Few Financial Terminologies

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Week 1

Terminologies

Current Assets: Current assets refer to the assets that enterprise can be realized or utilized within

one year or an operating cycle more than one year.

Cash:Cash includes the final balance of the three accounts: cash on hand, cash in bank, and cash

equivalents, and the monetary fund with special purpose are not included.

Accounts Receivable: Accounts receivable includes the payment should be received for selling

goods, providing services and other business activities.

Other Receivables: This subject accounts for receivable and temporary payment expect for

deposit paid, buy back the sale of financial assets, notes receivable, accounts receivable,

prepayments, Dividend Receivable interest receivable, accounts receivable, subrogation receivable,

accounts receivable reinsurance, reinsurance contract reserve receivable and other receivables.

(Example: Petty cash for traveling)

Prepaid Accounts: This subject shows the advance money paid by firms in accordance with the

contract. In situation of limited advance payment, this subject is not necessary to be set up, and

will the credited directly to the "accounts payable" item.

Inventory: inventory refers to finished goods or commodities, products in the production process,

materials used in the production processor the provision of services held for enterprises held in

daily activities

Deferred Expenses: deferred expense is the expense already paid but should be shared by the

current and future periods, such as low value consumable amortization, a large amount of

lump-sum property insurance fees, sewage charges, technology transfer fees, advertising fees,

fixed assets repairmen fees and prepayment for the rental of the fixed assets.


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Non-current Assets: non-current assets refer to the assets other than current assets.

Long term investment: Long-term Investments refers to the investment that does not meet the

conditions of short-term investment which is not ready for cycling into cash in a year or an

operating cycle more than one year. Long term investment can be divided into long-term stock

investment, long-term investments in bonds and other long-term investments according to the

nature

(Example: Inject equity establish subsidiaries; Purchase bonds)

Fixed Assets: fixed assets are a tangible asset that has the following characteristics at the same

time: (1) held for production of goods, providing labor services, rental or business management; (2)

the service life should be more than one accounting year.

(Example: Equipment Plants Automobiles computer equipment factory car Computers)

Intangible Assets and Other Assets: refers to the identifiable non monetary assets which have no

physical substance owned or controlled by enterprises. This account includes the intangible assets

held by the enterprise, including patents, non patented technology, trademark, copyright, the right

to the use of land.

(In the current criterion, goodwill is separated from the five lists of assets, but this course is not

involved in such specific accounting treatment, and it still will be categorized in the concept of

intangible assets.)

Depreciation: depreciation refers to the depreciation of fixed assets within a certain period to

make up for the loss of fixed assets value in accordance with the rate of extraction, or fixed assets

depreciation computed by the depreciation rate according to the uniform provisions of national

economic accounting.

Biological Assets: A biological asset refers to the animal and plant. Biological assets are classified

into consumptive biological assets, the productive biological assets, and public welfare biological


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assets.

Consumptive biological assets refers to the biological assets held for sale in the future, or will be

harvested as agricultural products, including growing field crops, vegetables, timber and livestock.

The productive biological assets refer to the biological assets held for the output, services or rental

of agricultural products, including economic forest, firewood forest, husbandry animal and

draught animals.

The public welfare biological assets refer to the biological assets for the purpose of protection or

environmental protection, including the windbreak and sand fixation forest, forest for soil and

water conservation and water conservation forest.

Financial Assets: financial assets usually refers to the enterprise's cash, bank deposits, other

monetary funds receivables (such as enterprise deposit in other city,bank check deposit, bank

draft deposit, credit card deposit, credit guarantee deposit, Refundable deposits etc.), notes

receivable, accounts receivable, other receivables, loan equity investment, bond investment and

asset formed by financial derivatives.

Fair Value or fair market value / fair price: the voluntary price fixed by both parties that

familiar with the market situation and determined in the even bargain conditions, or the price by

unrelated parties in even bargain under the condition of an asset can be sold or a liability can be

off the price.

Historical Cost / original cost: cash or cash equivalents paid for the asset. Liabilities are those

that will be paid in cash or cash equivalents in the normal business activities.

Financial Statement

in Million Dollars

Assets Liabilities

Current assets Current l iabi l i t ies

Cash 808 Short-term borrowing 1262

Accounts receivable 1180 Accounts payable 688
http://www.iciba.com/deposit_in_other_cityhttp://www.iciba.com/deposit_in_other_city


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Other receivables 21 Other payables 9

Prepaid accounts 221 Deposit received 0

Inventory 527 Other liabilities 1044

Deferred expenses 9 Total current liabilities 3004

Others 290

Non-current assets Noncur rent l iabi l i t ies

Long-term investment 60 Long-term loans payable 1368

Fixed asset 5422 Bond payable 0

Intangible assets and other

assets168 Long term payable 12

Total Assets 8706 Others 793

Shareholer's equity

Capital stock 498

Additional paid-in capital 2002

Surplus reserve 308

Retained earnings 722

Total liabilities and shareholders'

equity8706

Documents

Few Financial Terminologies