會(huì)計(jì)英語unit11FinancialStatements.ppt

1、Unit 11,Financial Statements,Balance Sheet .Income Statement .Cash Flow Statement,2,Financial Statements,For a business enterprise, all the relevant financial information, presented in a structured manner and in a form easy to understand, are called the financial statements. They typically include f

2、our basic financial statements Balance sheet: referred to as statement of financial position or condition, reports on a companys assets, liabilities, and ownership equity at a specific time. Income statement: referred to as Profit and Loss statement (or a P&L), reports on a companys income, expenses

3、, and profits over a period of time. Statement of retained earnings: explains the changes in a companys retained earnings over the reporting period. Cash flows Statement : reports on a companys cash flow activities, particularly its operating, investing and financing activities,3,For large corporati

4、ons, these statements are often complex and may include an extensive set of notes to the financial statements and management discussion and analysis. Notes to financial statements are considered an integral part of the financial statements. All the financial statements are built to be used together

5、to present a complete picture of a companys finance,4,Purpose of financial statements,The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economi

6、c decisions. Reported assets, liabilities and equity are directly related to an organizations financial position. Reported income and expenses are directly related to an organizations financial performance. Financial statements should be understandable, relevant, reliable and comparable,5,Financial

7、statements are intended to be understandable by readers who have a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently. Financial statements may be used by users for different purposes. Owners and managers require financial

8、statements to make important business decisions that affect its continued operations. Financial analysis is performed on these statements to provide management with a more detailed understanding of the figures. They are also used as part of managements annual report to the stockholders,6,Employees n

9、eed these reports in making collective bargaining agreements (CBA) with the management, in the case of labor unions or for individuals in discussing their compensation, promotion and rankings. Prospective investors make use of financial statements to assess the viability of investing in a business.

10、Financial analyses are often used by investors and are prepared by professionals (financial analysts), thus providing them with the basis for making investment decisions. Financial institutions (banks and other lending companies) use them to decide whether to grant a company with fresh working capit

11、al or extend debt securities (such as a long-term bank loan or debentures) to finance expansion and other significant expenditures,7,Government entities (tax authorities) need financial statements to ascertain the propriety and accuracy of taxes and other duties declared and paid by a company. Vendo

12、rs who extend credit to a business require financial statements to assess the creditworthiness of the business. Media and the general public are also interested in financial statements for a variety of reasons,8,Case,Fruit Juice & Sugar,Diversified products, such as power generation, jet engines, me

13、dical technologies and services,Milk,9,Balance Sheet,10,Assets = Liabilities + Owners equity,The balance sheet is the fundamental and backbone of the whole accounting and reporting system. It provides a snapshot of the businesss financial position, such as assets, liabilities and owners equity at a

14、specific time,11,1.Functions of Balance Sheet,1)Evaluating and predicting short-term solvency of a business Solvency means the financial ability of a company to pay debts when they become due. (2)Evaluating and predicting capital structure and long-term solvency Long-term solvency of a business is d

15、etermined by both its profitability and capital structure,12,2.Format of Balance Sheet,The balance sheet has to contain: Name of the business Name of the financial statement Date of the report The financial items it reflects,Huntnington GalaryBalance sheetDecember 31,2009,13,Assets, Liabilities and

16、owners equity are listed on a balance sheet, and according to their liquidity, the items are subcategorized and listed separately,14,15,16,17,18,19,20,Income Statement,21,Profit = Revenues - Expenses,Income statement is a summary of the operating results of a business for an accounting period. It pr

17、ovides information about revenues generated and expenses incurred. The difference between the revenues and expenses is identified as the net income or net loss,22,1) Evaluating the profitability of a business From income statement, we can know whether the company is profitable in this period and by

18、comparing them in different periods, we can know whether the company has better profitability. (2) Evaluating the solvency of a business Solvency is also determined by profitability. (3) Facilitating decision-making Management gets a clear idea of revenues, expenses and profits and the relationship

19、among them, and then can make better decision. (4) Evaluating management performance Income statement indicates the operating efficiency, which finally reflects the management performance of a business,1.Functions of Income statement,23,2.Format of income statement,The income statement has to contai

20、n: Name of the business Name of the financial statement Period of the report The financial items it reflects,Huntnington GalaryIncome StatementFor the year ended December 31,2009,24,25,26,27,Cash Flow Statement,28,The cash flow statement shows the inflows and outflows of cash and cash equivalents du

21、ring a certain accounting period as a result of operating, investing, and financing activities of the enterprise,cash-basis accounting,29,1.Functions of Cash flow statement,1) Clearly visualize the cash movements in the business over a period of time and enable better use of cash. (2) Evaluate the c

22、hanges in net assets of a business and evaluate its financial structure when considered together with balance sheet and income statement. (3) Facilitate assessment of the ability of a business to generate cash. (4) It is the basis of financial analysis and budgets,30,2. Content of cash flow statement,1) Operating activities Operating activities s