财务英语讲义.docx

财务英语讲义.docx

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财务英语讲义

LESSONONE

ACCOUNTING:

ANINFORMATIONSYSTEM

Accountingisaninformationsystemnecessitatedbythegreatcomplexityofmodernbusiness.

Oneofthemostimportantfunctionsofaccountingistoaccumulateandreportfinancialinformationthatshowsanorganization’sfinancialpositionandtheresultsofitsoperationstoitsinterestedusers.Theseusersincludemanagers,stockholders,banksandothercreditors,governmentalagencies,investmentadvisors,andthegeneralpublic.Forexample,stockholdersmusthaveanorganization’sfinancialinformationinordertomeasureitsmanagement’sperformanceandtoevaluatetheirownholdings.Banksandothercreditorsmustconsiderthefinancialstrengthofabusinessbeforepermittingittoborrowfunds.Potentialinvestorsneedfinancialdatainordertocompareprospectiveinvestments.Also,manylawsrequirethatextensivefinancialinformationbereportedtothevariouslevelsofgovernment.Businessesusuallypublishsuchreportsatleastannually.Tomeettheneedsoftheexternalusers,aframeworkofaccountingstandards,principlesandproceduresknownas“generallyacceptedaccountingprinciples”havebeendevelopedtoinsuretherelevanceandreliabilityoftheaccountinginformationcontainedintheseexternalfinancialreports.Thesubdivisionoftheaccountingprocessthatproducestheseexternalreportsisreferredtoasfinancialaccounting.

Anotherimportantfunctionofaccountingistoprovidethemanagementinsideanorganizationwiththeaccountinginformationneededintheorganization’sinternaldecision-marking,whichrelatestoplanning,control,andevaluationwithinanorganization.Forexample,budgetsarepreparedunderthedirectionsofacompany’scontrolleronanannualbasisandexpressthedesiresandgoalsofthecompany’smanagement.Aperformancereportissuppliedtohelpamanagerfocushisattentiononproblemsoropportunitiesthatmightotherwisegounnoticed.Furthermore,cost-benefitdatawillbeneededbyacompany’smanagementindecidingamongthealternativesofreducingprices,increasingadvertising,ordoingbothinattempttomaintainitsmarketshares.Theprocessofgeneratingandanalyzingsuchaccountinginformationforinternaldecision-makingisoftenreferredtoasmanagerialaccountingandtherelatedinformationreportsbeingpreparedarecalledinternalmanagementreports.Ascontrastedwithfinancialaccounting,amanagerialaccountinginformationsystemprovidesbothhistoricalandestimatedinformationthatisrelevanttothespecificplansonmorefrequentbasis.Andmanagerialaccountingisnotgovernedbygenerallyacceptedaccountingprinciples.

Thegrowthoforganizations,changesintechnology,governmentregulation,andtheglobalizationofeconomyduringthetwentiethcenturyhavespurredthedevelopmentofaccounting.Asaresult,anumberofspecializedfieldsofaccountinghaveevolvedinadditiontofinancialaccountingandmanagerialaccounting,whichincludeauditing,costaccounting,taxaccounting,budgetaryaccounting,governmentalandnot-for-profitaccounting,humanresourcesaccounting,environmentalaccounting,socialaccounting,internationalaccounting,etc.Forexample,taxaccountingencompassesthepreparationoftaxreturnsandtheconsiderationofthetaxconsequencesofproposedbusinesstransactionsoralternativecoursesofaction.Governmentalandnot-for-profitaccountingspecializesinrecordingandreportingthetransactionsofvariousgovernmentalunitsandothernot-for-profitorganizations.Internationalaccountingisconcernedwiththespecialproblemsassociatedwiththeinternationaltradeofmultinationalbusinessorganizations.Allformsofaccounting,intheend,provideinformationtotherelatedusersandhelpthemmakedecisions.

ReadingMaterial

（1）

GenerallyAcceptedAccountingPrinciples

Financialaccountingreliesoncertainstandardsorguidesthathaveusefulovertheyearsinimpartingeconomicdata.Thesestandardsarecalledgenerallyacceptedaccountingprinciples.Theyarecloselyrelatedtoexperienceandpracticeandmaychangeovertime.Variousterms,suchasprinciple,standard,assumption,convention,andconcept,areoftenusedtodescribesuchguides.

Themostfundamentalconceptsunderlyingtheaccountingprocessare:

AccountingEntity.Eachbusinessventureisaseparateunit,accountedforseparately.

GoingConcern.Theassumptionismadeinaccountingthatabusinesswillcontinueindefinitely.

MeasuringUnit.Conventionalaccountingstatementsarenotadjustedforchangesinthevalueofthedollar.

AccountingPeriod.Accountingreportsarerelatedtospecifictimeperiods,typicallyoneyear.

HistoricalCost.Assetsarereportedatacquisitionpriceandarenotadjustedupward.

Objectivity.Wheneverpossible,accountingentriesmustbebasedonobjectivelydeterminedevidence.

AnumberoforganizationsexistinU.S.A.thatareconcernedwiththeformulationofaccountingprinciples.ThemostprominentamongthemisthefinancialaccountingStandardsBoard（FASB财务会计准则委员会）.TheFASB,organizedin1973,isanongovernmentalbody（非政府机构）whosepronouncementshavetheforceofdictatingauthoritativerulesforthegeneralpracticeoffinancialaccounting.BeforethecreationoftheFASB,theAccountingPrinciplesBoard（APB会计原则委员会）oftheAmericanInstituteofCertifiedPublicAccountants（AICPA美国注册会计师协会）fulfilledthefunctionofformulatingaccountingprinciples.

LESSONTWO

ASSETSSECTIONOFBALANCESHEET

Therearethreebasicfinancialstatementswhicharetheendproductsoffinancialaccounting:

BalanceSheet,IncomeStatementandtheStatementofCashFlows.Thenatureandformatsofthefirsttwostatementswillbeillustratedinthisandthefollowingtwolesson.Balancesheetandincomestatementarepreparedatleastyearly,butisalsocustomarytopreparethemquarterlyormonthly.

BalanceSheetisalistingofanorganization’sassets,liabilitiesandowners’equityonagivendate.Itisdesignedtoportraythefinancialpositionoftheorganizationataparticulartime（e.g.,onJanuary31,2000）.AspresentedinExhibit2-1,thethreemajorsectionsofthebalancesheetarepresentedintheT-accountformat.Thispresentationallowstheuserstotellataglancethattotalassets（e.g.,$259000）arebeingfinancedbytwosources:

$79000bythecreditors（i.e.,liabilities）and$180000bytheowner（i.e.,owner’sequity）.Animportantaspectofthisstatementisthatthetotalassetsalwaysequalthesumofliabilitiesandowner’sequity.Thisbalancingissometimesdescribedastheaccountingequation:

Assets=Liabilities+Owners’Equity.Thislessondealswiththeassetssectionofabalancesheet.Theliabilitiesandowner’sequitysectionwillbediscussedinLessonThree.

Assetsaretheeconomicresourcesofanorganizationthatcanusefullybeexpressedinmonetaryterms.TheassetsofDouglasCompanyhavebeenfurtherclassifiedintocurrentassetsandlong-termassets.Currentassetsarecashandotherassetsthatwillbeconvertedintocashorusedupduringthenormaloperatingcycleofthebusinessoroneyear,whicheverislonger.Currentassetsareusuallylistedintheorderoftheir“liquidity”orconvertibilityintocash.SomeexamplesofcurrentassetsotherthanthoseshowninExhibit2-1arenotesreceivableandmarketablesecurities.Prepaidexpensessuchasinsurance,rent,andsuppliesarenormallyconsumedduringtheoperatingcycleratherthanconvertedintocash.

（Exhibit2-1）

DOUGLASTRADINGCOMPANY

BalanceSheet

January31,2000

Assets

Liabilitiesandowner'sEquity

CurrentAssets

CurrentLiabilities

Cash

$65,000

NotesPayable

$16,000

AccountsReceivable

34,000

AccountsPayable

59,000

Inventory

98,000

AccruedSalariesPayable

4,000

PrepaidInsurance

3,500

TotalCurrentliabilities

$79,000

SuppliesonHand

1,500

TotalCurrentAssets

$202,000

Owner'sEquity

FixedAssets

K.Douglas,Capital

$180,000

StoreFixtures

$72,000

Less:

Accumulated

Depreciation

15,000

$57,000

TotalLiabilitiesand

TotalAssets

$259,000

Owner'sEquity

$259,000

Long-termassetsarerelativelylong-livedassetsusedinoperatinganorganizationandmaybefurtherclassifiedintofixedassets（orplantandequipment）andintangibleassets.Fixedassetsmayincludeland,buildings,andvariouskindsofequipment（machinery,storefixtures,officeequipment,deliveryequipment,etc.）.Theyconstitutethemajorcategoryoflongtermassets.Depreciableassetsarenormallyshownattheiroriginalcost,theaccumulatedportionofthecosttakenasdepreciationtodateissubtractedfromitsoriginalcosttoobtainthebookvalueoftheasset.Intangibleassetsarecharacterizedbythelegalclaimsorrightswhichmayincludepatents,trademarks,franchises,goodwill,etc.

ReadingMaterial

（2）

FieldsofaccountingActivity

Accountantsperformmanydiverseservicesandareengagedinvarioustypesofemployment.Thethreemajorfieldsofaccountingactivityareprivateaccounting,publicaccounting,andgovernmentalaccounting.

Moreaccountantsareemployedinprivateaccountingthaninanyotherfield.Privateemployersofaccountantsincludemanufactures,wholesalers,retailers,andservicefirms.Inmanylargecompanies,theheadoftheaccountingdepartmentiscalledthecontroller.

Thefieldofpublicaccountingiscomposedoffirmsthatrenderindependent,expertreportsonfinancialstatementsofbusinessenterprises.Publicaccountingfirmsalsoperformawidevarietyofaccountingandmanagerialservices,actingasconsultantsoftheirclients.Mostaccountantsinapubl