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Business Model - The Financial Statement

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The Financial Statement

The Financial Statement used to describe Economic Activities

Economic Activities

Functions of each statement

Balance Sheet: What initial investment has become and how it worth.

Assets Liabilities
Current Assets Current Liabilities
Cash Short-term borrowing
Account Receivable Account Payble
Other Receivable Other Payable
Prepaid accounts Deposit Received
Inventory Other Liabilities
Deferred Expenses Total Current Liabilities
Other
Noncurrent Assets Noncurrent Liabilities
Long-term investment Long-term loans payable
Fixed asset Bond Payable
Intangible Assets and Other Assets Long term payable
Others
Shareholder's equity
Capital Stock
Additional Paid-in captical
Surplus reserve
Retained earnings
Total Assets Total Liabilities and Shareholders' Equity

If the expenditure brings Some thing for the future use, it is called the asset, Otherwise, if the expenditure is only related to curren period, it is called expense.

The assets of today are the expenses of the future.

Current assets

The current assets play an important role in funding day-to-day business operations.

Noncurrent asstes

Noncurrent assets are a company's long-term investments for which the full value will not be realized within the accounting year.

The ownership of individuals dose not belong to enterprises.

How to determine the value of the assets?

  1. Cost of acquisition(But many assets' value fluctuates over time)
  1. Market price(Not all assets have a market price available)
  2. Fair value
  3. Historical Cost : Under the principle of historical cost, if an asset is not sold, it will always be recorded as the purchase price.

IFRS:Internarional Financial Reporting Stantard

Assets

Captical stock

When this company has more than one shareholder, the division of shares between the company's shareholders in not accordance with their capital contributions, it is according to the proportion of equity.

The surplus reserve is profit that cannot be distributed by the law. And retained earnings is profit we don't want to distribute.

Accounting Identities

\[ Assets = Liabilities + Shareholders'Equity \]

residual claims

Shareholders are the ultimate risk bearer and benefit receiver of a company.


Income Statement

We can see if our initial investment's value is guaranteed, But this is not enough,we want to know if we are making profit as well.

Operating Income
- Operating Cost
- Business Tax and Surcharges (turnover tax)
- Operating expenses
- Administration Expenses
- Financial Expenses
- Impairment loss of asset
+ Gain on the Changes in the fair value
+ Investment Income
= Operating profit
+ Non-operating revenue
- Non-operating expenses
= Total Profit
Net Profit

\[Revenue - Cost = Gross Profit \]

\[Operating Income - Operating Cost = Gross Profit \]

\[Total Profit - Income tax = Net Profit \]

Turnover tax

Period expenses

Excess inventory
Shortage of inventory

The characteristic of the non-operating income and expenditure they are both not related to the company's operating activities. They happen by chance and don't have continuity in the company's plans.

Taxable income: based on the tax law
Total profit: based on accounting standards

\[Revenue - Expenses = Profit \]

Notice:
\(Income \not ={Cash Inflow}\)

\(Expenses \not ={Cash Outflow}\)

\(Profit \not ={Cash Flow}\)

Depreciation is used to describe the decreasing in value of fixed assets. When calculating depreciation. We don't need to pay cash to anyone, We only write it down on the books. At this time, we have to record an expense, but we don't need to pay cash.

\[Cash Inflow - Cash Outflow = Cash Flow \]

Question: How do we prepare the financial reports?

Cost of goods sold at manufacture process.
Operating expense at sales process.

Variable Cost

Fixed Cost

Within the scope of a certain capacity, the amount of the fixed cost remains the same no matter how many products are produced.

\[Variable Cost + Fixed Cost = Total Cost \]

R&D investments at research stage are counted as expenses, and at the development statge it is counted as an intangible asset.
The fees for applying patents are included in the value of intangible assets.
Purchased technology and patents are also intangible assets.
The intangible assets created by the enterprise itself will not ususally show on the financial report.


Cashflow Statement

Operating activities Investment activities Financing activities
Core Business Other Business Fixed assets Investment Debt
Inflow Sale,Tax Rent, Tax Disposal Disposal,Investment Income Raise Money
Outflow Procurement,Salar,Tax Rent, Tax Purchase or Construct Invest Interest, Pricipal

Operating Lease(of short duration, small amount)
Financing Lease(of long duration, big amount)

Cash flow statement is catagorized description of cash inflows and outflows according to the three activities including operation investment and financing that a company engaged in.

The implications of cash changes caused by various reasons are different.

Cash are critical to the survival of an enterprise.

Cash flow statement describes where the cash comes from and goes to, more precisely, it displays the risk profile of an enterprise.

\[Inflow - Outflow = Net Cash Flow \]

How do the changes in cash happen.

The Balance Sheet Income statement Cashflow Statement
Perspective Investment and Financial activities Operation activities Risk

Contingent Liability
Off balance sheet liability

标签:activities,Financial,assets,Cash,value,Cost,Operating,Statement,Model
来源: https://www.cnblogs.com/realms/p/15907054.html