财务会计概念与应用英文版Lecture4课件

1、财务会计概念与应用英文版lecture-41chapter 4completing the accounting cyclealbrecht, stice, stice, swain财务会计概念与应用英文版lecture-42periodic reporting fiscal year 12-month accounting period. calendar year when an entity closes its books on december 31.beginning of yearend of year财务会计概念与应用英文版lecture-43accrual accountin

2、g what do we do when transactions span more than one period? accrual accounting! revenues and expenses are recorded as they are earned and incurred, not necessarily when cash is received or paid. better measures a firms performance than does cash flow data.财务会计概念与应用英文版lecture-44revenue recognitionre

3、cognize revenue when:the earning process is substantially complete.cash has either been collected or collection is reasonably assured.1.2.财务会计概念与应用英文版lecture-45the matching principle all costs and expenses incurred in generating revenues must be recognized in the same reporting period as the related

4、 revenues.if revenues are recognized.related costs and expenses should be recognized.财务会计概念与应用英文版lecture-46example: accrual- vs. cash-basis accounting bond consultingreported income for 2009during 2009, bond consulting billed its client for $48,000. on december 31, 2009, it had received $41,000, wit

5、h the remaining $7,000 to be received in 2010. total expenses during 2009 were $31,000 with $3,000 of these costs not yet paid at december 31. determine net income under both methods.accrual-basis accountingrevenues earned $48,000 expenses incurred 31,000 income $17,000cash-basis accountingcash rece

6、ipts$41,000cash disbursement 28,000 income$13,000财务会计概念与应用英文版lecture-47adjusting entries entries required at the end of each accounting period to adjust the accounts to their proper amounts. unrecorded receivables. unrecorded liabilities. prepaid expenses. unearned revenues. each adjusting entry inv

7、olves at least one income statement account and one balance sheet account.财务会计概念与应用英文版lecture-48precision management earns rent revenue of $500 in 2009 but will not receive the payment until january 10, 2010. an adjustment will be needed. what is the adjusting entry?example: unrecorded receivables o

8、riginal entry nonenone correct balances 500500rent receivablerent revenue12/31/09 rent receivable 500 rent revenue 500财务会计概念与应用英文版lecture-49 original entry none none correct balances 1,000 1,000protege inc. is assessed property taxes of $1,000 for 2009, but will not make this payment until january 5

9、, 2010. an adjustment will be needed. what is the adjusting entry?property taxexpenseproperty tax payableexample: unrecorded liabilities12/31/09 property tax expense 1,000 property tax payable 1,000财务会计概念与应用英文版lecture-410example: prepaid expenses12/31/09 rent expense 1,800 prepaid rent 1,800rent exp

10、enseprepaid rentoriginal entry 3,600 3,600 adjusting entry 1,800 1,800correct balances 1,800 1,800cashon july 1, 2009, apex inc. pays $3,600 for one years rent in advance (covering july 1, 2009, to june 30, 2010). on december 31, 2009, an adjustment will be needed. what is the adjusting entry?财务会计概念

11、与应用英文版lecture-411unearned rentrent revenueoriginal entry 3,600 3,600adjusting entry 1,800 1,800correct balances 1,800 1,800 example: unearned revenues12/31/09 unearned rent 1,800 rent revenue 1,800on july 1, 2009, dahl house co. received $3,600 for one years rent in advance (covering july 1, 2009, t

12、o june 30, 2010). on december 31, 2009, an adjustment will be needed. what is the adjusting entry?cash财务会计概念与应用英文版lecture-412preparing financial statementsfour step process using the trial balance:identify all revenue and expense accounts and prepare the income statement.compute net income.compute t

13、he ending retained earnings balance.1. prepare a balance sheet using the balance sheet accounts and the ending retained earnings balance computed from step 3.财务会计概念与应用英文版lecture-413the notes and the audit notes list assumptions and methods used in preparing the financial statements. give more detail

14、 about specific items. augment the summarized numerical information. the audit check financial statements for conformity with gaap. review adjustments, sample selected accounts, and review accounting systems. attaches audit report and distributes it with the financial statements. 财务会计概念与应用英文版lecture

15、-414real vs. nominal accounts real accounts permanent not closed at year end. balance sheet accounts balances are carried forward to next period. nominal accounts temporary closed (brought to a zero balance) at year end. income statement accounts and dividends balance are not carried forward to next

16、 period.财务会计概念与应用英文版lecture-415the closing process the closing process record entries that reduce all nominal accounts to a zero balance at the end of the accounting period. nominal accounts are closed to retained earnings.revenuesbal. xxxxxxbeg. bal. xxxretained earnings revenuesexpensesbal. xxxexp

17、ensesxxx财务会计概念与应用英文版lecture-416closing entries step 1: close all revenue accounts by debiting them. step 2: close all expense accounts by crediting them. step 3: the difference between revenues and expenses (net income) should be credited to retained earnings.revenues . . . . . . . . . . . . . . . .

18、 . . . . . . . xxxcost of goods sold . . . . . . . . . xxxother expenses . . . . . . . . . . . . xxxretained earnings . . . . . . . . . . xxx财务会计概念与应用英文版lecture-417dividends nominal account but not an expense. distribution to shareholders. closed by crediting dividends and debiting retained earnings

19、 (reduces retained earnings).when dividends are first declared: dividends . . . . . . . . . . . . . . . . . . . . . . . xxxdividends payable . . . . . . . . . .xxxwhen dividends are paid:dividends payable . . . . . . . . . . . . . . . . xxxcash . . . . . . . . . . . . . . . . . . . . . .xxxto close

20、dividends at year end:retained earnings. . . . . . . . . . . . . . . . xxxdividends . . . . . . . . . . . . . . . . . xxx财务会计概念与应用英文版lecture-418preparing a post-closing trial balance list of all real accounts. a check of whether total debits equal total credits for all real accounts prior to beginning new accounting cyc