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Laws of the People's Republic of China |
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| Category | FINANCE | Organ of Promulgation | The State Council | Status of Effect | In Force |
| Date of Promulgation | 1992-11-30 | Effective Date | 1993-07-01 |
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Accounting Criteria for Enterprises |
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Article 1 In accordance with "The Accounting Law of the People's Republic
of China," these Criteria are formulated to meet the needs of developing a
socialist rnarket economy in our country, to unify the accounting standards
and to ensure the quality of accounting information.
Article 2 These Criteria shall be applicable to all enterprises
established within the territory of the People's Republic of China. Chinese
invested enterprises eslablished outside the territory of the People's
Republic of China (hereinafier referred to as enterprises abroad) shall be
required to prepare and disclose their financial reports to the relevant
domestic departments in accordance with these Criteria.
Article 3 Accounting systems of enterprises shall be formulated in
compliance with these Criteria.
Article 4 An enterprise shall accurately account for all its business
transactions actually taken place, and record in reliable reports all the
business activities of the enterprises itself.
Article 5 Accounting and financial reports shall be based on the
presumption that the enterprise shall carry on its operation in a continuous
and regular manner into the foreseeable future.
Article 6 An enterprise shall account for its business activities and
prepare its financial statements in distinct accounting periods. Accounting
periods may be a fiscal year, a quarter, or a month, commencing on the first
days thereof according to the Gregorian calendar.
Article 7 The Renminbi shall be the bookkeeping base currency. A foreign
currency may be adopted as the bookkeeping base currency for enterprises which
conduct business transactions mainly in foreign currency. However, in
preparing financial statements, business transactions in foreign currency are
to be converted into Renminbi. Enterprises abroad shall convert their foreign
currency business transactions into Renminbi in preparing financial statements
to the relevant domestic departments.
Article 8 The debit and credit double entry bookkeeping technique is to
be adopted for recording all accounting transactions.
Article 9 Accounting records and financial reports shall be formulated in Article 10 The accounting records and financial reports shall be based on Article 11 Accounting information shall be designed to meet the Article 12 Accounting records and financial reports shall be prepared Article 13 Accounting methods used shall be consistent from one period to Article 14 Accounting records and financial reports shall be prepared in Article 15 Accounting records and financial statements shall be prepared Article 16 The accrual basis of accounting shall be adopted in accounting Article 17 Revenue shall be matched with related costs and expenses in Article 18 Principle of prudence shall be followed, and possible loss and Article 19 The values of all assets are to be recorded at historical Article 20 A clear distinction shall be reasonably drawn between revenue Article 21 Financial statements shall reflect comprehensively the Article 22 Assets are economic resources, which are measurable by money Article 23 Assets shall normally be divided into current assets, Arliele 24 Current assets refer to those assets which will be realized or Article 25 Cash and all kinds of deposits shall he accounted for Article 26 Short-term investments refer to various marketable securities, Marketable securities shall be accounted for according to historical cost Income reeeived or receivable from marketable securities in currenl period Short-term investments shall be itemized and shown in book balance in Article 27 Receivables and prepayments shall include: notes receivable, Receivables and prepayments shall be accounted for according to actual Provision for bad debts may be set up on accounts receivable. The All receivables and prepayments shall be cleared and collected in time, Prepaid expenses shall be amortized according to period benefiting, and Article 28 Inventories refer to merchandise, finished goods, semifinished All inventories shall be accounted for at historical cost as obtained. When delivering inventories, enterprises nay account for their actual cost All inventories shall be taken stock periodically. Any overage, shortage All the inventories shall be disclosed at historical cost financial Article 29 Long-term investment refers to the investment not intended to Shares investment and other investments shall be accounted for by cost Bonds investment shall be accounted for according to actual amount paid. Where bonds are acquired at a premium or discount, the difference between Interest accrued during the period of bonds investment and the difference Long-term investment shall be itemized and shown separately in financial Long-term investment matured within a year shall be itemized in the Article 30 Fixed assets refer to the assets whose service life is over Fixed assets shall be accounted for at historical cost as obtained. Fixed assets received as donations shall be accounted through evaluation Fixed assets financed by leasing shall be accounted mutatis mutandis to Depreciation on the fixed assets shall be accounted on the basis of the The original value, accumulated depreciation and net value of fixed assets The actual expenditures incurred for the purpose of acquiring or updating The fixed assets shall be taken inventory periodically. The net profit or Article 31 Intangible assets refer to assets that are used by an Intangible assets purchased shall be accounted for at actual cost. All intangible assets shall be averagely amortized over the periods Article 32 Deferred assets refer to all the expenses that cannot be The expenses incurred to an enterprise during its preparation period shall Expenditures incurred on major repair and improvement of the rented fixed All deferred assets shall be shown separately in accounting statements by Article 33 Other assets refer to the assets except all items mentioned Article 34 Liabilities are debts borne by an enterprise, measurable by Article 35 Liabilities are generally classified into current liabilities Article 36 Current liabilities refer to the debts which will be paid off All current liabilities shall be accounted for at actual amount incurred. Balance of current liabilities shall be itemized and shown in financial Article 37 Long-term liabilities refer to the debts which will be Long-term loans payable include the loans borrowed from financial Bonds shall be accounted for at par value. When bonds are issued in Long-term accounts payable include accounts payable for importing Long term liabilities shall be itemized and shown as long-term loans, Long-term liabilities to be matured and payable within one year shall be Article 38 Owners' equity refers to the ownership of the investors with Article 39 Invested capital is the capital fund actually invested in the Invested capital shall be accounted for at the amount actually invested. Amount of shares issued by a share-holding enterprise shall be accounted Special appropriation allocated by the government to an enterprise shall Article 40 Capital reserve includes premium on capital stock, legal Article 41 Surplus reserve refers to the reserve fund set up from profit Surplus reserve shall be accounted for at the amount actually set up. Article 42 Undistributed profit refers to the profit reserved for future Article 43 Invested capital, capital reserve, surplus reserve and Article 44 Revenue refers to the financial inflows to an enterprise as a Article 45 Enterprises shall rationally recognize revenue and account for Enterprises shall recognize revenue when merchandise shipped, service Revenue of long-term project contract (including labour service) shall be Article 46 Return of sales, sales allowances and sales discount shall be Article 47 Expenses refer to the outlays incurred by an enterprise in the Article 48 Expenses directly incurred by an enterprise in production and Article 49 Administrative and financial expenses incurred by enterprise's Article 50 The expenses paid in current period but attributable to the Article 51 Enterprises shall generally calculate products cost each Costing methods may be decided by the enterprise itself according to the Article 52 Enterprises shall calculate expenses and costs at the actual Those adopting the norm cost method, or planned cost method in accounting Article 53 Enterprises shall convert the cost of commodities sold and Article 54 Profit is the operating results of an enterprise in an Operating profit is the balance of operating revenue after deducting Net investment profit is the balance of income on external investment Net non-operating income is the balance of non-operating income which have Article 55 Loss incurred by an enterprise shall be made up according to Article 56 Items that constitute the profits and the distribution of Article 57 Financial reports are the written documents summarizing and Article 58 A balance sheet is an accounting statement that reflects the Items of the balance sheet should be arranged according to the categories Article 59 An income statement is an accounting statement that reflects Items of the income statement should be arranged according to the Items of the profit distribution part of the income statement may be shown Article 60 A statement of changes in financial position is an accounting Items of the statement of changes in financial position are divided into An enterprise may also prepare a cash flow statement to reflect the A cash flow statement is an accounting statement that reflects the Article 61 Financial statements may, if necessary, be arranged in a way When so arranged, if the classification and contents of statement items of Article 62 Financial statements shall be prepared from the records of Article 63 Consolidated financial statements shall be prepared by the Article 64 Notes to the financial statements are explanatory to related Article 65 The Ministry of Finance shall be responsible for the Article 66 These Criteria shall be effective as of July 1, 1993.
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the Chinese language. Minority languages may be used concurrently with the
Chinese language by enterprises in autonomous areas of minority nationalities.
And a foreign language may also be used concurrently by enterprises with
foreign investment or foreign enterprises.
Chapter II General Principles
business transactions actually taken place, and truthfully reflect the
financial position and operating results of an enterprise.
requirements of national macro-economic control, to satisfy the needs of all
concerned external users to understand an enterprise's financial position and
operating results, as well as the needs of enterprises to strengthen internal
management and administration.
according to stipulated accounting methods, and accounting data shall be
comparable and convenient to be analyzed.
the other and shall not be arbitrarily changed. Where changes are absolutely
necessary. the changes and reasons therefor and their impact on an
enterprise's financial position and operating results, shall be indicated in
the financial statements.
a timely manner.
in a clear, concise manner to facilitate understanding, examination and use.
records and financial reports.
accounting.
expense shall be reasonably determined.
costs at the time of acquisition. The amount recorded in books of account
shall not be adjusted even though a fluctuation in their value may occur,
except otherwise stipulated by the State.
expenditures and capital expenditures. Expenditure shall be regarded as
revenue expenditure where the benefit to the enterprise is only related to the
current fiscal year; and as capital expenditure where the benefils to the
enterprise last for several fiscal years.
financial position and operating results of an enterprise. Transactions
relating to major economic activities are to be identified and separately
reported in financial statements.
Chapter III Assets
value, and which are owned or controlled by an enterprise, including all
property, claims, and other rights.
long-term investments, fixed assets, intangible assets, deferred assets and
other assets.
consumed within one year or within an operating cycle longer than a year,
including cash, cash deposits, short-term investments, receivables,
prepayments, and inventories, etc.
according to the actual amount of receipt and payment.
which can be realized at any time and will be held less than a year, as well
as other investment with a life of no longer than a year.
as obtained.
and the difference between the receipt obtained from securities sold and book
cost shall be all accounted for as current profit or loss.
financial statement.
accounts receivable, other receivables, accounts prepaid and prepaid expenses,
etc.
amount.
provision for bad debts shall be itemized and shown as a deduction item of
accounts receivable in the financial statement.
and shall be checked with relaled parties periodically. Any accounts
receivable, proved and confirmed to be definitely uncollectible, shall be
recognized as bed debts and written off against provision for bad debts or
charged to current profit or loss as bad debts loss, if such provision is not
set up.
the balance shall be itemized and shown separately in financial statement.
goods, goods in process, and all kinds of materials, fuels, containers,
low-value and perishable articles and so on that stocked for the purpose of
sale or production and consumption during the production operational process.
Those enterprises keep books at planned cost or norm cost in daily accounting
shall account the cost variances and adjust planned cost or norm cost into
historical cost periodically.
under the following methods: first-in first-out, weighted average, moving
average, specific identification, last-in first-out, etc.
or out-of-date, deterioration and damage thai need to be scrapped shall be
disposed within the year and accounted into current profit or loss.
statement.
be realized within a year, including shares investment, bonds investment and
other investments.
method or equity method respectively, in accordance with different situation.
The interest accrued contained in the actually paid amount shall be accounted
for separately.
the cost and the face value of the bonds shall be amortized over the periods
prior to maturity of the bonds.
between the amount of principal and interest received on bonds sold and their
book cost and interest accrued but not yet received shall be accounted for as
current profit and loss.
statements.
financial statements separately under the caption of current assets.
one year, unit value is above the prescribed standards and where original
physical form remains during the process of utilization, including buildings
and structures, machinery and equipment, transportation equipment, tools and
implements, etc.
Interest of loan and other related expenses for acquiring fixed assets, and
the exchange difference from conversion of foreign currency loan, if incurred
before the assets having been put into operation or after been put into
operation but before the final account for completed project is made, shall be
accounted as fixed assets value; if incurred after that, shall be accounted
into current profit or loss.
with reference to the market price of similar assets or with relevant
evidences. Expenses incurred on receiving those donated fixed assets, shall be
accounted for as the fixed assets value.
selfowned fixed assets and shall be indicated in notes to the financial
statements.
original cost, estimated residual value, estimated useful life and working
capacity, according to the straight line method or the working capacity (or
output) method. If conforming to relevant regulations, accelerated
depreciation method may be adopted.
shall be itemized and shown separately in financial statement.
and conducting technical reforming on the fixed assets, shall be itemized and
shown separately in financial statement.
loss incurred in discard and disposal, and also overage, shortage of fixed
assets shall be accounted into current profit and loss.
enterprise for a long term without material state, including patents,
non-patented technology, trademark, copyrights, right to use land sites, and
goodwill, etc.
Intangible assets received from investors shall be accounted for at the
assessed value recognized or the amount specified in the contract.
Self-developed intangible assets shall be accounted at actual cost in the
development process.
benefited from such expenditures and the unamortized balance shall be itemized
and shown in financial statements.
accounted into current profit or loss totally but should be periodically
amortized in future years, including starting expenses, expenditures incurred
in major repair and improvement of the rented fixed assets, etc.
be accounted for as starting expenses except those that shall be accounted
into related property or material value. The starting expenses shall be
averagely amortized in a certain period of years after the operation starts.
assets shall be averagely amortized during the period of leasing.
its balance not yet amortized.
above.
Chapter IV Liabilities
money value, which is to be paid to a creditor in assets, or services.
and long-term liabilities.
within one year or an operating cycle longer than a year, including short-term
loans payable, notes payable, accounts payable, advances from customers,
accrued payroll, taxes payable, profits payable, other payables, provision for
expenses, etc.
Liabilities incurred but the amount to be estimated shall be accounted for dt
a reasonable estimate, and then adjusted after the actual amount is given.
statements.
redeemed after one year or an operating cycle longer than a year, including
long-term loans payable, bonds payable, long-term accounts payable, etc.
institutions and other units. They shall be accounted independently according
to the different characters of the loans and at the amount actually incurred.
premium or discount, the difference between the amount actually obtained and
the par value shall be accounted independently, and be written off
periodically or increasing the interest expenses of every period prior to the
maturity of bonds.
equipments, accounts payable for fixed assets financed by leasing. Long-term
accounts payable shall be accounted at actual amounts.
bonds payable, long-term accounts payable in financial statements.
shown as a separate item under the caption of current liabilities.
Chapter V Owners' Equity
respect to the net assets of an enterprise, including capital invested in by
investors, capital reserve, surplus reserve, and undistributed profit, etc.
enterprise by its investors, whether it be in form of cash, physical goods or
other assets for the operation of the enterprise.
for as equity at the face value of the shares issued.
be accounted for as government investment unless otherwise stipulated.
increment of property value through revaluation and value of donated assets
accepted, etc.
according to relevant State regulations.
distribution or to be distributed.
undistributed profit shall be itemized and shown in financial statements.
Deficit not yet made up, if any, shall be shown as a deduction item of owners'
equity.
Chapter VI Revenue
result of the sale of goods and services, and other business activities of the
enterprise, including basic operating revenue and other operating revenue.
the revenue on time.
provided as well as money collected or rights to collect money obtained.
reasonably recognized, in general, according to the completed progress method
or the completed contract method.
accounted for as deduction item of operating revenue.
Chapter VII Expenses
course of production and operation.
provision of service, including direct labour, direct materials, purchase
price of commodities and other direct expenses shall be charged directly into
the cost of production or operation; indirect expenses incurred in production
and provision of service by an enterprise is to be allocated into the cost of
production and operation, according to certain standards of allocation.
administrative sectors for organizing and managing production and operation,
purchase expenses on commodities purchased, and sales expenses for selling
commodities and providing service, shall be directly accounted as periodic
expense in the current profit and loss.
current and future periods shall be distributed and accounted into current and
future periods. The expenses attributable to the current period but not yet
paid in current period shall be recognized as accrued expenses of the current
period.
month.
characteristics of its production and operation, type of production management
and requirements of cost management. Once it is decided, no change shall be
made arbitrarily.
amounts incurred.
for daily calculation shall reasonably calculate the cost variances, and
adjust them into historical cost at the end of the month while preparing
financial statements.
service provided into operating cost accurately and timely, then account
current profit and loss together with periodic expenses.
Chapter VIII Profit
accounting period, including operating profit, net investment profit and net
non-operating income.
operating cost, periodic expenses and all turnover taxes, surtax and fees.
after deducting investment loss.
no direct relevance with the production and operation of an enterprise after
deducting non-operating expenses.
the stipulated procedure.
profits shall be itemized and shown separately 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
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.
financial position of an enterprise at a specific date.
of assets, liabilities and owners' equity, and shall be shown item by item.
the operating results of an enterprise within an accounting period, as well as
their distribution.
formation and distribution of profit, and shall be shown item by item.
separately in a statement of profit distribution.
statement that reflects comprehensively the sources and application of working
capital and its changes during an accounting period.
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.
changes in its financial position.
condition of cash receipts and cash disbursements of an enterprise during a
cerlain accounting period.
that the previous accounting period can be compared to the subsequent periods.
the previous accounting period are different from that of the current period,
such items shall be adjusted in conformity with that of the current period.
account books, completely recorded and correctly checked and other relevant
information. It is required that they must be true and correct in figures,
complete in contents and issue in time.
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.
items in the financial statement of the enterprise concerned so as to
facilitate 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 impact on the
financial position and operating results of the enterprise; description of
unusual items; detailed information 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
interpretation of these Criteria.
URL: http://www.asianlii.org/cn/legis/cen/laws/acfe345