Notes of Learning the Course Financial Management for Non-financial Staff Written by Professor Gao Qifu

 

Financial Management for Non-financial Staff:

Professional Manager: Understand & Use of Financial Information.

Professional accounting people：Collecting & Processing Financial Information.

First, interpreting financial information rightly，learning how to read the enterprise's financial report

Second, perceiving real financial situation, & how to assess the financial situation of enterprises

Third, listen carefully to the views of Certified Public Accountants

Four, learning how to read the audit report

eg：Compared to pilots who cannot to read the control cabin, professional managers who cannot read the financial report are terrible too.

Lecture One   Accounting is the language of enterprises

I. Elements of the accounting language

Accounting is the language of enterprises, a common internal communication tool and we need it dealing with nations, companies, banks and international world. What does it perform is the economic activities via currency.

Carrier of accounting: accounting documents, accounting books, financial accounting reports.

Elements of accounting

i. Information on a specific point in time

a、assets：i.e. resources, current assets that can be turned into money within one year, long-term investment for at least one year, capital assets

Intangible assets (land-use rights, patent), other assets

b、Liabilities: to currencies and current liabilities (debt within one year), long-term liabilities (over one year)

 c、Shareholders' equity: (investment in the assets of the enterprise's rights)

Revealed information on a specific point in time i.e. give enterprises a snapshot

Assets = interests + liabilities

ii.A certain period of the language vocabulary

a、revenue：

b、expenditure：

c、profit：

a period number, dynamic, like a video of a company

II、accounting language norms

Four levels:

1、accounting law（approved by Standing Committee）

2、Corporate financial accounting reports Ordinance

3、Enterprise Accounting Rules

4、Enterprise Accounting System

III.financial report

Accounting is a financial report of final product.

Composition of financial reports:

1、Accounting statements, i.e. tables turned from record of a certain period, information on a specific point in time and period , including balance sheet, profit and profit distribution statement, cash flow statement

2、Accounting statement notes: to help to read the information statement

3、Financial situation instruction: show a general understanding of financial situation, production, profitability, the use of the funds.

Bound in financial report book

Front: table of contents telling three parts

With A4 size paper

No matter how complicated the financial report book is, it always tells two things. One is situation of particular time point (of assets, liabilities & the rights and interests), the other is operation in a certain period of time (revenue, expenditure &  profit).

Standard and complete monthly report (two sheets)，quarterly report, half-year report and annual report

Lecture Two   How to Read the Balance Sheet

Ⅰ. Balance Sheet and its function

The sheet shows the total assets held by the an enterprise and how do they distribute in a certain period of time. It also tells when the enterprise will return the debt, and enterprise’s owner’s rights and interests

 eg：Liability is put before benefits in accounting.

Sheets of several periods can show the development trend of the financial situation of a enterprise.

II.format of balance sheets

Account style of system selling in shops

Report style, use a lot, good to read printing in A4 size paper

III. Contents of balance sheets

assets：

current assets: monetary fund，payment in advance，receivables etc. which can be cashed within one year

   long-term investment：Equity investment (the joint venture, stock and other investments), bonds investments etc. that can be empty for more than a year.

    capital assets：Investment in construction, engineering, material, etc.

    Intangible assets：trademarks, land use rights, patents

    Other assets：the court to freeze more than one year amortization period。

    Look down from the previous，liquidity is getting worse.

Liabilities：

current  liabilities：Short-term borrowings, accounts payable / notes receivable in advance to deal with wages, to meet the welfare, tax payable, and other amount due within one year.

       Long-term liabilities: Long-term borrowing to meet the bonds, the long-term payables. The owner's equity: some investors into the capital: paid-up capital / equity capital fund                  

The accumulation of business: profit, the surplus fund

It tells us how mush assets we have and how much profit get from the business.