会计审计专业英语1-3

会计审计专业英语授课班级：授课教师：IntroductiontoAccounting

Chapter11.Understanddefinitionofaccounting.2.Identifytheusersofaccountinginformation.3.Comprehendbasicaccountingassumptions.4.Understandimportantaccountingprinciple.5.Explainthequalitycharacteristicsofaccountinginformation.LearningObjectives1.1Whatisanaccounting

Accountingisaninformationsystemthatidentifies,records,andcommunicatesrelevant,reliable,andcomparableinformationaboutanorganization’sbusinessactivitiesthatcanbeexpressedinmonetaryterms.identify＆recordIdentifyingbusinessactivitiesrequireskeepingachronologicallogoftransactionsandeventsmeasuredinmonetaryunitandclassifiedandsummarizedinausefulformat.Communicatingbusinessactivitiesrequirespreparingaccountingreportssuchasfinancialstatements.Italsorequiresanalyzingandinterpretingsuchreports.1.2FormsoftheentityAnaccountingentityisaclearlydefinedeconomicunit.Therearethreebasicformofbusinessorganizations:theproprietorship,thepartnershipandthecorporation.Businesstakeoneofthethreeformsoforganizationsandinsomecasetheaccountingproceduresdependontheorganizationalform.1.3Usersofaccountinginformation

1.3.1ExternalusersExternalusersofaccountinginformationincludeshareholders(investors),lenders,directors,customers,suppliers,regulators,lawyers,brokers,andthepress.1.3.2InternalusersInternalusersofaccountinginformationarethosedirectlyinvolvedinmanagingandoperatinganorganization.Forinstance,themanagersofbusinessesuseaccountinginformationtosetgoalsfortheirorganizations,evaluatetheirprogresstowardthosegoals,andtakecorrectiveactionifnecessary.1.4Theaccountingprinciplesand

assumptions

1.4.1BasicaccountingprinciplePrincipleOfHistoricalCostmeansthattherecordingofaccountingelementsshouldusetheacquisitioncostwheneconomicbusinessestookplaceasthestandardtomeasure.MatchingPrinciplemeansthetimingofrecognitionrevenuesandexpensesintheincomestatement.TheMaterialityPrinciplehasseveralfeatures.Firstly,thecoreisonecannotomitormisrepresentimportantinformation.Secondly,theconceptisproposedfromtheperspectiveofinformationusers.Thirdly,judgmentofmaterialitycannotbeseparatedfromtheenterpriseenvironment.Lastly,judgmentofimportancecannotneglectitsownnature.ThePrincipleOfConservatismreferstothatwhendealingwiththeuncertaineconomicbusinessesoftheenterprises,peopleshouldholdthecautiousattitude.DifferentiateCapitalandRevenueExpendituresCapitalexpendituresareexpendituresexpectedtoyieldbenefitsbeyondthecurrentaccountingperiod,thatis,havefuturecashflows,andthusshouldbeaddedtotheplantandequipmentorcapitalassetaccount.Thecostofacapitalassetisrecognizedasanexpenseincurrentandfutureperiodsthroughdepreciation.Expenditureswhichareexpectedtoyieldbenefitsonlyinthecurrentperiodarecalledrevenueexpenditures.SubstanceOverFormThisprinciplerequiresthattransactionsandothereventsareaccountedforandpresentedinaccordancewiththeirsubstanceandeconomicrealityandnotmerelytheirlegalform.1.4.2BasicassumptionsAccountingassumptionsarethebasicfoundationuponwhichourgenerallyacceptedaccountingrests.Fourbasicassumptionssignificantlyaffecttherecording,measuring,andreportingofaccountinginformation.TheyincludeSeparateentity,Goingconcern，Time-period,Unit-of-measureassumption.SeparateentityItisthateconomicactivitycanbeidentifiedwithaparticularunitofaccountability.Goingconcernisthatacompanyorotherentitywillbeabletocontinueoperatingforaperiodoftimethatissufficienttocarryoutitscommitments,obligations,objectives,andsoon.Accounting-periodisaperiodoftimesuchasthe12monthsofJanuary1throughDecember31,orthemonthofJune,orthethreemonthsofJuly1throughSeptember30.MonetaryUnit

Accountingisbasedontheassumptionthatmoneyisthecommondenominatorbywhicheconomicactivityisconducted,andthatthemonetaryunitprovidesanappropriatebasisforaccountingmeasurementandanalysis.1.5AccountingBasisAbasisofaccountingcanbedefinedasthetimevariousfinancialtransactionsarerecorded.Thecashbasisandtheaccrualbasisarethetwoprimarymethodsoftrackingincomeandexpensesinaccounting.Thecashbasisisanaccountingmethodwhereinrevenuesarerecognizedwhencashisreceivedandexpensesarerecognizedwhenpaid.Usingtheaccrualbasisofaccountingmeansthatrevenues,expensesandotherchangesinassets,liabilities,andowners’equityareaccountedforintheperiodinwhichtheeconomiceventtakesplace,notnecessarilywhenthecashinflowsandoutflowstakeplace.1.6QualityCharacteristicsof

accountinginformation

1.6.1MainQualityCharacteristicsRelevance

Tobeuseful,financialinformationshouldberelevanttothedecision-makingneedsofusers.Reliability

Informationissaidtobe"reliable"whenitisfreefrommaterialbiasandcanbedependeduponbyuserstorepresentfaithfullywhatiteitherpurportstorepresentorcouldreasonablybeexpectedtorepresent.Comparability

Comparablefinancialaccountinginformationallowsuserstoidentifyrealsimilaritiesanddifferencesintheentity’sperformanceinrelationtoitsownperformanceovertimeandinrelationtotheperformanceofotherentities.Understandability

Informationmustbeunderstandabletobeusefultousersintheirdecision-makingprocess.1.6.2OtherQualityCharacteristicsTimelinessAccountinginformationshouldbereportedsoonenoughforittobeusefulfordecision-making.Truthfulness

Informationmustgiveafaithfulpictureofthefactsandcircumstancesinvolved.VerifiabilityIfknowledgeableandindependentobserverscanapplyanaccountingmeasurementandobtainessentiallythesameresult,themeasurementissaidtobeverifiable.Neutrality

Thetermneutralityindicatesthecharacteristicoffreedomfrombias.ConsistencyConsistencyinvolvesapplyingaccountingconceptsandprinciplesfromperiodtoperiodinthesamemanner.UniformityUniformityrequiresthatcompaniesinthesameindustryusethesameaccountingpoliciesandprocedures.1.7GAAPFinancialaccountingreliesoncertainstandardsorguidesthathaveprovedusefulovertheyearsinimpartingeconomicdata.Thesestandardsarecalledgenerallyacceptedaccountingprinciples.AnumberoforganizationsexistinU.S.A.thatareconcernedwiththeformulationofaccountingprinciples.ThemostprominentamongthemistheFinancialAccountingStandardsBoard.1.8EthicsinaccountingThegoalofaccountingistoprovideusefulinformationfordecisions.Forinformationtobeuseful,itmusttrusted.Thisdemandsprofessionalethicsinaccounting.TheaccountingEquationandDouble-entryBookkeeping

Chapter21.Understandingthestructureofaccountingequationsandtheimpactofeconomictransactionsonaccountingelementswithinanequation.2.Understandandmasterthebasicprinciplesofaccountinganddoubleentrybookkeeping.3.Identifyaccountingbooksandaccountingdocuments.LearningObjectives2.1Theaccountingequationandits

efforts

Thefinancialpositionofacompanyismeasuredbythefollowingitems:Assetsareresourcesacompanyownsorcontrols.Theseresourcesareexpectedtoyieldfuturebenefits.Liabilitiesarecreditors’claimsonassets.Theseclaimsreflectcompanyobligationstoprovideassets,productsorservicestoothers.Equityistheowner’sclaimonassets,andisequaltoassetsminusliabilities.Thebasicaccountingequation,alsocalledthebalancesheetequation,representstherelationshipbetweentheassets,liabilities,andowner'sequityofabusiness.Itisthefoundationforthedouble-entrybookkeeping

system.Foreachtransaction,thetotaldebitsequalthetotalcredits.Together,liabilities,andequityisreflectedinthefollowingaccountingequation:Assets=Liabilities+Equity2.2SourceDocumentsEachtimeacompanymakesafinancialtransaction,somesortofpapertrailisgenerated.Thatpapertrailiscalledasourcedocument.Asourcedocumentistheoriginalrecordofatransaction.Thesourcedocumentisessentialtothebookkeepingandaccountingprocessasitistheevidencethatafinancialtransactionoccurred.Thesourcedocumentshouldberecordedintheappropriateaccountingjournalassoonaspossibleafterthetransaction.2.3AccountsAnaccountmaybedefinedasarecordoftheincreases,decreases,andbalancesinanindividualitemofasset,liability,equity,revenue,orexpense.Accordingtotheircontent,accountcanbedividedintofivecategories.Assetaccounts,liabilitiesaccount,equityaccount,costaccount,profitandlossaccount.Toprovideacompletelistingofeveryaccountinanaccountingsystem,weneedafinancialorganizationaltool—Achartofaccounts(COA).Here’sasimplechartofaccountsexample:ChartofaccountsASSETS(1000-1999)1000Cash...LIABILITIES(2000-2999)2000AccountsPayable...OWNER'SEQUITY(3000-3999)3000×××,Capital...REVENUES(4000-4999)4000ServiceRevenue...EXPENSES(5000-5999)5000RentExpense...BedifferentwiththeCOA,eachaccountingrecordiscalled"anaccount"andeachaccounthasthestructure.Atleastcanbedividedintotwodirectiontheincreaseofoneregistrationparty,andthereduceinamountoftheotherregistrationparty,whichisthebasicstructurecanbesimplifiedasleftandrighttwodirections.Theaccounthasthreeparts:(1)thenameoftheaccountandtheaccountnumber,(2)thedebitside(leftside),(3)thecreditside(rightside).Theincreasesareenteredononeside,andthedecreasesontheother.Thebalanceisinsertednearthelastfigureonthesidewiththelargeramount.AccountTitleLeftsideordebitsideRightsideorcreditsideWhenanamountisenteredontheleftsideofanaccount,itisadebit,andtheaccountissaidtobedebited.Whenanamountisenteredontherightside,itisacredit,andtheaccountissaidtobecredited.TheabbreviationsfordebitandcreditareDr.andCr.,respectively.Howdoweknowwhichaccounttodebitandwhichonetocredit?Keepinginmindthe

accountingequation,belowisalistthatshowsyouwhathappenstoeachaccountwhenitisdebitedandwhenitiscredited.AccountDebit(Dr)Credit(Cr)AssetsIncreaseDecreaseLiabilitiesDecreaseIncreaseEquityDecreaseIncreaseExpensesIncreaseDecreaseRevenueDecreaseIncrease2.4Double-entryBookkeepingSystemWhenafirmfirstsetsupitsaccountingsystem,itmustdecidewhethertomanagefinancialreportingandrecordkeepingwithasingleentrysystemoradoubleentrysystem.Withsingleentryaccounting,asinglefinancialeventcallsforjustoneaccountentry.Thedoubleentryapproachisso-namedbecauseeachfinancialeventcallsforatleasttwochangesintheaccounts:Acreditentryinoneaccount.Anequal,offsettingdebitentryinanotheraccount.Thedoubleentrysystemofaccountingorbookkeepingmeansthateverybusinesstransactionwillinvolvetwoaccounts(ormore).Doubleentryalsoallowsfortheaccountingequation(assets=liabilities+owner'sequity)toalwaysbeinbalance.Athirdaspectofdoubleentryisthattheamountsenteredintothegeneralledgeraccountsasdebitsmustbeequaltotheamountsenteredascredits.Atalltimes:TotalDebits=TotalCreditsAmismatchinthesetwototalsisasignalthattheaccountscontainabookingoraccountingerror.Formoreonthisformoferror-checking,seeTrialBalance.DoubleentriesmaintainthebalanceintheAccountingequations:Assets=Liabilities+OwnersEquityDebits=CreditsMaintainingthebalanceintheseequations,meansthattheorganization'sBalancesheetprovidesanaccuratebasisforassessingthecompany'sfinancialposition,financialstructure,capitalization,andfinancialstatementmetrics(ratios).2.5LedgersThebasicsummarydeviceofaccountingistheaccount.Thisisthedetailedrecordofthechangesthathaveoccurredinaparticularasset,liability,equity,revenueandexpenseduringaperiodoftime.Eachaccountappearsonitsownpage.Forconvenientaccesstotheinformationintheaccounts,thepagesaregroupedtogetherinasinglebookcalledtheledger.Therearetwotypesofledgers:generalledgerandsubsidiaryledger.TheGeneralLedgerThegeneralledgeriswhereallaccountingtransactionsarepostedinadoubleentrysystemusingdebits(ontheleft)andcredits(ontheright)foreachtransaction.Thegeneralledgeristhebookusedtolistalltheaccountsestablishedbyanorganization.Thegeneralledgerholdstheaccountsreportedinthefinancialstatements.Maintainingthebalanceintheseequations,meansthattheorganization'sBalancesheetprovidesanaccuratebasisforassessingthecompany'sfinancialposition,financialstructure,capitalization,andfinancialstatementmetrics(ratios).It’sstructureisshownasfollows:

(AccountTitle)AccountNO___DateDescriptionPostRef.DebitCreditBalance(Dr.orCr.)

SubsidiaryLedger

Insomeinstancesthereisaneedtotracktransactionswithinasingleaccountinmoredetail.Thisisaccomplishedbyusingasubsidiaryledger.Asubsidiaryledger,breaksoutasinglegeneralledgeraccountintosubgroupsthatsharecommoninformation.Individualtransactionsarepostedtothegeneralledgeraccount,calledthecontrollingaccount,andtotheappropriatesubsidiaryledger.Acompanywillonlyhaveonegeneralledger,butitcanhavemultiplesubsidiaryledgers.2.6JournalsTheinformationabouteachbusinesstransactionisinitiallyrecordedinanaccountingrecordedcalledaJournal.Afterward,thedataistransferredorpostedtotheledger,thebookofsubsequentorsecondaryentry.Sincethejournalistheaccountingrecordedwhichtransactionsarefirstrecorded,itiscalledthebookoforiginalentry.Itisalsocalledthedaybookbecausethejournalisachronological(day-by-day)recordofallbusinesstransactions.Journalsaredesignedtorecordedinformationaboutdifferenttransactions,includingsales,purchases,cashreceiptsandcashdisbursements,andmanyothers.Thenatureofoperationandthevolumeoftransactionsintheparticularbusinessdeterminethenumberandtypesofjournalsneeded.Theymaybegroupedinto(1)generaljournalsand(2)specializedjournals.SpecialjournalsAbusinessofanysizeentersintosotransactionsthattheuseofasinglejournalwouldimposeintolerablerestrictionsonitsabilitytomaintainadequaterecords.Therefore,usualtobreakdownorsubdividethejournalintoanumberofspecializedjournals,eachbeingusedtorecordtransactionsofcertainkind.Itismuchsimplerandmoreefficienttogrouptogetherthosetransactionsinaspecialjournal.Whenspecialjournalsareused,onlythosetransactionsthatdonotoccuroftenenoughtowarrantentryinaspecialjournalarerecordedinthegeneraljournal.2.7RecordingTransactionsIllustrationJournalization(theprocesstorecordtheentireeffectsofabusinesstransactioninajournalintermsofdebitandcredit.)(1)Identifytransactions(2)Specifyandclassifyaccounts(3)Determinechangesofaccounts(4)DetermineDr.OrCr.ofeachaccount(5)EnterthetransactioninthejournalPosting(theprocedurethattheitemsenteredingeneraljournalaretransferredtothegeneralledger.)(1)Transferthedateofthejournalentrytothedatecolumnofaledgeraccount(2)Transfertheamountofthejournalentrytothedebitorcreditcolumnoftheledgeraccount.(3)Transferthepagenumberofthejournalentrytothepostingreference.(4)TransferthepagenumberoftheledgeraccounttoREF.Columnofthejournalentry.TheaccountingCycleChapter31.Listanddescribethestepsintheaccountingcycle.2.Understandthecomponentsoffinancialstatement.3.Learntopreparethetrial-balancesheet.LearningObjectives3.1PreparingaTrialBalance

Atrialbalanceisalistandtotalofallthedebitandcreditaccountsforanentityforagivenperiodusuallyamonth.Theformatofthetrialbalanceisatwo-columnschedulewithallthedebitbalanceslistedinonecolumnandallthecreditbalanceslistedintheother.ThetrialbalanceispreparedafterallthetransactionsfortheperiodhavebeenjournalizedandpostedtotheGeneralLedger.Keytopreparingatrialbalanceismakingsurethatalltheaccountbalancesarelistedunderthecorrectcolumn.Theappropriatecolumnsareasfollows:Assets=DebitbalanceLiabilities=CreditbalanceExpenses=DebitBalanceEquity=CreditbalanceRevenue=CreditbalancePreparingthetrialbalanceistheprocessoftotalingthedebitsandcreditsinchartofaccounts,thenmakingsurethatthesumofalldebitsequalsthesumofallcreditsthatthetwoamountsbalance.Thetrialbalanceisavitalstepintheaccountingcycle,beingthefirststepinthe"endofaccountingperiod"process.Herearethestepsyouwillundertaketopreparethetrialbalance:1.Foreachledgeraccount—totalyourcreditsanddebits.2.Ifthecredittotalislarger,subtractthedebittotalfromthecredittotaltogetyourledgeraccounttotalwhichgoesinthecreditcolumnofthetrialbalance.3.Ifthedebittotalislarger,subtractthecredittotalfromthedebittotaltogetyourledgeraccounttotalwhichgoesinthedebitcolumnofthetrialbalance.4.Puttheledgeraccounttotalinthecreditordebitcolumnofyourtrialbalance.Whenyouhavedebitorcredittotalsforeachledgeraccount,addallofyourcredittotalstogetacreditgrandtotal.Addallofyourdebittotalstogetadebitgrandtotal.Thisisyourtrialbalance.Butthetrialbalancebalances,doesnotmeanthattheaccountsarecorrectorthatmistakesdidnotoccur.Theremighthavebeentransactionsmissedoritemsenteredinthewrongaccount:1.Failuretorecordatransactionortopostatransaction.2.Recordingthesameerroneousamountforboththedebitandthecreditpartsofatransaction.3.Recordingthesametransactionmorethanonce.4.Postingapartofatransactioncorrectlyasadebitorcreditbuttothewrongaccount.Inordertoproceed,you'llneedtofigureoutwhythetrialbalanceisunbalancedandfixit:ErrorCorrectionProcedureJournalentryisincorrectbutnotposted.Drawalinethroughtheerrorandinsertcorrecttitleoramount.Journalentryiscorrectbutpostedincorrectly.Drawalinethroughthepostederrorandpostcorrectly.JournalentryisincorrectandpostedJournalizeandpostacorrectingentry.Thecorrectingentryisdatedwhentheerrorisdiscovered.Aftercorrecttheentry,wealsoneedtocorrectthetrialbalance.3.2AdjustingtheaccountsInordertoreflecttherealisticnetincomeofabusinessbasedtheaccrual-basisaccounting,allrevenuesearnedandallexpensesincurredduringthesameperiodmustbereportedregardlesswhethercashrelatingtorevenuesorexpensesisreceivedorpaidinaccordancewiththerealizationprincipleandthematchingprinciple.Therefore,itisoftennecessarytoadjustsomeaccountbalancesattheendofeachaccountingperiodtoachieveapropermatchingofcostsandexpenseswithrevenues.Adjustingaccountsisathree-stepprocess:1.determinewhatthecurrentaccountbalanceequals.2.Determinewhatthecurrentaccountbalanceshouldequal.3.Recordanadjustingentrytogetfrom1to2.FiscalandCalendarYears

Anaccountingtimeperiodthatisoneyearinlengthisafiscalyear.Afiscalyearusuallybeginswiththefirstdayofamonthandendstwelvemonthslateronthelastdayofamonth.AccrualandcashbasisaccountingAccrualaccountingrequiresadjustmentsforprepaid,unearned,andaccrueditems;therefore,itreportsrevenueswhenearnedandexpenseswhentheexpirationofbenefitisincurred.Cashbasisaccountingdoesnotmakeadjustmentsforprepaidexpenses,accruedexpenses,unearnedrevenues,andaccruedrevenues;revenuesarerecordedwhencashisreceivedandexpensesarerecordedwhencashispaid.Thecashbasisofaccountingisnotgenerallyaccepted.AdjustingentriesAdjustingentriesarejournalizedinthegeneraljournalandthenpostedintothegeneralledger.Adjustingentriesusedtorecord:Deferrals(Prepayments)PrepaidExpenseCosts/expensespaidbeforetheyareconsumedUnearnedRevenueRevenuesthatarecollectedorreceivedbutnotyetearnedAccruals(Unrecorded)AccruedExpenseExpensesincurredbutnotyetpaidAccruedRevenueRevenueearnedbutnotyetreceivedPrepaidexpensesorunearnedrevenuesPrepaidexpensesaregoodsorservicesthathavebeenpaidforbyacompanybuthavenotbeenconsumedyet.Unearnedrevenuesarealsorecordedbecausetheseconsistofincomereceivedfromcustomers,butnogoodsorserviceshavebeenprovidedtothem.Inthissense,thecompanyowesthecustomersagoodorserviceandmustrecordtheliabilityinthecurrentperioduntilthegoodsorservicesareprovided.AccruedexpensesandaccruedrevenuesManytimescompanieswillincurexpensesbutwon'thavetopayforthemuntilthenextmonth.Non-cashexpensesAdjustingjournalentriesarealsousedtorecordpaperexpenseslikedepreciation,amortization,anddepletion.Theseexpensesareoftenrecordedattheendofperiodbecausetheyareusuallycalculatedonaperiodbasis.Thisalsorelatestothematchingprinciplewheretheassetsareusedduringtheyearandwrittenoffaftertheyareused.3.3PreparingFinancialStatementsPreparingfinancialstatements;includingthebalancesheet,incomestatement,statementsofretainedearnings,andstatementofcashflows;isthemostimportantstepintheaccountingcyclebecauseitrepresentsthepurposeoffinancialaccounting.Wecanpreparefinancialstatementdirectlyfrominformationintheadjustedtrialbalance.3.4MakingclosingentryAclosingentryisajournalentrymadeattheendoftheaccountingperiodinwhichdataismovedintothepermanentaccountsonthebalancesheetfromtemporaryaccountsontheincomestatement.Thepurposeoftheclosingentryistobringthetemporaryaccountbalancestozeroonthegeneralledger,includingrevenue,expenseanddividendaccounts.Allincomestatementbalancesareeventuallytransferredtoretainedearnings.FourStepsinPreparingClosingEntries1.Closeallincomeaccounts(Revenues)toIncomeSummary:RevenuesIncomeSummary2.CloseallexpenseaccountstoIncomeSummary:IncomeSummarySalariesExpenseAdvertisingExpenseDepreciationExpenseInterestExpense...3.CloseIncomeSummarytoRetainedEarnings:IncomeSummaryRetainedEarnings4.CloseDividendstoRetainedEarnings:RetainedEarningsDividends3.5AccountingCycleThetermaccountingcyclereferstothestepsinpreparingfinancialstatements.Itiscalledacyclebecausethestepsarerepeatedeachreportingperiod.Accountingperiodscanbemonthly,quarterly,oryearlydependingontheneedsofthebusiness.T