IMBA財政會計課件英文版(ppt 52)

IMBAFinancialAccountingInstructor:GuohuaJiang(姜姜國國華華））UniversityofCalifornia,Berkeley(加加州州大大學(xué)學(xué)伯伯克克利利分分校校)田長長霖霖，，陳陳省省身身，，李李遠(yuǎn)遠(yuǎn)哲哲，，趙趙元元任任，，張張愛愛玲玲,錢錢穎穎一一。。。。。。MostrecentNobelPrizewinners:DanielMcFadden(2000),GeorgeAckerlof(2001)Whata“great”timeforaccounting?Orisn’tit?Accounts:angelsordevils?Youmayhatethem,butyouhavetohavethem2002,theyearofaccountingEnron,Worldcom,GeorgeW.Bush,DickCheneyBlameaccountingonanything,frominvestorlossestoSaddamHusseinhidingnuclearweaponButwestaycool!TimeMagazine:PersonsoftheYear2002:WhistleblowersCynthiaCopperofWorldcomColleenRowleyofFBISherronWatkinsofEnronWhenyouthinkofaccountants,whatimagecomesuptoyourmind?TheFatherofAccounting-LucaPacioli(1445-1517)HewroteafamousmathematicsbookInonechapterheinventeddouble-entryaccountingsystemHetaughtLeonardoDaVinciperspectiveandproportionality.Theknowledgewasusedtopaint“theLastSupper”DowJonesIndustrialAverage1930-2002DJIA,NASDAQ1990-2002BacktoSquareOne:DJIA1998-2002DorDot.bomb-NASDAQ1998-2002TheThreeMajorStockExchangesTheRegulatorofU.S.StockMarketThecurrentSECcommissionersWhoissueAmericanAccountingStandardsInternationalAccountingStandards“BigFour”InternationalAccountingFirmsErnstYoung(worldwiderevenue2002:$10.1billions,4.3billionsintheU.S.)PriceWaterhouseCoopersDeloitte&ToucheKPMGArthurAnderson(oops!)AuditorOpinionsUnqualified“Unqualified”opinionisactuallygoodopinion, confused?Iwas.QualifiedDisclaimerofopinionAdverseopinionGeneralElectric2001AnnualReport(10K)TheusersofaccountingandeconomicconsequenceofaccountingdecisionsEquityinvestorsCreditorsGovernmentCustomerSuppliersLaborunionInvestingMottoTwofriendswenthuntinginthejungle.Allofasudden,abearjumpedoutofnowhereandcameafterthem.A:Run!B:No,itishopeless,wewon’toverrunabear.A:ButIdonothavetorunfasterthanthebear.Ionlyneedtorunfasterthanyou!FinancialAccountingandTaxAccountingTaxaccountingisdesignedbyIRS,InternalRevenueServiceMajordifferenceinrevenuerecognitionandexpenserecognitionTaxaccountingcanembedgovernment’’seconomicpoliciesGoalsofthiscourseHowtoreadfinancialstatementHowtointerpretfinancialstatementWhatinferencestodrawfromfinancialstatementHowtobaseeconomicdecisionsontheinformationinfinancialstatementAlanguagetocommunicateinbusinesscommunityTomakefriendsSyllabusAfinancialstatementuser’’sperspectiveEmphasizetwoissues:EarningsManagementandvaluationFrequentmini-caseanalysisOnebigcaseanalysis,individuallyoringroupsNewsarticleswillbetestedinfinalexamExpecttoreadALOT!EarningsManagement:Rao,Teoh,Wong,ReviewofAccountingStudies,1998Earningsrestatements––MinWu,HKUSTAccounting-basedValuationWhoaremypeers?Earningsmultiples,book-valuemultiples,salesmultiplesEVA?,Economicvalueadded,Residualincomevaluation(RIV),Edward,Bell,OhlsonModel(EBO)Inoneword,Sharevalue=f(earnings,bookvalue,dividend,cashflow,etc.)Accounting-basedValuation-2Howimportantisaccountinginformation?January22,2003,aftermarketclosed,AT&T(stocksymbolT)announced:Revenuefor4thquartershrankto$9.3billionfrom10.2billioninthe4thquarterofpreviousyearLossfromcontinuingoperationswidenedto$611millionfrom$216million.Howimportantisaccountinginformation?

(F)Howimportantisaccountinginformation?IntheweekendbeforeMonday,Feb.3,2003,Mattel(MAT)announcedfourthquarterresults:Revenueincreasedfromthefourthquarterayearearlierby6.9%to$1.56billion.Netincomeincreasedby35%to$186.1million.Earningspershare(EPS)increasedto42centsfrom31cents.Howimportantisaccountinginformation?

(F)ValueInvestingAccountingconceptsandprinciplesEntityconceptReliabilityprinciple(objectivityprinciple)CostprincipleGoing-concernconceptStable-of-monetary-unitconceptConservatismprincipleAccrualaccountingconceptEntityconceptAcompanyisanindependententity.Onlytransactionsthatarerelatedtothecompanyitself,notaparticularpersonworkingforthecompany,shouldbeconsideredcompanyaffairandberecorded.Example:theownerofanicecreamstoregivesanicecreamtohisniece;thisactisnotabusinesstransaction,itisfamilyaffair.Butifhegivestoaneighbor’sniece,itisabusinesstransaction.Itiscalledpromotion.Reliabilityprinciple(objectivityprinciple)Accountingnumbers1)shouldbeverifiable,and2)canbeconfirmedbyanindependentobserver.Examplesofunreliablenumbers:Men’’sweightWomen’sageNumberofyearsaPh.D.takestofinishhisdegreeCEO’’spayEnron’searningsHistoricalCostPrincipleAllacquiredassetsshouldberecordedattheiractualcost,I.e.,theamountofmoneypaidtoobtaintheasset,eventhoughthecostofthesameassettodayisdifferent.Why?Historicalcostisreliable.Going-concernconceptItislikepeopleinthepastwhowishanemperorlivesforever,weassumecompaniesliveforever,althoughtheytendtodiefast.Why?Becauseifweassumegoing-out-of-businessconcept,manywiredthingswillhappen.1)Assetsneedtoberecordedatcurrentmarketprices2)Liabilitieswillhavetoberepaidrightaway3)EarningsandbookvaluesdonotmatterGoing-out-of-businessistheexception,nottherule.Stable-of-monetary-unitconceptOnedollartoday=OnedollartomorrowWhy?PurchasingpowerchangesduetoinflationordeflationButweareok.Ifthechangeinpricelevelisnottoodramatic,weholdthestable-of-monetary-unitconcept.Otherwise,everyaccountwillhavetobeadjustedeveryquarter.ConservatismprincipleThetensionbetweencreditorsandshareholdersandthetensionbetweenshareholdersandmanagementdictatethataccountingisconservative.Reportbadnewsinfinancialstatementsasearlyandascompleteaspossible;reportgoodnewsinfinancialstatementsonlyaftertheuncertaintysurroundingthegoodnewsisresolved.Conservatismprinciple-examplesResearchanddevelopmentexpendituresAdvertisingexpenditureOtherpromotionexpendituresRelationshipbuildupcostsAlltheseexpenditureswilllikelygeneratefuturebenefitsforthefirm.Buttheyareexpensed,notcapitalizedasassetsonbalancesheetbecausetheirbenefitsareuncertainandhardtomeasure.AccrualAccountingRevenue:recognizewheneveritisearned,notwhencashchangeshandsExpense:recognizewheneveritisincurred,notwhencashchangeshandsFinancialStatementsBalanceSheet:atapointintime,i.e.,December31,balancesheetmeasureshowmuchassetthecompanyown,howmuchdebtthecompanyowe,andhowmuchequityshareholdershaveinthecompanyAssets=Liabilities+EquityIncomeStatement:duringtheperiodendingonthebalancesheetdate,i.e,duringtheyear,howmuchrevenuesthecompanygenerates,howmuchexpensesareusedtogeneratetherevenues,andtheearnings(Revenues––Expenses).Profitsincreaseequityonbalancesheet,whilelossesdecreaseequityonbalancesheet.StatementofRetainedEarnings:Beginningequity+Earnings––Dividends=Earningsequity(onbalancesheet)Whataccounts