Kế toán tài chính 1 - Chapter 3: The statement of financial position and financial disclosures
Part I
The full-disclosure principle requires that financial statements provide all material, relevant information concerning the reporting entity. Disclosure notes typically span several pages and either explain or elaborate upon the data presented in the financial statements themselves, or provide information not directly related to any specific item in the statements. Disclosure notes must include certain specific notes such as a summary of significant accounting policies, descriptions of subsequent events, and related third-party transactions.
The summary of significant accounting policies conveys valuable information about the company’s choices from among various alternative accounting methods. For example, management chooses whether to use accelerated or straight-line depreciation, and whether to use FIFO or weighted average basis to measure inventories. Typically, this first disclosure note consists of a summary of significant accounting polices that discloses the choices the company makes.
Part II
A subsequent event is a significant development that takes place after the company’s financial year-end but before the financial statements are issued. Examples include the issuance of debt or equity securities, a business combination or the sale of a business, the sale of assets, or any other event that has a material effect on operations.
Part III
Some transactions and events occur only occasionally, but when they do occur, they are potentially important to evaluating a company’s financial statements. In this category are related-party transactions, errors, and fraud.
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THE STATEMENT OF FINANCIAL POSITION AND FINANCIAL DISCLOSURESChapter 3© 2013 The McGraw-Hill Companies, Inc.The Statement of Financial PositionLimitations:The Statement of Financial Position does not portray the market value of the entity as a going concern nor its liquidation value.Resources such as employee skills and reputation are not recorded in the Statement of Financial Position.Usefulness:The Statement of Financial Position describes many of the resources a company has for generating future cash flows.It provides liquidity information useful in assessing a company’s ability to pay its current obligations.It provides long-term solvency information relating to the riskiness of a company with regard to the amount of liabilities in its capital structure.Reports a company’s financial position on a particular date.Resources (Assets)Claims against resources (Liabilities)Remaining claims accruing to owners (Owners’ Equity)The Statement of Financial PositionAssets are resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.CashCash EquivalentsShort-term InvestmentsReceivablesInventoriesPrepaid ExpensesCurrent AssetsWill be converted to cash or consumed within one year or the operating cycle, whichever is longer.Current AssetsCash equivalents include certain negotiable items such as commercial paper, money market funds, and Treasury bills.Operating Cycle of a Typical Manufacturing CompanyUse cash to acquire raw materialsConvert raw materials to finished productDeliver product to customerCollect cash from customer1234Noncurrent AssetsInvestmentsProperty, Plant, & EquipmentIntangiblesOther AssetsNot expected to be converted to cash or consumed within one year or the operating cycle, whichever is longer.Noncurrent AssetsNoncurrent AssetsOther AssetsInclude long-term prepaid expenses and any noncurrent assets not falling in one of the other classifications.InvestmentsNot used in the operations of the business.Include both debt and equity securities of other corporations, noncurrent receivables, and cash set aside for special purposes.Property, Plant, and EquipmentAre tangible, long-lived, and used in the operations of the business.Include land, buildings, equipment, machinery, and furniture.Reported at original cost less accumulated depreciation. Intangible AssetsUsed in the operations of the business but have no physical substance.Include patents, copyrights, and franchises.Reported net of accumulated amortization.©Liabilities are present obligations of the entity arising form past events, the settlement of which is expected to result in outflow from the entity of resources embodying economic benefitsCurrent LiabilitiesAccounts PayableNotes PayableAccrued LiabilitiesUnearned RevenuesCurrent Maturities of Long-Term DebtObligations expected to be satisfied through current assets or creation of other current liabilities within one year or the operating cycle, whichever is longer.Current LiabilitiesLong-term LiabilitiesLong-term Notes MortgagesLong-term BondsPension ObligationsLease ObligationsObligations that will not be satisfied within one year or operating cycle, whichever is longer.Long-Term LiabilitiesShareholders’ Equity is residual interest in the assets of the entity after deducting all its liabilities. Shareholders’ EquityIssuedCapitalRetained EarningsTreasury shares, capital reserve, translation reserve and other reserves, and other comprehensive income itemsDisclosure NotesSummary of Significant Accounting PoliciesConveys valuable information about the company’s choices from among various alternative accounting methods.Subsequent EventsA significant development that takes place after the company’s financial year-end but before the financial statements are issued.Noteworthy Events and TransactionsTransactions or events that are potentially important to evaluating a company’s financial statements, e.g., related-party transactions, errors, and fraud.Management Discussion and AnalysisProvides a biased but informed perspective of a company’s operations, liquidity, and capital resources.Management’s ResponsibilitiesPreparing the financial statements and other information in the annual report.Included in annual reports to assert the responsibility of management and directorsAuditors’ ReportExpresses the auditors’ opinion as to the fairness of presentation of the financial statements in conformity with accounting standards.Must comply with the auditing standards of the specific jurisdictions over which the company operates.Auditors’ OpinionsUnqualifiedIssued when the financial statements present fairly the financial position, results of operations, and cash flows are in conformity with accounting standards.QualifiedIssued when there is an exception to the standard unqualified opinion but is not of sufficient seriousness to invalidate the financial statements as a whole.AdverseIssued when the exceptions are so serious that a qualified opinion is not justified.DisclaimerIssued when there is insufficient information on which to express an opinion.Compensation of Directors & Top ExecutivesDisclosureDirectors’ remunerationRemuneration policies and practicesAuditor’s report on remuneration policiesIn the U.S., a proxy statement is sent each year to all shareholders, usually in the same mailing with the annual report. Using Financial Statement InformationComparative Financial StatementsAllow financial statement users to compare year-to-year financial position, results of operations, and cash flows.Horizontal AnalysisExpresses each item in the financial statements as a percentage of that same item in the financial statements of another year (base amount).Vertical AnalysisInvolves expressing each item in the financial statements as a percentage of an appropriate corresponding total, or base amount, within the same year.Ratio AnalysisAllows analysts to control for size differences over time and among firms.Liquidity Ratios=Current ratioCurrent assetsCurrent liabilitiesMeasures a company’s ability to satisfy its short-term liabilities=Acid-test ratioQuick assetsCurrent liabilitiesProvides a more stringent indication of a company’s ability to pay its current liabilitiesFinancing Ratios=Debt to equity ratioTotal liabilitiesShareholders’ equityIndicates the extent of reliance on creditors, rather than owners, in providing resources=Times interest earned ratioNet income + Interest expense + TaxesInterest expenseIndicates the margin of safety provided to creditorsAppendix 3: Reporting by Operating SegmentReportable Operating Segment CharacteristicsEngages in business activities from which it may earn revenues and incur expenses.Many companies operate in several business segments as a strategy to achieve growth and to reduce operating risk through diversification. Segment reporting facilitates the financial statement analysis of diversified companies.Operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance.Discrete financial information is available.What Amounts Are Reported By An Operating Segment?General information about the operating segment.Segment profit or loss, segment assets, segment liabilities, and the basis of measurement.Reconciliations of the totals of segment revenues, reported segment profit or loss, segment assets, segment liabilities and other material segment items.Segment ReportingReporting by Geographic AreaIFRS No. 8 requires an entity to report certain geographic information unless it is impracticable to do soInformation About Major CustomersRevenues from customers generating 10% or more of the revenue of an entity must be disclosed.End of Chapter 3© 2013 The McGraw-Hill Companies, Inc.
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