Accounting Knowledge: Report Series

The role of each statement is summed up in one sentence.

1. the balance sheet reflects the financial position at a certain time.

2. the profit and loss account reflects the business results at a certain time. The last number of the table "net profit" will be included in the profit distribution table.

3. the profit distribution table reflects the profit distribution in a certain period, and adjusts the undistributed profits at the beginning of the period to the undistributed profits at the end of the period and is included in the balance sheet.

4. the cash flow statement reflects the results of changes in cash and the reasons for changes in the financial position.

1. Balance sheet

First, let's take a look at two important accounting formulas.

Formula 1 borrower = Lender

The basic knowledge of accounting begins with the borrower and the lender.

The borrower is on the left side of the account book, and the lender is on the right side of the account book.

Here, we must keep an unchangeable law: "debtor = credit party". In other words, in any paction, both sides must be registered at the same time. The principles are as follows:

(1) when assets increase, they are recorded on the left side; when assets decrease, they are recorded on the right side.

(2) when debt is increased, it is recorded on the right side; when it is reduced, it is recorded on the left side.

Formula 2 assets = Liabilities + shareholders' equity

The most important concept in accounting is "balance". Its main body is the borrower and the lender just mentioned. In short, the increase in assets is the borrower; the increase in liabilities or shareholders' interests is the credit side, and the balance between the two sides is called "balance".

Based on these two important formulas, the balance sheet reflects the financial status of an enterprise at a certain time. It reveals what the company owns, that is, the assets of the company, the debts owed by the company, the liabilities of the company, and the value of the company's net assets, that is, the interests of the shareholders.

The accounts on the balance sheet can not be cleared at the beginning of each new fiscal year and their balance is zero.

In the balance sheet, assets are arranged according to the order of liquidity from large to small, while liabilities are arranged in the order of debt maturity.

Two. Income statement

The income statement reflects the profit of an enterprise in a certain period of time.

A significant difference between it and the balance sheet is that every account on the income statement will be consolidated at the beginning of each new accounting year, with a balance of zero.

The general expression of the statement can be expressed as gross income - total cost = net profit (loss).

This expression can derive the following expressions:

Operating profit (loss) = sales revenue cost cost total

In the upper form, the total cost includes: (1) the cost of goods sold, the selling expenses and the management expenses; the depreciation before tax profit = the operating profit, the interest expense, the net profit (loss) = the pre tax profit net profit or net loss, representing the net profit of the enterprise.

It is usually referred to as the "bottom line" (commonly known as net profit, usually at the bottom line of the income statement).

As an operator, it is important to always realize that what you really earn is net profit, not business profit.

We should pay attention to the following questions in this table:

(1) the cost of sales should take into account the following aspects:

Can we reduce the cost of goods sold by renegotiation with suppliers or finding new and cheaper suppliers? Can we purchase large quantities of inventory in order to effectively reduce the cost of goods sold? Can we substitute other items, materials and products for the purchase? Can we raise the selling price of our products?

(2) generally speaking, when sales cost and management expenses are dropping rapidly, most of them are

Is the reduction in costs caused by layoffs? In other words, is there a staff member being dismissed or a company shrinking? If so, what is the direct and indirect costs associated with layoffs and downsizing?

Is the reduction in cost?

Is the reduction in costs caused by the tightening of expenditure related to employee costs and employee benefits?

Is the reduction in costs like office rental, utilities (such as telephone, etc.) and insurance?

Does the reduction in cost come from the reduction of research and development? If so, what effect will it have on the future profitability of the enterprise?

(3) the total cost and cost should be considered in the following aspects:

How does this ratio compare with the same industry level? Can this cost item be further reduced without any adverse effects?

(4) depreciation is based on depreciation expense, which reflects the potential of tax reduction due to the loss of equipment or other real estate, or the natural elimination. We can consider the following question: is the increase in depreciation cost caused by the purchase of new machinery or equipment or other real estate, or by the change of depreciation method used?

(5) a comparison between operating profit and net profit that enterprises invest in their lucrative profits in order to get state tax relief or increase in net profit is only due to the fall in interest rates and interest costs. Fortunately, we should pay attention to: in absolute terms, interest expense is significantly reduced, and the percentage reduction is 50%.. Although the object of income tax is pre tax profit (increased by 50%), the growth of income tax is only 20%, far less than the growth of operating profit, pre tax profit and net profit.

Three. Cash flow statement

This report reveals the source and application of cash in a given period of time, which reflects the profits and debts of the enterprise.

Cash flows can be divided into three categories: cash flows from business activities, cash flows from investment activities and cash flows from fund-raising activities.

Using the cash flow statement, you can further draw some basic conclusions of your company.

Some activities cause the cash inflow of enterprises and some activities do not, and the final result is that the cash income of enterprises is higher than that of expenditure.

How to make full use of funds?

As the saying goes, "it is harder to borrow money than to spend money".

To make good use of money, enterprises must "spend their money on ideas".

This requires the operators of modern enterprises to pay attention to the rational distribution of funds according to the nature, structure and operation needs of various funds, so that they can turn around and avoid risks and achieve the purpose of profit.

The use of funds is a very important issue related to the survival and survival of enterprises.

First of all, in terms of capital utilization, capital expenditures must be stable and reliable.

This is because the occupation of capital, such as investment in fixed assets, is a long-term occupation. We should choose the lowest cost source of funds, and we should focus on internal capital.

Therefore, at the beginning of the investment, to set up stable and reliable funds is an important condition for making good use of funds.

Even if there are insufficient funds and need to borrow funds, we should pay attention to the cost of capital, the source of return and the matching of the return period. We should fully estimate the possibility of risks and take precautions against risks.

This is the essentials of mastering the use of funds.

Secondly, in the course of business operation, we should pay attention to the reasonable ratio between fixed assets and long-term debt.

The long term use of fixed assets, the dispersion of value compensation and the slow turnover make it impossible to convert cash into money funds.

Therefore, enterprises should fully consider the ability to repay debts when obtaining long-term debt sources.

Generally speaking, the scale of fixed assets should be higher than that of long-term debt, that is, the ratio of long-term liabilities should not be higher than the value of fixed assets, and the ratio of structural assets should be determined by the investment structure of enterprises.

Finally, the ratio of current assets to current liabilities should be kept at an appropriate rate.

In terms of its nature, the use of liquid assets has the characteristics of quick turnover, strong liquidity and self liquidating ability (after sale).

However, we can not ignore the possibility of market risk, default risk and financial risk, that is, sales losses suffered by fluctuations in market prices, and debtors of enterprises can not perform their debts on time. Owing to the possible differences in financial revenue and expenditure and distribution schedules, there are difficulties in cash dispatching failures and difficulties in repaying current liabilities.

This requires the use of current liabilities while taking into account the ratio and coordination of liquidity.

Under normal circumstances, the ratio of current assets to current liabilities should also be adjusted, and appropriate adjustments should be made at any time with the operating conditions.

In short, the structure and ratio of the use of funds are realized through the comprehensive balance of the supply, production, marketing plan and financial revenue and expenditure of enterprises, and at any time attention should be paid to regulating the operation of capital.

On the issue of raising and applying funds, enterprises must also pay attention to two points: first, the enterprise and its organization and operator must be familiar with and master the financial business, grasp the changes in the financial market at any time, make full use of the financial market to obtain extensive financial services for the enterprises; two, the modern entrepreneurs must establish the investment consciousness of the commodity economy, carry out the scientific and democratization of the investment decision, and obtain the success of the business.