Investment certificates: Investment certificates are the
certificates issued by a joint venture to testify the amount of
investment subscribed by the parties to the joint venture. They
are issued to the joint ventures after the parties to the venture
have put in their respective subscribed investment and after the
Chinese-registered accountant has verified the amount and issued the
verification report. Without the consent of the other parties and the
approval of the examination and approval authority of the joint
venture, no party to the joint venture is allowed to dispose of the
certificate by transfer, mortgage or other ways.
Reserve fund: The reserve fund of a joint venture is a
special fund withheld from its profits to make up for the losses
the venture may be subjected to and to guard against accidents. The
proportion of the fund is to be decided upon by the board of
directors, but it is not to exceed a certain amount. The reserve
fund is in general not to be used for other purposes, but, with the
approval of the joint venture's examination and approval authority,
may be used by the joint venture for increasing its capital or
expanding production.
Bonus and welfare fund for staff and workers: The bonus and
welfare fund for the staff and workers of a joint venture is a
special fund withheld from the venture's profits to improve the
welfare of the staff and workers and encourage individuals or
groups who have made comparatively great contributions to the
production and work. It can be used only for commending those
who have made comparatively great contributions and providing
collective welfare facilities for the staff and workers, medical and
health service and financial aids.
Enterprise expansion fund: The expansion fund of a joint
venture is a special fund withheld from the joint venture's
profits to expand its production. It can be used for purchasing
fixed assets, increasing circulating funds and expanding
operation. It can also be used for the trial manufacture of new
products, undertaking scientific research and running technical
training for the staff and workers.
Industrial property: The industrial property is the proprietary
right acquired in accordance with the law for patented inventions,
new designs and trade marks. It is to be protected according to the
law, although such protection is strictly regional. Exclusive in
character, the industrial property shall not be encroached upon by
others. Use of such a right by others must have the consent of the
owner of the right and a fixed amount of reward for him. The Law
on Joint Ventures Using Chinese and Foreign Investment stipulates
that a joint venture may make its investment in industrial
property, to which provision rules have been added in the
Regulations for the Implementation of the Law on Joint Ventures
Using Chinese and Foreign Investments.
Knowhow: Knowhow,also called technical secret,is technical knowledge
which can be transferred or imparted and which not known to the
public and not patented. Unlike the patent right whose effective
period is limited, knowhow is monopolized by means of secrecy.
Accrual basis: This is an accounting method of ascertaining the
income and costs of a venture in a fiscal period (a month, a
season or a year). In other words, the income and costs of a current
period should be dealt with as such, no matter if the sum is
received or paid in that particular period. Conversely, the income
and costs not of the current period shall not be dealt with as
such, even if the sum is received or paid in that particular period.
For instance, the rent of September should still be entered into
the account book as the costs of that month, even if it was paid in
August or October. The adoption of accrual basis makes it possible to
accurately calculate a venture's income, costs and profit or loss in
various fiscal periods.
Debit-credit bookkeeping method: In accounting,the
words"debit" and "credit" are used to record the increase and
decrease of a venture's application of funds (assets or costs)
and its sources of funds (liabilities, capital or income).
"Debit" signifies the increase in the application of funds or the
decrease in the source of funds and "credit" denotes the decrease in
the application of funds or the increase in the source of funds. In
accordance with the principle that a venture's application of
funds must equal its sources of funds, each item of the ec
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