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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 |
|
THE General Rules Governing Enterprise Financial Affairs |
|---|
Article l These General Rules are formulated in order to normalize the
financial behaviours of the enterprises, facilitate fair competition among
enterprises and strengthen their financial management and economic calculation
so as to meet the needs of the development of socialist market economy in our
country.
Article 2 These General Rules shall be the principles and norms that must
be observed by various enterprises established within the territory of the
People's Republic of China in conducting financial activities.
Article 3 An enterprise shall, within 30 days after completing business
registration or its modification, submit to the competent finance department
the duplicated copy of such documents or their modification as the approval
certificate for the establishment of the enterprise, the business license and
articles of association, etc.
Article 4 The fundamental principles guiding the enterprise's financial
management shall be to establish and improve the enterprise's internal
financial management system, effectively accomplish the basic work of
financial management. truthfully reflect the enterprise's financial position,
calculate and turn over tax to the State according to the laws, and ensure the
investors' rights and interests from infringement.
Article 5 The basic tasks and methods of the enterprise's financial Article 6 A statutory capital shall be required for the establishment of In terms of the investors, the capital may be classified as the State Article 7 An enterprise may, according to the laws and regulations of the The enterprise and the other investors may, according to the laws, claim Article 8 The difference of the fund contributed by the investors over The capital reserve may be transferred into the capital according to the Article 9 The enterprise shall enjoy, according to the laws, the right to Article 10 The liabilities of an enterprise include long-term liabilities The long-term liabilities refer to the debt, the maturity period of which The current liabilities refer to the debt, the maturity period of which is Article 11 The accrued interest expenses of long-term liabilities The accrued interest expenses of the current liabilities sball be Article 12 The current asset refers to the asset that will be realized Article 13 The enterprise may set up the provision for bad debts The bad debt loss refers to the account receivable that cannot be Article 14 The inventory refers to the materials reserved by the The low-value and perishable articles and the containers used for The net profit or loss deriving from the inventory overage, shortage or Article 15 The fixed assets refer to the assets, the service life of Article 16 The difference between the revenue deriving from the sale of Article 17 The expenditures of the construction in progress refer to the The expenditure caused by the trial operation before the completion of the Article 18 The fixed assets' classified depreciation life and the Starting from the next month after its operation, the depreciation of the Article 19 The repair expense for the fixed assets shall be accounted Article 20 Intangible assets refer to those assets which are used by The costs of intangible assets shall be amortized periodically within the Article 21 Deferred assets refer to those expenses that cannot be The starting expenses shall be amortized periodically within a period of Article 22 Other assets include specially chartered reserve resources and Article 23 The external investment refers to those investments in other Short-term investments refer to the marketable securities that can be Long-term investments refer to the marketable securities that are not Article 24 For those external investments which are made by enterprises With regard to those external investment in the form of purchasing bonds, With regard to those external investments in the form of purchasing Article 25 Both profit and dividends deriving from the enterprise's The difference between the value of the external investment realized by Article 26 All those payments of the enterprise for producing or dealing Article 27 Selling, administrative and financial expenses incurred by The selling expenses include such expenses as transportation expense, The administrative expenses refer to the expenses that the enterprise The financial expenses include the net expenditure for the interest Article 28 The following outlays by enterprises shall not be accounted Article 29 Operating revenues refer to revenues the enterprise obtains The sales return, sales allowance and sales discount shall be deducted Article 30 The total amount of enterprise's profits include operating Operating profits refer to the amount of operating revenue after deducting Net investment profit refers to the remainder of investment profit after The net non-operating income refers to the remainer of non-operating Article 31 The incurred current year's loss of the enterprise may be Article 32 The enterprise shall pay the income tax according to the laws Unless otherwise stipulated by the State, the profit after the income tax (1) Loss incurred by confiscation, fine and penalty for delayed tax (2) Coverage for enterprise loss of previous years; (3) Retention for statutory reserve fund earmarked for loss coverage or (4) Retention for public welfare fund earmarked for expenditures on (5) Profit distribution to the investors. The undistributed profit of the Article 33 Foreign currency transactions refer to all the transactions The Renminbi shall be the bookkeeping base currency for an enterprise. Article 34 The ending balance of various foreign currency items Article 35 The net profit and loss on exchange incurred by an enterprise Article 36 In case of foreign exchange swap transactions of an Article 37 When an enterprise is disbanded or goes bankrupt in accordance Article 38 The salaries, travelling expenses, office expenses and Inventory overage or shortage, disposal of property, insolvent obligations Article 39 After the appropriation of liquidation expenses out of the (1) Staff wages and labour insurance payable and callable; (2) Tax payment payable and callable; (3) Other obligations payable and callable. Where the enterprise is unable to liquidate all the items in the same Article 40 Income tax shall be paid according to the laws on the net Article 41 Financial reports, including balance sheet and income The enterprise is required to submit at regular intervals the financial Article 42 The explanatory statements on financial condition shall mainly Article 43 Financial indexes summarizing and assessing the financial Article 44 The Ministry of Finance shall be responsible for the Article 45 The enterprise financial systems of different sectors shall be Article 46 These General Rules shall be effective as of July 1, 1993.
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management shall be to effectively accomplish the work relating to the plan,
control, calculation, analysis and examination of the revenue and expenditure,
reasonably raise fund according to the laws, effectively utilize the
enterprise's assets and actively improve economic efficiency.
Chapter II Fund Raising
an enterprise. The capital refers to the fund registered by an enterprise with
the administrative department for industry and commerce.
capital, the capital of legal entity, the individual capital and the
foreigner's capital.
State, adopt various measures to raise capital, such as seeking State
investment, raising capital from various parties or issuing stocks. The
investors may invest in the enterprise in such forms as cash, kinds or
intangible assets.
compensation for the breach of contract with respect to investors who fail to
contribute fund according to the investment contract or agreement.
the capital (including the stock premium) in the enterprise's operations of
raising the capital, the statutory increment of property value through
revaluation and the donated property received shall be accounted into the
capital reserve.
relevant stipulations.
manage over the capital it raised, and during the period of the enterprise's
operation, the investors may not withdraw their capital investment in any form
except transferring to others according to the laws. Where the laws and
administrative regulations stipulate otherwise, the provisions otberwise
stipulated sball be observed.
and current liabilities.
is over one year or over an operating cycle longer than a year, including
long-term borrowings, long-term bonds payable and long-term accounts payable,
etc.
within one year or within an operating cycle longer than a year, including
short-term borrowings, short-term bonds payable, provision for expenses and
the accounts payable or received in advance, etc.
incurred during the preparation period shall be accounted into the starting
expenses; where incurred during the operation period, into the financial
expenses; where incurred during the liquidation period, into the liquidation
profit and loss. Among these, where the expenses are connected with building
or purchasing the fixed asset or intangible asset, they shall be accounted
into the value of the built or purchased asset before the asset is delivered
and put into operation or before the final account of the completed project is
made although the asset has been delivered and put into operation.
accounted into financial expenses.
Chapter III The Current Assets
into cash or utilized within one year or within an operating cycle longer than
a year, including cash, various deposits, inventories, receivables and
prepayments, etc.
according to the stipulations of the State. The bad debt loss incurred shall
be set off against the bad debt provision. If the bad debt provision is not
set up, the bad debt loss incurred may be accounted the current expenses.
collected even after the liquidation is made with the bankrupt property or the
legacy when the obligor goes bankrupt or is dead, or the account receivable
that remains uncollectible after three years when lhe obligor failed to comply
with debt-redeeming obligation.
enterprise for the purpose of sale or consumption in the process of production
and operation, including supplies, fuels, low-value and perishable articles,
goods in process, semi-finished goods, finished goods, outside-produced parts
and merchandise, etc.
revolving purpose, after being put into use, may be accounted into expenses in
one period or in deferred periods.
damage, shall be accounted into the current profit and loss. Among these, the
extraordinary loss of inventory damage may be accounted into the current loss.
Chapter IV The Fixed Assets
which is over one year, the unit value of which is above the prescribed
standards, and the original physical form of which remains in the process of
utilization, including building and structures, machinery equipment, transport
equipment, tools and implements, etc.
the fixed assets deducting the clearing expenditure and its book value, and
the net profit or loss deriving from the inventory overage, shortage or damage
of the fixed assets shall both be accounted into the current profit and loss.
incurred expenditure for building or purchasing fixed assets or making
technical innovation before the fixed assets are delivered and put into
operation, including special materials such as equipment and supplies to be
used for project construction, the project prepayments and the expenditures
for the non-completed project.
project and its related operational revenue are generally to be charged into
or deducted from the cost of construction in progress.
depreciation methods as well as the scope of calculating depreciation shall be
determined by the Ministry of Finance. The enterprise, according to the
stipulations of the State, selects specific depreciation methods and
determines the extent of accelerating depreciation.
fixed assets are to be calculated on a monthly basis. Starting from the next
month after the fixed assets are out of utilization, the calculation of the
depreciation ceases.
into the current cost or expenses. The repair expense, when being not regular
or being relatively large, may be allocated either through amortization over
different periods or through the accrual method, the case shall be filed with
the compelent finance department for the record.
Chapter V Intangible Assets, Deferred Assets and Other Assets
enterprises for a long time but do not have concrete physical forms, including
patents, trade-marks, copyrights, land-use rights, non-patented technology,
goodwill and so on.
specified time limits starting from the day of being used. Those intangible
assets without specified time limits shall be amortized according to the
expected service life or within a period of no less than ten years.
entirely accounted into the current year's profit and loss, and need to be
amortized in the following years, including starting expenses, amelioration
expenses for rented fixed assets and so forth.
no less than five years beginning from the day when the operation starts.
so on.
Chapter VI External Investment
enterprises carried out by an enterprise in the forms of cash, kinds and
intangible assets or through buying such marketable securities as stocks and
bonds including both short-term and long-term investments.
readily shifted into cash and held less than one year as well as other forms
of investment no longer than one year.
intended to be shifted into cash in a short period and can be held more than
one year as well as other forms of investment longer than one year.
in the form of physical property or intangible assets, the difference between
the current value recognized by revaluation and the net book value shall be
accounted into the capital reserve.
the differences between the actual payments and the bond's face value shall be
considered as the premiums or discounts of the bonds, and both of them shall
be amortized or be set off after transferring them into other accounts
periodically before maturity.
stocks, when the actual payments include announced dividends, difference of
the actual payments after deducting the dividends receivable shall be
considered as the actual value of the external investments.
external investment shall be accounted into investment returns and shall be
subject to the payment of income taxes according to the stipulations of the
State.
the enterprise and the book value of the investment shall be accounted into
the current profit and loss.
Chapter Vll Cost and Expenses
in commodities and providing services, including direct wages, direct
materials, purchase price of commodities, and other direct payments, shall be
accounted directly into production and operation costs. Those indirecl
expenses for producing or dealing in commodities and providing services shall
be proportionally allocated into production and operation cost.
enterprise shall be directly accounted into the current profit and loss.
loading and unloading expense, packing expense, insurance expense, exhibition
expense, travel expense, advertisement charge, and the staff wages of
specially established selling agencies, and other expenses, all of which the
enterprise shall bear when selling products (commodities) or providing
services.
shall unilaterally bear, including general office expense, labour union
outlays, staff training expenses, labour insurance fee, unemployment insurance
fee, board of directors meeting expense, consulting fee, litigation fee, tax
paymenl, landuse fee, land deterioration recovery fee, technology transfer
fee, technology innovation expense, amortization of intangible assets,
amortization of starting expense, business reception expense, bad-debt loss,
the administration fee handed over to higher level authorities, and other
administrative expenses.
payment, the net exchange loss and the bank's service charge within the
enterprise's operational period.
into the cost or expense: expenses for purchasing and building fixed assets,
payments for intangible assets and other assets, external investment outlays;
coufiscated assets, various kinds of fines, sponsor contributions and
donations, and some other outlays that may not be lined into cost or expense
according to the State regulations.
Chapter VIII Operating Revenues, Profits and Their Distribution
from selling goods and providing services in its production and operation.
fromm the current operating revenue of the enterprises.
profit, net investment profit, and the net amount of non-operating income and
expenses.
costs, expenses, various kinds of turnover taxes, and surtaxes and fees.
deducting investment loss.
income after deducting non-operating expenses.
covered with the next year's profits; if the next year's profits cannot make a
full covering, the enterprise may use its pre-income-tax profits to do the
covering continuously within a five-year period; if the loss still cannot be
totally covered by pre-income-tax profit in five years, the enterprise can use
its post-income-tax profit to cover.
after adjusting the profits according to the State stipulations.
shall be distributed in the following order:
payment in violation of tax laws;
capital increase in accordance with State regulations;
welfare facilities for the enterprise employees;
previous years may be incorporated into distribution in the current year.
Chapter IX Foreign Currency Transactions
conducted in currencies other than the bookkeeping base currency, such as
receipts and payments of money, settlement of current account, and pricing.
Those enterprises conducting operational receipts and payments mainly in
foreign currencies may choose one foreign currency as the bookkeeping base
currency.
(excluding those recorded separately at the exchange rates in the foreign
exchange swap centres) shall be converted into bookkeeping base currency at
the official exchange rate prevailing at the end-of-period, unless otherwise
stipulated by the State. The difference between the amount of the bookkeeping
base currency converted from foreign currency at the official exchange rate
and the book amount shown in bookkeeping base currency shall be accounted into
the current profit and loss as profit and loss on exchange.
during the preparation and construction period shall be accounted into
starting expenses and amortized in a period no less than five years starting
from the operation of the enterprise, or to be retained to cover the loss
incurred by the enterprise during the operation period, or to be retained and
incorporated into liquidation profit and loss. The exchange profit and loss
incurred during the production and operation period shall be accounted into
financial expenses, and during the liquidation period, into liquidation profit
and loss. The exchange profit and loss associated with purchase and
construction of fixed assets and intangible assets shall be accounted into the
value of the purchased and constructed assets prior to the delivery to their
users or prior to the final account for completed project after the delivery
to the users.
enterprise, the difference between the amount of bookkeeping base currency
converted from the foreign currency at the swap rate and the book amount shown
in bookkeeping base currency shall be accounted into the current profit and
loss as profit ancl loss.
Chapter X Enterprise Liquidation
with its Articles of Association, or is closed because of other reasons, a
liquidating organ shall be established to clear its assets, claims and
obligations in a thorough manner, to formulate balance sheet, general
inventory and statement of claims and debts, to work out the measures for
asset valuation and handling of claims and obligations, and to process
appropriately all the remaining issues.
announcement fees of the liquidating organ during the liquidation period shall
be accounted into liquidation expenses and be covered as the first priority by
the enterprise with its current assets.
and non-recoverable claims, and operating income and loss incurred during the
liquidation period shall be accounted into liquidation profit and loss.
euterprise's property, the obligations shall be liquidated according to the
following order:
order, the liquidation shall be made proportionately.
liquidation profit after the completion of the liquidation. The remaining
after-tax property shall be distributed in proportion to the equity
contributions of investors or in accordance with the provisions of contracts
and Articles of Association.
Chapter XI Financial Reports and Financial Assessment
statement, statement of changes in financial position (Statement of Cash
Flows), relative supporting schedules and explanatory statements on financial
condition, shall be written documents summarizing and reflecting the financial
position and operation resuits of an enterprise.
reports to its investors and creditors, relevant government departments, and
other users.
illustrate the status of production and operation of the enterprise,
realization and allocation of profit, increase and decrease and turnover of
fund, tax payment, changes in the condition of assets and properties; the
issues which have key impact on the current and future financial position; the
issues which may substantially affect the financial position of the enterprise
after balance sheet date and prior to the submission of financial reports; and
other issues which need to be explained.
position and operation results include liquidity ratio, quick ratio, accounts
receivable turnover, turnover of inventories, assets-liabilities ratio,
profit-costs ratio, profit and tax-operating revenue ratio and profit-costs
ratio, etc.
Chapter XII Supplementary Provisions
interpretation and organizing the implementation of these General Rules.
formulated by the Ministry of Finance in accordance with these General Rules.
URL: http://www.asianlii.org/cn/legis/cen/laws/grgefa459