袁蓉丽《会计专业英语》Chapter 8.pptVIP

Chapter 8Financial Statements and Financial Statement Analysis 8.1 Financial statements8.2 Financial statement analysis2 8.1 Financial StatementsFinancial statements are the principal means through which a company communicates its financial information to stakeholders. This chapter introduces four primary financial statements: (1) the Statement of Financial Position (often referred to as the Balance Sheet), (2) the Income Statement;(3) the Statement of Cash Flows; and (4) the Statement of Changes in Owners’ Equity.Note disclosures are an integral part of each financial statement.3 8.1.1 Balance Sheet1. The Purpose of a Balance SheetThe Balance Sheet is also called the Statement of Financial Position. The purpose of this financial statement is to demonstrate where the company stands, in financial terms, at a specific point in time. It reports the assets, liabilities, and owners’ equity of a business enterprise at the end of a specific date.The user of the Balance Sheet can assess a company’s liquidity, solvency, and financial flexibility through the information on assets, liabilities, and Owners’ equity.4 2. The Elements of a Balance SheetA Balance Sheet includes three general classes of items, assets, liabilities, and owners’ equity.Assets can be divided into current assets and non-current assets. Current assets usually include cash, short-term investments, receivables, and prepaid expenses; converting themselves into cash in one year or less. Non-current assets require more than one year to realize their full value to the company, such as long-term investments, property, plant and equipment, and intangible assets.Liabilities can be divided into current liabilities and long-term liabilities.Owners’ equity includes capital stock, additional paid-in capital, and retained earnings.5 3. The Format of a Balance SheetNormally there are two presentation formats of a Balance Sheet.Horizontal presentation. This presentation format lists assets, by sections, on the left side