IMBA财政会计课件英文版(ppt 52).pptVIP

How important is accounting information? January 22, 2003, after market closed, ATT (stock symbol T) announced: Revenue for 4th quarter shrank to $9.3 billion from 10.2 billion in the 4th quarter of previous year Loss from continuing operations widened to $611 million from $216 million. How important is accounting information?(F) How important is accounting information? In the weekend before Monday, Feb. 3, 2003, Mattel (MAT) announced fourth quarter results: Revenue increased from the fourth quarter a year earlier by 6.9% to $1.56 billion. Net income increased by 35% to $186.1 million. Earnings per share (EPS) increased to 42 cents from 31 cents. How important is accounting information?(F) Value Investing Accounting concepts and principles Entity concept Reliability principle (objectivity principle) Cost principle Going-concern concept Stable-of-monetary-unit concept Conservatism principle Accrual accounting concept Entity concept A company is an independent entity. Only transactions that are related to the company itself, not a particular person working for the company, should be considered company affair and be recorded. Example: the owner of an ice cream store gives an ice cream to his niece; this act is not a business transaction, it is family affair. But if he gives to a neighbor’s niece, it is a business transaction. It is called promotion. Reliability principle (objectivity principle) Accounting numbers 1) should be verifiable, and 2) can be confirmed by an independent observer. Examples of unreliable numbers: Men’s weight Women’s age Number of years a Ph.D. takes to finish his degree CEO’s pay Enron’s earnings Historical Cost Principle All acquired assets should be recorded at their actual cost, I.e., the amount of money paid to obtain the asset, even though the cost of the same asset today is different. Why? Historical cost is reliable. Going-concern concept It is like people in the past who wish an emperor lives fo