完整word版财务报表分析英文版

A necessarystep in the accounting process, then, is the adjustment of all accounts to an accrual basis andtheir subseque nt p osti ng to the gen eral ledger. Adjusti ng en tries are therefore n ecessaryto achieve a proper match ing of reve nues and expen sesi n the determ in ati on of net in come for the curre nt p eriod and to achieve an accurate stateme nt of the assets and equities existi ng at the end of the p eriod.
In practice, financial reporting is done at the end of the accounting period. Accounting periods can be any length in time. Firms typically use the year as the primary accounting period. The 12-month accounting period is referred to as the fiscal year. Firms also report for periods less than a year (e.g. quarterly) on an interim basis.
The statement of stockholder's equity: reports the amounts and sources of changes in equity from transactions with owners.
The footnotes of the financial statements: allow uses to improve assessment of the amount, timing and uncertainty of the estimates reported in the financial statements.
Some external transactions might not even seem like transactions and are recognized only at the end of the accounting period. Examples include unrecorded revenues and credit purchase.
The most accurate way to measure the results of enterprise activity would be to measure them at the time of the enterprise's eventual liquidation. Business, government, investors, and various other user groups, however, cannot wait indefinitely for such information. If accountants did not provide financial information periodically, someone else would.
A. Measuring Business Income
a.explain why financial statements are prepared at the end of the regular accounting period.
Major Financial Statements:
The balance sheet: provides a "snapshot" oBaidu Nhomakorabea the firm's financial condition.
deferred expen sesthat ben efits more tha n one p eriod: for exa mp le, prep aid expen ses(e.g. prep aid in sura nee, rent) are expen ses p aid in adva nee and recorded as assets before they are used or con sumed. Whe n these assets are con sumed, ex pen ses should be recog ni zed: a debit to an expense acco unt and a credit to an asset acco unt. Ano ther exa mple is dep reciati on. The cost of a Iong-term asset is allocated as an expense over its useful life. At the end of each period dep reciatio n expen seis recorded through an adjust ing en try: a debit to a dep reciati on expense acco unt and a credit to an accumulated dep reciati on acco unt (a contra acco unt used to total the p ast dep reciati on expen ses on sp ecific Ion g-term assets).
The periodicity or time period assumption simply implies that the economic activities of an enterprise can be divided into artificial time periods. These time periods vary, but the most common are monthly, quarterly, and yearly.
The information must be reliable and relevant. This requires that information must be consistent and comparable over time and also be provided on a timely basis. The shorter the time period, the more difficult it becomes to determine the proper net income for the period. A month's results are usually less reliable than a quarter's results, and a quarter's results are likely to be less reliable than a year's results. Investors desire and demand that information be quickly processed and disseminated; yet the quicker the information is released, the more it is subject to error. This phenomenon provides an interesting example of the trade-off between relevance and reliability in preparing financial data.
Adjustme nt princip les
•The reve nue recog niti on principle
•The match ing principle
What to adjust?
Each adjusting entry affects both a real account (assets,liability, or owner's equity) and a nominal or in come stateme nt acco unt (reve nue or expen se). The four basic types of adjust ing en tries are:
Accounting period must be of equal length. Financial statements are prepared at the end of the regular accounting period to allow comparison across time.
Some economic activities do not occur as the result of external transactions. Examples include depreciation and the expiration of prepaid expenses.
Timing: Often a transaction affects the revenue or expenses of two or more accounting periods. The related cash inflow or outflow does not always coincide with the period in which these revenue or expense itemsare recorded. Thus, the need for adjusting entries results from timing differences between the receipt or disbursement of cash and the recording of revenue or expenses. For example, if we handle transactions on a cash basis, only cash transactions during the year are recorded. Consequently, if a company's employees are paid every two weeks and the end of an accounting period occurs in the middle of these two weeks, neither liability nor expense has bee n recorded for the last week. To bring the acco unts up to date for the prep arati on of financial statements, both the wage expense and the wage liability accounts need to be in creased.
b.explain why the accounts must be adjusted at the end of each period. Why?
Most external transactions are recorded when they occur. The employment of an accrual system means that numerous adjustments are necessary before financial statements are prepared because certain accounts are not accurately stated.
The income statement: reports on the "performance" of the firm.
The statement of cash flows: reports the cash receipts and cash outflows classified according to operating, investment and financing activities.