIVES:When your students have finished studying this chapter, they should be able to:1. Contrast accounting for investments using the equity method and the market–valuemethod.2. Explain the basic ideas and methods used to prepare consolidated financial statements.3. Describe how goodwill arises and how to account for it.4. Use financial statements analysis to evaluate an organization’s performance5. Explain and use a variety of popular financial ratios.6. Identify the major implications that efficient stock markets have for accounting.CHAPTER 17: ASSIGNMENTSCRITICAL THINKING EXERCISES25. Market Method, Equity Method, and Total Assets26. Depreciation in Consolidated Financial Statements27. Just-in-Time (JIT) Inventory and Current Ratio28. Market EfficiencyGENERAL EXERCISES and PROBLEMS29. Equity Method30Consolidated Financial Statements31.Determination of Goodwill32.Purchased Goodwill33.Amortization and Depreciation34.Allocating Total Purchase Price to Assets35.Preparation of Consolidated Financial Statements36.Intercorporate Investments and Ethics37.Profitability Ratios38.Financial RatioUNDERSTANDING PUBLISHED FINANCIAL REPORTS39.Meaning of Account Descriptions40.Classification on Balance Sheet41.Effects of Transactions Under the Equity Method42.Noncontrolling Interests43.General Electric and GECS44.Goodwill45.Accounting for Goodwill46.Income Ratios and Asset Turnover47.Financial Ratios48.Nike 10-K Problem: Using Consolidated Financial StatementsEXCEL APPLICATION EXERCISE49. Calculating Financial RatiosCOLLABORATIVE LEARNING EXERCISE50. Financial RatiosINTERNET EXERCISE51. General Electric’s Annual Report()CHAPTER 17: OUTLINEPart One: Intercorporate Investments Including ConsolidationsFirms often invest in the equity securities of other companies. The investor may be simply investing excess cash, or he may be seeking some degree of control over the investee. There are three methods of accounting for intercorporate investments: the equity and market methods and consolidation.An investor that holds less than 20% of another company is assumed to be a passive investor—it cannot significantly influence the decisions of the investee—and it uses the market method. Investors with between 20% and 50% interest use the equity method.At this level of ownership, the investor has the ability to exert significant influence on the investee. Firms with an interest in excess of 50% must use the consolidation approach.I. Market Value and Equity Methods{L. O. 1}A.Market-Value Method—records the initial investment on the balancesheet at fair market value (FMV). Such investments are often calledmarketable securities in the financial statements. Trading Securities—investments that the company buys only with the intent to resell themshortly. Available-for-Sale Securities—investments that the companydoes not intend to sell in the near future. Changes in market value oftrading securities are reported as gains (increase in FMV) or losses(decrease in FMV), whereas available-for-sale securities have theirunrealized gains or losses shown in a separate valuation allowanceaccount in the stockholders’equity section of the balance sheet. (SeeEXHIBIT 17-1)B.Equity Method—accounts for the investment at the acquisition costadjusted for the investor’s share of dividends and earnings or losses ofthe investee after the date of investment. Investors increase the carryingamount of the investment by their share of investee’s earnings andreduce the carrying amount by dividends received from the investeeand by their share in investee’s losses.II. Consolidated Financial Statements {L. O. 2}Parent Company—the company owning more than 50% of the other business’s stock.Subsidiary—the company whose stock is owned by the other business. Although parent and subsidiary companies typically are separate legal entities, in many regardsthey function as one unit. Consolidated Financial Statements—financial statements that combine the financial statements of the parent company with those of various subsidiaries.A.The AcquisitionWhen a parent acquires a subsidiary, the evidence of interest is recorded asInvestment in Subsidiary. When the consolidated statements are prepared,they cannot show both the evidence of interest and the underlying assets andliabilities of the subsidiary. To avoid such double-counting, the reciprocalevidence of ownership present is eliminated in two places: (1) the Investmentin Subsidiary on the parent company’s books and (2) the Stockholders’ Equityon the subsidiary company’s books. The entries necessary to accomplish thisare called eliminating entries.III. Recognizing Income After AcquisitionLong-term investments in equity securities (e.g., the investments in a subsidiary) are carried in the investor’s balance sheet by the equity method. The income generated bya subsidiary is recognized by the parent company as an increase in an account titledInvestment in Subsidiary.A. Noncontrolling InterestsWhen a parent holds less than 100% of the stock of a subsidiary, aconsolidated balance sheet includes an account on the equities side calledNoncontrolling Interests in Subsidiaries, or simply Noncontrolling Interests—the account that shows the outside stockholders’interest, as opposed to theparent’s interest, in a subsidiary corporation.B. Perspective on Consolidated StatementsSee EXHIBIT 17-2 and EXHIBIT 17-3for an illustration of howinvestments in subsidiaries are presented in companie s’ annual reports. Theheadings of the statements indicate that they are consolidated statements. Onbalance sheets, the minority interest typically appears just above thestockholders’ equity section. On income statements, the minority interest inthe net income is deducted as if it were an expense of the consolidated entityafter all the other expenses are listed. Investments in Affiliates(orInvestments in Associates)—listed as an asset on the balance sheet and reflectthe purchase cost and interests in income or loss of investees. The FASBrequires all subsidiaries to be consolidated. The major reason for forcingconsolidation is to provide a more complete picture of the economic entity.See EXHIBIT 17-4for a summary of the accounting for different levels ofinvestment in subsidiaries.C. Accounting for Goodwill {L. O. 3}In CHAPTER 16, goodwill is defined as the excess of cost over fair value ofnet identifiable assets of businesses acquired. The purchase price of asubsidiary often exceeds its book value. In fact, it frequently exceeds the sum ofthe fair market values of the identifiable individual assets less the liabilities.When the amount paid exceeds the book values, the assets will be valued attheir fair market values for the consolidated statements. Any amounts paidabove the fair market values of the individual assets are carried as goodwill inthe consolidated financial statements.A purchaser may be willing to pay more than the current values of theindividual assets received because the acquired company is able to generateabnormally high earnings. The causes of this excess earnings power may betraced to personalities, skills, locations, operating methods, and so forth.“Goodwill”is originally generated internally. For example, a happycombination of advertising, research, management talent, and timing may give aparticular company a dominant market position for which another company iswilling to pay dearly. This ability to command a premium price for the totalbusiness is goodwill. The selling company will never record goodwill.Therefore, the only goodwill recognized as an asset is that identified when onecompany is purchased by another.Part Two: Analysis of Financial StatementsCareful analysis of financial statements can help decision makers evaluate an organization’s past performance and predict its future performance. Financial statements of Microsoft Corporation in EXHIBIT 17-5 and EXHIBIT 17-6 are used to focus on financial statement analysis.Investors analyze financial statements in order to decide whether to buy, sell, or hold common stock. Managers and the financial community (e.g., bank officers and stockholders) use them as clues to help evaluate the operating and financial outlook for an organization. Budgets or pro forma statements, carefully formulated expressions of predicted results including a schedule of the amounts and timings of cash repayments, are helpful to creditors. They want assurances of being paid in full and on time.IV. Component PercentagesComponent Percentages—analysis and presentation of financial statements in percentage form to aid comparability, and is frequently used when comparing companies that differ in size (see EXHIBIT 17-7). The resulting statements are called Common-Size Statements.Income statement percentages are usually based on sales = 100%. Comparing the gross margin rate or the net income percentage with those of other firms in the industry or with prior years may be useful. Better yet, a comparison of these percentages (along with those for other items on the income statement) with what was budgeted for the current year may help in diagnosing what changes created better or worse results.Balance sheet percentages are usually based on total assets = 100%. One can see the shifts in the composition of assets between current and long term. In addition, one can see shifts in the equities side of the balance sheet between current liabilities, noncurrent liabilities, and stockholders’ equity.V. Use of Ratios {L. O. 4}See EXHIBIT 17-8for how typical ratios are computed from financial statements.Many more ratios could be computed. For example, Standard & Poor’s Corporation sells a COMPUSTAT service. Via computer, COMPUSTAT can provide financial and statistical information for thousands of companies. The information includes 175 financial statement items on an annual basis and 100 items on a quarterly basis, plus limited footnote information. The SEC makes annual financial statements available online in its Edgar database (/edgar.shtml). The ratios shown in EXHIBIT 17-8 are as follows:TYPICAL NAME NUMERATOR DENOMINATOR OF RATIOShort-Term Ratios:Current ratio Current assets Current liabilitiesAvg. collection periodin days Avg. A/R x 365 Sales on account Debt-to-Equity Ratios:Current debt to equity Current liabilities Stockholders’ equity Total debt to equity Total liabilities Stockholders’ equity Profitability Ratios:Gross profit rate or Gross profit orpercentage gross margin SalesReturn on sales Net income SalesReturn on stockholders’Net income Averageequity stockholders’ equity Earnings per share Net income less Avg. common sharesdividends on P/S outstanding Price earnings Market price per Earnings per shareshare of common stockDividend Ratios:Dividend yield Dividends per Market price percommon share common share Dividend payout Dividends per Earnings per sharecommon shareA. Comparisons {L. O. 5}Evaluation of a financial ratio requires a comparison. There are three main types of comparisons: (1) Time Series Comparisons—with a company’s own historical ratios (e.g., for 5 to 10 years); (2) Benchmark Comparisons—general rules of thumb (e.g., there is trouble if a company’s current debt is at least 80% of its tangible net worth); and (3) Cross-Sectional Comparisons—ratios of other companies or with industry averages from Dun and Bradstreet. Comparisons for the Microsoft Company data across years, against benchmarks, and to the industry are presented.B. Discussion of Specific RatiosThe current ratio is a widely used statistic. Other things being equal, the higher the current ratio, the more assurance the creditor has about being paid in full and on time. The average collection period in days is another important short-term ratio. An increase in this ratio might indicate increasing acceptance of poor credit risks or less energetic collection efforts.Both creditors and shareholders watch the debt-to-equity ratios to judge the degree of risk of insolvency and stability of profits. Companies with heavy debt in relation to ownership capital are in greater danger of suffering net losses or even bankruptcy when business conditions sour, revenues and many expenses decline, but interest expenses and maturity dates do not change.Investors find profitability ratios especially helpful. The gross profit rate and return on sales are both measures of operating success. Shareholders view the return on their invested capital as more important. The return on equity provides a measure of overall accomplishment.The final four ratios in EXHIBIT 17-8 are based on earnings and dividends.The first, earnings per share of common stock (EPS), is the most popular of all ratios. This is the only ratio that is required as part of the body of the financial statements of publicly held companies in the United States. The EPS must be presented on the face of the income statement. The calculation of EPS can be more complicated than is indicated in EXHIBIT 17-8depending on the capital structure of the firm and the presence of common-stock equivalents.The price earnings, dividend yield, and dividend payout ratios are especially useful to investors in the common stock of the company.C. Operating Performance RatiosBusinesspeople often look at invested capital’s rate of return as an importantmeasure of overall accomplishment:rate of return on investment = income / invested capitalThe measurement of operating performance (i.e., how profitably assets areemployed) should not be influenced by the management’s financial decisions(i.e., how assets are obtained). Operating performance is best measured bypretax operating rate of return on average total assets:pretax operating rate = operating incomeof return on average total assets average total assetsThe right-hand side of the equation above consists of two important ratios:operating inc. = operating income x salesavg. total assets sales avg. tot. assets The right-hand side terms in the equation above are often called the operatingincome percentage on sales and total asset turnover (i.e., the two basic factorsin profit making). An improvement in either will, by itself, increase the rate ofreturn on total assets.If ratios are used to evaluate operating performance, they should excludeextraordinary items. Such items are not expected to recur, and therefore theyshould not be included in measures of normal performance.VI. Efficient Markets and Investor Decisions {L. O. 6}Much research in accounting and finance has concentrated on whether the stock markets are “efficient”.Efficient Capital Market—market prices “fully reflect”all information available to the public. Therefore, searching for “underpriced” securities in such a market would be fruitless, unless an investor has information that is not generally available. If the real-world markets are indeed efficient, a relatively inactive portfolio approach would be an appropriate investment strategy for most investors.The hallmarks of the approach are risk control, high diversification, and low turnover of securities. The role of accounting information would mainly be in identifying the different degrees of risk among various stocks so that investors can maintain desired levels of risk and diversification.Many ratios are used simultaneously rather than one at a time for such predictions. Research showed that accounting reports are only one source of information. In the aggregate, companies that choose the least-conservative accounting policies do not fool the market. In sum, the market as a whole generally sees through any attempts by companies to gain favor through the choice of accounting policies that tend to boost immediate income.Some alternative sources of financial information are the following: company press releases, trade association publications, brokerage house analyses, and government economic reports. If accounting reports are to be useful, they must have some advantage over alternative sources in disclosing new information. Financial statement information may be more directly related to the item of interest, more reliable, lower in cost, and/or more timely than alternative sources.CHAPTER 17: Quiz/Demonstration ExercisesLearning Objective 11. The Colts Corporation has acquired a 10% interest in the shares of GiantsCorporation. Colts reported income for 20X1 of $25 million and issued dividends of $10 million during the year. Becaise Colts use the available for sale method of accounting for their investment in Giants, for 20X1 the value of their income will _____.a. increase by $25 million, the amount of Giants earningsb. increase by $1 million, the dividends paid by Giants to Coltsc. decrease by $10 million, the amount Giants paid out in dividendsd. increase by $1.5 million, Colts’ share in the earnin g s of Giants reduced by theirshare of the dividends paid out2. The Raiders Corporation owns 40% of the outstanding shares of the WarriorsCorporation. During 20X1, Warriors reported income of $25 million and paid dividends of $10 million to shareholders. Raiders use the equity method to account for their investment in Warriors. Accordingly, the value of their Warriors investment during 20X1 will increase by _____.a. $14 million, the sum of the dividends received by Raiders and their share inthe earnings of Warriorsb. $6 million, Raiders’ share in earnings of Warriors reduced by the dividendsreceivedc. $4 million, the dividends paid by Warriors to Raidersd. $10 million, Raiders’ share in the earnings of WarriorsLearning Objective 23. When a company purchases more than 50% of the stock of another business, the twocompanies’ financial statements must be presented _____.a. separately in the same annual report with the nature of the ownership interestfully disclosedb. in two separate sets of financial statements that cannot appear in the sameannual reportc. in the form of consolidated financial statements after eliminating entries arerecorded to avoid the double counting of assets and equityd. together regardless of whether the ownership interest continues4. Taylor Company owns 90% of the outstanding shares of Turner Company. If TurnerCompany reports earnings for the year of $20 million, the consolidated financial statements will show a _____ million increase in the _____.a. $20; consolidated sh areholders’ equityb. $2; noncontrolling interest in Turnerc. $20; consolidated net assetsd. $20; noncontrolling interest in TurnerLearning Objective 35. Goodwill is recognized for accounting purposes _____.a. when a business is purchased for a price that exceeds the fair market value ofits assets less liabilitiesb. every year as long as the IRS does not objectc. when the value of a business exceeds its historical cost book valued. when a business is purchased for a price that exceeds the book value of itsassets less liabilities6.Goodwill may be caused by _____.a.excellent general management skillsb.potential efficiency by rearrangementc.dominant market positiond.all of the abovee.none of the aboveLearning Objective 5Use the comparative balance sheets and income statements below for the Louise Company in answering questions 7 through 10:Louise CompanyComparative Balance SheetsDecember 31, 20X1 and 20X220X1 20X2AssetsCash $ 61,100 $ 27,200Accounts Receivable (net) 72,500 142,700Inventory 122,600 107,800Property, Plant, and Equipment (net) 577,700 507,500Total Assets $833,900 $785,200Liabilities and Stockholders’ EquityAccounts Payable $104,700 $ 72,300Notes Payable within one year 50,000 50,000Bonds Payable 200,000 210,000Common Stock—$10 par value 300,000 300,000Retained Earnings 179,200 152,900Total Liabilities and Stockholders Equity $833,900 $785,200Louise CompanyComparative Income StatementsFor the Years Ended 12/31/X1 and 12/31/X220X2 20X1 Sales $ 800,400 $ 900,000Cost of Goods Sold 454,100 396,200Gross Profit $ 346,300 $ 503,800Operating ExpensesSelling Expenses $ 130,100 $ 104,600Administrative Expenses 40,300 115,500Interest Expense 25,000 20,000Income Tax Expense 14,000 35,000Total Operating Expenses $ 209,400 $ 275,100Net Income $ 136,900 $ 71,3007. The Louise Company’s current ratio for 20X2 was _____.a. 1.66b. 5.39c. 1.23d. 1.008. Louise Company’s total debt to equity ratio has _____.a. decreased from 0.74 to 0.73 from 20X1 to 20X2b. increase from 0.73 to 0.27 from 20X1 to 20X2c. decrease from 0.32 to 0.74 from 20X1 to 20X2d. increased from 0.27 to 0.32 from 20X1 to 20X29. Louise Company’s gross profit rate for 20X1 was _____.a. 20.58%b. 55.98%c. 46.65%d. 61.92%10. In 20X2, Louise Company’s return on sales was _____.a. 2.39%b. 4.61%c. 23,27%d. 17.10% Learning Objective 611. An efficient capital market _____.a. creates an opportunity for investors to spot “underpriced” securities usingpublicly available informationb. is one in which market prices “fully reflect” all information to the publicc. has no bearing on accounting statements and proceduresd. explains why some individuals are able to “beat the market” through the use ofpublicly available information12.If markets are truly efficient, then the proper portfolio includes which of the followingcharacteristics?a.high diversificationb.risk controlc.low turnover of securitiesd.all of the abovee.none of the aboveCHAPTER 17: Solutions to Quiz/Demonstration Exercises1. [b]The amount of dividends received will increase the dividend income account.2. [b]With the equity method, the investor recognizes his share in earnings, butreduces the investment by the amount of dividends received.3. [c]Consolidated financial statements must be issued when ownership exceeds50%.4. [b]The noncontrolling interest will be increased by its share in the earnings of thesubsidiary.5. [a]Goodwill is recorded for the amount by which the purchase cost exceeds thefair market value of the net assets obtained. First, the assets are written up totheir fair market values. Then any excess is recorded as goodwill, which isamortized over a period not exceeding 40 years.6. [d]7. [a]The current ratio is found by dividing the current assets by the current liabilities.Here current assets are $256,200 [$61,100 + $72,500 + $122,600] and currentliabilities are $154,700 [$104,700 + $50,000]. Therefore, the current ratio is1.66 [$256,200/$154,700].8. [b]In 20X1 the total debt-to-equity ratio was 0.73, which was computed as[($72,300 + $50,000 + $210,000) / ($300,000 + $152,900)]. In 20X2, the totaldebt-to-equity ratio has increased to 0.74 [($104,700 + $50,000 + $200,000) /($300,000 + $179,200)].9. [b]The gross profit rate is found by dividing the gross profit by sales. For 20X1,that would be $503,800 / $900,000 = 55.98%.10. [d]The return on sales is found by dividing the net income by sales. For 20X2,that was $136,900 / $800,400 = 17.10%.11. [b] 12. [d]。
会计英语第四版参考答案
会计英语第四版参考答案Chapter 1: Introduction to Accounting1. What is accounting?- Accounting is the systematic recording, summarizing, and reporting of financial transactions and events of a business entity.2. What are the main functions of accounting?- The main functions of accounting are to providefinancial information for decision-making, ensure compliance with laws and regulations, and facilitate the management of a business.3. What are the two main branches of accounting?- The two main branches of accounting are financial accounting and management accounting.4. What is the purpose of financial accounting?- The purpose of financial accounting is to provide an accurate and fair representation of an entity's financial position and performance to external users.5. What is the double-entry bookkeeping system?- The double-entry bookkeeping system is a method of recording financial transactions in which every transactionis recorded twice, once as a debit and once as a credit, to maintain the equality of the accounting equation.Chapter 2: Accounting Concepts and Principles1. What are the fundamental accounting concepts?- The fundamental accounting concepts include the accrual basis of accounting, going concern, consistency, and materiality.2. What is the accrual basis of accounting?- The accrual basis of accounting records transactions when they occur, regardless of when cash is received or paid.3. What is the going concern assumption?- The going concern assumption is the premise that a business will continue to operate for the foreseeable future.4. What is the principle of consistency?- The principle of consistency requires that an entity should apply accounting policies consistently over time.5. What is the principle of materiality?- The principle of materiality states that only items that could potentially affect the decisions of users of financial statements are included in the financial statements.Chapter 3: The Accounting Equation and Financial Statements1. What is the accounting equation?- The accounting equation is Assets = Liabilities +Owner's Equity.2. What are the four main financial statements?- The four main financial statements are the balance sheet, income statement, statement of changes in equity, and cashflow statement.3. What is the purpose of the balance sheet?- The balance sheet provides a snapshot of an entity's financial position at a specific point in time.4. What is the purpose of the income statement?- The income statement reports the revenues, expenses, and net income of an entity over a period of time.5. What is the purpose of the cash flow statement?- The cash flow statement reports the cash inflows and outflows of an entity over a period of time.Chapter 4: Recording Transactions1. What is a journal entry?- A journal entry is the initial recording of atransaction in the general journal.2. What are the steps in the accounting cycle?- The steps in the accounting cycle are analyzing transactions, journalizing, posting, preparing a trial balance, adjusting entries, preparing financial statements, and closing entries.3. What is the difference between a debit and a credit?- A debit is an increase in assets or a decrease inliabilities or equity, while a credit is an increase in liabilities or equity or a decrease in assets.4. What are adjusting entries?- Adjusting entries are made at the end of an accounting period to ensure that revenues and expenses are recorded in the correct period.5. What is the purpose of closing entries?- Closing entries are made to transfer the balances of temporary accounts to the owner's equity account and to prepare the accounts for the next accounting period.Chapter 5: Accounting for Merchandising Businesses1. What is a merchandise inventory?- A merchandise inventory is the stock of goods held by a business for sale to customers.2. What is the cost of goods sold?- The cost of goods sold is the direct cost of producing the merchandise sold during an accounting period.3. What is the gross profit?- The gross profit is the difference between the sales revenue and the cost of goods sold.4. What is the difference between a perpetual and a periodic inventory system?- A perpetual inventory system updates inventory records in real-time with each sale or purchase, while a periodicinventory system updates inventory records at specific intervals, such as at the end of an accounting period.5. What is the retail method of inventory pricing?- The retail method of inventory pricing is a method of estimating the cost of ending inventory by applying a cost-to-retail ratio to the retail value of the inventory.Chapter 6: Accounting for Service Businesses1. What are the main differences in accounting for service businesses compared to merchandise businesses?- Service businesses do not have inventory and their primary expenses are typically labor and overhead costs.2. What is the main source of revenue for service businesses? - The main source of revenue for service businesses is the fees charged for the services provided.3. What are the typical expenses。
会计金融英文复习资料 introduction to accounting and finance
INT0006: INTRODUCTION TO ACCOUNTING & FINANCERevision1: ROLE OF ACCOUNTING IN BUSINESSUSERS OF ACCOUNTING INFORMATION (STAKEHOLDERS)MANAGERSAs those responsible for planning the activities of thebusiness, managers are major users of accounting information.Types of management decisions requiring accountinginformation include: ∙ the pricing of goods [& services] ∙ the quantity of goods to produce∙ investment in new equipment ∙ raising of finance to maintain/expand the business∙ production capacity ∙ purchase of stock These are many of the stakeholders in any business, butthere will be others. Many of these groups are external to the business itself; however they have an interest in the success or failure of the business.Business organisationnCompetitors Lenders Managers OwnersCustomers Suppliers Investment analystsCommunity representative s Government Employees and theirrepresentativesRULES, REGULATIONS AND STANDARDSETHICAL RULESThere are four main ethical rules which accountants should follow. These are NOT legal requirements, but principles of good practice.Prudence –when estimates of the future need to be made –for example over the creditworthiness of a debtor, managers are likely to be optimistic, it is the responsibility of theConsistency –in a company’s accounts. Accountants must keep to the same methods in subsequent accounting periods, to ensure that one year’s figures can be compared to previous periods.Objectivity– Accounts should be prepared with the minimum of bias. This is often not easy, as owners may want to adopt policies which would result in higher profit figures, or in disguising poor results. Often it is wise to resort to the prudence rule, but each case must be considered individually.Relevance– The amount of information which could be disclosed to any stakeholder is virtually limitless. It is important to limit what is provided to that which is relevant to the user’s needs. MEASUREMENT RULESThere are six main measurement rules which govern how data is recorded in accounting in an accounting system.Money measurement– All information should be presented in monetary terms. For example in the accounting records for a farm, we would not wish to know how many cattle the farm had bought and sold, it would be more useful to know the monetary value of the stock transactions.Historic cost–Transactions should be recorded at their original cost. Changes in value are ignored until an asset is disposed of.Realisation– Transactions should be accounted for in the accounting period in which legal title for them has been transferred fro the seller to the buyer.Matching– Can be referred to as the accruals convention. Expenses should be matched to the revenue that they helped generate. Difficulties occur when a business pays in advance or in arrears for an expense. A business will usually be required to pay rent in advance. An adjustment is made to the amount actually paid, so that in the final accounts the figure shown for rent is only that portion of what has been paid which actually relates to the accounting period being reported.Dual Aspect– Every time a transaction takes place there is a twofold effect. For example if a business receives money from a debtor, the amount of cash in the bank will go up and the amount of debtors will go down. This is the basis of double-entry bookkeeping.Materiality – This rule allows us to apply common sense to what is reported in accounts. If an item is insignificant then it can be ignored. It should be remembered that what may be an insignificant amount for a large business, may well be significant to a small business. Large companies usually report figures in £000, whereas a small business will report in whole pounds.Inventories(stock)BOUNDARY RULESBusiness Entity – For accounting purposes a business and its owner(s) are treated as being quite separate and distinct. This means that the owner cannot charge personal expenditure to the business, and any money invested in the business by the owner(s)is treated as a claim against the business.Going concern – financial statements should be produced on the assumption that the business will continue into the foreseeable future. If the accountant thinks that the business is not a going concern then the accounts would be prepared as if the business were to be closed.2: Statement of Financial Position (The Balance Sheet)THE MAJOR FINANCIAL STATEMENTSThe three main financial statements produced by a business are:The Cash Flow statement – showing cash movements over the accounting periodThe Income Statement (also known as the profit and loss account) which shows how much wealth was generated over the accounting period The Balance Sheet – showing the accumulated wealth at the end of the accounting periodTHE BALANCE SHEETThe balance sheet shows the financial position of a business at a particular moment of time. It shows the assets of a business and the claims against the business (liabilities and owners capital ).Assets – An asset must arise from a past transaction or event, they must be capable of measurement in monetary terms, they must be under the exclusive control of the business and be held for a probable future benefit.Claims – A claim must arise from a past transaction or event, it must be capable of measurement in monetary terms and will result in an obligation to the business to provide cash or benefit at a future time. Capital – this is the claim that the owners have against the business. Liabilities – The claims of all other parties against the businessTYPES OF ASSETAssets are listed on a balance sheet in a logical order depending on what type of asset they are.Non-current assets are held for the long term benefit of the business. They are the tools of the business.Current assets are held for the short term. The most common current assets are: Inventories (stock), trade receivables (debtors) and cash . They are listed in order of liquidity , with the least liquid being shown first. Most sales are made on credit so current assets can be shown as acycle.TYPES OF CLAIMClaims are normally classified into capital (owner’s claim) and liabilities.Liabilities can be further divided into:Current liabilities – amounts due for settlement in the short term – usually within 12 monthsNon-current liabilities – amounts due to outside parties which are not current liabilities. VALUATION OF ASSETSTangible non-current assets – Normally valued at historic cost – less depreciation. It is possible to decide to re-value these assets to a current fair value or market value. The main consequence of this is that the business must revalue all similar assets at the same time, and then regularly throughout the lives of the assets.Impairment of non-current assets – if an asset is impaired it is worth less than the balance sheet value. This could be caused by changes in market values, obsolescence or factors such as fire.The business must show the impaired value on the balance sheet.Inventories – stock must be valued at the lower of cost and net realisable value. DEPRECIATION AND VALUE OF ASSETS.VALUATION OF ASSETS ON THE BALANCE SHEETNon-current assetsThe historic cost convention means that assets are normally valued at the price paid for them. Most assets lose value over their lifetime. In accountancy this reduction in value is referred to as depreciation. The total depreciation to date of an asset is recorded on the balance sheet. The accumulated depreciation is deducted from the historic cost (or fair value) to show the written down value.To calculate depreciation four factors need to be considered:∙the cost (or fair value) of the asset;∙the useful life of the asset;∙the residual value of the asset (what it will be worth when the business has finished with it);∙the depreciation methodThe cost (fair value) of the assetThe cost figure will include al of the expenses necessary to bring the asset to the business and make it ready for use. This will include delivery costs, legal costs, installation costs and the cost of improvements or alterations.The useful life of the assetA business should estimate the useful life of each asset this will probably be shorter tan the assets actual life. Advances in technology will make computer equipment obsolete long before the equipmentactually stops working.The residual value of the asset Example 3.7Cost of machine £40,000 Estimated residual value at the end of its useful lifeWhen a business disposes of an asset, at the end of its useful life, it may be that the asset will still be of use to someone else and can be sold.Depreciation methodThere are two main methods of depreciation:∙straight line method∙reducing balance methodStraight line methodThis is the most straightforward method.Deduct residual value from the cost of the asset anddivide by the useful life of the assetCost £40,000Residual value £ 1,024£38,97638,976 / 4 = £9,744Depreciation would be charged at £9,744 each yearfor four yearsReducing balance methodThis method is more complicated to calculate,but results in a more accurate depreciationfigure each year. Assets use most of their valuein the early years of their useful life. Thereducing balance method takes account of this.It applies a fixed percentage to the writtendown value of the asset each year to calculateannual depreciation.Current assetsInventories (stock)Changing prices of stock make it more difficult to decide what the value of a business’s inventories should be reported as. Both accounting standards and the prudence convention tell us to value inventory at the lower of cost and net realisable value. However, if the business buys stock regularly throughout the year then the cost will be different for each batch purchased.There are three common methods used to value inventories, all of which make an assumption about the order in which inventories are used:∙FIFO (First in first out) – assumes that the business uses the oldest stock first∙LIFO (Last in first out) – assumes that the business uses the newest stock first∙AVCO (weighted average cost) – assumes that all stock is treated as equal, and recalculates cost based on the quantity purchased at each price.LIFO method is NOT acceptable to use in final accounts.Normally net realisable value will be higher than cost. If for any reason the realisable value is lower than cost, for example inventories have suffered damage, then the balance sheet valuation should be the net realisable value.Trade receivables (debtors)When a business sells goods or services on credit, the amounts owed to the business are shown on the balance sheet as trade receivables or debtors.There is always the risk that some of these debtors may not pay. When it becomes certain that a debt is not going to be paid, the business must reduce the debtors and write off the bad debt as an expense in the financial period.Some businesses assume that a percentage of their debtors will not pay each year, and make a provision for bad debts every year.3: INCOME STATEMENTSTHE INCOME STATEMENT (PROFIT AND LOSS ACCOUNT)The income statement measures how much wealth has been generated by a business over a specified period.It deducts expenses from revenues to arrive at a profit figure.RECOGNITION OF REVENUERevenue should only be recognised when it has been realised. In practice this means that the business should only show revenue:–When it can be measured;–When it is probable that it will be received; and–The associated costs can be measured.ACCRUALS AND PREPAYMENTSThe expenses shown on the income statement are those incurred in the accounting period. In the normal course of business some expenses are paid in advance and some are paid in arrears.EXPENSES PAID IN ADVANCEWhen a business pays in advance, it will usually have paid for some of next years expenses. For example, rent is often paid in advance. The amount paid which relates to next year’s rent is NOT shown as an expense this year. Instead it appears on the balance sheet as a prepayment.EXPENSES PAID IN ARREARSIf an expense has not yet been paid for, the total amount incurred in the accounting period is shown as an expense on the income statement, with the amount not yet paid appearing on the balance sheet as an accrual4: SHARE CAPITALSHARE CAPITALAll Companies issue ordinary shares. The people who hold these shares own the business, they are known as shareholders or members. Ordinary shares are also known as equities.A company is formed by at least one person –the subscriber– that person agrees to buy a number of shares in the company. The money paid for those shares is the company’s share capital. The share capital will be made up of a number of shares of a certain denomination, such as 10p, 50p and £1 this is known as the nominal value.Limited Liability CompaniesA limited liability company is an artificial person in law. It has many of the same rights and responsibilities as a real person. A limited company is incorporated.It is a straightforward task to create a company. The subscriber, or promoter, fills in some simple forms and pays a small fee to the Registrar of Companies, who then issues a Certificate of Incorporation which evidences that the company exists.The company is quite separate from its owners. If the company is sued, the most that any owner (shareholder) can lose is limited to the amount they have paid, or agreed to pay, for their shareholding. In order to show stakeholders that a company has the right to limited liability the company must include in its name the word limited if it is a private limited company or plc if it is a public limited company.The main difference between private andpublic limited companies is that publiccompanies can offer their shares for saleto the general public.Types of sharesWhen a company is formed theincorporation documents state themaximum value of shares which thecompany will issue. This is called theauthorised share capital. Normally thecompany will not issue all of its authorisedshare capital at incorporation, it will onlyissue as much as it needs for immediate requirements. The amount of shares actually issued to shareholders is called the issued share capital. This allows the company to raise more capital in the future by issuing more shares.Sometimes shareholders have the right to pay for their shares by instalments. Until the whole amount has been paid, these shares will be known as partly paid. When the final instalment has been paid, the shares are known as fully paid.There are two main types of shares: ordinary shares and preference shares. Ordinary shareholders are not entitled to any dividend. The board of directors will decide each year if a dividend is to be paid, and how much that dividend will be. Preference shareholders are normally entitled to a specified amount of dividend. The preference shareholders dividend is paid before any ordinary shareholders dividend. Sometimes preference shares are cumulative, meaning that if a company cannot pay a dividend one year, the dividend unpaid will be added to the following year’s divid end.Raising capitalAs a company grows it may wish to raise more capital. It can then issue some more of its authorised share capital to new or existing shareholders.A private company can only issue shares to people it knows. Public companies can advertise a share issue, and often will take out a large advert in the main newspapers.Issues of new shares will normally be at a price higher than the nominal value of the shares. This is because its existing shares will be valued at a higher price. The extra that is paid for these new shares is called share premium.Methods of issuing new shares:∙Rights issues, made to existing shareholders, in proportion to their existing shareholdings∙Public issues, made to the general public∙Private placings, made to selected individuals, who are approached and asked if they would be interested in investing.A company may, under specific circumstances, buy back its own shares. This is rare, and the procedure laid out in the Companies Acts must be followed.Bonus issuesA company may issue shares to its existing shareholders, without raising capital. Companies frequently issue bonus shares as a method of reorganising its capital. The shareholders will each gain extra shares, but their ownership of the business will remain unchanged. Since there are more shares in issue, the value of each individual share will go down, making the shares more attractive to potential new investors.SOURCES OF FINANCEINTERNAL SOURCES OF FINANCEThese are sources which do not require the agreement of anyone outside the business. They are quick and easy to access, cheaper than external sources and flexible.Short term finance can be obtained by:∙ Reducing the levels of stock.∙ Arranging longer credit periods with suppliers ∙ Ensuring debtors pay more quickly Long term finance can be provided by retained profits. All of the profits of the business which have not been distributed to shareholders by dividend can be made available to invest in the business. It would also be possible to raise funds internally by selling un-used assets.EXTERNAL SOURCES OF FINANCEExternal sources of finance are more expensive to raise, and more time consuming. In the short term the most common form of externalfinance in the bank overdraft . Most businesses will have an overdraft agreement in place with their bankers.Debt factoring – a factoring company will take over the debts of a business, for a cash advance, usually less than 80% of the total debts. The factor will then collect the debts of the business, and repay the remaining 20% (less charges and interest) to the business.Invoice discounting is where a financial institution loans a percentage of the total debtors of a business, but without agreeing to collect the debts for thebusiness. In the longer term a business may raise finance byissuing new shares, either ordinary shares orpreference shares.Most businesses will also rely on long term loans .The details of the loan will be set out at the beginning, whether the loan is from a bank obtained through the issue of loan stock.Long term bank loans will normally be secured against the property of the business. If the business fails to repay the loan, the bank has the right to take the property of the business and sell it to repay the loan.5: WORKING CAPITAL CONTROLDEFINITIONTotal internal financeTighter credit controlDelayed payment to trade payablesReduced inventories levels Long-termShort-term Retained profitsOrdinary sharesBankoverdraft Debt factoringPreference shares Loans Total finance Long- term Short-termLeases Hire purchase agreementsInvoice discountingWorking capital is defined as current assets less current liabilities.The cash cycle shows the circulation of working capital in a business. This show how creditors (suppliers) provide stock, which is sold to debtors, who will eventually pay cash and so on.MANAGING WORKING CAPITALA business’s financial health depends on effective management of working capital.Managing inventories (stock) ∙ know stock levels, and perform physical checks (stocktakes) to make sure the information is correct.∙ re-order stock at appropriate times to make sure that the business does not run out, or hold too much. If prices are expected to rise then it may be wise to stockpile to save money in the future ∙ Monitor actual stock against budgeted stock as part of the budgetary control systemJust in time inventories managementJust in time (JIT) inventories management can help avoid the need to hold stock. Businesses must develop excellent relationships with their suppliers and their customers, so that customers give them notice of when they intend to order goods, and suppliers guarantee to fulfil orders in the minimum possible time.Managing receivables (debtors)Selling goods on credit will result in costs for a business. These include the administrative costs, bad debts and opportunity costs . However selling on credit is widespread, and so most businesses will offer credit terms to some of their customers.A business must have clear policies about who to give credit to, the amount and term of credit it will offer, how it will collect debts and how to reduce the risk of non-payment. Managing CashA cash flow forecast allows managers to monitor cash balances, so that surplus funds can be invested and borrowing facilities can be arranged if necessary.Managing payables (creditors)A business should negotiate suitable credit terms with its suppliers, and make prompt payment according to those terms. Businesses which obtain a reputation for slow payment will often impair their credit rating, and find further credit difficult to obtain.6: RATIO ANALYSISFINANCIAL RATIOSFinancial ratios are a quick and simple way of assessing the financial health of a business.STOCKCASHTYPES OF FINANCIAL RATIOSProfitabilityProfitability ratios relate profit to other key figures in the financial statements. Profit measures are the central measures of operating achievement.Activity (Efficiency)Activity ratios measure the efficiency with which the business utilises its assets, providing insights into management policy and operational efficiency.LiquidityLiquidity ratios examine the ability of the business to meet its short-term commitments. It is vital that a firm has the capacity to pay debts when they fall due. Poor liquidity can undermine the confidence of creditors/lendersGearing (Leverage)Gearing is important in the assessment of financial risk. Gearing ratios examine the relative contributions of investors and lenders, and the capacity of the business to service and repay loans.InvestmentSome ratios are calculated for the benefit of investors. They measure the performance of the business as it applies to the owners of the business. These investor ratios are often quoted in the financial press. Profitability ratiosActivity/Efficiency ratiosLiquidity ratiosGearing ratiosInvestor ratiosOverheads budgetTrade receivablesbudgetTrade payablesbudgetCapital expenditure budget Raw materials purchases budgetSales budget Direct labour budgetCash budgetLIMITATIONS OF FINANCIAL RATIOSAlthough ratios are a quick and easy to understand method of analysing the financial state of abusiness, there are some important limitations.∙ Quality of financial statements – if the prudence concept has been applied to reduce the stated value of an asset, then the ratios using that value will be lower. If the financial statements have been produced with the intention to mislead, then the ratios will be incorrect. ∙ Limited focus – it is important not to rely only on ratio analysis. Looking at the actual data can help to show a better picture of the business ∙ Comparison – ratios mean nothing on their own. They must be compared with something. It is important to compare ‘like with like’. Ideally we can compare across several years in the same business. Alternatively comparisons can be made with ‘industry standard’ figures. ∙ Balance sheet ratios – remember that the balance sheet represents one moment in the life of the business. The figures on the balance sheet may not reflect the true financial position of the business. ∙ Qualitative information – there is a lot that can be found out about a business by examining information which is NOT involved with numbers. How happy are the staff? Can the directors be trusted?7: BUDGETING AND BUDGETARY CONTROL AND PREPARATIONBUDGETINGEvery successful business plans for the future. Typically a business will produce a long-term plan aimed at achieving its business objectives. In order to achieve this plan, shorter term plans, for 12 months at a time will be produced. An important part of the short term plan will be a financial budget.TYPES OF BUDGETThere are many parts to a budget, all of which involve predicting future business conditions.Normally the process will begin with the sales budget . The business will forecast how many sales it will make, and at what selling price.Having decided on the level of sales, a production budget can be prepared, which will take into account the opening and closing inventories which the business wishes to maintain. The production budget then leads to materials purchases budget , direct labour budget and overheads budget.During this process the business can calculate the expected costs of all items in the budgets, and decide whether there is a need to purchase non-current assets.All of the information in these individual budgets will be put together into a budgeted income statement, balance sheet and cash flow statement.Limiting factors.It is possible that some of the items necessary to achieve budget are not available in the required quantities. Often a supplier of raw materials will be unable to meet increased orders, or there will be insufficient skilled labour available. These limiting factors may mean that the budget must be amended.BUDGETARY CONTROLBudgets allow managers to control the business. It allows them to check, on a regular basis, that the business is performing according to the budget. If things are not going according to plan, something can be done to put things right.Often managers will only receive information about items which are not going according to budget This is a form of exception reporting.When actual figures do not equal budgeted figures the difference is known as a variance. Variances can be favourable or adverse. Both adverse and favourable variance must be investigated so that they can be explained.FLEXING THE BUDGETThe budgets discussed so far have been fixed budget. They are based on a best estimate of the future. Usually as the business carries on, things will change. If, for example, production was budgeted at 10,000 units, but an unexpected order arrived which meant that production increased to 12,000 units, it would be necessary to change the budget figures to show this increased activity. This process is known as flexing the budget.QUALITY OF BUDGETSIn order to make sure that the budget is a useful tool it should be prepared carefully. The figures used to estimate costs should be achievable. Some businesses use an ideal budget which in practice is not achievable. If a business is trying to work with a budget which is not achievable staff will be demotivated.Budget holders should be involved in the production of the budget, as they will be able to estimate figures for their particular areas of the business.8: BREAKEVEN ANALYSISTHE BEHAVIOUR OF COSTSCosts in a business behave in different ways as the volume of activity changes. There are three ways that the costs could behave within a range of activity levels:Variable costs – These are costs where the cost varies in proportion to the activity level. For example if a carpentry workshop makes two tables, it will use twice as much wood.Fixed costs – These are costs which do not normally change when levels of activity change. The cost of rental for the carpentry workshop will normally remain the same whether they produce 1 or 100tables.Eventually, if business expanded a lot, the carpentry business may need to expand its operation, and rent another workshop. In this event this fixed cost would become a stepped cost.Semi variable costs – Some costs are a mixture of the two, they have a part of the cost which is fixed and the remainder which is variable. Some mobile phone bills will charge a set amount per month, but will charge more depending on how many calls are made.MARGINAL COSTINGMarginal costing requires us to classify all costs as variable, fixed or semi-variable. As we have seen all businesses must meet their fixed costs, whether or not they produce and sell goods. The selling price of a unit, less its variable costs will contribute towards the fixed costs. His gives us the marginal costing equation:contribution = selling price per unit BREAK-EVEN ANALYSISThe break-even point of a business is when it makes neither a profit nor a loss . This can be calculated by dividing the total fixedcosts of the business, by the contribution per unit, giving the number of unit sales needed to break-even.Multiply the number of units by the selling price to give the break-even point (BEP) in monetary terms.If a target profit is required, then this can be added to fixed costs, and the total divided by the contribution per units to show total sales required in order to achieve the target profit.USES OF BREAK-EVEN ANALYSISBusinesses use break-even analysis when forecasting future levels of activity. This is a useful tool to show the effects of changes in costs, and also changes in selling price. Managers can clearly identify sales levels to achieve predicted profit figuresRent cost (£)R。
关于_会计制度_的外文(3篇)
第1篇Accounting systems are essential tools for organizations to manage their financial resources and ensure compliance with legal and regulatory requirements. This essay provides an overview of accounting systems, their purpose, components, and their importance in various industries.I. IntroductionAccounting is a systematic process of recording, summarizing, analyzing, and reporting financial transactions of a business. An accounting system is a framework that organizations use to organize, maintain, and process their financial information. This essay aims to provide an in-depth understanding of accounting systems, their role in financial management, and their relevance to different sectors.II. Purpose of Accounting SystemsThe primary purpose of an accounting system is to provide accurate and reliable financial information that can be used for decision-making, financial reporting, and compliance purposes. The following are some of the key objectives of an accounting system:1. Financial Reporting: Accounting systems help organizations prepare financial statements such as balance sheets, income statements, and cash flow statements. These statements provide a comprehensive overview of the financial performance and position of a business.2. Decision-Making: Accurate financial information enables management to make informed decisions regarding the allocation of resources, pricing strategies, and expansion plans.3. Compliance: Accounting systems ensure that organizations comply with relevant financial regulations and standards, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).4. Internal Control: An effective accounting system helps organizations maintain internal controls, reduce fraud risks, and ensure the integrity of financial information.III. Components of an Accounting SystemAn accounting system consists of several components that work togetherto ensure the accurate recording and reporting of financial transactions. The following are the key components of an accounting system:1. Chart of Accounts: A chart of accounts is a list of all accounts used in the accounting system. Each account represents a specific type of financial transaction, such as assets, liabilities, equity, revenue, and expenses.2. Journal Entries: Journal entries are the first step in the accounting process. They record the details of financial transactions, includingthe date, accounts affected, and the amount of the transaction.3. General Ledger: The general ledger is a collection of all the journal entries made during a specific period. It provides a summary of the transactions for each account and helps in the preparation of financial statements.4. Trial Balance: A trial balance is a list of all the accounts andtheir balances from the general ledger. It ensures that the total debits equal the total credits, indicating that the accounting entries are accurate.5. Financial Statements: Financial statements are the end result of the accounting process. They include the balance sheet, income statement,and cash flow statement, which provide an overview of the financial performance and position of a business.6. Internal Controls: Internal controls are policies and procedures designed to ensure the accuracy and reliability of financial information. They include segregation of duties, authorization, and verification processes.IV. Types of Accounting SystemsThere are several types of accounting systems, each designed to meet the specific needs of different businesses. The following are some of the most common types of accounting systems:1. Manual Accounting System: A manual accounting system relies on paper-based records and manual processes. This system is suitable for small businesses with limited financial transactions.2. Computerized Accounting System: A computerized accounting system uses accounting software to record, process, and report financial information. This system is more efficient and accurate than a manual system and is suitable for businesses of all sizes.3. Integrated Accounting System: An integrated accounting system combines accounting functions with other business processes, such as inventory management, sales, and purchasing. This system provides a comprehensive view of the business and improves efficiency.4. Cloud-Based Accounting System: A cloud-based accounting system stores financial data on remote servers, allowing users to access the information from anywhere. This system is suitable for businesses with multiple locations or remote employees.V. Importance of Accounting SystemsAccounting systems play a crucial role in the financial management of organizations. The following are some of the key reasons why accounting systems are important:1. Financial Transparency: Accounting systems ensure that financial information is accurate, complete, and accessible to stakeholders, such as investors, creditors, and regulatory authorities.2. Risk Management: An effective accounting system helps organizations identify and mitigate financial risks, such as fraud, mismanagement, and non-compliance.3. Performance Measurement: Accounting systems provide metrics and benchmarks that allow organizations to measure their financial performance and make improvements.4. Decision-Making: Accurate financial information helps management make informed decisions regarding the allocation of resources, pricing strategies, and expansion plans.5. Legal and Regulatory Compliance: Accounting systems ensure that organizations comply with relevant financial regulations and standards, reducing the risk of legal penalties and fines.VI. ConclusionAccounting systems are essential tools for organizations to manage their financial resources and ensure compliance with legal and regulatory requirements. By providing accurate and reliable financial information, accounting systems enable management to make informed decisions, measure performance, and comply with regulations. Understanding the purpose, components, and types of accounting systems is crucial for businesses of all sizes to achieve financial success.第2篇IntroductionAccounting systems are essential tools for businesses to track their financial transactions, make informed decisions, and ensure compliance with legal and regulatory requirements. In this article, we will provide an overview of accounting systems, including their purpose, types, principles, and the process of financial reporting.I. Purpose of Accounting SystemsThe primary purpose of accounting systems is to provide accurate and reliable financial information to various stakeholders, including investors, creditors, employees, and management. By tracking financial transactions, accounting systems help businesses in the following ways:1. Measuring financial performance: Accounting systems enable businesses to measure their financial performance by analyzing revenues, expenses, assets, and liabilities.2. Planning and budgeting: Accounting systems provide historical data that can be used to forecast future financial performance and make informed decisions regarding budgeting and resource allocation.3. Compliance with legal and regulatory requirements: Accounting systems help businesses comply with various legal and regulatory requirements, such as tax laws, financial reporting standards, and accounting principles.4. Facilitating decision-making: Accounting systems provide management with the necessary information to make informed decisions about the business's future direction.II. Types of Accounting SystemsThere are several types of accounting systems, each with its unique characteristics and applications. The most common types include:1. Cash accounting: This system records financial transactions when cash is received or paid. It is simple and straightforward but may not provide a complete picture of a business's financial health.2. Accrual accounting: This system records financial transactions when they occur, regardless of when cash is received or paid. It provides a more accurate representation of a business's financial performance and is widely used by businesses.3. Fund accounting: This system is used by not-for-profit organizations to track financial resources and expenditures. It ensures compliance with legal and regulatory requirements.4. Managerial accounting: This system is used by management to make informed decisions about the business. It focuses on internal financial information and provides detailed reports on various aspects of the business.III. Principles of AccountingAccounting principles are the guidelines that govern the preparation and presentation of financial statements. The most widely accepted accounting principles include:1. Generally Accepted Accounting Principles (GAAP): GAAP is a set of standards and guidelines that provide a framework for preparing andpresenting financial statements. These principles ensure consistency and comparability among financial statements.2. International Financial Reporting Standards (IFRS): IFRS is a set of accounting standards developed by the International Accounting Standards Board (IASB). These standards are used in many countries and are designed to provide a global framework for financial reporting.3. Cost principle: This principle requires businesses to record assets and liabilities at their historical cost, rather than their market value.4. Revenue recognition principle: This principle requires businesses to recognize revenue when it is earned, rather than when it is received.IV. Financial Reporting ProcessThe financial reporting process involves the preparation, presentation, and dissemination of financial statements. The steps in the process include:1. Identifying financial transactions: The first step is to identify and record all financial transactions that affect the business's financial position.2. Recording transactions: Once transactions are identified, they must be recorded in the accounting system using the appropriate accounting principles.3. Summarizing transactions: The recorded transactions are then summarized in financial statements, such as the income statement, balance sheet, and cash flow statement.4. Analyzing financial statements: Financial statements are analyzed to determine the business's financial performance and position.5. Disseminating financial information: The financial information is then disseminated to stakeholders, such as investors, creditors, and employees.ConclusionAccounting systems are essential tools for businesses to track their financial transactions, make informed decisions, and ensure compliance with legal and regulatory requirements. By understanding the purpose, types, principles, and process of financial reporting, businesses can effectively manage their financial resources and achieve their goals.第3篇Accounting systems play a crucial role in the financial management of businesses and organizations worldwide. They provide a structured framework for recording, analyzing, and reporting financial transactions. This article delves into the significance of accounting systems, their evolution over time, and the various components that make up aneffective accounting framework.I. IntroductionAccounting systems have been in existence since ancient times, withearly civilizations using simple methods to track their finances. However, as economies grew and businesses became more complex, the need for sophisticated accounting systems became evident. This article explores the importance of accounting systems, their evolution, and the key components that define a robust accounting framework.II. The Importance of Accounting Systems1. Financial Reporting: Accounting systems enable businesses to prepare accurate and timely financial reports, such as balance sheets, income statements, and cash flow statements. These reports provide stakeholders with essential information about the financial performance and position of the organization.2. Decision Making: By providing reliable financial information, accounting systems help managers and owners make informed decisions regarding the allocation of resources, expansion, and other critical business activities.3. Compliance: Accounting systems ensure that businesses comply withlegal and regulatory requirements, such as tax obligations and financial reporting standards.4. Performance Measurement: Accounting systems help organizations assess their financial performance and identify areas for improvement.5. Stakeholder Communication: Accounting systems facilitate communication between the organization and its stakeholders, such as investors, creditors, and government agencies.III. Evolution of Accounting Systems1. Ancient Times: Early accounting systems were based on simple counting methods, such as using tally sticks or pebbles to track transactions.2. Middle Ages: During the Middle Ages, double-entry bookkeeping was introduced, which is the foundation of modern accounting systems. This method involves recording every transaction twice, once as a debit and once as a credit.3. Industrial Revolution: The Industrial Revolution brought about the need for more sophisticated accounting systems to handle the increased complexity of businesses. This era saw the development of accounting principles and standards.4. 20th Century: The 20th century witnessed the emergence of various accounting software and tools that streamlined accounting processes. Additionally, the development of international accounting standards and regulations further enhanced the consistency and comparability of financial reports.5. 21st Century: The 21st century has seen the integration of technology, such as artificial intelligence and blockchain, into accounting systems. These advancements have revolutionized the way businesses manage their finances and report their financial performance.IV. Key Components of an Effective Accounting System1. Chart of Accounts: This is a list of all the accounts used in the accounting system, categorized into asset, liability, equity, revenue, and expense accounts.2. Double-Entry Bookkeeping: This method ensures that every transactionis recorded twice, once as a debit and once as a credit, which helps maintain the balance of the accounting equation.3. General Ledger: This ledger contains all the accounts in the chart of accounts and provides a comprehensive record of all financial transactions.4. Financial Statements: These statements include the balance sheet, income statement, and cash flow statement, which provide an overview of the financial performance and position of the organization.5. Internal Controls: These are policies and procedures designed to ensure the accuracy, completeness, and reliability of financial records and to prevent fraud and errors.6. Budgeting and Forecasting: These processes involve preparingfinancial plans for the future, based on historical data and assumptions about future events.V. ConclusionAccounting systems are essential for the financial management of businesses and organizations. They have evolved significantly over time, adapting to the changing needs of the economy and technology. As businesses continue to grow and become more complex, the importance of effective accounting systems will only increase. By understanding thekey components of an accounting system and staying abreast of technological advancements, businesses can ensure that their financial records are accurate, reliable, and compliant with legal and regulatory requirements.In summary, accounting systems play a vital role in the financial management of businesses, providing stakeholders with essential information for decision-making, compliance, and performance measurement.As the economy continues to evolve, businesses must adapt their accounting systems to meet the challenges of the modern world.。
chap01Introduction to Accounting
Accounting defined
Accounting is an information system that identifies, measures, records and communicates relevant, reliable, consistent and comparable information about an organization‟s economic activities.
财会专业英语
CH01 Introduction to Accounting
CH01 Introduction to Accounting
1. Bookkeeping and accounting
2. The field of professional accounting
3. Accounting concepts and principles
Economic Decisions
Various factors must be considered when making economic decisions:
financial aspects
personal taste
social factors
environmental factors
Financial and Management Accounting
Accounting‟s role of assisting decision makers by measuring, processing, and communicating financial information is usually divided into the categories of management accounting and financial accounting. Although the functions of management accounting and financial accounting overlap部分重叠 , the two can be distinguished by the principal users of the information they provide.
《会计专业英语》Chapter 1 Introduction to Accounting
▪ 1.1 What is accounting ▪ 1.2 Forms of business entities ▪ 1.3 Business activities ▪ 1.4 Users of accounting information ▪ 1.5 Types of accounting ▪ 1.6 Careers in accounting
12
Internal users
➢ Internal users are employees of an enterprise and are directly involved in managing and operating the business.
➢ From basic labor categories to chief executive officers, all employees are paid, and their paychecks are generated by the accounting information system.
➢ Resources owned by a business are called capital assets. ➢ Assets have different types and names. Various, non-current,
and tangible assets are called property, plant, and equipment (PPE).
9
Investing activity
➢ Investing activities involve the purchase of the resources a company needs in order to operate.
会计英语
Consider the financial strength before permitting it to borrow funds
Compare prospective investments
Are interested in the allocation of resources
Manage the business efficiently and make effective decisions
(Specific)
Provide information about economic resources, claims to resources, and changes in resources and claims.
Objectives of Financial Reporting
Provide information useful in assessing amount, timing and uncertainty of future cash flows.
Provide information useful in making investment and credit decisions.
(General)
Users of accounting information
Financial accounting External report
manager
Differences between FA & MA
Financial Accounting External report Historical information Governed by GAAP Interested users Prepared annually Managerial accounting Internal report Historical and estimated information No detailed regulation Managers Prepared more frequently
会计英语 翻译chapter1
Chapter one Introduction to Accounting 1.1 Bookkeeping and AccountingAccounting is an information system that identifies，measures，records and communicates relevant，reliable，consistent，and comparable information about an organization’s economic activity. Its objective is to help people make better decisions.An understanding of the principles of bookkeeping and accounting is essential for anyone who is interested in a successful career in business. The purpose of bookkeeping and accounting is to provide information concerning the financial affairs of a business. Owners, managers, creditors, and governmental agencies need this information.An individual who earns living by recording the financial activities of business is known as a bookkeeper, while the process of classifying and summarizing business transactions and interpreting their effects is accomplished by an accountant. Accountant is the individual who understands the accounting principles, theoretical and practical application, and can manage, analyze, and interpret the accounting records. The bookkeeper is concerned with techniques involving the recording of transactions, and the accountant’s objective is the use of data for interpretation.第一章['tʃæptə]会计导论[.intrə'dʌkʃən]1.1 簿记与会计会计是一个信息系统，[ai'dentəfai]辨别、['meʒəz]测量、记录和交流相关的['reləvənt]、可靠的[ri'laiəbl]、持续的[kən'sistənt]和可比的['kɔmpərəbl]一个组织经济活动的信息。
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TOPIC 2 REVIEW SOLUTIONS9.1 State the different types of budgets that may be prepared.Different budgets include: sales or fees budget; operating expenses budget; production and inventory budgets; budgeted income; cash budget; budgeted balance sheet; and the capital budget.9.4 ‘Budgets need to be reviewed in the light of actual performance.’ Explain.As the budget period passes circumstances change and what was expected does not necessarily occur. In such circumstances, original estimates should be reviewed and the budget adjusted.9.9 What is a chart of accounts and what is its role in the begetting process?The Chart of Accounts is the “index” for the financial accounting system – it details all the accounts set up in the system. Each account is given a unique number so that is can be located in the system. The numbering system enables every transaction to be classified and recorded against the applicable account. This enables like transactions to be grouped together.The budget is an estimate of future business transactions. To enable an assessment of variance actual transactions need to be compared with the estimates in the budget. As mentioned earlier, the Chart of Accounts provides the numeric system to record actual transactions. Therefore, to enable variance analysis the budget needs to be structured in the same format.E9.1 From the following data for Masheys Enterprises, calculate the receipts from debtors for June, July and August of 2011.Credit sales are normally settled according to the following pattern: 60 per cent in the month following sale, and 35 per cent in the second month following the sale. Five per cent of accounts are never settled.Example of calculations shown in brackets.Receipts from Debtors Schedule for three months ending 31 August 2011E9.2 From the following data for Acoustic Sales, calculate the receipts from debtors for September, October and November of 2011Credit sales are normally settled according to the following pattern: 20 per cent in the month of the sale, 50 per cent in the month following the sale, and the remainder in the second month following the sale. (examples of calculations shown in brackets)Receipts from Debtors Schedule for three months ending 30 November 2011E9.3 Ski Lifters is a business that provides a chairlift for tourists in the Alpine region. The peak season is in winter, with the low season during the summer months. Sales are high during the ski season and then taper off once the season closes. Explain why preparing a cash budget might be particularly important for Ski Lifters.A cash budget for Ski Lifters will help with cash planning. A cash budget prepared on a monthly basis will enable Ski Lifters to identify those times of expected cash surplus (during the peak season) and cash shortages (during the low season). The nature of the industry suggests a review of the estimates during the budget period will further help with planning.E9.6 Ainsworth Enterprises has provided the following estimates relating to the first quarter of 2011:The cash balance at the beginning of 2011 is $11 250.RequiredPrepare a cash budget for the quarter ending 31 March 2011.AINSWORTH ENTERPRISESCash budgetfor first quarter ending 31 March 2011Cash receiptsCash sales ................................................................................ 46 000Receipts from debtors ............................................................ 71 500Receipt of loan ........................................................................ 15 000 132 500Cash paymentsWages ...................................................................................... 54 000Office furniture ....................................................................... 12 600Utilities .................................................................................... 3 800Administrative expenses ......................................................... 14 100Payments to creditors ............................................................. 52 900 137 400Net cash flow .......................................................................... $(4 900)Bank balance at 1 January 2011.............................................. 11 250Bank balance 31 March 2011 .................................................. 6 350。