4-Financial Statement Analysis
P1-4 Accruals and other adjustments in preparing financial statements 掌握以下几种权责发生制（Accrual Basis）：
权责发生制是以权利和责任的发生来决定收入和费用归属期的一项原则。
R1-4 收入应与为取得该收入所发生的费用、成本相匹配，以正确计算在该会计期间所 获得的净损益。
R2-4 ★除了基本概念以外还需要掌握几个名词
??unearned revenue 或deffered revenue (liability): The firm receives cash before it provides a good or service to customers，等到货物delivery 之后，B/S 表中liability 会减少一部分，cash 增加一部分
??unbilled revenue 或 accrued revenue (asset): If the revenue is earned, and it is just that the billing dept has not raised the bill, then you should take up the revenue under accrued receivables and for most purposes, they should be the same as accounts receivables.（未开票前，称为unbilled；开票后，从unbilled 转为A/R）
??prepaid expenses(asset): The firm pays cash ahead of time for unanticipated expense. ??accrued expenses(liability): An expense that is incurred, but not yet paid for, during a given accounting period.
P2-4 Audits of Financial Statements 的理解
R3-4 Audits of Financial Statements 掌握概念及理解：
??概念：Audit is an independent review of an entity’s financial statement.
??理解：Audits provide reasonable assurance that the financial statements are fairly presented, meaning that there is a high degree of probability that they are free of material error, fraud or illegal acts.
??Audit report 有三种类型分别是qualified opinion, unqualified opinion, adverse opinion. ??★An unqualified audit opinion conveys that the financial statement report a “true and fair view” or are “fairly presented” in accordance with applicable accounting standards. ??★The auditors must also express an opinion on the company’s internal control systems according to Sarbanes-Oxley Act.
P3-4 Other Information Sources of Financial Statements 的理解 R4-4 ★Financial footnotes
??includes information about account methods and assumptions; related-party transactions; commitments and contingencies ??footnotes 是被审计过的
R5-4 Supplementary schedule: provides explanatory information, such as operating income or sales by region or business segment; R6-4 ★MD&A (Management Discussion & Analysis):
??Management must highlight any favorable or unfavorable trends, and
??Identify significant events and uncertainties that affect the company’s liquidity, capital resources, and results of operations;
??Such as, to provides information about the effects of inflation, changing prices R7-4 ★Proxy statement: provides useful information regarding ??Management and director compensation;
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??Company stock performance;
??Any potential conflicts of interest between management, shareholders and board; ??Relevant current information on their websites and press release and as part of conference calls.
R8-4 Annual filing (10-K) & quarterly report (10-Q): generally present the 4 key financial statements and footnotes but are not audited.
R9-4 8-K: reported to SEC, which includes material corporate events on a more current basis, such as M&A
P4-4 关于Financial Statement 指标、准备和呈报的一些要求 R10-4 美国准则与国际准则
??Standard-setting bodies: make the rules, such as FASB——U.S. GAAP; IASB——IFRS ??Regulatory authorities: enforce the rules, such as SEC——美国；FSA——英国 R11-4 ★ Qualitative characteristics of financial statement under IASB, relevance 和 reliability faithful presentation（two fundamental characteristics）
??Relevance: Financial statements are relevant if the information in them can influence user’s economic decisions. To be relevant, information should have predictive value, confirmatory value, or both.
??Faithful representation. Information that is faithfully representative is complete, neutral (absence of bias), and free of error.
R12-4 ★Four characteristics enhance relevance and faithful presentation
??Understandability：Users should be able to readily understand the information .
??Timeliness. Information is available to decision makers before the information is stale. ??Verification：Independent observers, using the same methods, obtain similar results. ??Comparability
R13-4 Constraints on financial statement
??Relevant vs. Timely：There is a tradeoff between relevant and timely.
??Cost vs. benefits：The benefit users gain from the information should be greater than the cost of presenting it.
??Non-quantifiable：Non-quantifiable information (reputation, brand loyalty, capacity for innovation, etc.) cannot be captured directly in financial statements.
R14-4 ★Coherent of financial reporting framework (underlying logic) ??Transparency：Full disclosure and fair presentation create transparent.
??Comprehensiveness：An effective financial reporting framework is based on principles that are universal enough to provide guidance for recording both existing and newly developed transactions.
??Consistency：Similar transactions should be accounted for in a similar manner regardless of industry company size, geography, or other characteristics. R15-4 Standard-setting approach
??Principles-based: require the prepares of financial reports and auditors to exercise considerable judgment in financial reporting — IFRS
??Rules-based: establishes specific rules for each element or transaction — U.S. GAAP ??U.S. GAAP 将慢慢转变为Objectives Oriented（结合以上两者）
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P5-4 Financial Statement Elements 的理解
Financial Statement Elements 掌握U.S. GAAP 和IFRS 的区别：
R16-4 US GAPP: Assets，Liabilities，Equity or Net Assets，Investments by owners， Distributions to owners，Comprehensive income，Revenues，Expenses，Gains， Losses
R17-4 IFRS: Assets、Liabilities、Equity or Net Assets、Revenues，Expenses
P6-4 Steps in the Financial Statement Analysis Framework
R18-4 Steps in the Financial Statement Analysis Framework — 6 个步骤 ??State the objective and context
??Gather data：所有财务报表信息的搜集
??Process the data：将财务报表搜集的信息做处理，如计算ratio ??Analyze and interpret the data：将分析出来的各种ratio 进行分析 ??Report the conclusions or recommendations ??Update the analysis
P7-4 Accounting System R19-4 ★报表制作几个步骤
??General Journal: list of entries sorted by date (order) ??General ledger: sorted by account
??Initial trial balance/Adjusted trial balance: balance, Trial balances are typically prepared at the end of an accounting period as a first step in producing financial statement. ??Financial statements
P8-4 Revenue Recognition
R20-4 Revenue Recognition criteria
??completion of the earnings process & assurance of payment. For example, Receiving cash before revenue recognition--unearned revenue ??Expenses are recognized when incurred.
??Under IFRS: risk and reward is transferred, no continuing control or management over the goods sold, revenue can be readily measured, probable inflow of economic
benefits, cost can be realiably measured (for service, the stage of completion can be measured)
??Under GAAP: evidence of arrangement between the buyer and seller, product being delivered or service has been rendered, price is determined or determinable, reasonably sure of collecting money.
R21-4 ★Revenue Recognition 理解： ??Under U.S. GAAP
1) 对于long-term contract，可以选用POC 和CC——此处定为考点，请重点掌握. Percentage of completion: 在工程的收入与支出确定时使用。通过已产生支出与总 支出的比例来确定收入总额。Completed-contract:当工程的结果不确定时使用。收 入，支出和利润均在工程完工后确认。
2) 对于分期付款合约，如果收款非常确定，那么可以按照普通的收入确定法来确定
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收入；如果收款不确定那么用installment sales；如果收款高度不确定那么用cost recovery 3) 熟记：POC 和CC 的区别: 重要指标，A 是POC 比较大；L 是POC 比较小；NI 的波 动是CC 比较大；但是total CF 一样大 ??Under IFRS
1) 对于long term contract，只有POC；
2) 那么如果遇到长期合同，与美国准则下CC 不同，在国际准则下选用收入的确认不 超过成本，最后才确认毛利；如果有亏损，全额进行确认。 3) 其它与美国准则一样
R22-4 ★installment method 和cost recovery method 如何区分（under US. GAAP） Under US. GAAP, Installment method and Cost recovery method are used ??Installment method: when collectibility cann’t be reasonably estimated, profit is recognized as cash is collected.
??Cost recovery method: when is highly uncertain, profit is recognized only when cash collected exceeds cost incurred.
??假如：ABC firm considered the initial investment by the buyer was not substantial enough to warrant full recognition of the gain.
??If the recovery of cost is assured if default.也就是说就算是default，公司也能确认cost 是可以recovery 的。所以题目中有这样的描述就是installment sales；
??如果没有这样的描述，那么就是cost recovery。Cost recovery 较谨慎。 ??例：Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted. On June 15, 2007, a short term agreement was entered into sell the property and automatic equipment of ABC firm for USD 100,000. As the result of this sale, the subsidiary will no longer offer sales of title insurance or real estate closing servicing. ABC firm considered the initial investment by the buyer was not substantial enough to warrant full recognition of the gain. However, the recovery of the cost of the property is reasonably assured if the buyer defaults. Which of the revenue recognition method will be the most appropriate? 答：用installment sales method R23-4 ★Installment 在IFRS 下如何进行利润确认
??the discounted present value: is recognized at the time of sale
??the difference between the installment payments and the discounted present value: is recognized as interest over time
??If the outcome of the project cannot be reliably estimated:revenue recognition is similar to the cost recovery method.
P9-4 Accounting Equation
??Assets = Liabilities + Owners’ equity
??Assets = Liabilities + Contributed Capital + Ending retained Earnings
??Assets= Liabilities + Contributed Capital + Beginning Retained Earnings + Revenue – Expenses – Dividends
??Owners equity = contributed capital + ending retained earnings.
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P10-4 Income Statement 相关其它特殊交易的处理，如Barter Transactions R25-4 ★Barter Transactions
??Under IFRS, 收入确认fair value of revenue from similar non-barter transactions with unrelated parties.
??Under U.S. GAAP, 收入确认为fair value only if a company has historically received cash payments for such services and can thus use this historical experience as a basis for determining fair value.
R26-4 Round Trip：barter transactions 的一种形式，比如A 公司有一项服务卖给B 公司， 立刻又从B 公司购入了等额的产品，此时A 公司的收入等于费用，这样的交易 不影响NI，也不影响CF
R27-4 ★Gross Revenue and Net Revenue ??Gross revenue: 公司分开记录收入和支出。 ??Net revenue: 公司只记录收入和支出的差额。
??确认为gross revenue 是有条件的：the company is the primary obligor under the
contract, bears risk, can choose the supplier, and has reasonable latitude to establish price； ??如果不满足以上条件，确认为net revenue，比如代售，代销确认的就是net
P11-4 Income Statement 的线下项目
R28-4 FASB 要求，在一份基本的Income Statement 中，为了得到Net Income，必须包含 net income from continuing operations 和non-recurring items. R29-4 ★Non-operating income:
??For non-financial service company： 在equity or debt securities issued 的投资，any dividend, interest (including amortization discount or premium) or profits from sales 都 视为non-operating income；
??For financial service firms, interest income and expense are likely components of operating activities.
R30-4 ★Non-recurring items 分为三种
??分别叫做：Unusual or infrequent items, Extraordinary items, Discontinued operations. ??Unusual or infrequent items 指Transactions or events that are either unusual in nature or infrequent in occurrence but not both.唯有它列示于net income from continuing
operations 之上.包括：(1) gains or losses from the sale of assets or part of a business. (2) impariments, write-offs, write-downs and restructuring costs.
??Extraordinary items 指性质高度异常的重大损益项目，该项目因企业日常业务活动以 外的交易或事项产生，并预期不会再度发生，包含了灾难带来的损失，对于国外 没收，及提前赎回债券的损失（美国准则有这项，但是国际准则没有这一项）
R31-4 ★Discontinued Operations：the business line in disposal of or intended to dispose generate the income (earnings or loss net of tax); during the phase period (since measurement date to disposal date), should recognize the loss but not the gain.
R32-4 ★Accounting changes 包括changes in accounting principles, changes in accounting estimates。
??changes in accounting principles 需要追溯调整，即retroprospective，放在R/E beginning （在美国准则下这一条已经不再显示了，现在来自于这里的变动全部直接调整期初 留存收益）。
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