Introduction to Financial Accoun

Accounting is a system for recording information about business transactions to provide summary statements of a company's financial position and performance to users who require such information.

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Balance Sheet Equation

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例如我们花500000买房子，但自己只有5w，那么买车以后的asset就是50w，liabilities是我们管银行借的45w，我们自己投入的equity是5w。

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如果第二年房子涨价，cash flow实际上没有增加，income statement却增加了。

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An asset is a resource that is expected to provide future economic benefits. That means, it's either going to generate future cash inflows or it's going to reduce future cash outflows.

• it must be acquired in a past transaction or exchange.
• the value of its future benefits can be measured with a reasonable degree of precision.

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A liability is a claim on assets by creditors or non-owners, that represent an obligation to make future payment of cash, goods, or services.

• the obligation is based on benefits or services received currently or in the past.
• the amount and timing of payment is reasonably certain.

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tax虽然没有很明确的transaction，但是因为有benefit (政府允许商家经营)，所以还是算liability。

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Stockholders equity is the residual claim on assets after settling claims of creditors. In other words, it's assets minus liabilities. A lot if synonyms for this, It's also called, shareholders' equity, owners' equity, net worth, net assets, net book value.

• The first source is what we call contributed capital, which arises from selling shares of stock to the public.
• The other source Stockholder's Equity is Retained earnings which arise from operating the business.

Dividends are distributions of retained earnings to shareholders.

why are dividends not an expense?
First, dividends are not considered an expense because they're not considered a cost of generating revenue. Instead dividends are a discretionary decision by the board of directors to return some funds back to shareholders that's presumably somewhat independent of the company's performance or sales during the period.
Second, we created dividends payable, because once the board declares a dividend, it's essentially holding the shareholders' money until it sends the check, making the shareholders creditors of the company.

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debit and credit is not good and bad.
It's just left and right. We start with the debit account, we use the abbreviation Dr for debit. The name of the account and the dollar amount. Then we list the credits after that. We indent the credits, put a Cr for the abbreviation, the names of the accounts credited and the dollar amount.

debit = increase of debit / decrease of credits
credit = increase of credit / decrease of debits
等号两边必须是正值，左边就是debit，右边是credit

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Expense：维持asset日常使用的钱
Asset：花了以后可以提高asset剩余价值，买来以后不是为了尽快卖出去的（卖出去的叫inventory）可以带来收益
Account Payable：欠供应商的钱
Notes Receivable：应收票据，借出去的钱对应的asset（员工借的钱）
Account Receivable：客户借的钱

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除了dividend是在宣布的瞬间，公司就需要留出钱来支付，也就是那一刻开始公司就欠股权人钱。其他promise都不应该入账，比如员工入职合同。

Retained Earnings在Dr方就是负债赤字，在Cr方就是地主家的余粮收益。

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Revenue is an increase in shareholder's equity from providing goods or services.

• First, it has to be earned, which means goods and services are provided.
• And it has to be realized, which means that payment for the goods and services is either received in cash or something that can be converted to a known amount of cash.

比如软件售出的revenue，不会将所有金额入账，因为有些是以后的服务费，而日后的维护动作还未发生，也就没有has been provided，所以只会先入账一部分。
股票出售是不可以认为是revenue的哦~

Expenses are decreases in shareholders' equity that arise in the process of generating revenues.

• They're recognized when either the related revenues are recognized （需要在产品售出时再记录为expense）
• or when they're incurred if they're difficult to match with revenues. （产生的瞬间就可以记录，但会分period，比如工资只会记当前的）

product cost是产品的直接成本，比如零件；period cost是间期成本，比如研发人员的工资、管理成本等。
dividends不可以人为是expense哦~ 因为不是经营成本。

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如果销售货物就总会有两个transaction，一个是sales和cash的，一个是inventory和销货成本的：

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工资：

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Adjusting Entries

因为很多费用是period费用，所以需要adjust entry。

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straight line 折旧：
depreciation expense = (original cost of the asset - salvage value) / useful life
salvage value 和 life 由管理者决定，想用多少年

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prepaid成为非prepaid得时候就需要adjust entry啦：

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折旧：

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还未发生未交付的订单是不可以入账的，但是公司可以自主自愿披露一些未入账的来年订单，帮助投资人了解。

如果我们先收到了cash，但是还没有提供服务，那么就可以用unearned revenue记录（liability）；如果我们先花了cash，但是还没有成为expense，比如prepaid asset房租之类的；如果先发生了expense但是还没有花钱，就需要先用liability来平衡；如果有了revenue但是还没有收到cash，就需要一个receivable来作为asset平衡。

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Financial Statement

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CoGS: 销货成本，就是产品的直接成本，比如原材料的价格、材料折旧等
Gross Profit: 毛利
Operation Expense: 经营成本，属于period cost，比如办公房屋的租赁成本
Operating Income: 经营利润（衡量公司的核心指标）
Interest, Gains, and Losses: 非经营所得，比如卖掉了一栋房子或者一家子公司之类的
Net Income: 净利润

为了让公司的核心业务经营显得很好，管理者会希望将一些支出挪到 Operating Income 之后，让 Operating Income 的数字更好看。

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Close entry就是将之前的revenue和expense都挪到retained earnings：

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Operating, Investing, and Financing Cash Flows

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Operation Activities: transactions related to providing goods and services to customers and paying expenses related to generating revenue. The best way to think about this section is it's the analogy to the income statement. So transactions that appear on the income statement, we tend to see their cash impact in the cash from operating activities section. （dividends属于这部分）

Investing Activities: These are transactions related to acquiring or disposing long term assets.（出售或者获取长期有形或者无形资产，例如售出business、售出房屋、收购公司）

长于一年的投资活动算Investing，如果短于一年就算Operation（经验但不是定律）

Financing Activities:These are transactions related to owners or creditors. Except for interest payments.（发行新股、回购、向银行借钱）

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cash flow分析只看涉及cash的操作：

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A capital improvement would be anything that increases the value of the building or its useful life. We would add that to the building account, and appreciate it over time, and we'd consider the cashflow an investing activity. 所以装修房屋可以增加资产价值，会认为是投资而不是运营。

如果购买以后迅速卖掉更像库存，属于经营活动；但如果购买后不断对外出租，就更像长期资产，属于投资活动。

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account payable说明欠别人的，所以自然增加了自己的cash；库存余额说明没用完，所以减少了自己的cash；因为折旧增加了费用，就减少了利润，但是没有实际的现金流出，因此在计算现金流量时，不作为现金流出，应当加回来。

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when a company anticipates future loses, they have to recognize an expense for them today.如果公司预计到之后会有损失，当下就需要把损失记为expense——谨慎性原则

purple公司还处于mature阶段，有健康的现金流，并且投入比较多在investment；而green公司虽然和purple的净利润等都一致，但是它并没有做太多投资，大多数钱用于还debt，属于衰退期。

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Ratio Analysis

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比如如果净利润是1千万是好还是坏？需要取决于你的投资是多少：
Return on Equity (ROE) = Net Income / Average Shareholders' Equity
因为净利润是一个period数值，所以equity可以用起始和结束点平均值计算

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为了让ROA去除对杠杆的依赖，比如更多asset意味更高德负债，于是又更多的利息需要支付，净利润就少了，所以有去杠杆净利润：
ROA = De-levered Net Income / Avg. Asset
De-levered Net Income = Net Income + (1-t) * Interests Expense (t is tax rate)

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比如折扣店的利润很低，但是efficiency很高；而奢侈品商店则是利润很高，流转率很低：

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公司增长的时候很难比较去年和今年的差异，所以income和balance表都需要除以资产和销售，但现金流是增长不敏感的，所以不需要除：

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Days Receivable: 回款速度
Days Inventory: 存货周转天数（如果制造更复杂了也会增加这个天数）
Days Payable: 向供应商付款速度
Net Trade Cycle: a measure of the number of days that you have to borrow from a bank to meet a short-term cash shortfall.

如果公司的 Net Trade Cycle 增加，而 Days Payable 减少，说明给供应商回款可能有折扣，并且折扣高于银行贷款利息，随之会看到 interests expense 减少。

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比率需要和同行业的公司进行对比，看是行业的整体问题还是公司自己的问题。