Research On The Impact Of Earnings Structural Adjustment On The Quality Of The Income Statement Of Listed Companies Under The New Accounting Standards

The rapid development of science and technology enriches the route and speed of transmission of information and further accelerates the reform of all the activities of human society. Economic activity as an important part of human society is also currently undergoing dramatic changes. Although economic globalization, the division of labor and the rapid flow of capital worldwide strengthen the connection of enterprises all over the world, they also bring more interference factors to the living conditions of enterprises. Nowadays, the capital market has been developed to some extent and enterprises gradually exist in the economic agents in the form of corporate system. The ownership and management rights of resources have been further separated. The current business environment, mode of operation and economic development has been reformed dramatically. In order to meet the needs of economic development, the objective, timely, high-quality, efficient measure and delivering business operations and financial conditions, several reforms of accounting standards have been made for all countries, which render accounting standards to embrace new concepts and new measurement attributes and do some adjustments on the presentation of financial statements for many times, especially that of income statement, which is the carrier of the reflection of the enterprise’s surplus results and profit structure and is the basis of the analysis of enterprise’s surplus quality. Therefore, the income statement is the hardest-hit area where enterprises gloss over financial conditions and cover up the actual situations of enterprise operations. Various international organizations and countries have made adjustments and modifications on the items of the presentation of the income statement, the presentation order of the items and the segregation of items for many times. The international accounting standards board and the United States financial accounting standards board have revised the accounting elements and the item presentations for many times to plug up loopholes in the accounting system. Both the outbreak of global financial crisis which expanded rapidly and influenced profoundly and the lack of risk awareness of profit structure for investors brought devastating blow to the real economy body and led to many bankruptcies. This caused discussion about the reasons of crisis among governments and the general investors, whether some accounting items are the chief plotters of the crisis or just the early warning of crisis that people do not take notice of.After the development for nearly twenty years, the socialist market with Chinese characteristics has been set up and gradually manifested its superiority under the influence of western market and our national situation. The reform and development of economy drives the establishment and change of the related institutions and service systems, especially the establishment, reform and development of the accounting system which is closely connected with economic activity. In order to revise and improve PRC’s Accounting Standards (CAS), there are two significant reforms in1996and2006, one of which is a landmark event. The new CAS, which conclude one basic standard and thirty-eight specific standards, were issued and effective in February15,2006and January1,2007, separately. The new CAS have redefined some accounting elements, introduced new ideas and accounting items, had larger adjustments on the format of the income statement and the content of disclosure, added some new presentation items and made some integration on the original presentation items. In particular, this series of changes and adjustments, such as profit or loss of fair value, the introduction of the concept of asset impairment loss, determination of investment income, change of the disclosure position of minority shareholder rights and filling earnings per share data in the column, etc., reflects the transformation to the assets and liabilities view, which presents more detailed constituents of profit and allows investors to clear know how much of the profit has been already actually achieved, without risk and which part is just reflected on paper and not transformed to real income.Analyzing the quality of the income statement is to estimate that whether the income statement is in accordance with the accounting theory, whether the target of presentation is reasonable, whether the presentation information is enough to meet the requirements of the quality of accounting information, and whether the changes of item, order and classification of presentation can better reflect the enterprise surplus’quality which is under the influence of enterprise surplus’quality constitute. Firstly, this paper discussed quality criterion of accounting elements and analyzed the characteristics that financial statements should possess. Then the adjustments of profit structure of the income statement under the new rules are expounded and operating profit would be divided according to risk factors. Finally, case study proves that the adjustments of profit structure under the new standards can surely improve profit quality and provide more information to the income statement users to make more reasonable decisions. In the end of this paper, the fundamental reasons of the improvement of profit quality would be summarized and the income statement further reform would be discussed.