article 51 enterprises shall generally calculate products cost each month.
costing methods may be by the enterprise itself according to the characteristics of its production and operation, type of production management and requirements of cost management. once it is , no change shall be made arbitrarily.
article 52 enterprises shall calculate expenses and costs at the actual amounts incurred.
those adopting the norm cost method, or planned cost method in accounting for daily shall calculate the cost variances, and adjust them into cost at the end of the month while preparing financial statements.
article 53 enterprises shall convert the cost of commodities sold and service provided into operating cost and , then account current profit and loss together with periodic expenses.
chapter viii profit
article 54 profit is the operating results of an enterprise in an accounting period, including operating profit, net investment profit and net non-operating income.
operating profit is the balance of operating after deducting operating cost, periodic expenses and all turnover taxes, surtax and fees.
net investment profit is the balance of income on investment after deducting investment loss.
net non-operating income is the balance of non-operating income which have no direct relevance with the production and operation of an enterprise after deducting non-operating expenses.
article 55 loss incurred by an enterprise shall be made up according to the stipulated procedure.
article 56 items that constitute the profits and the distribution of profits shall be itemized and shown in the financial statements.
a distribution of profit plan which is not yet approved is to be identified in notes to the financial statements.
chapter ix financial reports
article 57 financial reports are the written documents summarizing and reflecting the financial position and operating results of an enterprise, including a balance sheet, an income statement, a statement of changes in financial position (or a cash flow statement) together with supporting schedules, notes to the financial statements, and explanatory statements on financial condition.
article 58 a balance sheet is an accounting statement that reflects the financial position of an enterprise at a date.
items of the balance sheet should be arranged according to the categories of assets, liabilities and owners' , and shall be shown item by item.
article 59 an income statement is an accounting statement that reflects the operating results of an enterprise within an accounting period, as well as their distribution.
items of the income statement should be arranged according to the and distribution of profit, and shall be shown item by item.
items of the profit distribution part of the income statement may be shown in a statement of profit distribution.
article 60 a statement of changes in financial position is an accounting statement that reflects comprehensively the sources and application of working capital and its changes during an accounting period.
items of the statement of changes in financial position are divided into sources of working capital and application of working capital.
the difference between the total sources and total applications is the net increase (or decrease) of the working capital.
sources of working capital are subdivided into profit sources and other sources; applications of working capital are also subdivided into profit distribution and other applications, all shall be shown item by item.
an enterprise may also prepare a cash flow statement to reflect the changes in its financial position.
a cash flow statement is an accounting statement that reflects the condition of cash receipts and cash disbursements of an enterprise during a cerlain accounting period.
article 61 financial statements may, if necessary, be arranged in a way that the previous accounting period can be compared to the periods.
when so arranged, if the and contents of statement items of the previous accounting period are different from that of the current period, such items shall be adjusted in with that of the current period.
article 62 financial statements shall be prepared from the records of account books, completely recorded and checked and other in. it is required that they must be true and correct in figures, complete in contents and issue in time.
article 63 consolidated financial statements shall be prepared by the enterprise, where it owns 50% or more of the total capital of the enterprise it has invested or otherwise owns the right of control over the invested enterprise.
financial statements of an invested enterprise engaged in special line of business not suitable for consolidation, may not be consolidated, but they shall be submitted together.
article 64 notes to the financial statements are explanatory to items in the financial statement of the enterprise so as to understanding of the contents of the statements, the contents of which shall mainly include:
major accounting methods adopted;
changes in accounting methods, the reasons for the changes, and their on the financial position and operating results of the enterprise;
description of unusual items;
detailed in relating to major items listed in the financial statements;
and any other explanations necessary to provide users with a clear view and understanding of the financial statements.
chapter x supplementary provisions
article 65 the ministry of finance shall be responsible for the of these criteria.
article 66 these criteria shall be effective as of july 1,1993.