《会计英语》PPT课件.ppt

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1、Accounting English 2017,1,Chapter 2-2,Accounting Cycle(Cont.),Accounting English 2017,2,Before financial statements can be prepared,the accounts must be reviewed to ensure they reflect the correct balances;adjustments will be needed to adjust prepayments and unearned amounts,and to record amortizati

2、on and accruals.The adjusted trial balance is used to prepare the statements.Closing entries are journalized and posted in preparation for the next accounting period.,Accounting English 2017,3,Need for adjustments,The life of a business is divided into accounting periods so that periodic financial r

3、eports can be prepared and used.Adjustments at the end of each period are necessary to update some of the asset,liability,expense,and revenue accounts and to show the effects of previously unrecorded internal economic events of the business.,Accounting English 2017,4,Revenue=Cash receivedExpense=Cas

4、h paidRevenue Cash receivedExpense Cash paid,Accounting English 2017,5,Accrual and cash basis accounting,Accrual accounting requires adjustments for prepaid,unearned,and accrued items;therefore,it reports revenues when earned and expenses when the expiration of benefit is incurred.Cash basis account

5、ing does not make adjustments;revenues are recorded when cash is received and expenses are recorded when cash is paid.The cash basis of accounting is not generally accepted.,Accounting English 2017,6,Adjusting the accounts(step 5),Adjusting entries are journalized in the general journal and then pos

6、ted into the general ledger.Adjusting entries are used to:charge the expired portion of prepaid expenses to Expensecharge the expired portion of fixed assets cost to Amortization/Depreciation expenseaccrue expenses and record the related liabilitiesrecognize as revenues the earned portion of unearne

7、d revenue liabilitiesaccrue revenues and record the related assets,Accounting English 2017,7,Prepaid Expenses,Accrued Expenses,Unearned Revenue,Accrued Revenue,Types of Adjusting Entries,Depreciation,Accounting English 2017,8,Entries to prepaid expenses,Prior Periods,Current Period,Future Periods,Tr

8、ansactionPaid future expenses in advance(creates an asset).,End of Current Period,Adjusting Entry Recognize portion of asset consumed as expense,andReduce balance of asset account.,Entries to prepaid expenses,Accounting English 2017,9,Examples Include:DepreciationSuppliesExpiring Insurance Policies,

9、Entries to prepaid expenses,Accounting English 2017,10,Jan.1,Dec.31,$2,400 Insurance Policy Coverage for 12 Months,$200 Monthly Insurance Expense,On January 1,Webb,Co.purchased a one-year insurance policy for$2,400.,Accounting English 2017,11,Entries to prepaid expenses,Initially,costs that benefit

10、more than one accounting period are recorded as assets.,Accounting English 2017,12,Entries to prepaid expenses,The costs are expensed as they are used to generate revenue.,Accounting English 2017,13,Entries to prepaid expenses,SOCICost of assets used this period to generate revenue.,SOFPCost of asse

11、ts that benefit future periods.,Accounting English 2017,14,The Concept of Depreciation,Depreciation is the systematic allocation of the cost of a depreciable asset to expense.,Depreciable assets are physical objects that retain their size and shape but lose their economic usefulness over time.,Accou

12、nting English 2017,15,The Concept of Depreciation,The portion of an assets utility that is used up must be expensed in the period used.,Cash(credit),Fixed Asset(debit),On date when initial payment is made.,The assets usefulness is partially consumed during the period.,At end of period.,Accumulated D

13、epreciation(credit),Depreciation Expense(debit),Accounting English 2017,16,Depreciation Is Only an Estimate,During May of 20 x7,Barones repair shop purchased an equipment with a useful life of 50 months for$5,000 cash.Using the straight-line method,calculate the monthly depreciation expense.,Account

14、ing English 2017,17,Depreciation Is Only an Estimate,Barones repair shop would make the following adjusting entry.,Contra-asset,Accounting English 2017,18,Accumulated depreciation would appear on the SOFP as follows:,Equipment$5,000Less:accumulated depreciation 100 4,900,Accounting English 2017,19,E

15、ntries to Unearned Revenue,Prior Periods,Current Period,Future Periods,TransactionCollected from customers in advance(creates a liability).,End of Current Period,Adjusting Entry Recognize portion earned as revenue,andReduce balance of liability account.,Accounting English 2017,20,Entries to Unearned

16、 Revenue,Examples Include:Airline Ticket SalesSports Teams Sales of Season Tickets,Accounting English 2017,21,Entries to Unearned Revenue.,Jan.1,Dec.31,$6,000 Rental Contract Coverage for 12 Months,$500 Monthly Rental Revenue,On January 1,Webb,Co.received$6,000 in advance for a one-year rental contr

17、act.,Accounting English 2017,22,Entries to Unearned Revenue.,Initially,revenues that benefit more than one accounting period are recorded as liabilities.,Accounting English 2017,23,Entries to Unearned Revenue.,Over time,the revenue is recognized as it is earned.,Accounting English 2017,24,Entries to

18、 Unearned Revenue,SOCIRevenue earned this period.,SOFPLiability for future periods.,Accounting English 2017,25,Entries to Accrued Expenses.,Prior Periods,Current Period,Future Periods,TransactionLiability will be paid.,End of Current Period,Adjusting Entry Recognize expense incurred,andRecord liabil

19、ity for future payment.,Accounting English 2017,26,Entries to Accrued Expenses.,Examples Include:InterestWages and SalariesProperty Taxes,Hey,when do we get paid?,Accounting English 2017,27,Entries to Accrued Expenses.,Monday,May 29,Friday,June 2,$3,000 Wages Expense,On May 31,Webb,Co.owes wages of$

20、3,000.Pay day is Friday,June 2.,Wednesday,May 31,Accounting English 2017,28,Entries to Accrued Expenses.,Initially,an expense and a liability are recorded.,Accounting English 2017,29,Entries to Accrued Expenses.,SOCICost incurred this period to generate revenue.,SOFPLiability to be paid in a future

21、period.,Accounting English 2017,30,Entries to Accrued Expenses,Monday,May 29,Friday,June 2,$5,000 Weekly Wages,Lets look at the entry for June 2.,Wednesday,May 31,$2,000 Wages Expense,$3,000 Wages Expense,Accounting English 2017,31,Entries to Accrued Expenses,The liability is extinguished when the d

22、ebt is paid.,Accounting English 2017,32,Entries to Accrued Revenue,Prior Periods,Current Period,Future Periods,TransactionReceivable will be collected.,End of Current Period,Adjusting Entry Recognize revenue earned but not yet recorded,andRecord receivable.,Accounting English 2017,33,Entries to Accr

23、ued Revenue,Examples Include:Interest EarnedWork Completed But Not Yet Billed to Customer,Accounting English 2017,34,Entries to Accrued Revenue,Saturday,Jan.15,Tuesday,Feb.15,$170 Interest Revenue,On Jan.31,the bank owes Webb,Co.interest of$170.Interest is paid on the 15th day of each month.,Monday,

24、Jan.31,Accounting English 2017,35,Entries to Accrued Revenue,Initially,the revenue is recognized and a receivable is created.,Accounting English 2017,36,Entries to Accrued Revenue.,SOCIRevenue earned this period.,SOFPReceivable to be collected in a future period.,Accounting English 2017,37,Entries t

25、o Accrued Revenue,Saturday,Jan.15,Tuesday,Feb.15,$320 Monthly Interest,$170 Interest Revenue,Lets look at the entry for February 15.,Monday,Jan.31,$150 Interest Revenue,Accounting English 2017,38,Entries to Accrued Revenue,The receivable is collected in a future period.,Accounting English 2017,39,St

26、eps 6 and 7:The adjusted trial balance and preparation of financial statements,The sixth step in the accounting cycle is the preparation of an adjusted trial balance to prove the equality of debits and credits upon completion of the adjustment process.The seventh step in the accounting cycle is prep

27、aring the financial statements using the adjusted account balances as summarized on the adjusted trial balance.,SOCI,40,Accounting English 2017,Retained Earnings Statement,41,Accounting English 2017,SOFP,42,Accounting English 2017,Accounting English 2017,43,The worksheet,A worksheet is a tool the ac

28、countant uses at the end of an accounting period to show the effects of the adjustments and organize the data for use in preparing financial statements and recording the adjusting and closing entries.The worksheet is an internal working paper that incorporates steps 4(unadjusted trial balance)throug

29、h 7(preparation of financial statements)of the accounting cycle.,Accounting English 2017,44,Step 8:Closing entries,Closing the temporary accounts at the end of each accounting period serves to transfer the effects of these accounts to the proper owners equity account that appears on the SOFP.It also

30、 gives the revenue,expense,and withdrawals(or dividend for a corporation)accounts zero balances,preparing them for use in the following period.,Accounting English 2017,45,Step 8:Closing entries(cont.),Closing involves the following steps:Revenues are closed to the Income summary account.Expenses are

31、 closed to the Income summary account.The balance in the Income summary account is closed to the Owners equity account.The Owners dividends/withdrawals account is closed to the Owners equity account.,Accounting English 2017,46,Closing Entries for Revenue Accounts,Since Sales Revenue has a credit bal

32、ance,the closing entry requires a debit to the Service Revenue account.,Accounting English 2017,47,Closing Entries for Revenue Accounts,Accounting English 2017,48,Closing Entries for Expense Accounts,Since expense accounts have a debit balance,the closing entry requires a credit to the expense accou

33、nts.,Accounting English 2017,49,Net Income,Closing Entries for Expense Accounts,.,Accounting English 2017,50,Closing the Income Summary Account,Since Income Summary has a$2860 credit balance,the closing entry requires a debit to Income Summary.,Accounting English 2017,51,Closing the Income Summary A

34、ccount,The balance in Income Summary is now zero.,Accounting English 2017,52,Closing the Owners Dividend Account,Since the dividend account has a debit balance,the closing entry requires a credit to dividend.,Accounting English 2017,53,Closing the Owners Dividend Account,Accounting English 2017,54,S

35、tep 9:Post-closing trial balance,The two main goals of the post-closing trial balance are to:test the equality of debits and credits in the general ledger after the closing entries have been postedconfirm that all temporary accounts have been closed,Accounting English 2017,55,After all closing entri

36、es are made,After-Closing Trial Balance looks like this.,Accounting English 2017,56,The accounting cycle summary,The nine steps in the accounting cycle are:analyzejournalize in the general journalpost from the general journal to the general ledgerprepare the unadjusted trial balancejournalize and po

37、st adjusting entriesprepare the adjusted trial balanceprepare financial statementsjournalize and post closing entriesprepare post-closing trial balance,Accounting English 2017,57,Classification of SOFP items,A classified SOFP categorizes asset,liability,and equity accounts.Assets are grouped into th

38、ree main categories:current assetslong-term investmentsfixed assets Liabilities are grouped into two categories:current liabilitiesnon-current liabilities,Accounting English 2017,58,Classification of SOFP items(cont.),The equity of a sole proprietorship is reported on one line,while a separate capital account is reported for each partner in a partnership.Corporations report the investments of their shareholders as contributed capital;the equity from net incomes less dividends is reported as retained earnings.,Accounting English 2017,59,End of Chapter 2,