The Study On The Application Of The Comprehensive Income Statement In China

Income is the most important information concerned by users of financial statements, especially by investors. The traditional income determining pattern, which bases on the historical cost principle, revenue realization—matching principle and conservation principle, reflects the operation performance of the business enterprises. This mode is adapted to the economic environment of industrial age and the goal of reporting entrusted responsibility. However, due to the huge development of the society and complicated activities of enterprises, more and more unconventional sources of revenue are generated. Traditional income statement can only report realized income in one fiscal period which seriously lags behind the economic events occurred. Therefore, it doesn't meet the needs for financial performance information of users of financial statement. In order to make up the shortcomings of the traditional income information and enhance its usefulness, west countries represented by U.S, posed the concept of comprehensive income, and released new accounting standards in which the comprehensive income is required to be presented."Enterprise Accounting Standard"promulgated in China in February, 2006 embodies the concept of comprehensive income. But whether it can be widely used in china depends not only on the necessity, but also the feasibility of its application in our country.The article begins with the limit of the traditional income recognition mode, from which we can come to a conclusion that it is necessary to report comprehensive income, then analyses the basic theories of comprehensive income including the recognition, measurement, and rationale which reflects its characteristics and superiorities comparing to traditional income pattern. In the aspect of practice, the article introduces the application of comprehensive income statement in U.S. and points out what we could learn from it. Finally, combining with the accounting standards and accounting system of our country, it discusses how to improve comprehensive income report by business enterprises in China.