会计概念英文名词解释

I.

Session 1 Definitions and Elements of Financial Statements You will need to learn these underlined terms for the midterm! Income statement – “video” of revenues, expenses, gains, losses over a period of time a. Basic definitions: –increase in equity (and associated increase in assets and/or decrease in liabilities) earned from the sale of goods or provision of services to customers; it is measured on a gross basis as the amount of assets to be received. – decrease in equity (and associated decrease in assets and/or increase in liabilities) created by sale of goods, rendering of services or passage of time; it is measured on a gross basis as the amount of assets consumed. increase in equity resulting from selling assets or recognizing the increase in value of assets (or decrease in value of liabilities); it is measured on a net basis as the positive difference between current value and amount recorded on the balance sheet. – decrease in equity resulting from selling assets or decrease in value of assets (or increase in value of liabilities); it is measured on a net basis as the negative difference between current value and amount recorded on the balance sheet. which a firm prepares an income statement and statement of cash flows (e.g., an annual report has a 12-month accounting period and a quarterly statement has a 3-month accounting period). b. Elements: revenue from selling goods or providing services to customers, which is reported as the top line on the income statement. , material, and overhead costs directly related to providing goods or services.

is the difference between Sales Revenue and Cost of Goods

Sold, which represents the profit that is available to cover all of the other

expenses on the income statement.

are expenses related to the ordinary operating

activities of the firm of providing goods or services to customers or gains

and losses related to operating assets like PPE.

FINANCING activities (i.e., interest expense) and INVESTING activities

(i.e., interest income and gains and losses on investments).

equals operating profit minus other income and

expense.

equals a GAAP based measure of the government charges on

income.

c. because amounts accumulate for a defined period of time and are then

zeroed out when the balance is transferred to retained earnings.

Annual income statement amounts represent the total revenues or

expenses for a 12 month period called the fiscal year.

II. Balance sheet – “snapshot” of assets, liabilities, stockholders’ equity at a point

in time

a. Basic Definitions

services sold to customers and then back to cash collected from customers.

b. Elements: : resource the firm controls because of a past transaction or event that provides expected future benefits. asset a firm expects to convert to cash, sell, or

consume within the longer of one year or an operating cycle. asset not classified as current. creditor’s claims or obligationthat represents a probable future economic sacrifice of assets or services based on a past transaction or event. : obligation a firm expects to pay within the

longer of one year or an operating cycle. liabilitynot classified as current.

: measure of financing provided by owners of the firm

that captures owners’residual claim on assets of the firm after satisfying liabilities.

cumulative net income minus dividends over

the life of the firm.

Retained earnings are a source of financing. When earnings exceed

the dividends paid out to shareholders, it increases equity or the

owner’s claim on the firm.

There is NOT a corresponding “cash fund” in the asset section equal

to the balance in retained earnings. Changes in retained earnings are

a function of net income and dividends declared, which may or may

not correspond to changes in cash.

distribution of cash to the owners of the firm.

c. the amountsaccumulate year after year. The ending balance from the previous year becomes the beginning balance for the next year. For example, ending cash amount in 2011 will be the beginning cash amount in 2014, that is then adjusted for 2014 inflows and outflows to determine the 2014 cash amount.

d. Basic accounting equation:

ASSETS = LIABILITIES + STOCKHOLDERS' EQUITY

III. Assets are resources and liabilities and equity represent the claims on those resources. Statement of Retained Earnings (included in Statement of Shareholders’

Equity) presents a“video” of the change in retained earnings from net income and dividends during the period.

Statement of Cash Flows – “video” of the sources and uses of cash over a period of time that explains the change in the cash balance on the balance sheet. a. Operating – core operations and items related to measurement of net income b. Investing- firms INVEST in assets so includes asset transactions:

i. buy and sell property plant and equipment

ii. buy and sell investments

c. Financing - firms FINANCE with debt and equity so includes debt and equity transactions

i. borrow and pay back nonoperating debt

ii. issue and repurchase stock

iii. pay dividends

d. Format

+Net Operating Cash Flow

+ Net Investing Cash Flow

+ Net Financing Cash Flow

= Change in Cash for the Period

Beginning Cash from Last Year

+/- Change in Cash for the Period

= Ending Cash for This Year The powerful implication is investments in assets can be financed with either DEBT or EQUITY! IV.

Balance Sheet AccountName Definitions

An account accumulatestheincreasesanddecreasesthatoccurforasingleitem.

GAAPdoesnotprovideanall-inclusivelistofacceptableaccountnamessotheirusage

variesbyfirm.

Separateaccountsarereportediftheyare “material ”orcrucialtounderstandingfirm performance. Forexample,somefirmsdivideinterestrevenueandinterestexpenseinto

separateaccountswhileotherfirmscombinethemintoonenetaccount.

Youwillreceivecredit inexamsaslongasthenameispotentiallyusedinpractice

andaccuratelydescribesandcorrectlyclassifiesanaccountasasset,liability,or

shareholders ’equity. Itisacceptable,butnotrequired,tousemorespecificaccount

nameslikeprepaidrentforprepaidexpense.

Thefollowinglistofaccountnamesarecommonlyused.

Assets:

Cash –currencyorbalancesincheckingaccounts,CDs,ormoneymarketaccounts

availabletomeetcurrentobligations. Highlyliquidshort-terminvestmentswithlessthan 90daystomaturityandlittleriskofvaluechangesarecalled"cashequivalents"and

includedinthecashaccount.

Short-terminvestmentormarketablesecurities –currentvalueofinvestmentsin

anotherfirm ’sdebtorequitysecuritiesthatcanbequicklysoldforcash.

Accountsreceivable –amountduefromcustomersforgoodsandservicesalready delivered. Grossaccountsreceivableistheamountowed. Netaccountsreceivableis

theamountexpectedtobecollectedaftersubtractinganallowanceforuncollectible accounts.

Notesreceivable –amounttobereceivedfromanoutsideentityformalizedwithanote

orlendingagreementthatspecifiesinterestandpaymentterms.

Inventory –rawmaterials,workinprocess(productsstartedbutnotfinished),and

finishedgoodsavailableforsaletocustomers.

Prepaidexpenses –assetrecognizedwhencashpaidinadvanceofwhenfuture

expenseswillbeincurred.

Long-terminvestments –investmentsinbondsorequitysecuritiesexpectedtobeheld forthelong-term.

Property,plant,andequipment(gross) –originalcosttoobtainandputintoservice

buildings,land,andequipment.

Accumulateddepreciation –acontraoroffsettingaccountwiththecumulativeamount ofthecostofproperty,plantandequipmentassignedtodepreciationexpense.

Property,plantandequipment(net)–originalcostminusaccumulateddepreciation. Intangibleassets –itemslikepatentsandcopyrightsthatprovidefuturebenefitbutdo nothavephysicalsubstance. Intangibleassetsareonlyrecognizedwhentheyare

purchasedfromanoutsidesource. Forexample,ifafirmpurchasesapatentfrom

anothercompanythecostisshownasanasset. However,ifafirmdoesresearchthat

resultsinapatent,thoseresearchcostsareincludedinR&Dexpenseandanassetis

onlyrecognizedforthelegalandregistrationfeestoobtainthepatent.

Goodwill –purchasepriceofanacquired companyminusthemarketvalueofthe

identifiableassetsminusliabilitiesofthatcompany. Themarketvaluesofbothtangible andintangibleassetsareconsideredinthecalculationofidentifiableassets. Goodwillis ONLYrecognizedwhenonecompanypurchasesanothercompanyatapremiumfor

thingslikefuturepotential,marketpower,andqualityofworkforcethatarenot

considered “identifiableassets. ”

Otherpayablesoraccruedexpenses –amountsowedforexpensesthathavealready

beenrecognizedlikeinterest,taxes,salaries,andrent.

Short-termloanspayableornotespayable –obligationsformalizedwithanoteorlending agreementthatspecifyinterestandpaymenttermsandareduewithinthenextyear.

Currentmaturitiesoflong-termdebt-theportionoflong-termdebtexpectedtobe

paidwithinthenextyear.

Unearnedrevenueoradvancesfromcustomer –liabilityincurredbecausecashwas receivedfromcustomersinadvanceofwhenrevenueisearnedsothefirmhasan

obligationtodelivergoodsorservicestothecustomer.

Long-termdebt (Notes,LoansBonds,orMortgagePayable)–obligationsformalized withanoteorlendingagreementexpectedtobepaidmorethan1yearlater. Liabilities: Accountspayable –amountowedtosuppliersforinventoryorothergoodsorservices purchasedoncredit.

Shareholders’Equity:

Commonstockatpar –parorstatedvalueoftotalstockissuedoverthelifeofthefirm.

Commonstockhasvotingrights. Notethatparvaluehaslegalsignificance

butnorealeconomicsignificance. Forexample,insomelegaljurisdictionsparvalue

canplayaroleindistributionstostockholdersinthecaseofliquidation.However,par

valuedoesnotrelatetothemarketvalueofthestock.

Somelegaljurisdictions,includingTexas,allownoparvaluestock.

Additionalpaidincapital - totalamountofcashreceivedaboveparvaluewhenthe

stockwasissued,aggregatedoverthelifeofthefirm. Notethatsomefirmsincludethe

parvalueandadditionalpaidincapitalinone “commonstock ”account. Also,notethat

additionalpaidincapitalisreducedforcertainstockoptionandtreasurystock transactions.

Example: Issue10,000sharesof$1parvaluecommonstockfor$5per

share. Theshareholders'equitysectionwillappearasfollows:

Commonstockatpar $10,000

Additionalpaidincapital $40,000

Preferredstock -amountofcashthefirmreceivedforstockgivingtheholdera

preferencerelativetocommonshareholdersintermsofdividendsandcashreceivedif

thefirmisliquidated.

Treasurystock -repurchase price of stock that was issued and then repurchased by the firm and held internally.

Noticethattreasurystockreducesshareholders ’equitybecauseitreducestheequity

claimedbyOUTSIDEshareholders.

Retainedearnings –cumulativenetincomeminusdividendsoverthelifeofthefirm.

AccumulatedOtherComprehensiveIncome -gainsandlossesthatbypassthe

incomestatementandflowdirectlytotheshareholders ’equity,accumulatedover

thelifeofthefirm.

Income Statement Account Name Definitions Interest income – interest earned on debt investments.

Cost of goods sold or cost of sales revenue– labor, material and overhead costs directly related to providing goods and services. It is recognized only for the goods or services delivered during the period. For example, a manufacturing firm includes manufacturing salaries and depreciation on manufacturing equipment in the inventory account and then in cost of goods sold when the inventory is sold to customers.

Assume TI has 20 inventory items available for sale that cost $1000 each, and they sell 5 of these items for $1600 each. The income statement would show sales revenue of $8,000 (5 * $1,600) and cost of goods sold of $5,000 (5 * $1,000). It is not appropriate to show revenues minus cost of goods sold as one net amount on the income statement. With this example, the inventory asset account on the balance sheet contain $15,000 (15 * $1,000).

Now assume, you know that beginning inventory is $12,000, purchases were $8,000, and ending inventory is $15,000. Calculate Cost of Goods Sold with the following equation: Beginning Inventory 12,000

+ Purchases = Cost of Goods Available for Sale $20,000

- Ending Inventory = Cost of Goods Sold =$5,000

Depreciation expense – cost of PPE allocated to expense during the current period.

Wage or salary expense – amount of wages employees have earned during the period.

Rent expense – amount of rent incurred during the period.

Advertising expense – amount of advertising costs incurred during the period.

Interest expense –cost incurred during the period for money borrowed.

Insurance expense – amount of insurance used during the period.

Tax expense – federal, state, and local taxes measured on income.

Selling, general, and administrative expense – all costs to sell and manage a firm (includes sales and management salaries and depreciation related to headquarters building).

Research and development –all costs to create and develop new products (includes R&D salaries and depreciation on research facilities and equipment).