Definition

From the accounting point of view, provident fund refers to a kind of reserve drawn from the company's operating profit or other income in accordance with laws, articles of association or resolutions of the shareholders' meeting. The establishment of provident fund system is of great significance to the survival and development of the company. After the establishment of the provident fund system, when losses occur, it can be used to make up for the losses, which can be used to enrich the company's funds and enhance the company's credit, thus avoiding the great turmoil in the company's business activities and ensuring the safety of creditors and social transactions. In addition, the company requires long-term development, and additional investment with provident fund is undoubtedly the best way to expand the scale and scope of operation.

in the use of the provident fund, it is mainly used to convert it into new capital and make up for the company's losses. In addition, when the company issues new shares, it can use part or all of the provident fund to expand the funds and issue new shares to shareholders according to the original shareholding ratio. However, the provident fund must not be distributed to shareholders as dividends.

2. Classification criteria

1. The provident fund can be divided into statutory provident fund and arbitrary provident fund based on whether it is compulsory to withdraw according to the law.

the statutory provident fund refers to the provident fund that must be drawn by force according to the law. The proportion (or amount) of its extraction and its use are directly stipulated by law. Statutory provident fund is also called "compulsory provident fund".

Arbitrary accumulation fund refers to the accumulation fund freely set up or withdrawn from the statutory accumulation fund by the company according to the articles of association or the resolution of the shareholders' meeting. Therefore, whether to set up any provident fund and how to withdraw and use it is entirely up to the company to decide freely, and the law does not interfere.

2. According to the source standard of provident fund, the provident fund can be divided into surplus reserve fund and capital reserve fund.

surplus reserve fund refers to the reserve fund drawn by the company from its after-tax operating profit. Therefore, its source is unique, that is, it can only come from the company's surplus.

the capital accumulation fund refers to the accumulation fund drawn from the income generated by the company's non-business activities.

III. Functions

According to Article 168 of China's Company Law and relevant regulations, the functions of provident fund mainly include:

1. Make up for losses. When the company loses money, it must try to make up for it, otherwise it will violate the principle of capital maintenance. According to Article 169 of the New Company Law.

2. expand the company's production and operation. Without increasing capital, it is undoubtedly a convenient and quick way to expand the company's production and operation with the provident fund drawn over the years.

3. Increase capital. When necessary, the company may transfer the common reserve fund to share capital.

4. It can be used to distribute dividends under special circumstances. Generally speaking, when a company has no profit in that year, it shall not distribute dividends. However, in order to maintain the reputation of the stock, the company can use the surplus reserve fund to distribute dividends at a rate of no more than 6% of the face value of the stock after making up the losses with the surplus reserve fund. However, after the dividends are distributed, the statutory surplus reserve fund of the company shall not be less than 25% of the registered capital.

iv. types

the company's provident fund can be divided into statutory provident fund, discretionary provident fund and capital provident fund.

1. Statutory common reserve fund

refers to the reserve fund that the company deducts not less than 1% of the after-tax profit of the previous year at the time of year-end settlement before distribution to make up for operating losses and development.

when the accumulated amount of the statutory common reserve fund of the company reaches 5% of the registered capital of the company, it may not be withdrawn. It can be seen that the provident fund is to prevent the risk of operating losses and prepare financial resources for the company's development. The company law requires the company to use part of its profits as provident fund by mandatory provisions, precisely to ensure the company's financial reserves.

The so-called "statutory reserve fund" in Article 166 of China's Company Law actually belongs to the theoretical category of statutory surplus reserve fund.

article 166 of the company law stipulates that when distributing the after-tax profits of the current year, the company shall withdraw 1% of the profits and include them in the company's statutory reserve fund. The situation that the company needs to make up losses is not considered here. If the company continues to make profits without loss, the statutory surplus reserve fund can be accrued according to a certain proportion of the net profit after income tax; If the company suffers losses in the current year and makes profits in the next year, according to the relevant provisions of the Tax Law and the accounting system, the company's profits should be used to make up for the losses first, and after making up the losses, the enterprise income tax should be paid as required, and then the surplus reserve should be drawn according to a certain proportion of the after-tax surplus. Using pre-tax profits to make up for losses can only last for five years, and after five years, profits after income tax must be used to make up for losses.

2. Arbitrary accumulation fund

Arbitrary accumulation fund means that after deducting the statutory accumulation fund of not less than 1% of the company's after-tax profits in the previous year, or when the statutory accumulation fund has reached 5% of the company's registered capital and will not be increased, the shareholders' meeting, the authority of the company, decides to deduct some shares from the profits as arbitrary accumulation fund. The ratio of arbitrary accumulation fund to registered capital is not limited, and it is completely deducted by the authority of the company according to the development needs.

because the common reserve fund is a reserve fund made by the company to make up for losses and development, the amount of the reserve fund is decided by the shareholders' meeting, and the company law does not interfere, which belongs to the scope of company autonomy.

Paragraph 3 of Article 166 of the Company Law stipulates: "After the company withdraws the statutory reserve fund from the after-tax profits, it may also withdraw any reserve fund from the after-tax profits upon the resolution of the shareholders' meeting or shareholders' meeting".

3. Capital accumulation fund

Capital accumulation fund refers to the part of capital or assets invested by investors or others (

or units) whose ownership belongs to investors but does not constitute paid-in capital. That is to say, the capital accumulation fund is the capital invested by investors that exceeds the statutory capital, or the assets invested by others (or units) that do not form paid-in capital. It is not transformed from the net profit realized by enterprises, but belongs to the category of capital in essence.

Article 167 of the Company Law stipulates the capital reserve fund and its sources: "The premium paid by a joint stock limited company by issuing shares at an issue price exceeding the par value of the shares and other income listed in the capital reserve fund as stipulated by the financial department of the State Council shall be listed as the company's capital reserve fund." Article 4 of "Accounting Standards for Companies" stipulates: "Capital accumulation fund includes equity premium, revaluation and appreciation of statutory property, and the value of assets donated."

v. All of the accumulation fund

The capital accumulation fund is the capital or assets invested by investors or others in the enterprise, the ownership of which belongs to investors, and the amount exceeds the statutory capital. From the source of formation, capital reserve is not transformed from the profits realized by enterprises, but belongs to the category of invested capital in essence. Therefore, it is fundamentally different from retained earnings, because the latter is transformed from the profits realized by enterprises. Therefore, when accounting for capital reserve, the key point is to distinguish its income items. At the same time, although the capital accumulation fund belongs to the category of invested capital, it is different from the paid-in capital. The paid-in capital is generally the original investment invested by investors to seek value appreciation, and it belongs to legal capital, and there are strict restrictions on the amount; There is no strict limit on the amount of capital reserve, and its sources are relatively diverse. It can come from the extra investment of investors, or from other enterprises or individuals besides investors, such as donated assets.

in the process of establishment or operation of enterprises, such as establishment, merger, capital increase and investment, the problem of handling capital reserve is often involved, especially in some small and medium-sized enterprises. In the process of property right system reform, the losses approved for write-off often cannot be written off in the correct order, resulting in the distortion of capital reserve figures on the books. Although this will not affect the total amount of owners' equity, when the capital reserve fund is transferred to capital, it will affect the interests of different investors in the enterprise because it is calculated and divided according to the proportion of shareholders' investment in paid-in capital. Also, due to other reasons, the changes of capital reserve fund can not be handled correctly. Therefore, in accounting, accounting treatment should be carried out according to the specific sources and changes of capital reserve fund. From the content, the capital accumulation fund mainly includes four parts, namely: capital premium and equity premium, asset appreciation, accepting donated assets, and foreign currency capital conversion difference. However, from the source breakdown, it can be identified as six items, namely: capital premium or equity premium, asset appreciation, non-cash assets equity investment, assets donated, capital generated by equity investment accounted by equity method, and foreign currency capital conversion difference.

In general, the provident fund needs to be paid for a certain period of time before it can be used. Nowadays, the housing price is soaring, so it needs a loan to buy a house. In the process of loan, you can rely on the provident fund loan to buy a house. The provident fund is mainly to protect the legitimate rights and interests of workers from infringement and reduce the economic pressure of buyers.

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