CHAPTER 2

FINANCIAL STATEMENTS
FOR
DECISION MAKING
báo cáo tài chính
Learning Objectives

LO1. Basic financial statements

LO2. Assumptions made and characteristics of information
LO3. The effects of transactions on the accounting equation and
financial statements
 LO1.
BASIC
Financial
STATEMENTS

03/42
Basic financial statements
Báo cáo kết quả kinh doanh

The income statement

Bảng cân đối kế toán

The balance sheet

Báo cáo tình hình thay đổi vốn chủ sở hữu

The statement of changes in equity

Báo cáo lưu chuyển tiền tệ

The statement of cash flow

4
THE INCOME STATEMENT Báo cáo kết quả kinh doanh

Ước tính doanh thu của công ty trong 1 kỳ/quý/tháng…

The income statement measures a firm’s profitability over a period
of time. The firm can choose the length of the reporting time
period (a month, a quarter or a year).

The elements of the Income statement include

Tổng thu nhập
• Revenues represent gross income the firm earned during a particular period of
time (usually from sales).
• Expenses represents the cost of providing goods and services during a given
period of time.
• Net income is what is left after expenses are subtracted from revenues.
Lợi nhuận ròng

Net Income = Revenues – Expenses

5
Debit Credit
 Acme Corporation Income Statement for the year Ended 30 June 2010

Net Sales/ Revenue $15,000,000

Cost of Goods Sold 5,000,000
Gross Profit 10,000,000
Selling and Administrative Expenses 800,000
Depreciation Khấu hao tài sản cố định 2,000,000
Operating Income (EBIT) 7,200,000
Others
expenses Interest expense Chi phí lãi vay 1,710,000
Earning before Taxes (EBT) 5,490,000
Taxes Income Taxes (40%) 2,196,000
Net Income (NI) $3,294,000
7
 The Income Statement
• Cost of Goods Sold The first expense subtracted from sales is cost of goods
sold, which refers to the direct costs of producing the goods sold by a
company. Includes the cost of the materials and labor directly used to create
the good. Excludes indirect expenses such as distribution costs and sales
force costs. Chi phí phân phối

Subtracting cost of goods sold of $5 million from sales of $15 million

gives Acme’s gross profit, which equals $10 million.

• Selling and Administrative Expenses From gross profit, we next subtract

Acme’s selling and administrative expenses ($800,000). Selling expenses
include marketing and salespeople’s salaries. Administrative expenses
include office support, insurance, and security.
8
The Income Statement
• Depreciation Expense Depreciation expense is subtracted next—$2
million for Acme in 1999. Depreciation expense is the year’s allocation of
the cost of plant and equipment that have been purchased this year and
in previous years. Because assets provide their benefits to the firm over
several years, accountants subtract the cost of long-lived assets a little at
a time over a number of years. The allocated portion of the cost of a
firm’s assets for the income statement’s period of time is the
depreciation expense.

• Operating Income When we subtract selling and administrative

expenses and depreciation expense from gross profit, we are left with
Acme’s earnings before interest and taxes (EBIT), also known as
operating income. 9
The Income Statement
• Interest expense associated with any debts of the company.

• Earning before taxes we then subtract interest expense to arrive at

Acme’s earnings before taxes (EBT).

• Income Taxes

• Net Income Finally, after we subtract all operating expenses,

financing expenses, and taxes from revenues, we arrive at the firm’s
net income (NI).
10
The balance sheet Bảng cân đối kế toán

The balance sheet shows the firm’s assets, liabilities, and equity at
a given point in time. This snapshot of a company’s financial
position tells us nothing about the firm’s financial position before
or after that point in time.

The balance sheet consists of three elements:

• Assets are the resources controlled by the firm
• Liabilities are amounts owed to lenders and other creditors
• Owners’ equity is the residual interest in the net assets of an equity that
remains after deducting its liabilities
vốn chủ sở hữu

Assets = Liabilities + Owners’ equity

Ví dụ: muốn mua xe 3 tỷ mà hiện tại đang có 2 tỷ => đi vay 1 tỷ rồi mua xe
=> Xe = 3 tỷ = asset; Nợ = 1 tỷ = liabilities; Vốn tự sở hữu ban đầu = 2 tỷ = Equity 12
 Acme Corporation Balance sheet as at 30 June 2010
Assets:
Cash $10,000,000
Marketable Securities 8,000,000
Account Receivable Khoản phải thu 1,000,000
Inventory Hàng tồn kho 10,000,000
Prepaid Expenses 1,000,000
Total Current Assets $30,000,000
Fixed Assets, Gross 28,000,000
Less Accumulated Depreciation (8,000,000)
Fixed Assets, Net 20,000,000
Total Assets 50,000,000 13
 Acme Corporation Balance sheet as at 30 June 2010
Liabilities and Equity
Account Payable $4,000,000
Notes Payable 3,000,000
Accrued Expenses 2,000,000
Total current liabilities 9,000,000
Long - term debt 15,000,000
Total liabilities 24,000,000
Preferred stock 1,000,000
Common stock (3 million shares) 3,000,000
Capital in excess of Par 12,000,000
Retained Earnings 10,000,000
Total Equity 26,000,000
Total Liabilities and Equity $50,000,000 14
The Asset Accounts
- Current assets provide short-term benefits to the firm. Current assets
are items listed on a company’s balance sheet that are expected to be
Năm tài chính (Mỹ: 1/10 - 30/9)
converted into cash within one fiscal year. Năm ngân sách/thuế (VN: 1/1 - 31/12)

- Noncurrent assets (Fixed assets) provide long-term benefits to the

firm. Noncurrent Assets are long - term assets that a company
expects to hold over one fiscal year that cannot readily be converted
to cash within a year.

15
 Cash, account receivable

Current Assets (Working capital) marketable securities

inventory, prepaid expense

- Cash
- Marketable securities are securities that can quickly and easily be
converted into extra cash
Khoản phải thu
- Account receivable is the amount that customers owe the company
Hàng tồn kho
- Inventory is the amount of raw materials and good produced, but not
yet sold to customers
Chi phí trả trước - các khoản tạm ứng
- Prepaid expense are goods and services that have been paid for in
advance but not yet received or used. For example: premium paid on
an insurance policy Ex: Bảo hiểm - Prepaid insurance
16
Fixed assets (Noncurrent assets) Plant & equipment,
depreciation, intangible asset,
long-term investments

- Gross plant and equipment nhà xưởng sản xuất máy móc
Khấu hao cộng dồn
- Accumulated depreciation is the sum of all the depreciation expenses
ever taken on the firm’s income statements.
- Intangible assets are nonphysical assets, such as patents and
copyrights. They are considered to be noncurrent assets because they
provide value to a company but cannot be readily converted to cash
within a year.
- Long-term investments, such as bonds and notes, are considered
noncurrent assets because a company usually holds these assets on
its balance sheet for more than one fiscal year.
17
The Liabilities and Equity Accounts
- The liability and equity section shows how the company’s assets are
financed.

- The funds come from those who have liability (debt) claims against
the firm or from those who have equity (ownership) claims against
the firm.

18
 Liabilities DEBTS

Các khoản phải trả (Short term: < 1 năm)

- Account payable is the amount of money a business owes to
suppliers that have sold the firm material on account.
Thương thơm Phiếu phải trả
- Note payable is legal IOUs that represent the debt of borrower and
the claim the lender has against that borrower.
Nợ tồn đọng
- Accrued expenses are business expenses that have not been paid yet.
For examples: employee’s wages
- Long - term debts are debt that are not due within one year.
Accrued expense (Liabilities) >< prepaid expense (Asset)
Long-term debts (Liabilities) >< Long-term investment (Asset)
19
 Equity OWNERSHIP

- Preferred Stock preferred stockholders have a greater claim to a

company's assets and earnings.
- Common Stock
Sự chênh lệch của giá trị cổ phiếu
- Capital in excess of Par is the original market price per share value of
the stock sold minus that stock’s par value times the number of shares
Thặng dư vốn cổ phần
issued. = (Giá cổ phiếu ban đầu - Giá cổ phiếu hiện tại)x Số lượng cổ phiếu cấp ra
Lợi nhuận giữ lại / Lợi nhuận ròng sau thuế
- Retained Earnings represents the sum of all the earnings available to
common stockholders of a business during its entire history, minus the
sum of all the common stock dividends that it has ever paid. Those
earnings are not paid out, but retained. 20
 Báo cáo tình hình thay đổi của vốn chủ sở hữu
The statement of changes in equity
The statement of changes in equity serves as a connecting link
between the balance sheet and the income statement, and
explains the changes that took place in equity during the period.

Balance sheet Income statement Balance sheet

(as at beginning of the year) (for the period) (as at end of the year)
A1 - L1 = E1 I - E = Profit A2 - L2 = E2

Statement of changes
in equity
(for the period)
E1 + Profit - Drawings = E2
Acme Corporation Statement of changes in Equity for the year Ended
30 June, 2010

Acme Corporation, Capital - 1 July 2009 24,706,000

Add: Profit for the year 3,294,000
28,000,000
Less: Drawings 2,000,000
Acme Corporation, Capital - 30 June 2010 $26,000,000

23
Exercise 2.15
Exercise 2.3
The statement of cash flows
The statement of cash flows reports the company’s cash receipts
and payment over a given period of time. For the year ended
trong một khoảng thời gian nhất định —> nhận vào và nhả ra bn tiền

These cash flows are classified as follows:

1 Operating CF
include the cash effects of transactions that involve the normal business of the firm

Investing CF
2 are those resulting from the acquisition or sale of property, plant, and equipment;
of a subsidiary or segment; of securities; and of investments in other firms

Financing CF
3 are those resulting from issuance or retirement of the firm’s debt and
equity securities and include dividend paid to stockholder
Debt retirement occurs when a borrower repays the principal associated with a bond or note.
27
Acme Corporation Statement of Cash FLows for the year Ended 30
June, 2010
Không phải học bài này
Cash received from (Used in) Operations
Net Income $3,294,000
Depreciation 2,000,000
Decrease (Increase) Marketable Securities 1,000,000
Decrease (Increase) Account Receivable (300,000)
Decrease (Increase) Inventory 7,300,000
Decrease (Increase) Prepaid Expenses 0
Decrease (Increase) Account Payable (3,000,000)
Decrease (Increase) Accrued Expenses (1,000,000)
Total Cash from Operations $9,294,000
28
Acme Corporation Statement of Cash FLows for the year Ended 30
June, 2010
Cash received from (Used in) Investments
New Fixed Asset purchases ($14,000,000)
Total cash From Investments ($14,000,000)
Cash received from (Used in) Financing Activities
Proceeds from New Long - Term Debt Issue $4,216,000
Proceeds from New Common Stock Issue 4,000,000
Short - term notes Paid Off (1,000,000)
Preferred Stock Repurchases (1,000,000)
Preferred Dividends (110,000)
Common Dividends (400,000)
Total Cash From Financing Activities $5,706,000 29
Acme Corporation Statement of Cash FLows for the year Ended 30
June, 2010

Total Cash from Operations $9,294,000

Total cash From Investments ($14,000,000)
Total Cash From Financing $5,706,000
Net Change in Cash Balance $1,000,000
Beginning Cash Balance $9,000,000
Ending Cash Balance $10,000,000

30
Classify each of the following activities as being either operating, investing or financing for
the purpose of preparing a statement of cash flows. Indicate whether there is an inflow (I)
or outflow (O) of cash:
(a) sale of land and buildings for cash a) Investing - I

(b) payment of wages to employees b) Operating - O - performance of business

(c) withdrawal of cash by the owner c) Financing - O - rút vốn

(d) repayment of a bank loan d) Financing - O

(e) cash purchase of a truck by a manufacturing company e) Investing - O - thu mua

Thuê
(f) lease of a fleet of motor vehicles by a courier business f) Investing - O - đầu tư sx vc

(g) borrowing of money from a finance company on a long-term basis g) Financing - I

(h) cash received from customers for the sale of goods h) Operating - I
 LO2.
(4)
Assumptions
and
characteristics of
information

03/42
 Assumptions made and characteristics of information
Giả thuyết, assumption mà kế toản sẽ sử dụng
—> được áp dụng trong tất cả các trường hợp (Trừ khi được chỉ rõ là ko áp dụng nữa)
- Overtime, as accounting has evolved, questions have arisen concerning
method of identifying events, the principles of measurement to be used
and the general guidelines to be followed in order to communicate financial
data useful in decision making.
- Accountants have gradually produced responses to these questions and
developed some underlying assumptions that are followed in the present -
day accounting reports.
 The accounting entity assumption
Giả thuyết thực thể kinh doanh

Hoạt động của doanh nghiệp # Hoạt động của chủ sở hữu
(Doanh nghiệp tự có tài sản và nợ của riêng nó)

- The entity is considered a separate entity distinguishable

from its owner and from all other entities.
- It is assumed that each entity controls its assets and incurs
its liabilities.
- The records of assets, liabilities and business.
 The accrual basis assumption
Giả thuyết cơ sở dồn tích
—> mọi giao dịch phát sinh: được ghi lại khi nó phát sinh
—> credit sale: công ty đã được trả tiền nhưng dòng tiền chưa về

- The financial statements of an entity are assumed to be

cộng dồn
prepared on the accrual basis.
- Under the accrual basis, the effects of all transactions and
events are recognized in accounting records when they
occur, and not when the cash is received or paid.
Loại khác và hiếm: Money basis assumption: các giao dịch được khi lại khi nó đã hoàn thành (được nhận hoặc được trả tiền)
The going concern assumption
Giả thuyết hoạt động liên tục

- Financial reports are prepared normally on the

assumption that the existing entity will continue to
operate in the future.
Trong tương lai, doanh nghiệp vẫn tiếp tục hđ —> vẫn phải lên sổ sách kế toán và plans
The period assumption
Giả thuyết kỳ kế toán

Chú ý kỳ kế toán của nó là bn

- The division of the life of the entity into equal time

intervals is known as the period assumption.
- As a result of this assumption, profit determination
involves a process of recognizing the income for a period
and deducting expenses incurred for that same period.
Characteristics of Accounting Information

- Relevance
- Reliability/ faithful representation
- Comparability (including consistency)
- Understandability
- Materiality
 Characteristics of Accounting Information
Tính thích hợp: các thông tin đưa ra —> để người dùng đưa ra quyết định về kinh tế

- Relevance means that the information can influence the

economic decisions made by users. A further aspect of
relevance is that the information must be presented by
the accountant to the user in time for a decision to be
made. It is a waste of time and effort for the accountant to
prepare detailed financial statement if they don’t reach
users before they make a decision.
 Characteristics of Accounting Information
Thông tin chính xác, đáng tin cậy
- Reliability/ Faithful representation means that the user is
assured that the information presented represents
faithfully, without bias or undue error, the underlying
transactions and events being reported in the financial
statements. Accountants require information to be
reliable, which means that the information reported
represents the fact as closely as possible.
 Characteristics of Accounting Information
So sánh được: (VD) so sánh bản income statement của 2 tháng khác nhau
(profit? net income? giống và khác ntn thì mới mang lại 2 con số khác biệt vậy?)
- Comparability is the quality of information that enables
users to identify similarities in and differences between
two sets of economic data.
- Consistency refers to use of the same accounting policies
and procedures, either from period to period within an
entity or in a single period across entities.
Tính nhất quán: (VD) so sánh 1 tháng vs nhau
Không so sánh 1 tháng vs 3 tháng
 Characteristics of Accounting Information
Dễ hiểu với người sử dụng (người có hiểu biết nhất định về kinh doanh và kế toán)
- Understandability is the quality of information that
enables users who have a reasonable knowledge of
business and economic activities and financial accounting,
and who study the information with reasonable diligence,
to comprehend its meaning. Understandability is
enhanced when information is classified, characterized,
and presented clearly and concisely.
 Characteristics of Accounting Information
Tính trọng yếu của thông tin:
- Materiality relates to the extent to which information can be
omitted, misstated or grouped with other information without
misleading the statement users when they are making their
economic decisions. Materiality must be considered in the
context of the other characteristics, especially relevance and
faithful representation. Materiality is viewed as a constraint on
the information to be included in an entity’s financial statements
rather than as a separate characteristic of good information.
 Reliable

Consistency
F
A
Của owner chứ không phải của công ty
G Materiality
B GD đc ghi nhận được
E/C
Relevance: tài sản đi thuê (có loại đc ghi là ts công ty luôn);
Long term lease: Going concern
D
Record in the year: kỳ kế toán là 1 năm
C Tài sản vẫn đang tiếp tục dùng
H
Comparability include consistency
 LO3.
EFFECTS OF
TRANSACTIONS
on the Financial
statement
Bài tập: cho transactions
—> xem nó làm tăng phần
nào và giảm phần nào

03/42
 EFFECTS OF TRANSACTIONS ON THE FS
Mọi giao dịch xảy ra sẽ ảnh hưởng ÍT NHẤT đến 2 yếu tố trong the accounting equation

- Transactions result in changes in assets, liabilities and equity

- Every transaction affects at least 2 components of the
accounting equation
- After each transaction is recorded, the equation is still
balance
ASSETS = LIABILITY + EQUITY
Ví dụ: Owner thêm vốn --> asset và equity chịu ảnh hưởng ; cash và capital sẽ bị thay đổi
TRANSACTION 1

Assume that Darren Jones decided to set up a business called

Darren’s Lawn and Gardening Services on 2 January 2010 by taking
$35,000 from his personal savings account and depositing it in a
business bank account he opened in the business name.
TRANSACTION 2

After making the initial investment, Darren, who also manages the
business, purchased a vehicle and some lawn mowing and
gardening equipment. The vehicle cost $21000 and the equipment
cost $9000.
Nếu pay = credit
—> Liabilities tăng
—> Account payable: $30 000

Nếu pay = cash

—> Cash = - $30 000
—> Vehicle + equipment: $30 000
 TRANSACTION 3

On 4 January, Darren purchased $2500 worth of fuel supplies from

Adam Fuel Ltd on credit, with an agreement to pay for the supplies
later.
Exercise 2.8

For each of the following, describe a transaction that would have the stated
effect on the accounting equation:
1. Increase an asset and increase a liability
2. Decrease one asset and increase another asset
3. Decrease an asset and decrease equity
4. Increase an asset and increase equity
5. Decrease a liability and decrease an asset
6. Decrease an equity item and decrease an asset
Exercise 2.10