МАНДАХ ИХ СУРГУУЛЬ

ГАДААД ХЭЛНИЙ ТЭНХИМ

Э.САЙХАНБАЯР, А.МИНЖИНСОР,
Б.БОЛОРЧУЛУУН, Э.УЛАМБАЯР

САНХҮҮГИЙН ТАЙЛАНГИЙН ЗАРЧИМ

УЛААНБААТАР ХОТ
2021 ОН
 МАНДАХ ИХ СУРГУУЛЬ
ГАДААД ХЭЛНИЙ ТЭНХИМ

САНХҮҮГИЙН ТАЙЛАНГИЙН ЗАРЧИМ

Удирдcан багш . . . . . . . . . . . . . .../Ш.Нандинцэцэг /

Гүйцэтгэсэн оюутан: . . . . . . . . . . . . . . ../ Э.Сайханбаяр, А.Минжинсор,

Б.Болорчулуун, Э.Уламбаяр /

УЛААНБААТАР
2021 ОН
 АГУУЛГА

АГУУЛГА.................................................................................................................................................... I

ХҮСНЭГТИЙН ЖАГСААЛТ......................................................................................................................... II

RESEARCH PURPOSE................................................................................................................................. 1

PRINCIPLES TO FOLLOW IN ACCOUNTING.................................................................................................. 1

1.1 OBJECTIVITY PRINCIPLE................................................................................................................................1

1.2 COST PRINCIPLE.......................................................................................................................................1
1.3 GOING CONCERN PRINCIPLE.......................................................................................................................2
1.4 MONETARY UNIT PRINCIPLE.......................................................................................................................2
1.5 REVENUE RECOGNITION PRINCIPLE...............................................................................................................2
1.6 BUSINESS ENTITY PRINCIPLE........................................................................................................................3
1.7 MATCHING PRINCIPLE...............................................................................................................................3
1.8 FULL DISCLOSURE PRINCIPLE.......................................................................................................................3
1.9 PRINCIPLE OF MATERIALITY........................................................................................................................3
1.10 CONSISTENCY PRINCIPLE.......................................................................................................................4
1.11 REALIZATION PRINCIPLES.......................................................................................................................4

ABOUT NON-GAAP.................................................................................................................................... 5

ДҮГНЭЛТ (STYLE PRELIMINARY HEADER)................................................................................................... 9

АШИГЛАСАН НОМ ЗҮЙ (TIMES NEW ROMAN, 12PT, BOLD, ЗҮҮН ТАЛДАА ЗЭРЭГЦЭХ)............................10

ХАВСРАЛТ A НЭРИЙГ БИЧНЭ ҮҮ............................................................................................................. 11

ХАВСРАЛТ B НЭРИЙГ БИЧНЭ ҮҮ............................................................................................................. 12

 ХҮСНЭГТИЙН ЖАГСААЛТ

Table 1 Prevalence of Non-GAAP Use..................................................................................5

Table 2 International Business Machines Corporation U.S GAAP to Operating (Non-
GAAP) Results Reconciliation (Dollar in millions, except per share amounts)............6
Table 3 Hewlett Packard Enterprise Company and Subsidiaries...........................................6
Table 4 Median Sales, Assets, and Market Cap for Companies Reporting GAAP Earnings
versus Non-GAAP Earnings (Dollars in millions).........................................................8
 RESEARCH PURPOSE.

The purpose of this study is to examine how general accepted accounting principles are
applied in practice and why the use of Non-GAAP has create in the United States. It also
research how differences between GAAP and Non-GAAP affect financial statements.

PRINCIPLES TO FOLLOW IN ACCOUNTING

It should be the base mainstay to follow of the record accounting and preparation of financial
statements of any type of entity. The “generally accepted accounting principles” are used to
provide users with useful, reliable and comparable information. In international practice, there
are two forms, US GAAP and International GAAP, but these principles are directed to provide
users with useful, reliable, and comparable information.

1.1 Obje

The accountant must consider whether there is reliable evidence to include in the
registration. In other words, any measure is considered to be realistic if it is supported by
evidence. The way to check this is for the two accountants to work independently of each other
and give the same answer. Transactions with valid primary documents must be recorded in the
accounting records.
Example:
Company X has asked an auditing company to do an external audit of financial records for
the company. When the external auditor started to validate the records, he asked for receipts
from customers in order to validate the Accounts receivable. If company X can’t present proper
receipts to the auditor, then the objectivity principle is violated. As the statements can’t be
verified, so the records can’t be used.

1.2 Cost

Most assets and liabilities are initially recorded at cost rather than market value. The cost is
the total amount paid when the asset was first acquired. In other words, any amount paid until the
asset is ready for use is a cost.Some types of assets and liabilities are measured at market value
(fair value). For example, long-term debt, rent, investment, etc. [ CITATION ХНя12 \l 1033 ]
Example:
Case 1: MNT 10,000 was paid for transportation costs to purchase goods worth MNT
200,000.
Solution: Record the goods for 210,000 MNT. (Record the total amount paid at the time of
purchase)
Case 2: On October 10, 2010, I paid 20,000,000 MNT to buy a building. At that time, the price
of the same building was 25,000,000 MNT.
Solution: The building will be recorded at cost of MNT 20,000,000.

1.3 Goin

An entity should maintain records based on the imagination that it will continue to do
business's activity now and in the future. In other words, it has no goal of ceasing operations. For
example, depreciation and amortization should be accounted for based on the assumption that
fixed asset for long-term use, plant and equipment will be used in the future. [ CITATION
ХНя12 \l 1033 ]
Example:
When an asset is purchased, the organization plans to use it and reap benefits for more
than a year, however, the expenditure for the same is to be incurred in the year of purchase.Thus,
in such a situation, the organization shall capitalize on the assets and claim depreciation on the
assets over the years for the life of the asset. This distribution of expenditure (depreciation) is
possible only because of the going concern concept, which is, the business shall be carried on for
at least the life of the asset or beyond.

1.4 Mon

In accounting, reflects transactions that can be expressed in monetary terms. In other

words, only items that can be expressed in monetary terms are recorded. For example, in
Mongolia, the tugrug is used, and in the United States, Canada, Australia, and Singapore, the
dollar is used. [ CITATION ХНя12 \l 1033 ]
Example:
Case 1: Let’s suppose X company bought a plot of land in 2010 at a cost of $50,000. It
recorded the newly purchased land with a value of $50,000 in its books. Now, in 2021, X
company bought an adjacent plot of land at a cost of $300,000. It will record both plots of land at
an amount of $350,000 (50,000 + 300,000). There is a significant difference in the purchasing
power between 2010 and 2021, but under the monetary unit assumption, it is ignored.

1.5 Reve

Specifies the period for which income is recognized and recorded. Revenue should be
recorded when revenue becomes available, regardless of whether a cash payment has been made.
In other words, revenue must be recorded only when the goods or services reached the
consumers. [ CITATION ХНя12 \l 1033 ]
If the goods and services are delivered to the consumer but the money is not received, it
considered the loan sales revenue. However, if the goods are not delivered to the consumer but
the money is received, it is considered as pre-income and is not recorded as income.
Example:
Case 1: In December 2010, the 2011 subscription fee of MNT 8,000,000 was received.
Solution: No income will be registered in October. (The publication will not record revenue until
it reaches consumers.)

1.6 Busi

Accounting should reflect only the activities of the entity. In other words, the entity's
accounts should be independent of the owner's personal use and other business activities.
Examples:
Case 1: The owner paid $ 80,000 for electricity and utilities for his apartment.
Solution: Costs do not be included in company registration. (Owner's personal use does not
apply to the company.)
Case 2: The company needed money and borrowed 600,000 MNT from the owner.
Solution: Register a debt of 600,000 MNT in the company registration.

1.7 Mat

This is called the principle of matching income and expenses. It is necessary to record the
expenses related to earning the income at the time the income was recorded. This will ensure that
the results of the entity's operations will be accurate and realistic. [ CITATION ХНя12 \l 1033 ]
Example:
Case 1: The company's October electricity bill was MNT 60000, but has not yet paid.
(Will be paid in November)
Solution: Because of expenses incurred in connection with earning income in October, it should
be recorded in October, regardless of whether the money has been paid or not.

1.8 Full

Additional disclosures will be made to make the information more understandable to users.
And it includes details of the basis used in the preparation of the financial statements, the
accounting method and the items reported.
Example:
Case 1: Due to an error in the company's registration, it was decided to make additional
clarifications and correct.
Solution: Additional clarifications do not correct the error.

1.9 Prin

The items in the accounting need to with material amount. Material items separately, and
immaterial items by their characteristics should be consolidated and recorded. Materiality is what
significantly affects the decision-making needs of information users. [ CITATION ХНя12 \l
1033 ]
Example:
$10,000 is material to a small business with sales of $100,000. However, $10,000 is not
material to a large company with annual sales of $10,000,000.
 1.10 Con

An entity needs to consistently follow the registration method and basis from one
generation to another. In other words, do not use one method today and another registration
method tomorrow. Registration information should be able to be many-year or compared with
other entities. Although, you may change your registration policy for a certain of reasons. In
such cases, that the indicator of current year and previous year are necessary to be calculated and
recorded in this way.
Example:
Case 1: Bob’s Computers, a computer retailer, has historically used FIFO for valuing its
inventory. In the last few years, Bob’s has become quite profitable and Bob’s accountant
suggests that Bob switch to the LIFO inventory system to minimize taxable income. According
to the consistency principle, Bob’s accountant can change accounting methods for a justifiable
reason. [ CITATION ХНя12 \l 1033 ]

1.11 Real

Any transaction must be recorded each time it occurs. Regardless of whether or not a
payment has been paid must be recorded at the time of the transaction. [ CITATION ХНя12 \l
1033 ]
Examples:
Case 1: The company's October electricity bill was MNT 60000, but has not yet paid.
(Will be paid in November)
Solution: Because of expenses incurred in connection with earning income in October, it should
be recorded in October, regardless of whether the money has been paid or not.
Case 2: In October, we borrowed MNT 400,000 and agreed to pay within November.
Solution: Register the goods in October. (Regardless of whether a cash payment has been made,
it should only be registered when the goods are received.)
In addition to the above general principles, the Accounting Law of Mongolia states that the
following principles must be followed in the accounting of business entities and organizations.

1. Principle of compatible: The financial statements of the business entity and organization
shall comply with international accounting standards
2. Principle of correct: Financial statements should be based on true and correct facts,
figures and information;
3. Principle of obvious: Registration and report indicators should be simple, specific and
understandable;
4. Principle of comparable: As for methodology, devise records, report numbers, and data
that can be methodologically compared with past and future numbers and data;
5. Principle of optimal: Use the best options for your specific needs in management and cost
accounting;
6. Going concern principle: The business entity must record the quantitative information of
its operations on a continuous basis.
 ABOUT NON-GAAP

There are some cases happen when GAAP reports do not accurately describe business
operations. Companies can report their accounting figures as non-GAAP and provide a link
between adjusted and fixed results. Non-GAAP figures often do not take into account non-fixed
and non-cash costs, such as acquisitions, restructuring, and one-time adjustments to the balance
sheet. This mitigates the high income volatility caused by temporary conditions and gives a
clearer picture of the ongoing business. [ CITATION ALI21 \l 1033 ]

Table 1 Prevalence of Non-GAAP Use

Criteria GAAP Non-GAAP
Accounting Companies followed to the standards and No such standard or accounting method
formats specified in the accounting can be followed by companies.
method.
Investors and It is useful for investors to analyze their Ordinary users, investors and lenders
Creditors investment through financial statements, can easily understand financial
Analysis but it is a little difficult to understand the statements.
standard format.
Standarts This is the industry standard. It is not an industry standard.
Business From a financial point of view, it shows Some adjustments are needed to get a
operations a clear picture of business operations. clear picture of the business operations.
Non Reccuring Non-recurring expenses will be included Non-recurring expenses will be
Expenses in its financial statements. excluded in its financial statements.
Window There is no scope for window dressing of There is scope for window dressing of
dressing profitability in financial statements. profitability in financial statements.
Comparison of There is a reliable comparison of No reliable comparison of financial
Financial financial results from Industry to results between company to company,
Results industry, company to company and year industry to industry and year to year.
to year.
[ CITATION Mad21 \l 1033 ]

Nowadays, 13 of the 50 states in the United States have fully approved the use of Non-GAAP.
1.Washington
2.Idaho
3.North Dakota
4.Kansas
5.Oklahoma
6.Missouri
7.Illinois
8.Indiana
9. Alabama
10.Michigan
11.West Virginia
12.New York
13.Vermont
There are 14 states that do not approve of Non GAAP at all, and 13 states that accept it
with some restrictions. [ CITATION ALI21 \l 1033 ]
 The two tables below show an example of how companies report non-GAAP is apparent
in the 2016 disclosures of IBM and HPE. The two disclosures differ greatly both in presentation
and in their calculation of non-GAAP earnings. IBM introduces conditions other than GAAP for
each line of income statement, while HPE only sets the bottom line total.

Table 2 International Business Machines Corporation U.S GAAP to Operating (Non-GAAP)

Results Reconciliation (Dollar in millions, except per share amounts)
GAAP Acquisition-related Retirement- Operating(NON-
adjustments related GAAP)
adjustments
Gross profit $ 38,924 $494 $316 $ 39,734
Gross profit margin 47.9% 0.6 0.4 48.9%
S, G&A 21,069 (501) (253) 20,315
R, D&E 5,751 - (29) 5,722
Other (Income) and 145 (7) - 138
Expense
Total Expense & 25,964 (508) (282) 25,174
Other (Income)
Pretax Income from 12,330 1,003 598 13,931
Continuing
Operations
Pretax Income 15.4% 1.3 0.7 17.4%
margin from
Continuing
Operations
Provision 449 268 183 900
for/(Benefit) from
Income Taxes
Effective Tax Rate 3.6% 1.7 0.7 17.4%
Income from 11,881 735 415 13,031
Continuing
Operations
Pretax Income 14.9% 0.9 0.5 16.3%
margin from
Continuing
Operations
Diluted Earnings per $ 12.39 $ 0.77 $ 0.43 $ 13.59
share
[ CITATION The20 \l 1033 ]
S, G&A=Selling, General & Administrative Expenses
R, D&E=Research, Development & Engineering

Table 3 Hewlett Packard Enterprise Company and Subsidiaries

Adjustments to GAAP Net Earnings, Earnings from Operations, Operating Margin,and Net
earnings per share(Dollars in millions, except percentage and per share amounts)

12 months ended Net earnings 12 months ended Net earnings per

October 31,2016 per share October 31,2015 share
GAAP net earnins $ 3161 $ 1.82 $ 2461 $ 1.34

Non-GAAP
adjustments:

Amortization of 755 0.43 852 0.46

intangible assets

Restructuring 1236 0.71 954 0.52

charges

Acquisition and 178 0.10 89 0.05

other related charges

Separation costs 598 0.34 797 0.43

Defined benefit plan - - 225 0.12

settlement charges

Impairment of data - - 136 0.07

center assets

Gain on MphasiS (2420) (1.39) - -

and H3C divestitures

Separation costs in - - 4 -
interest and other,
net

Tax indemnification (317) (0.18) - -

adjustments

Loss from equity 93 0.05 - -

interest

Adjustments for (594) (0.33) (724) (0.39)

taxes

Valuation - - (1251) (0.67)

allowances, net, and
sepataion taxes

Tax settlements 647 0.37 - -

Non-GAAP net $ 3337 $ 1.92 $ 3,543 $ 1.93

earnings
[ CITATION The20 \l 1033 ]
Under Non GAAP, companies use a variety of terms. The varying styles, calculations, and
terminology further hamper the comparability and consistency of the disclosures and make
analysis of non-GAAP earnings across companies and years a challenge.
Terminology Examples Companies

Adjusted Adjusted net income, Adjusted EPS, Adjusted income from continuing 41
operations, Adjusted operating income or “as adjusted”

Excluding Excluding other costs, excluding certain items, excluding specified 10

items, excluding adjustments, or excluding significant items

Non-GAAP Non-GAAP earnings, Non-GAAP income, Non-GAAP EPS, Non- 20

GAAP operating income, or Non-GAAP income from continuing
operations
[ CITATION The20 \l 1033 ]

The average sales, total assets, and market capitalization of companies that only report
GAAP income are provided to companies that report income other than GAAP for one year or
more. In almost all cases, only GAAP reporters had higher average sales, assets, and market
capitalization than non-GAAP reporters. Large companies are often reluctant to report non-
GAAP income because they have little material impact on repetitive or rare occurrences.

Table 4 Median Sales, Assets, and Market Cap for Companies Reporting GAAP Earnings versus
Non-GAAP Earnings (Dollars in millions)

2010 2011 2012 2013 2014 2015 2016

Medium GAAP 31,763 37,349 44,176 43,011 42,698 42,653 42,480

sales only

Non 32,778 37,121 35,015 35,299 34,866 32,777 31,360

GAAP

Medium GAAP 54,705 62,177 73,194 83,351 96,411 106,453 125,450

total only
assets
Non 52,240 55,201 61,547 64,010 61,446 65,927 66,099
GAAP

Medium GAAP 66,342 51,252 60,501 79,730 88,869 86,235 93,247

market only
cap
Non 47,392 51,085 55,271 73,006 77,486 81,212 83,724
GAAP
[ CITATION The20 \l 1033 ]
 ДҮГНЭЛТ (STYLE PRELIMINARY HEADER)

Энд дүгнэлт болон зөвлөмжөө оруулна уу (Style Normal)

(12pt өндөртэй 1 хоосон мөр)

Тухайн өгүүллийг дүгнэж Times New Roman фонд дээр 12pt үсгийн өндөртэйгээр
Regular горимд бичнэ.

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(12pt өндөртэй 2 хоосон мөр)

АШИГЛАСАН НОМ ЗҮЙ (TIMES NEW ROMAN, 12PT, BOLD, ЗҮҮН ТАЛДАА
ЗЭРЭГЦЭХ)

(12pt өндөртэй 1 хоосон мөр)

Судалгааны ажлын төгсгөлд ишлэл татсан ном, зохиолын нэрсийг тавих ба өгүүлэлд иш
татсан дарааллаар нь дугаарлана. Нэрсийг Times New Roman фонд дээр 12pt үсгийн
өндөртэйгээр дараах хэлбэрээр бичнэ.
(12pt өндөртэй 1 хоосон мөр)
1. Ванчигсүрэн, Д. (1996). Шавь төвтэй сургалтын онол, аргазүй. Олон улсын эрдэм
шинжилгээний хурал. Улаанбаатар хот: Монгол.
2. Jamyansuren, S. (2015). Business methodolgy. Ulaanbaatar: Press Lord LLC.
3. Бэгз, Н., Нямдаваа, Ё. (1995). Монголын боловсролын түүхийн унших бичиг.
Улаанбаатар хот: Монгол. 77х
4. Мандах Их Сургууль, (2017). Эрдэм шинжилгээ, судалгааны ажлын стандарт:
1.9 Судалгааны ажил, Улаанбаатар хот. Монгол. 9х

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ХАВСРАЛТ B НЭРИЙГ БИЧНЭ ҮҮ

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