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We discuss all kinds of accounting questions, professional accounting theory and practice, including: finance, balance sheet, income statement and cash flow. And we recommend the good books and tools that can help you master accounting and finance more quickly. What our purpose is to help people know and learn accounting more easilier, understand and apply it deeply. For example, to be a CPA, making applying an accounting manager job with good salary becoming reality; help the bosses to manage their enterprises more efficiency and evade tax reasonablely.

Sincerely, we hope the articles can give you some help.

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As known, applying an accounting manager job with good salary is not a easy project for most accountants, because of the hot competition. Many fresh graduates and the accountants whose work experience are within serveral years face big problems in the applying. The questions maybe: the poor work experience, less cases of operation, education or the excellent competitor. Face these headache questions, we should calm down and analyse yourself.

Firstly, you should imporve imporve yourself and become an excellent competitor. The qualification certificate is the basic. And the most important is that You must master the accounting skillfully, such as: the preparation of monthly reporting packages, reconciliations, payroll, A/P, A/R, and multiple P&Ls.

Secondly, collect and accumulate the practical work experience. Try to practise yourself more in your life as much as possible. Collecting it in a paper or book of yours. Read and revise it. Remember it in your heart! Maybe it sounds like you’re in an examination, but the process of applying an good accounting manager job is more difficult than an examination in the school.

Thirdly, if possibly, joining the CPA exam and pass it. You’ll gain the winning chips.

Here’re serveral advice for you to apply an accounting manager job:

1. find a fitable company you want.
   Think about the position and analyse the company, if possibly, look the web of the company and analyse you whether or not do this job.
2. Accurate applying.
   You wording should be cautious in your applying information. Except your curriculum vitae, you can describe your working experience easily. It can prove you’re experienced. If your experience is refer to the industry of the company, congratuations! You have won a score.
3. The electronic version of your qualification certificate.
   Except that, you can add the web address of the certificate. Improve you’re honest.
4. if possibly, you can publish your operation advice about the company you’re applying.
   Remember, you’re not a single accounter, but a member of the company. You must be care for the operation of your company and help the colleagues if it’s needed. Here, please, you should be more cautious. And you advice should be constructive. So, before that you shoud better analyse the operation of the company more carefully.
5. Don’t apply too more companies at one time.
   I think, you can choose 2-3 companies that you consider it’s fitable. Too more means the scattered attention.

Good luck for you!

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Net cash flow from investing activities includes: that paid and received for property, plant and equipment and other non-current assets, interest and dividends received on investments. Through it, you can know the resources transferred in order to obtain the earning in the future and cash flow, and the cash inflows arising from the resources transferred previously.

It includes:

1. cash paid for property, plant and equipment an dother non-current assets
2. cash received on the sale fo property, plant and equipment and other non-current assets
3. cash paid for investments in or loans to other enterprises
4. cash received for the sale of investments or the repayment of loans to other enterprises
5. interest received on investments or loans
6. dividends received on investments.

According to these items, you should analyse the cash flow is whether enough for investing or not.

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Goodwill has been defined as ‘the advantage, whatever it may be, which a person gets by continuing to carry on, and being ectitled to represent to the outside world that he is carrying on, a business which has been carried on for some time previously.’

Goodwill may be seen as an intangible asset, the value of the going concern element of the business. It is the excess of the cost of the acquisiton over the acquiter’s interest in the fair value of the identifiable assets and liabilities acquired as at the date of the exchange transaction.

Purchase goodwill arises as a result of a purchase transaction (e.g when one business acquires another as a going concern). It will be recognised within the accounts because at a specific point in time the face of purchase has established a figure of value for the business as a whole which can be compared with the fair value of the individual assets acquired, and this figure will be incorporated in the accounts of the acquiring business as the cost of the acquisition.

Non-purchased, or inherent, goodwill is not generally recognised in the accounts because no event has occurred to identify the value of the business as a whole.

Goodwill should be arised on an acquisiton to be recogniesd as an asset and amortised over its useful life. The useful life taken should not normally exceed twenty years, but a longer life may be taken if it can be justified by the circumstances.

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The charge of depreciation can impact the net profit in the income statement, so the methods of calcuating depreciation is very important. Adopting different methods of calculation, the result will be different. And it’ll refer to the expense and tax in the income statement. Choosing the fit methods of calcuating depreciation, it need to be faced by the finance staff.

There’re several possible methods of calcuating depreciation:

1. straight line method of depreciation
2. reducing balance method
3. sum of the digits method
4. revaluation method.

Straight line method

It’s the simplest amd most popular methods of calcuating depreciation. Under this method the depreciation charge is constant over the life of the asset. And we need know three pieces of information:

1. the original (historical) cost of the asset
2. an estimate of its useful life to the business
3. an estimate of its residual value at the end of its useful life.

Annual depreciation charge = (Orginal – Residual value)/Estimated useful value

For example, a company puerchased a car on 1 January at a cost of $24,000. The company estimates that its useful life is four years, after which he will trade it in for $4,000. The annual depreciation charge is to be calculated using the straight line method.

Depreciation charge = ($24,000 – $4,000)/4= $5,000 p.a.

Reducing balance method

Under this method the depreciation charge will be higher in the earlier years of the life of the asset. Here needs a percentage to apply. And in the first year the percentage is applied to cost but in subsequent years it’s applied to the asset’s net book value (alternatively known as written down value).

The net book value (NBV) or written down value (WDV) of a non-current asset is its original cost less the accumulated depreciation on the asset to date.

For example, a trader purchased an item of plant for $1,000. The depreciation charge for each of the first five years is to be calculated, assuming the depreciation rate on the reducing balance to be 20% p.a.

The fixed depreciation is related to: useful life of asset (years), residual value of the asset and cost of the asset.

Sum of the digits method

The aim of this method is to show a higher depreciation charge in the early years of the life of an asset.

For example, the cost of asset is $4,200, the scrap value is $200, the estimaged usefullife is four years.

Sum of digits: 4 years + 3 years + 2 years + 1 years =10

Revaluation method

When a non-current asset has been revalues, the charge fro depreciation should be based on the revalued amount and the remaining useful economic life of the asset. Therefore, because of the revaluationm the depreciation is higher than previously. And an upward revaluation has resulted in a higher depreciation charge to the income statement.

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Depreciation is a method of applying the matching or accruals concept to the cost of non-current assets.

A non-current asset is an asset intended ofr use on a continuing basis in the business. It can be sub-divided into tangible assets (plant, building, motor vehicles, etc.) and intangible assets (goodwill, patents, trademarks, etc.).

Depreciation is the systematic allocation of the depreciablse amount of a non-current asset over its useful life. It maybe:

• use, e.g. plant and machinery or motor vehicles
• physical wear and tear
• passsing of time, e.g. a ten-year lease of property
• obsolescence through technology and market changes, e.g. plant and machinery of a specialised nature
• depletion, e.g. the extraction of material from a quarry.

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Net cash flow from financing activities comprise receipts or repayments of principal from or to external providers of finance. It can help the investors and creditors estimate the claim for the cash flow of the company in the future, and the price to obtain the cash inflows previously.

Financing cash inflows include:

1. receipts form issuing shares or other equity instruments.
2. receipts for missuing debentures, loans, notes and bonds and from other long-term and short-term borrowings, but not including overdrafts, which are included in cash and cash equivalents.

Financing cash outflows include:

1. repayments of amounts borrowed, but not including overdrafts
2. the capital element of finance lease rental payments
3. payments to reacquire or redeem the entity’s shares.

You should measure the price of financing cash flow and the earnings when you’re financing the cash flow.

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As known, profit before tax is using the accruals concept, but net cash flow from operating activities only records the cash inflows and outflows according to the trading. Some operating activities impact profit before tax, but not operating cash flow, because of the the accruals concept.

The indirect method starts with profit before tax, and adjusts according to the depreciation, profit/loss on disposal of non-current asset, balance sheet change in receivables, balance sheet change in inventories, and balance sheet change in payables.

Then you should understand the reconciliation between profit before tax and net cash flow from operating activities as the following:

1. Depreciation.
   Depreciation is a book write-off of capital expenditure. But please note that capital expenditure will be recorded into investing activities. Therefore, the depreciation represents an addition to reported profit in deriving cash inflow.
2. Profit/loss on disposal of non-current asset.
   If the profit or loss on the sale has been included in profit before tax, an adjustment is necessary in computing operating cash flow. A loss means added to reported profit, a profit means deducted from the reported profit.
3. Balance sheet change in receivables.
   The figure changed in receivables is using the accruals concept, the receivables mean that you haven’t received it, but it can impact the profit before tax. For example, there’s a revenue in ledger, you haven’t received the cash, but it’ll generate the related tax. So you should consider this part.
4. Balance sheet change in inventories.
   The inventories will impact the cash flow, because cash was spent on its purchase or a payable incurred, it represent an actual or potential cash outflow. A corresponding adjustment would be made to payables to the extent that the expense relating to such payables will not have been charged in the income statement. The practical difficulties is to determine how much inventory has not been paid for at the balance sheet date.
5. Balance sheet change in payables.
   It does not represent a cash outflow until paid. An increase in payables between two balance sheet dates is an addition to reported profit, a decrease means a deduction from reported profit. If the purchase doesn’t result in charge to the income statement in the current year, the corresponding payable is not included in the reconciliation of profit to net cash inflow. For example, a payable in respect of non-current asset is not included.

As the direct method, you should know:

1. the sales to derive cash received from customers
2. the purchases to derive cash payments to suppliers
3. the wages to derive cash paid to and on behalf of employees.

And interest paid is shown as part of operating activeites, but dividends paid are shown as part of financing activities. Cash flow arising from taxes on income should be separately disclosed as part of operating activities unless they can be specifically identified with financing and investing activities.

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Firstly, we should analyse the structure of cash flow statement.

As known, cash flow statement is divided into three parts: operating cash flow, investing cash flow and financing cash flow. And in operating cash flow, there’re two methods to prepare it: the direct and indirect method of cash flow.

Secondly, when you’re analysing the cash flow, you should note the cash requirements as the following:

1. Repayment of existing loans.
   All loans to be repaid in the next couple of years should be considered, including any convertible loans.
2. Increase in working capital.
   When the business is expanding, working captial will also need to increase. You should know the coefficient: (Inventory + receivables – payables)/Sales *100%
   Suppose this is 30% ans sales are currently $1m, a 20% increase in sales requires finance of 0.06m(1m*20%*30%) to increase the working capital.
3. Capital expenditure requirements.
   It’s necessary to consider whether the company will have sufficient cash to meet this capital expenditure.
4. Other commitments.
   You should know the deadline.
5. Contingent liabilities.
   If these liabilities are very high, their crystallisation could cause real problems for the company. Especially in list companies, guaranting mutually is very dangerous.
6. Leasing commitments.
   If these are material,they should be carefully monitored in relation to the cash available.

So you can know the cash situation of the company when you’re analysing the cash flow. You should note the cash shortfall, after all, that many companies go bankrupt is just because of cash break. Here, if you want to know more details, read Free Cash Flow: Seeing Through the Accounting Fog Machine to Find Great Stocks (Wiley Finance)

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The balance sheet shows the financial situation of a company at a point in time (the balance sheet date), but the income statement reflects the operational results of the company over a period of time.

The face of the balance sheet should include:

1. property, plant and equipment
2. investment property
3. intangible assets
4. financial assets
5. investments accounted for using the equity method
6. biological assets
7. inventories
8. trade and other receivables
9. cash and cash equivalents
10. trade and other payables
11. tax liabilities
12. provisions
13. financail liabilities
14. minority interest
15. issued capital and reserves.

As a minimum, the face of the income statement should include:

1. revenue
2. finance costs
3. share of profits and losses of associates and joint ventures accounted for using the equity method
4. tax expense
5. a single amount comprising the post-tax profit or loss on discontinued operations
6. profit or loss for the period
7. minority interest
8. net profit or loss for the period.

The important difference between the balance sheet and income statement is that one is at a point in time, the other is over a period of time. You should according to the specfic to prepare the balance sheet and income statement under the accounting stardards.