专业英语重修5

1、Topic 1 THE ACCOUNTING CYCLESteps involved in the Accounting Cycle9. Prepare post closing trial balance8. Journalize and post closing entries7.Prepare Financial statements6.Prepare an Adjusted trial balance 5. Journalize and post adjusting entries4.Prepare a Trial balance3.Post to Ledger accounts2.

2、Journalize transactions1.Analyze business transactions结账后试算平衡表编制日记账过账分析业务试算平衡调整分录调节后试算平衡表财务报表结账分录 Analyzing the effect of business transactions on the basic accounting equation.(基本会计等式）Step 1: Transaction AnalysisEconomicResourcesClaims toEconomicResourcesRecall the Accounting EquationAssets=Liabili

3、ties + Owners EquityThe Account（账户）: Account is an individual accounting record of increases and decreases in a specific Asset, Liability, or Owners Equity item.Step 2: Journalize the transactionsThe Double-Entry SystemlDouble-Entry System （复式记账法复式记账法） states that every accounting transaction should

4、 always be recognized in two accounts, in one as a debit and another credit. Where do we record the transaction?Record Transactionsin the Journal.GENERAL JOURNALAccount Titles and Explanations2Office Equipment 5,000 Cash 5,000 (Purchased office equipment for cash)Date DebitCreditGENERAL JOURNALAccou

5、nt Titles and ExplanationsDate Debit Credit 2 Cash 1 200 Unearned Revenue 1 200 Received cash advance from Mary Ltd.GENERAL JOURNALAccount Titles and ExplanationsDate Debit Credit 3 Cash 10 000 Sales Revenue 10 000 Received cash from selling goods to Miller.GENERAL JOURNALAccount Titles and Explanat

6、ionsDate Debit Credit 31 Rent Expense 900 Rent Payable 900 Accrued rent expense for the monther.One debitOne creditEach transaction is recorded with at least:Total debits must equal total credits.Summary: The Double-Entry SystemDouble entry follows the rules of the accounting equation.GENERAL JOURNA

7、LAccount Titles and Explanations2007 Oct. 1 Cash 10,000 Common Stock 10,000 BalanceAcct 1010 Account CASHDateAcct 3010 Account COMMON STOCKDateBalancedebitdebitcreditcreditdebitdebitcreditcreditrefrefPosting EntriesGENERAL JOURNALAccount Titles and Explanations2007 Oct. 1 Cash 10,000 Common Stock 10

8、,000 BalanceAcct 1010 Account CASHDateAcct 3010 Account COMMON STOCKDateBalancedebitdebitcreditcreditdebitdebitcreditcreditrefrefOct 1Oct 1gj 1gj 110,00010,00010,00010,000Posting EntriesPosting EntriesGENERAL JOURNALAccount Titles and Explanations2007 Oct. 1 Cash 10,000 Common Stock 10,000 BalanceAc

9、ct 1010 Account CASHDateAcct 3010 Account COMMON STOCKDateBalancedebitdebitcreditcreditdebitdebitcreditcreditrefrefOct 1Oct 1gj 1gj 110,00010,00010,00010,000 the number of the general journal page.Step 4: Prepare a Trial BalanceA list of all the accounts and their balances at a given time.It serves

10、to prove the mathematical equality of debits and credits after posting.It aids in the preparation of financial statements.Sierra CorporationTrial BalanceOctober 31, 2007Debit Credit Cash $15,200Advertising Supplies 2,500Prepaid Insurance 600Office Equipment 5,000Notes Payable $ 5,000Accounts Payable

11、 2,500Unearned Service Revenue 1,200Common Stock 10,000Dividends 500Service Revenue 10,000Salaries Expense 4,000Rent Expense 900 $28,700 $28,700Step 5: Journalize and post adjusting entrieslPeriod-end adjustments are required to bring accounts to their proper balances after considering transactions

12、and/or events not yet recorded. GAAP RELATIONSHIPS IN REVENUE AND EXPENSE RECOGNITIONTime-Period AssumptionEconomic life of businesscan be divided intoartificial time periodsRevenue-Recognition PrincipleRevenue recognized in the accounting period inwhich it is earnedMatching PrincipleExpenses matche

13、d with revenuesin the same period when efforts are expended to generate revenuesADJUSTING ENTRIESAdjusting entries are made at the end of the period in order for:1 Revenues to be recorded in the period in which they are earned, and for. 2 Expenses to be recognized in the period in which they are inc

14、urred.TYPES OF BALANCE DAY ADJUSTMENTS1.Accrued revenue2.Accrued expenses3.Revenue in advance4.Prepaid expensesRevenue earned but not yet receivedExpenses incurred but not yet paidRevenue received but not yet earnedExpenses paid but not yet incurredEXAMPLE lAccrued revenuelCommission is due to be pa

15、id in July on a property sold in JuneGeneral Journal Date Details Debit ($) Credit ($) 30 June Accrued revenue 4000 Commission revenue 4000 Commission accrued but not yet received EXAMPLElPrepaid expenseslPaid an amount of $3000 insurance policy on 1 June 2006, which relates to June, July, and Augus

16、t in the next financial year. So at the end of June:EXAMPLElAccrued expenseslWages to be paid in July include $1000 for employees who worked on 29 June.General Journal Date Details Debit ($) Credit ($) 30 June Wage expense 1000 Accrued wages 1000 Wages accrued EXAMPLElRevenue received in advancelFee

17、s received on 1 June 2006 included a deposit of $2000 for a project lasting 2 months.The adjusted trial balance is used to prove the equity of total debit balances and total credit balances after the adjusting entries have been made.Financial statements (except Cash Flow Statement) can be easily pre

18、pared from the adjusted trial balance.Step 6:Prepare an adjusted trial balance11 Step 7:Prepare financial statements lFinancial statements are prepared using the corrected balances from the adjusted trial balance. Step 8:Journalize and post closing entriesClosing entries transfer the temporary accou

19、nt balances to the stockholders equity account.and reduce the balances in the temporary accounts to zero. 11 Close Temporary Accounts OnlyThe Closing ProcessStep 9:Prepare a post-closing trial balancelPost-Closing Trial Balance is a list of balances for all accounts that not closed. lThe purpose of

20、a post-closing trial balance is to verifies that:Total debits = total credits for permanent accounts.All temporary accounts have zero balancesPost-Closing Trial BalanceQUESTION Please prepare adjusting entries for the month ending 30th June 2006 for the following events:lThe balance of unearned serv

21、ice revenue on 1st June was $1,500. At the 30th June, one third of this amount had been earned.lYearly depreciation of equipment is estimated to be $2,400.lThe business earns interest from the bank and is paid $5,000 interest on 31st March and 30th September each year. lOffice Supplies balance on 1s

22、t June was $1,500. The balance at 30th June was $600.lThe balance of Prepaid Insurance on 1st June was $1,400, which represented 7 months of unexpired insuranceTopic 2Bank ReconciliationlUSE OF A BANK minimizes the amount of currency that must be kept on handcontributes significantly to good interna

23、l control over cash. A “double” record of cash is maintained, one by the company, one by the bank. These two accounts must be reconciled.lBank Statement -la copy of the banks records sent to the customer for periodic review. lBank Statement showslcheck & other debitsldeposits & other creditsldaily c

24、ash balanceRECONCILING THE BANK BALANCElReconciliation is necessary as the balance per bank and balance per books are seldom in agreement due to time lags and errors11 5TermslDeposits in transit - deposits recorded by the depositor that have not been recorded by the bank.lOutstanding checks - checks

25、 issued and recorded by the company that have not been paid by the bank.lNSF check - a check that is not paid by the bank because of insufficient funds in the customers bank account.lAdjusted balance - same as true cash balance, correct cash balanceSteps in preparing a bank reconciliation:lDetermine

26、 deposits in transitlDetermine outstanding checkslNote any errors discoveredlTrace bank memoranda to the recordsl Each reconciling item used in determining the “Adjusted cash balance per books” should be recorded by the depositor with an adjusting entryBANK RECONCILIATIONENTRIES FROM BANK RECONCILIA

27、TIONlThe bank statement shows a collection of Note Receivable for $1000, plus interest earned $50, less collection fee $15. This is not recorded in the cash book. bank reconciliation statement 1035 15 1000 50lBook error. An examination of the cash disbursements journal shows that check No. 443 was a

28、 payment on account to Andrea Company, a supplier. The check, with a correct amount of $1,226.00, was recorded at $1,262.00. 幻幻灯片灯片 21 lAn NSF check becomes an accounts receivable to the depositor. 幻灯片幻灯片 21 lBank Service Charges. Check printing charges (DM) and other bank service charges (SC) are d

29、ebited to Miscellaneous Expense because they are usually nominal in amount. 幻灯片幻灯片 21 1.8 REPORTING CASHlCash Recorded in both the statement of financial position and the statement of cash flowsThe statement of financial position shows the amount of cash available at a given point in timeThe stateme

30、nt of cash flows shows the sources and uses of cash during a period of time.11 6Amounts due from individuals and other companies-expected to be collected in cashThree major classes of receivableslAccounts Receivable （应收账款）（应收账款）- amounts owed by customers on account, expected to be collected within

31、30-60 dayslNotes Receivable （应收票据）（应收票据） - claims for which formal instruments of credit are issuedlOther Receivables （其他应收款）（其他应收款）- non-trade receivables, for example, interest receivable and advances to employeesTYPES OF RECEIVABLES11 Accounts Receivable.lAmounts owed by customers on account.lRes

32、ult from the sale of goods/services.lExpected to be collected within 30-60 days.lMost significant type of claim held by company.lOften called trade receivables.11 RECOGNIZING ACCOUNTS RECEIVABLEWhen a business sells merchandise to a customer on credit, Accounts Receivable is debited (increased) and

33、Sales is credited (increased). DateAccount Titles DebitCreditGeneral Journal July 1 Accounts Receivable Polo Co.1,000Sales 1,000D ateAccount T itles D ebitC reditG eneral Journal RECOGNIZING ACCOUNTS RECEIVABLEWhen a business receives returned merchandise previously sold to a customer on credit, Sal

34、es Returns and Allowances （销售退（销售退回与折让）回与折让）is debited and Accounts Receivable is credited (decreased).July 5 Sales Returns and Allowances 100 Accounts Receivable Polo Company 100 Receivables are valued at the net amount expected to be received in cashlExcludes amounts that the company estimates it

35、will not be able to collect (net realizable value)Credit losses lRecorded as Bad Debts Expense lConsidered a normal and necessary risk of doing businessACCOUNTING FOR IRRECOVERABLE DEBTS11 Methods for Accounting for Uncollectible AccountslThe Direct Write-off Method（直接转销法）lThe Allowance Method（备抵法）D

36、irect Write-Off MethodlBad debt losses are not estimated.lNo allowance account is used.lAccounts are written off when determined uncollectible lAccounting entry:Bad Debts Expense 200 Accounts Receivable-M. E. Doran 200 Bad debt expense will Bad debt expense will show only actual losses.show only act

37、ual losses.Accounts receivable will be reported at gross Accounts receivable will be reported at gross amount.amount.Direct write-off methodAn entry is made for bad debts expense when an account is determined to be uncollectible at which time the loss is charged to Bad Debts ExpenseNo matching of ba

38、d debts expense with the sales revenueAccounts receivable are reported at their gross amount on the statement of financial position.Not acceptable for financial reporting purposes.DIRECT WRITE-OFF METHOD (summary) under Allowance method, Bad Debts Expense is an expense to record estimated uncollecti

39、ble receivables. Uncollectible accounts are estimatedAt the end of each periodExpense for the uncollectible accounts isMatched against sales in the same accounting period in which the sales occurredResults in Receivables being stated at cash (net) realizable valueTHE ALLOWANCE METHODTHE ALLOWANCE ME

40、THODKeeps expenses from being understatedon the income statement and accounts receivables from being overstated on the statement of financial position.Estimated uncollectibles are debited to Bad Debts Expense and credited to Allowance for Doubtful Accounts at the end of each period.THE ALLOWANCE MET

41、HODDateAccount Titles DebitCreditGeneral Journal Dec. 31 Bad Debts Expense12,000 Allowance for Doubtful Accounts 12,000Presentation of Allowance for Doubtful AccountsActual uncollectibles are debited to Allowance for Doubtful Accounts and credited to Accounts Receivable at the time the specific acco

42、unt is written off.THE ALLOWANCE METHODDateAccount Titles DebitCreditGeneral Journal Mar. 1 Allowance for Doubtful Accounts 500 Accounts Receivable - R. A. Ware 500When there is recovery of an account that has been written off: reverse the entry made to write off the account and.Recovery of Uncollec

43、tible AccountsD ateAccount T itles D ebitC reditG eneral Journal July 1 Accounts Receivable R. A. Ware 500 Allowance for Doubtful Accounts 500Record the collection in the usual manner.DateAccount Titles DebitCreditGeneral Journal July 1 Cash 500 Accounts Receivable 500Allowance Method (summary)Allow

44、ance for doubtful accounts is not closed at the end of the yearBad debt expense is NOT recorded when an actual write-off occursIt has been previously estimated and recordedA write-off of accounts receivable affects only statement of financial position accountsA recovery of accounts receivable affect

45、s only statement of financial position accountsPercentage of Receivables. （应收款项百分比法）（应收款项百分比法） Management establishes a percentage relationship between the amount of receivables and the expected losses from uncollectible accounts.2% of $600,000= $12,000Aging of Accounts Receivable（应收账款账龄分析法）（应收账款账龄分

46、析法） The analysis of customer balances by the length of time they have been unpaid. The longer a debt is outstanding, the less likely it is to be paid.AGING SCHEDULEThe older the accounts, the less likely to be paidPERCENTAGE OF RECEIVABLES BASISIf the trial balance shows Allowance for Doubtful Accou

47、nts with a credit balance of $528, an adjusting entry for $1,700 ($2,228 - $528) is necessary.Assume at the end of period, Accounts Receivable has a balance of $111 400, the company estimated that 2% would become uncollectible.If the trial balance shows Allowance for Doubtful Accounts with a credit

48、balance of $528,PERCENTAGE OF RECEIVABLES BASISIf the trial balance shows Allowance for Doubtful Accounts with a credit balance of $528, an adjusting entry for $1,700 ($2,228 - $528) is necessary.DateAccount Titles DebitCreditGeneral Journal Dec. 1 Bad Debts Expense 1,700 Allowance for Doubtful Acco

49、unts 1,700（存货）（存货）INVENTORYl inventory are assets: Held for sale in the ordinary course of business;In the process of production for such sale; orIn the form of materials or supplies to be consumed in the production process or in the rending of services.Inventory-Merchandiser（商业企业）（商业企业）lConsists of

50、 many different itemslOwned by the companylIn a form ready for sale to customerslOne inventory classification: Merchandise Inventory （库存商品）77Inventory Manufacturing （制造业）（制造业）lFinished goods inventory lWork in processlRaw materials781. Inventory systemlThere are two kinds of inventory systems :perio

51、dic inventory systemperpetual inventory system.11 1.1 Perpetual MethodlUnder perpetual method, it gives a continual record of the amount of inventory on hand. When an item is sold it is recorded in the Cost of Goods Sold account.1.2 Periodic MethodlUnder periodic method, it requires updating the inv

52、entory account only at the end of the period. Acquisition of merchandise inventory is recorded in a temporary Purchases account.Under periodic methodlRecording of revenues is the same as perpetual methodlAt the date of sale, no cost of merchandise sold is recordedlPhysical count taken at period end

53、to determine cost of ending inventory, and therefore cost of goods sold can be obtainedlRecord purchase returns and allowances, purchase discounts, and freight-in costs in separate accountsComparison of Perpetual to Periodic-buyerComparison of Perpetual to Periodic-sellerHow to get the Cost of Goods

54、 Sold under Periodic inventory systemlIn order to calculate the cost of goods sold during the accounting period, it is necessary to know the amount of opening and closing inventory for the period and the cost of goods purchased during the period.Cost of inventorieslPurchase price lCosts of conversio

55、nlOther costs incurred in bringing the inventories to their present location and conditionlCost of purchase:purchase price less trade discounts, rebates and other similar amounts; plusimport duties and other taxes; plustransport, handling and any other cost directly attributable to the acquisition o

56、f finished goods, services and materialslCost of conversion:costs directly related to the units of production, eg direct materials, direct laborfixed (eg cost of factory management and administration) and variable production overheads (eg indirect materials and labor) that are incurred in converting

57、 materials into finished goods, allocated on a systematic basis.90Inventory CostinglSpecific Identification methodlCost Flow AssumptionsFIFO- First-in, First-Out- earliest goods purchased are the first to be soldLIFO- Last-in,First-Out- latest goods purchased are the first to be soldAverage Cost Met

58、hod- costs are charged on the basis of weighted average unit cost91Specific IdentificationAn actual physical flow costing method in which items still in inventory are specifically costed to arrive at the total cost of ending inventory.FIFOlThe FIFO method assumes the earliest goods purchased are the

59、 first to be sold. 93FIFOLIFOlThe LIFO method assumes the last goods purchased are the first to be sold.95LIFO96 Weighted-Average CostWeighted-Average CostThe The average cost method allocates average cost method allocates the cost of goods available for sale the cost of goods available for sale on

60、the basis of weighted-average on the basis of weighted-average unit cost incurred.unit cost incurred.97Weighted AverageSomething to Notice lThe LIFO method assumes the last goods purchased are the first to be sold. LIFO is now disallowed in IFRS.lInventory has effect on both statement of profit or l