大学会计英语 unit 7
国际会计第七版英文版课后答案（第七章）
国际会计第七版英文版课后答案（第七章）预览说明:预览图片所展示的格式为文档的源格式展示,下载源文件没有水印,内容可编辑和复制Chapter 7Financial Reporting and Changing PricesDiscussion Questions Solutions1.Historical-based financial statements may be misleading during periods of significant inflation.Many resources may have been acquired in periods when the purchasing power of the monetary unit was much higher. These expenses then typically are deducted from revenues that reflect current purchasing power. The resulting income number is unintelligible. Another problem for statement readers is that the value of assets recorded at their historical acquisition cost is typically understated as a result of inflation. Understated asset values produce understated expenses and overstated earnings.Financial trends are also difficult to interpret, as trend statistics generally include monetary units of different purchasing power. A positive trend in sales may be due to price changes, not real increases in sales.2. A price index is a cost ratio, that is, the ratio of a representative “basket” of goods and servicesconsumed by an average family, compared to the price of that same basket in a benchmark (“base”) year. The price index is invaluable in enabling a statement reader to translate sums of money paid in the past to their current purchasing power equivalents.3.This statement is partly true and shows the confusion thatsurrounds inflation accounting. Inaccounting for changing prices, users must distinguish between general price changes and specific price changes. General prices refer to the prices of all goods and services in the economy. The object of accounting for general price level changes is to preserve the general purchasing power of a company’s money capital. Specific price changes refer to changes in the prices of specific commodities. The object of accounting for specific price changes is to preserve a company’s productive capacity or operating capability.4.The congressman is wrong. The object of inflation accounting is to clarify the distinction betweencapital and income, not to minimize corporate taxes. Inflation accounting shows how much money the company can pay in expenses, taxes, and dividends, while keeping enough resources to maintain its capital.5.Although it is generally conceded in principle that price level-adjusted financial statements are moreuseful than conventional accounting statements during periods of significant inflation, it is a judgment call to identify exactly when price level-adjusted statements become more meaningful. Asa rule of thumb, executives in Brazil use an inflation rate greater than 10 % per month. Investors inGermany or Switzerland may believe that 5 % inflation per year is alarming. Unfortunately, no one has yet developed a formal, rigorous, easy-to-apply definition of meaningfulness.How does one determine whether the benefits of price level-adjusted accounting information exceed the costs? While the costs to generate such information can be measured, it is muchharder to quantify the benefits. Financial accounting deals with information produced by business enterprises for use by external decision makers. Consequently, measurement of the benefits of price level-adjusted information must cover all user groups in an economy. Multiple user groups, uneven distributions of benefits (both within and between groups), and favorable economy-wide spillover effects of price level information complicate the task. Adding international dimensions makes the problem even worse.6.The U.S. approach resembles the price-level adjusted current cost model, whereas the U.K.approach embraces the current cost model. While both require disclosure of the impact ofchanging prices on monetary items, the U.S. approach basically uses the general price level index to compute monetary gains and losses, whereas the U.K. employs specific prices changes by way of its gearing adjustment.1.The International Accounting Standards Board sanctions use of the general price level model orthe current cost framework. Whichever method is employed, these inflation adjustments must be expressed in terms of constant purchasing power as of the balance sheet date. Purchasing powergains or losses are to be included in current income. Firms adjusting their accounts for changingprices must disclose, at a minimum: a) the fact that end-of-period purchasing power adjustmentshave been made, b) the asset valuation framework employed in the primary financial statements,c) the type of inflation index or indexes employed and theirlevel at the end of the period as wellas their movements during the period, and d) the net purchasing power gain or loss on netmonetary items held during the period. Given the options that are available, analysts mustunderstand the differences between the approved inflation accounting methods to be able tocompare companies choosing one option over the other and to assure proper interpretation ofinflation adjusted amounts.2.The historical cost-constant dollar model measures the impact of general price level changes on afirm's reported performance and financial position. The current cost model examines the impact of specific price changes on enterprise income and wealth.The two measurement frameworks are similar in that both attempt to clarify the distinction between capital and income. They differ in reporting objectives. Whereas the historical cost/constant dollar model attempts to preserve the general purchasing power of a firm's original money capital, the current cost model attempts to preserve an entity's physical capital or productive capacity.3.Your authors think that restating foreign and domestic accounts to their current cost equivalentsproduces information that is far more helpful to investor decisions than historical cost methods, whether or not adjusted for changes in general price levels. Such information provides a performance measure that signals the maximum amount of resources that enterprises can distribute without reducing their productive capacity. It also facilitates comparisons ofconsolidated data.10. The gearing adjustment is an inflation adjustment that partially offsets the additional charges toincome associated with assets whose values are restated for inflation (e.g., higher depreciation and cost of sales). This adjustment recognizes that borrowers generally gain from inflation because they can repay their debts with currency of reduced purchasing power. Hence, it is unnecessary to recognize the higher replacement cost of inventory and plant and equipment in the income statement so far as they are financed by debt.11. Accounting for foreign inflation differs from accounting for domestic inflation in two major ways.First, foreign rates of inflation often are higher than domestic rates, which increases potential distortions in an entity's reported results from changing prices. Second, as foreign exchange rates and differential national rates of inflation are seldom perfectly negatively correlated, care must be taken to avoid double-dipping when consolidating the results of foreign operations.12.Double-dipping refers to methods that count the effects of foreign inflation twice in reportedearnings. Earnings are reduced once when cost of sales is adjusted upwards for inflation, andagain when inventories are translated to domestic currency using a current exchange rate, whichyields a translation loss. Since the change in the exchange rate itself was caused by inflation, the result is a double charge for inflation.Exercise Solutions1.This exercise is a good way to test students’ understanding of the various approaches toaccounting for changin g prices. Vestel’s earnings numbers are based on the general price levelmodel whereas Infosys is measuring its performance based on a current cost framework. Modello goes a step further and adjusts its current cost statements for changes in the general price level.Some may feel that current cost data, which is based on the notion of replacement costs, is toosubjective a notion to be reliable. Since general price level data are based on general price level indices, the numbers appearing in Vestel’s income statement are much more objective andfacilitates comparisons among companies using a similar methodology. Moreover, Vestel’sstatements do not violate the historical cost doctrine. Others will argue that the value of stockinvestments are based on discounted future cash flows. Accordingly, the current cost framework provided by Infosys is more germane to investor decisions as it measures the amount of earnings that could be distributed as dividends without reducing the firm’s future dividend gen eratingpotential. Moreover, current cost earnings, including the gearing adjustment , reflects how thefirm is impacted by prices that are more germane to the firm, as opposed to the general public.Some will argue that Modello’s income statement combin es the best of both worlds. However,there is merit to the argument that the income statementshould measure the performance of thefirm and that this is best accomplished with the current cost framework. Since individualinvestors are affected by the g eneral price level, they should adjust their share of a firm’s current cost earnings distributions for general inflation.2. a.Income Statement Historical Price Level Historical Cost-Cost Adjustment Constant Dollar Revenue MXP 144,000,000 420/340 MXP 177,882,353 Operating expenses (86,400,000) 420/340 (106,729,412) Depreciation (36,000,000) 420/263 (57,490,494)Operating income MXP 21,600,000 MXP 13,662,447a Monetary gains(losses) - (73,248,759)Net income MXP 53,280,000 MXP(59,586,312)Balance SheetCash MX(P 157,600,000 420/420 MXP 157,600,000Land 180,000,000 420/263 287,452,471Building 720,000,000 420/263 1,149,809,885Acc. Depreciation (36,000,000) 420/263 (57,490,494)Total MXP 1,021,600,000 MXP 1,537,371,862Owners' equity(beg.) MXP1,000,000,000 rolled forward b MXP 1,596,958,174Net income (loss) 21,600,000 (59,586,312)Owner's equity MXP 1,021,600,000 MXP 1,537,371,862(end)a Monetary loss:CashBeginning balance 1,000,000,000 420/263 1,596,958,174 Purchase ofreal estate ( 900,000,000) 420/263 (1,437,262,356)Rental revenues 144,000,000 420/340 177,882,353Operating expenses (86,400,000) 420/340 106,729,412)157,600,000 230,848,759-157,600,000 Monetary loss (73,248,759)b Beginning equity x price level adjustment = adjusted amount= P 1,000,000,000 x 420/263 = P 1,596,958,1742.b.Cost HC/Constant DollarReturn on Assets 21,600,000 (59,586,312)1,021,600,000 1,537,371,862= 2.1% = -3.9%Cost-based profitability ratios tend to provide a distorted (overstated) picture of a company's operating performance during a period of inflation.3.20X7 20X8Cash MJR 2,500 MJR 5,100Current liabilities (1,000) (1,200)LT-Debt (3,000) (4,000)Net monetary liabilities MJR (1,500) MJR (100)Zonolia Enterprise’s net monetary liability position changed by MJR1,400 during the year (MJR100) –(MJR1,500).4.Nominal Restate for ConstantMJR’s Majikstan GPL MJR’sNet monetary liab.'s MJR 1,500 x 32,900/30,000 = MJR1,645 12/31/X7Decrease during year (1,400) = (1,400)Net monetary liab.'s MJR 100 x 32,900/36,000 = MJR 9112/31/X8Monetary (general purchasing power) gain MJR 1545. Historical Current Cost Current Income Statement Cost Adjustment Cost Revenues MXP 144,000,000 - MXP 144,000,000 Operating expenses 86,400,000 - 86,400,000 Depreciation (36,000.000) 1.8 64,800,000 Net Income (loss) MXP 21,600,000 MXP (7,200,000)Balance SheetCash MXP 157,600,000 - P 157,600,000 Land 180,000,000 1.9 342,000,000 Building 720,000,000 1.8 1,296,000,000 Acc. Depreciation (36,000,000) 1.8 (64,800,000) Total MXP1,021,600,000 MXP 1,730,800,000 Owners' Equity Beg. Balance MXP1,000,000,000 MXP 1,000,000,000 OE revaluation a - 738,000,000Net income (loss) 21,600,000 (7,200,000) Total MXP1,021,600,000 MXP 1,730,800,000a Revaluation of land MXP 162,000,000Revaluation of building 576,000,000MXP 738,000,0006. Solution in 000,000's:MJR8,000 X 137.5/100.0 = MJR11,00020X7 20X8Current cost MJR8,000 MJR11,000Acc. depreciation (1,600) (3,300)aNet current cost MJR6,400 MJR7,700a Current cost depreciation = MJR800 X 137.5/100.0 = 1,100per year for 3 years.7. As no new assets were acquired during the year, we must determine to what extent the MJR3,000 increase in the current cost of Zonolia's equipment exceeded the change in the general price level during the year. The appropriate calculation follows: MJR11,000 - [MJR8,000 X 36,000/30,000]= MJR11,000 - MJR9,600= MJR1,400Alternatively, if we follow the FASB’s sug gested methodology, where calculations are expressed in average (20X8) dollars, current cost depreciation would be computed by reference to the average current cost of the related assets. Thus, Current cost, 12/31/X7 MJR8,000,000Current cost, 12/31/X8 11,000,000MJR19,000,000Average current cost MJR19,000,000/2 = MJR9,500,000Current cost depreciation at 10% = MJR950,000Increase in current cost of equipment, net of inflation (000's): Current Restate for Current cost/Cost Inflation Constant Zonos Current cost, net12/31/X7 MJR6,400 X 32,900/30,000 MJR7,019Depreciation (950) (950)Current cost, net12/31/X8 7,700 X 32,900/36,000 7,037MJR 2,250 MJR968The increase in the current cost of equipment, net of inflation is MJR968. The difference between the nominal renge amount (MJR2,250) and constant renges (MJR968) is the inflation component of the equipment's current cost increase.8. Restate-translate method:Constant Translate $ Equivalentsrenges of constantrengesIncrease in currentcost of equip., netof inflation MJR968,000 X 1/4,800 = $202Translate-restate method:CC (MJR) Translate CC ($) Restate CC/ Constant $U.S. GPLCC, net MJR 6,400,000 x 1/4,800 = $1,333 x 292.5/281.5 = $1,38512/31/X7Dep. (950,000) x 1/4,800 = (198) = (198)CC, net 7,700,000 x 1/4,800 = 1,604 x 292.5/303.5 = 1,54612/31/X8MJR 2,250,000 $ 469 $ 3599.20X7 20X8￡m ￡mTrade receivables 242 270-Trade payables (170) (160)Net monetary working capital 72 110Change in monetary working capital = ￡38 (￡110 - ￡72) Nominal Restate for Constant￡British PPI ￡Net monetary W/C 72 X 110/100 = 79.212/31/20X7Increase during year 38 = 38.0Net monetary W/C 110 X 110/120 = 100.812/31/20X8Monetary working capital adjustment = (16.4)aa This amount is added to the current cost adjustments for depreciation and cost of sales because trade receivables exceeded trade payables, thus tying up working capital in an asset that lost purchasing power.Gearing adjustment:[(TL – CA)/(FA + I + MWC)] [CC Dep. Adj. + CC Sales Adj. + MWCA]where TL = total liabilities other than trade payablesCA = current assets other than trade receivables and inventoryFA = fixed assets including investmentsI = inventoryMWC = monetary working capitalCC Dep. Adj. = current cost depreciation adjustmentCC Sales adj. = current cost of sales adjustmentMWCA = monetary working capital adjustment= [(128 – 75)/(479 + 220 + 110] [￡m 216]= [.066 ] [216]= ￡14.3The only number I could readily identify in problem 9 is inventory of 220. The next number I could come close on is fixed assets. Looks like the solution above says 479, the text for 08 indicates 473. I could not see where the 110 (MWC) came from. Neither is it clear where the other 3 items in brackets came from. The solution needs to be clearer before I can check the numbers.This gearing adjustment of ￡14.3 million is subtracted from the current cost of sales and depreciation adjustments. It represents the purchasing power gain from using debt to finance part of the firm's operating assets.a.Nominal Thai Historical Translation U.S.baht inflation c ost/constant rate dollaradjustment baht equivalentInven-tory BHT500,000 x 100/200 = BHT250,000 x .02 = $5,000b.Nominal Translation U.S. U.S. Historicalbaht rate dollar inflation c ost/constantequivalent adjustment dollarsInven-tory BHT500,000 x .02 = 10,000 x 180/198 = $9,090Sorry this seems confusing compared to number 2 where the year end index was in the numerator and either the beginning or average index was in the denominator (e.g. 420/340 or 420/263). It is not clear why we do the opposite here where the Thai price level doubles and we put the 200 in the denominator and 100 in the numerator.c. Most students will prefer the restate-translate method. This approach has merit if general and specific pricelevels move in tandem. If not, neither approach is satisfactory as both are based on a historical cost valuation framework that is generally irrelevant for investment decisions.d. For reasons enumerated in this chapter, we favor restating local currency assets for specific price changesand then translating these current cost equivalents to dollars using the current exchange rate.11. We assume that Doosan Enterprises translates its inventory at the current rate and adjusts its cost ofsales for inflation by simulating what it would have been ona LIFO basis. Two adjustments are necessarybecause local inflation impacts exchange rates used to translate foreign currency inventory balances to dollars.With FIFO inventories, a translation loss is recorded in "as reported" earnings when it is originally translatedto U.S. dollars by a current exchange rate that changed (devalued) during the period. This translation loss isan indirect charge for local inflation. The inflation adjustment (simulated LIFO charge) to increase "as reported" cost of sales to a current cost basis is an additional charge for inflation. Absent some offsettingentry, consolidated results would be charged twice for inflation. To avoid this double charge, the translation loss embodied in reported earnings is deducted from the simulated LIFO charge to arrive at a net U.S. dollarcurrent cost of sales adjustment. Steps in the adjustment process are as follows:1. FIFO inventory subject to simulated LIFO charge KRW10,920,0002. Restate line 1 to January 1 currency units(KRW10,920,000 x 100/120). The result is anapproximation of December 31 LIFO inventory KRW9,100,0003. Difference between FIFO and LIFO inventorybalances (line 1 minus line 2) is the additionallira LIFO expense (current cost adjustment)for the current year. KRW1,820,0004. Translate line 3 to dollars at the January 1exchange rate (KRW1,820,000 ÷ 900). The resultis the additional dollar LIFO expense for thecurrent year $ 2,0225. Calculate the translation loss on FIFO inventory(line 1) that has already been reflected in "asreported" results:a. Translate line 1 at Januaryexchange rate (KRW10,920,000 ÷ KRW900) $ 12,133b. Translate line 1 at December 31exchange rate (L 10,920,000 ÷ KRW1,170) $ 9,333c. The difference is the translationloss in “as reported” results $ (2,800)6. The difference between lines 4 and 5c isthe cost of sales adjustment in dollars:a. Additional dollar LIFO expense fromline 4. $ 2,022b. Less: Inventory translation loss alreadyreflected in "as reported” results (fromline 5c) $ (2,800)c. The difference is the net dollar currentcost of sales adjustment $ (778)Here, the current cost of sales adjustment is negative (i.e., reduces the dollar cost of sales adjustment). This is because the won devalued by more than the differential inflation rate (assuming a U.S. inflation rate close to zero). If the lira devalued by less than the differential inflation rate, the cost of sales adjustment would have been positive.12.1. Cost of fixed assets at 12/31 EUR20,0002. FIFO inventory at 12/31 EUR 8,0003. Total EUR28,0004. Less: Owners' equity at 12/31 EUR 2,0005. Liabilities used to financefixed assets and inventory EUR26,0006. Restate liabilities to beginningof period markka (EUR26,000 X300/390) EUR20,0007. Purchasing power gain EUR 6,0008. Purchasing power gain inpounds (EUR 6,000/EUR 1.5) ￡4,0009. Translation gain on appliedliabilities(EUR 26,000/EUR 1.5 -EUR26,000/EUR1.95) ￡4,00010. Net purchasing power gain ￡ -0-In this case the translation gain on liabilities used to finance nonmonetary assets equals the purchasing power gain because the currency devaluation matched the differential inflation of 30%. Hence, no purchasing power gains would be recognized.Case 7-1 SolutionCase 7.1 Kashmir Enterprises1.a–cHistorical Price Level HistoricalCost Adjustment Cost ConstantIncome Statement RupeesRevenues INR6,000,000 160/144 I NR6,666,667Cost of Sales 2,560,000 160/128 3,200,000Selling & Admin. 1,200,000 160/144 1,333,333Depreciation 160,000 160/128 200,000Interest 240,000 160/160 240,000Monetary gains (losses)a - 741,666Net Income INR1,840,000 INR2,435,000Balance SheetCash INR2,480,000 160/160 I NR2,480,000 Inventory 480,000 160/128 600,000Building 3,200,000 160/128 4,000,000Accu. depreciation (160,000) 160/128 (200,000) Total INR6,000,000 INR6,880,000Accounts payable INR 620,000 160/160 I NR 620,000 Notes payable 2,400,000 160/160 2,400,000 Owners' equity 2,980,000 3,860,000INR 6,000,000 INR6,880,000a Monetary gains/(losses):CashBeg. balance INR 720,000 160/128 INR1,150,000 Down payment (800,000) 160/128 (1,000,000) Sales 6,000,000 160/144 6,666,667Selling & Adm. exp. (1,200,000) 160/144 (1,333,333) Payment on account (2,200,000) 160/144 (2,444,444) Interest (240,000) 160/160 (240,000)INR 2,480,000 INR2,798,890-2,480,000Monetary loss INR (318,890)a Monetary gains and losses:Accounts PayableBeg. balance INR 420,000 160/128 INR525,000 Purchases 2,400,000 160/128 3,000,000Payments on account (2,200,000) 160/144 (2,444,444) INR 620,000 INR1,080,556- 620,000Monetary gain INR 460,556a Monetary gains/(losses):Notes PayablePurchase warehouse INR 2,400,000 160/128 INR 3,000,000 - 2,400,000Monetary gain INR 600,000Net monetary loss: INR(318,890) + INR460,556 + INR600,000 = INR741,666.Current Cost Financial StatementsHistorical Adjustment Current Cost Income Statement Cost F actor EquivalentsRevenues INR6,000,000 - INR 6,000,000Cost of Sales 2,560,000 1.3 3,328,000Selling and adm. 1,200,000 - 1,200,000Depreciation 160,000 1.4 224,000Interest 240,000 - 240,000Net Income INR 1,840,000 INR1,008,000Balance SheetCash INR 2,480,000 - INR 2,480,000Inventory 480,000 1.3 624,000Building 3,200,000 1.4 4,480,000Acc. depreciation 160,000 1.4 224,000Total INR 6,000,000 INR 7,360,000Accounts payable INR 620,000 - INR 620,000Notes payable 2,400,000 - 2,400,000Owners' equity 2,980,000 4,340,000INR 6,000,000 INR 7,360,0002. Your authors favor current cost over historical or historical cost/constant dollar financial statements. Finance theory states that investors are interested in a firm's dividend-generating potential, as the value of their investment depends on future cash flows. A firm's dividend-generating potential, in turn, is directly related to its productive capacity. Unless a firm preserves itsproductive capacity or physical capital(e.g.,plant, equipment, inventories), dividends can’t be sustained over time. Under these circumstances, current cost financial statements give investors information important to their decisions. They show the maximum resources that a firm can distribute to investors without impairing its operating capability.3.Translate-Restate MethodBalance Sheet, Jan. 1Local Currency Trans. Dollar Inflation Historical costRate Equivalents Adjustment Constant $Cash INR 920,000 .025 $23,000 - $23,000Inventory 640,000 .025 16,000 - 16,000 Total INR1,560,000 $39,000 $39,000A/P INR 420,000 .025 $10,500 - $10,500 Owners' equity 1,140,000 .025 28,500 - 28,500 Total INR 1,560,000 $39,000 $ 39,000Income StatementDec. 31Revenues INR 6,000,000 .022 $ 132,000 108/104 $ 137,077 Cost of sales 2,560,000 .022 56,320 108/100 60,825Selling & Adm. 1,200,000 .022 26,400 108/104 27,415 Depreciation 160,000 .022 3,520 108/100 3,802 Interest 240,000 .022 5,280 108/108 5,280Net Income INR 1,840,000 $ 40,480 $ 39,755 Monetary gains (losses)a - - 4,468$44,223a Monetary gains/(losses):CashBeg. Bal INR 920,000 .02 $ 18,400 108/100 $ 19,872Downpayment (800,000) .02 (16,000) 108/100 (17,280) Sales 6,000,000 .02 120,000 108/104 124,615Selling & Adm. (1,200,000) .02 (24,000) 108/104 (24,923)Payments on Acc. (2,200,000) .02 (44,000) 108/104 (45,692) Interest (240,000) .02 (4,800) 108/108 (4,800)INR 2,480,000 $ 49,600 51,792-49,600Monetary loss $ (2,192) Accounts PayableBeg. Bal. INR 420,000 .02 $ 8,400 108/100 $ 9,072Purchases 2,400,000 .02 48,000 108/100 51,840Pmt. on acc. (2,200,000) .02 (44,000) 108/104 45,692INR 620,000 $ 12,400 $ 15,592- 12,400Monetary gain $ 2,820Notes payablePur. W/house Rpe 2,400,000 .02 $ 48,000 108/100 $ 51,840 48,000Monetary gain $ 3,840Netmonetary gain: $(2,192) + $2,820 + $3,840 = $4,468.Balance Sheet Local Trans. Dollar Inflation Historical cost- Dec. 31 Currency Rate Equiv. Adjustment Constant $Cash INR 2,480,000 .02 48,600 108/108 $ 48,600 Inventory 480,000 .02 9,600 108/100 10,368 Building 3,200,000 .02 64,000 108/100 69,120Acc. Dep. 160,000 .02 3,200 108/100 3,456Total INR 6,000,000 $120,000 $ 124,632Acc. payable 620,000 .02 12,400 108/108 $ 12,400Notes payable 2,400,000 .02 48,000 108/108 48,000Trans. adj.b - (9,380) (9,978)Owners' equity c 2,980,000 68,980 74,210Total INR 6,000,000 $120,000 $124,632________________________________________________________________ __b Translation adjustment:Beginning net assets Rpe 1,140,000 (.02 - .025) = $ (5,700) X 108/100 = $(6,156)Increase in net assets Rpe 1,840,000 (.02 - .022) = (3,680) X 108/104 = $(3,822)$(9,380) $(9,978) c Balancing residualRestate - Translate MethodBalance Sheet Local Inflation Historical Cost- Trans. D ollar Jan 1. Currency Adjustment Constant rupee Rate equivalents Cash INR 920,000 128/128 INR 920,000 .025 $ 23,000 Inventory d 640,000 128/128 640,000 .025 16,000Total INR1,560,000 INR1,560,000 $ 39,000Acct. payable INR 420,000 128/128 INR 420,000 .025 $ 10,500Owner's equity 1,140,000 1,140,000 28,500Total INR 1,560,000 INR 1,560,000 $ 39,000d Assumes inventory acquired near year-end.Income StatementYear ended Dec. 31Revenues INR 6,000,000 160/144 INR 6,666,666 .022 $ 146,667Cost of Sales 2,560,000 160/128 3,200,000 .022 70,400 Selling & Adm. 1,200,000 160/144 1,333,333 .022 29,333 Depreciation 160,000 160/128 200,000 .022 4,400Interest 240,000 160/160 240,000 .022 5,280Net Income INR1,840,000 INR1,693,334 $ 37,254 Monetary gains(losses)a- 741,666 .022 16,317INR2,435,000 $ 53,571Balance SheetDec. 31Cash INR 2,480,000 160/160 INR 2,480,000 .02 $ 49,600Inventory 480,000 160/128 600,000 .02 12,000Building 3,200,000 160/128 4,000,000 .02 80,000Acc. deprec. 160,000 160/128 200,000 .02 4,000Total INR 6,000,000 INR 6,880,000 $137,600Acc. payable INR620,000 160/160 INR 620,000 .02 $ 12,400 Notes payable 2,400,000 160/160 2,400,000 .02 48,000Owner's equity 2,980,000 3,860,000 87,770 Translation adj.b - (10,570)Total INR 6,000,000 INR 6,880,000 $137,600________________________________________b Beginning net assets INR1,140,000 (.02 - .025) = $ (5,700)Change in net assets 2,435,000 ).02 - .022) = $(4,870)$(10,570)Both methods are inadequate for American investors because they are based on the historical cost valuation framework. A better reporting procedure is to restate local accounts to their current cost equivalents, then translate these amounts to the reporting currency using the year-end (current) foreign exchange rate. This is illustrated here.Restate (current cost)/Translate (current rate)Cash INR 920,000 - INR 920,000 .025 $ 23,000Inventory 640,000 - 640,000 .025 16,000Total INR 1,560,000 INR1,560,000 $ 39,000Acc. payable INR 420,000 - INR 420,000 .025 $ 10,500Owner's equity 1,140,000 - 1,140,000 28,500。
会计英语 7
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课件 制作
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Section 1 Section 2
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Mini Case: The Preparation of Accounting Activities
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Section 1 Section 2
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Text A Assets 1. Non-current assets Non-current assets are not expected to be fully consumed within that period. There are four major types of non-current assets: long-term investment; property, plant, and equipment; intangible assets; natural resources. Securities we intend to hold for beyond one year are long-term investments. Long-term investment should be listed in current assets named “long-term investment maturing within one year”. (2) Property, plant, and equipment Property, plant, and equipment are assets held by an enterprise that have useful liar, including properties, buildings, machinery, equipment, transportation vehicles, and other equipment and tools used in production and operating activities. (3) Intangible assets Intangible assets are non-monetary long-term assets without physical substance held for use in the production of goods or supply of service, for rent to others, or for administrative purposes. (4) Natural resources Natural resources are assets that are physically consumed when used. Examples are standing timber, mineral deposits, and oil and gas fields. These assets represent soon-tobe inventories of raw materials that will be converted into one or more products by cutting, 第6 页 mining, or pumping.
会计专业英语 Lesson Seven 第七课 课件 教案
• A typical sequence of events • 典型的顺序如 is as follows: 下： • （1）A request for a • （1）当需要购 purchase,called a purchase 买某些商品或 requisition,is initiated by the 者某些存货的 person in charge of 数量低于再定 merchandise stock records 货点时，负责 whenever certain items are 存货记录的人 needed or when quantities of 员可填写请购 certain merchandise fall 单交购货部门。 below established reorder points.The requisition is forwarded to the purchasing department.
• 1月1日 • 销售商品$5000给K· 奥 利森，发票#101，付款 提货，到达站交货，货 到收运费。收到奥利森 的支票计$4800，即已 减去由他代付给承运商 的运费$200后的净额。
• 借：现金 4800 • 销货运费 200 • 贷：销货 5000 • （记入现金收入日记账）
New Words, Phrases and Special Terms
LESSON SEVEN
AN ILLUSTRATION 实例
• We shall list a few • 我们将列举若干 transactions to demonstrate 笔交易来说明它 how they are recorded in 们是怎样记录在 the several journals 第六课所表述的 mentioned in Lesson Six. 那几种日记账中 Pay attention to the credit 的。请注意各笔 terms involved in respective 交易中包含的赊 transactions. Note that cash 账条件。并请注 discounts are calculated on 意：现金折扣是 the billed price of 根据在每笔购货 merchandise retained in a 或销货中留下的 purchase or sale-not on 商品发票价格计 amounts representing 算的，不涉及表 returns and allowances or 示退货、折让或 transportation costs. 运输费用的金额。
21世纪大学实用行业英语综合教程Unit 7
Unit 7 Financial Accounting
Reading
Oral Practice
MiniProject
Phrases & Terms
Surfing the Internet
Video Clip
Words & Phrases positive /pztv/ a. 积极的；正面的
Unit 7 Financial Accounting
Reading
Oral Practice
MiniProject
Phrases & Terms
Surfing the Internet
Video Clip
Chinese Version
会计介绍
基本会计概念 会计是一个过程，用来衡量和记录一个企业的财产和负 债的财务价值，并随着时间的推移当价值发生变化时加以监 控。一个企业可以是指个人、公司或其他任何需作会计记录 的实体。
Unit 7 Financial Accounting
Learniቤተ መጻሕፍቲ ባይዱg Objectives
From studying this unit, students are expected to 1. learn the basics of accounting; 2. have the knowledge of cash flow; 3. learn about internal control.
Unit 7 Financial Accounting
Unit 7 Financial Accounting 财务会计
Unit 7 Financial Accounting
Part I Reading Part II Oral Practice Part III Mini-Project Part IV Phrases & Terms Part V Surfing the Internet Part VI Video Clip
大学生会计英语教材答案
大学生会计英语教材答案Unit 1: Introduction to AccountingExercise 1:1. Accounting is the process of recording, classifying, summarizing, and interpreting financial information.2. The primary goal of accounting is to provide useful financial information for decision-making.3. Financial accounting focuses on providing information to external users, such as investors and creditors.4. Managerial accounting focuses on providing information to internal users, such as managers and employees.5. Users of accounting information include investors, creditors, employees, government agencies, and the general public.6. The accounting equation is Assets = Liabilities + Equity.7. The three main types of business entities are sole proprietorship, partnership, and corporation.8. The accounting cycle includes the steps of analyzing transactions, recording them in the journal, posting to the ledger, preparing financial statements, and closing the books.9. The four financial statements are the income statement, balance sheet, statement of cash flows, and statement of retained earnings.10. Generally accepted accounting principles (GAAP) refer to the standard rules and guidelines followed in the preparation of financial statements.Exercise 2:1. c2. a3. d4. b5. cUnit 2: Basic Accounting PrinciplesExercise 1:1. Accrual accounting recognizes revenue when it is earned and expenses when they are incurred, regardless of when cash is received or paid.2. The matching principle requires that expenses be recorded in the same period as the corresponding revenue.3. Materiality refers to the significance or importance of an item or event in financial reporting.4. Conservatism principle suggests that when there are uncertainties, accountants should err on the side of caution and record the lower values of assets and higher values of liabilities.5. The monetary unit assumption assumes that only transactions that can be expressed in monetary terms are included in the accounting records.6. The economic entity assumption assumes that business transactions are separate from personal transactions of the owner(s).7. The historical cost principle requires that assets be recorded at their original cost, regardless of their current market value.8. Going concern assumption assumes that the business will continue to operate indefinitely.9. The full disclosure principle requires that all material information relevant to the financial statements be disclosed.10. Consistency principle requires that once an accounting method is chosen, it should be consistently followed in future periods unless there is a valid reason to change.Exercise 2:1. a2. c3. b4. d5. aUnit 3: Financial StatementsExercise 1:1. The income statement shows a company's revenues, expenses, and net income or loss for a specific period.2. The balance sheet provides a snapshot of a company's financial position at a specific point in time, showing its assets, liabilities, and equity.3. The statement of cash flows reports the cash inflows and outflows of a company during a specific period, categorized into operating, investing, and financing activities.4. The statement of retained earnings shows the changes in a company's retained earnings over a specific period.5. The classified balance sheet separates a company's assets, liabilities, and equity into current and non-current categories.6. Vertical analysis is the process of expressing each item in a financial statement as a percentage of a base amount.7. Horizontal analysis compares financial statement data across multiple periods to identify trends or changes.8. The current ratio is calculated as current assets divided by current liabilities and measures a company's short-term liquidity.9. The debt-to-equity ratio is calculated as total liabilities divided by total equity and measures a company's financial leverage.10. The earnings per share (EPS) is calculated as net income divided by the average number of outstanding shares and represents the portion of a company's profit allocated to each share.Exercise 2:1. d2. b3. c4. a5. cUnit 4: Revenue Recognition and Expense RecognitionExercise 1:1. Revenue recognition is the process of determining when and how revenue should be recorded in the accounting records.2. The revenue recognition principle states that revenue should be recognized when it is earned and realizable, and when it can be reliably measured.3. The matching principle requires that expenses be recognized in the same period as the revenue they help generate.4. Accrued revenue refers to revenue that has been earned but not yet received or recorded.5. Deferred revenue refers to cash received in advance for goods or services that are yet to be delivered or performed.6. Accrued expenses are expenses that have been incurred but not yet paid or recorded.7. Deferred expenses are prepaid expenses that have been paid but are yet to be consumed or used.8. The straight-line method is a common method used to allocate revenue or expenses evenly over a specified period.9. The installment sales method is used when a sale is made with payments to be received in multiple periods.10. The cost recovery method is used when the collectibility of revenue is uncertain, and revenue is recognized only when cash is collected.Exercise 2:1. a2. c3. b4. d5. aNote: This is a sample of the content that could be included in a university accounting English textbook. The actual textbook may cover additional topics and exercises.。
大学会计英语教材答案
大学会计英语教材答案Unit 1: Introduction to AccountingExercise 1:1. Accounting is a system of recording, summarizing, and analyzing financial transactions.2. The main goal of accounting is to provide useful financial information for decision-making purposes.3. The primary users of accounting information are investors, creditors, and management.4. The accounting equation is Assets = Liabilities + Equity.5. Financial statements include the income statement, balance sheet, and cash flow statement.Exercise 2:1. External users of accounting information include investors, creditors, and regulatory authorities.2. Internal users of accounting information include management, employees, and shareholders.3. The income statement shows the financial performance of a company over a specific period.4. The balance sheet provides information about a company's assets, liabilities, and equity at a specific point in time.5. The cash flow statement reports cash inflows and outflows during a specific period.Exercise 3:1. The accounting cycle consists of several steps: analyzing transactions, journalizing, posting to the general ledger, preparing a trial balance, adjusting entries, preparing financial statements, and closing the books.2. The trial balance is a list of all the ledger accounts with their respective debit or credit balances.3. Adjusting entries are made at the end of an accounting period to ensure that revenues and expenses are accurately recorded.4. The income statement shows the company's revenues, expenses, and net income or loss for a specific period.5. The balance sheet provides a snapshot of the company's financial position at a specific point in time.Unit 2: Financial StatementsExercise 1:1. The income statement reports a company's revenues, expenses, and net income or loss.2. Revenues are inflows of assets resulting from the company's primary activities, such as sales of products or services.3. Expenses are outflows of assets used to generate revenue, such as salaries, rent, and utilities.4. Net income is calculated by subtracting total expenses from total revenues.5. The net income or loss is transferred to the owner's equity section of the balance sheet.Exercise 2:1. The balance sheet reports the company's assets, liabilities, and equity.2. Assets are resources owned or controlled by the company, such as cash, inventory, and equipment.3. Liabilities are obligations or debts owed by the company, such as loans and accounts payable.4. Equity represents the owner's or shareholders' claim to the company's assets after deducting liabilities.5. The balance sheet follows the accounting equation: Assets = Liabilities + Equity.Exercise 3:1. The cash flow statement reports a company's cash inflows and outflows during a specific period.2. Operating activities include cash receipts and payments related to the company's core operations.3. Investing activities include cash inflows and outflows related to the buying or selling of long-term assets.4. Financing activities include cash receipts and payments related to borrowing or repaying debt, issuing or buying back shares, and paying dividends.5. The cash flow statement helps users assess a company's ability to generate cash and its cash management policies.Unit 3: Financial AnalysisExercise 1:1. Financial ratios are used to analyze a company's financial performance and condition.2. Liquidity ratios measure a company's ability to meet short-term obligations.3. Profitability ratios assess a company's ability to generate earnings.4. Solvency ratios evaluate a company's long-term financial stability.5. Market ratios measure a company's value based on its market price and financial performance.Exercise 2:1. The current ratio is calculated by dividing current assets by current liabilities.2. The higher the current ratio, the better a company's short-term solvency.3. The debt-to-equity ratio is calculated by dividing total debt by total equity.4. The debt-to-equity ratio indicates the proportion of a company's financing that comes from debt.5. The return on assets ratio is calculated by dividing net income by average total assets.Exercise 3:1. Horizontal analysis compares financial data over multiple periods to identify trends and changes.2. Vertical analysis compares financial data within a single period to determine the relative proportions of each item.3. Ratio analysis involves calculating and interpreting various financial ratios to assess a company's performance and condition.4. Trend analysis examines changes and patterns in financial data over a period of time.5. Comparative analysis compares a company's financial performance with that of its competitors.注意：本文为根据题目内容需求进行的教材答案分析，仅供参考使用。
财务会计课后习题答案(英文原版)第7单元
(b) 2.
The FASB’s conceptual framework consists of the following: (1) Objectives of Financial Reporting. (2) Qualitative Characteristics of Accounting Information. (3) Elements of Financial Statements. (4) Operating Guidelines (Assumptions, Principles, and Constraints). (a) According to the FASB in its development of the conceptual framework, the objectives of financial reporting are to provide information that: (1) is useful to those making investment and credit decisions, (2) is helpful in assessing future cash flows, and (3) identifies the economic resources (assets), the claims to those resources (liabilities), and the changes in those resources and claims. (b) The qualitative characteristics are: (1) relevance, (2) reliability, (3) comparability, and (4) consistency. Curtis is correct. Consistency means using the same accounting principles and accounting methods from period to period within a company. Without consistency in the application of accounting principles, it is difficult to determine whether a company is better off, worse off, or the same from period to period. Comparability results when different companies use the same accounting principles. Consistency means using the same accounting principles and methods from year to year within the same company. The going concern assumption is necessary because otherwise depreciation and amortization policies would not be justifiable and appropriate. Also, the current-noncurrent classification of assets and liabilities would lose much of its significance. Labeling anything as fixed or long-term would be difficult to justify. In addition, the going concern assumption lends credibility to the cost principle. Revenue should be recognized in the accounting period in which it is earned. The sales basis involves an exchange transaction between the seller and buyer and the sales price provides an objective measure of the amount of revenue realized. Expired costs generate revenues only in the current period and therefore are expensed immediately. Unexpired costs will generate revenues in current and future periods and are recorded as assets. (a) The accountant discloses information about an entity’s financial position, operations, and cash flows in the financial statements, or in the notes that accompany the statements. (b) The trade-offs involved with disclosure balance the costs of preparing additional information and the benefits from using it.
会计英语LESSON 7
Terms1Creditterms2TransportationtermsCredit terms•1/10,n/30;•Cash discounts are calculated on the billed price of merchandise retained in a purchase or sale.• e.g. sales:10,000 ; sales returns and allowances:1,000; “2/10,n/30”;•Cash discounts =(10,000-1,000)*2%=180Transportation Terms•Who would bear the freight cost and who would remit the freight under each of the following selling terms?a. F.O.B. shipping point, freight prepaid.b. F.O.B. shipping point, freight collect.c. F.O.B. destination, freight collect.d. F.O.B. destination, freight prepaid.Transportation Terms(1)Text Freight prepaid Collectdesignate theparty expected toremit to thefreight companybuyer sellerTransportation Terms(2)TextF.O.B.destinationShipping pointdesignate the partywho bear thetransportation costbuyersellerQuestion•What is meant by “cash discounts”?–“Cash discounts”is refer to as the deduction of the invoice price.Question•Explain the terms:2/10,1/20,n/30.–The terms mean that the full sales price (less any returns) is due in 30days from the date of sale; 2% cash discountwill be granted if the payment is made within 10 days; ifthe payment is made beyond 10 days but within 20 days,the buyer may deduct 1% from the invoice price.a.F.O.B. shipping point, freight prepaid.–The buyer would bear the freight cost and the sellerwould remit it to the freight company.• F.O.B shipping point, freight collect–The buyer would bear the freight cost and the buyer would remit it to the freight company.Questionc. F.O.B. destination, freight collect.•The seller would bear the freight cost and the buyer would remit it to the freight company.Questiond. F.O.B. destination, freight prepaid.•The seller would bear the freight cost and the seller would remit it to the freight company.An illustration —Exercise 1 (1)Problem:Alan Meaken began business as asurveyor and during a short periodcompleted these transactions:Cash 20 000Office Equipment 3 000Surveying Equipment 45 000Alan Meaken, Capital 68 000 An illustration —Exercise 1 (2)aBegan business by investing cash,$20 000; office equipment, $3 000; and surveying equipment, $45 000.bPurchased land for an office site, $19 000.Paid $3 800 in cash and signed a long-term note payable for the balance.Land 19 000Cash 3 800Long-term note payable 15 200cPurchased for cash a used prefabricated building and moved it onto the land foruse as an office, $8 000.Building 8 000Cash 8 000Prepaid Insurance 4 800Cash 4 800dPrepaid the annual premiumon two insurance policies, $4800An illustration —Exercise 1 (5)Cash 800Surveying Fees Earned 800 eCompleted a surveying job andcollected $800 cash in full payments. An illustration —Exercise 1 (6)Office Equipment 3 700Cash 700Long-term note payable 3 000 fPurchased additionalequipment costing $3 700.Gave $700 in cash andsinged a long-term notepayable for the balance.An illustration —Exercise 1 (7)Accounts Receivable 2 100 Surveying Fees Earned 2 100gCompleted a surveying job on creditfor Kilmer Contractors, $2 100.An illustration —Exercise 1 (8)Office Equipment 250Accounts Payable 250An illustration —Exercise 1 (9)Exercise 1 (10) An illustration —Accounts Receivable 3 150Surveying Fees Earned 3 150Exercise 1 (11) An illustration —Machinery Rental Expense 150Accounts Payable 150Cash 2 100Accounts Receivable 2 100 An illustration —Exercise 1 (12)An illustration —Exercise 1 (13)lPaid the wages of the surveying assistant,$840.Wages Expense 840Cash 840An illustration —Exercise 1 (14)mPaid for the office equipment purchased intransaction h.Accounts Payable 250Cash 250An illustration —Exercise 1 (15)nPaid $350 cash for repairs to a piece ofsurveying equipment,Repairs Expense 350Cash 350oAlan Meaken wrote a $260 check on the bank accountfor the business to pay for repairs to his personalautomobile. (The car is not used for businesspurposes.)An illustration —Exercise 1 (16)Alan Meaken, Withdrawals 260Cash 260pPaid the wages of the surveyingassistant, $880.An illustration —Exercise 1 (17)Wages Expense 880Cash 880An illustration —Exercise 1 (18) Permits Expense150Cash150qPaid fee to county for surveyingpermits, $150.。
财会专业英语课件 unit 7
Main ideas Contents of each paragragh companies have to publish the value of their assets and liabilities, that is profits and losses. the methods of accouting policies valuation: deciding how much sth. is worth measurement:determining how big sth. is consistency principle, means using the same accounting policy every year
• Advantages Historical cost is the result of the transaction, it reflect the market price.It is the data information user most want to see. There are source documents as historical cost basis,but other measurements are not,such as fair value.For this reason, using historical costing is covenient to ordit. Historical cost accurately reflect the transaction, do not need to adjusting the account.It can prevent arbitrary changes in the accounting records,maintain the reliability of accounting information. Historical cost is the basis of taxation.
会计英语课件 Unit 7 Liabilities
Accounts payable
$10,000
Assets =
Liabilities
+
Owner’s equity
Rev.
_
Exp.
=
Net Inc.
Cash Flow
10,000 = 10,000 +
_
=
10,000
OA
Read 7.1.2 and answer: 1 When are notes payable issued? 2 Is there a mistake in the entries? How to correct them?
Warming up
Your credit card balance is probably due within a short time, such as 30 days. Such liabilities that are to be paid out of current assets and are due within a short time, usually within one year, are called current liabilities. Most current liabilities arise from two basic transactions: 1. Receiving goods or services prior to making payment. 2. Receiving payment prior to delivering goods or services.
Notes payable
Notes payable are issued whenever bank loans are obtained. Notes payable usually required the borrower to pay an interest charge .Under normal conditions, the interest rate is stated separately from the principal amount of the note.
大学会计英语 unit 7
Suggested Answers
Why is it worthwhile to spend time analyzing and interpreting financial statements?
7.2 The Ratios Used for Analyzing Financial Statements
Short-term Solvency Ratios
In the short run, a company’s or a firm’s survival depends on its ability to pay its immediate debts. Such payments require cash. Short-term solvency ratios measure a company’s relative liquidity. Thus, the higher a firm’s liquidity ratios, the lower the risks involved for investors. The two most commonly used liquidity ratios are the current ratio and the quick (or acid-test ratio).
Suggested Answers
What are the common financial ratios used for analyzing financial statements?
Four classes of ratios, which include: short-term solvency ratios, long-term solvency ratios, profitability ratios and activity ratios.
会计英语第7章
◦ Both selling expenses and administrative expenses are period
5. Research and Development Costs
◦ Research and development (R&D) are activities undertaken by a firm to create new products, design new processes, improve old products, or to discover valuable new knowledge.
A company must be very careful to use these two words and try not to misuse.
According to the matching principle, once revenues have been recognized in conformity withria for any reporting period, expenses occurred in generating these revenues should also be recognized in the same period.
advertising expenses insurance expenses commission expenses
◦ ……
（3）Administrative Expenses
会计英语Unit 7 Owner’s Equity
2．The debt the shareholder should be responsible for will
be no more than the money he has put in. This is called the limited personal liabilities. 每个出资者以他们的出 资额为限对公司债务承担责任。 这被称作“有限责任 制”。
然而与所有者权益相比债权人的索偿权在法律上具有优先地位在所有者权益之前首先得以兑现所以所有者权益上实际反应的只是一个剩余数
会计英语Unit 7 Owner’s Equity
Learning Objectives
The main purpose of this unit is to give you more knowledge about owner’s equity. After learning this unit, you should be able to:
Owner’s equity represents the claims of owners to the business’ assets. However, for the creditors’ claims have legal priorities over the owner’s claim, the
1. Identify the three forms of business organizations.
2. Describe what the partnership is.
3. Outline the advantages of corporations.
4. Explain why the form of corporation is becoming more and more popular.
会计学原理(双语)Chapter 7
7-2
C1 Fundamental System Principles
Accounting information systems collect and process data from transactions and events, organize them in useful reports, and communicate results to decisions makers.
Laptop
Cloud Computing
Computer
Cell Phone
Tablet
Cloud computing uses applications via the Web instead of installing them on one's own computer.
7 - 23
Global View
7-8
P1
Sales Journal
7-9
P2
Proving the Ledgers
A schedule of accounts receivable lists each customer
and the balance owed.
The balance of the Accounts Receivable controlling account in the general ledger should equal the accounts
separately identified by its products, services, or geographic market.
会计英语第七单元课件
2 This flow of data is the same in either a manual or a computerized accounting systems. 3 small companies: may not be necessary 4 work sheet is a useful device for understanding the flow of the accounting data from the unadjusted trial balance to the financial statements.
250
250
50 43400
50 9755 16960 33645
50 26440
Income statement : Cr. $16960 – Dr. $9755 = $7205 (net income) Balance sheet: Dr. $33645 – Cr. $26440 = $7205 $7205 + $26440 = $33645 (net income increases OE)
4000
16340 4275 250 500
1600
985
15Supplies 800 expense 16 Misc. 455 Expense 17 Total 42600 42600 18Insuranc e expense 19 Rent revenue
1240
100
120
20Wages payable 21Depreciation expense 22Accumulated Depreciation Total
Unit Seven Accounting Cycle
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Suggested Answers
Whafor analyzing financial statements?
Four classes of ratios, which include: short-term solvency ratios, long-term solvency ratios, profitability ratios and activity ratios.
Suggested Answers
Is it good for a firm to have a high liquidity ratio?
Yes, it is. This is because the higher a firm’s liquidity ratios, the lower the risks involved for investors.
14. in serious danger of collapse or takeover 陷于破产或被收购的危险境地
Notes
15. debt ratios 负债（比）率 = measures of a firm’s ability to meet its long-term debts, used to analyze the risk of investing in the firm 16. debt-to-owners’-equity ratio 债务与业主权益之 比率 = a form of debt ratio calculated as total liabilities divided by owner’s equity = debtequity ratio 债务与资本比率 17. leverage n. 融资额度杠杆 = using borrowed funds to make purchases, thus increasing the user’s purchasing power, potential rate of return, and risk of loss 18. profitability ratios 盈利能力比率 = measures of a firm’s overall financial performance in terms of its likely profits, used by investors to assess their probable returns 19. return on sales 销售盈利 = a form of profitability ratio calculated as net income divided by net sales 20. return on investment 投资收益 21. earnings per share 每股收益 = a form of profitability ratio calculated as net income divided by the number of common stock shares outstanding （还未兑现或偿还的普通股） 22. in the abstract 抽象地 23. potential adj. 潜在的 24. activity ratios 营业活动比率 = measures how efficiently a firm uses its resources; also used by investors to assess their probable returns on their investments 25. inventory turnover ratio 存货周转比率 = an activity ratio that measures the average number of times inventory is sold and restocked during the year 26. be tied up in inventory 被限制在或套在库存或 存货之中 27. get more mileage 获得更多的好处 = get more benefits from sth.
Notes
1. short-term solvency ratio 短期偿付能力 比率 2. liquidity ratios 流动性比率 = measures of a firm’s ability to meet its immediate debts (短期/即期债务) used to analyze the risk of investing in the firm 3. current ratio 流动比率 = a form of liquidity ratio calculated as current assets (流动资产) divided by current liabilities (流 动负债); Current ratio has often been called the bankers’ ratio 4. quick (or acid-test) ratio 速动比率或酸性 试验比率 = a form of liquidity ratio calculated as quick assets divided by current liabilities 5. inventory n. 存货，库存 = materials and goods currently held by the company but that will be sold within the year 6. to convert into... 变换成…… 7. just one step removed from being converted into cash 离开变换成现金只差一 步之遥 8. securities n. 证券 9. be excluded from this measure 被排斥在此衡量之外 10. be liquidated at sacrifice price 按亏本价 进行变现 11. stringent adj. 严格的，严厉的 12. a rule of thumb 约略的估计；按所了解 的实际经验进行估计 13. long-term solvency ratios 长期偿付能力 比率
Because careful analysis of them can help accountants evaluate an organization’s past performance and predict its future performance. And such evaluation in turn help managers, investors, and others make intelligent, informed financial decisions like “whether to extend credit to another firm or organization?” and “what stock to buy in the future?”
Is it good for a firm to have a high liquidity ratio?
Suggested Answers
Why is it worthwhile to spend time analyzing and interpreting financial statements?
Unit Seven
Analysis of Financial Statements
Warming-up Questions
Why is it worthwhile to spend time analyzing and interpreting financial statements? What are the common financial ratios used for analyzing financial statements?