基础会计学件英文.pptx

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1、STUDY OBJECTIVESAfter studying this chapter,you should understand:Time period assumptionAdjusting entries for prepaymentsAccrual basis of accountingAdjusting entries for accrualsWhy adjusting entries are necessaryPurpose of an adjusted trial balanceMajor types of adjusting entriesAlternate treatment

2、 of prepayments&accrualsCHAPTER 3Adjusting Accounts and Preparing Financial Statements第1页/共44页The Accounting PeriodC 1第2页/共44页AccountingAccrual Basis versus Cash BasisAccrual BasisRevenues are recognized when earned and expenses are recognized when incurred.Cash BasisRevenues are recognized when cas

3、h is received and expenses are recorded when cash is paid.C 2第3页/共44页Cash BasisRevenues are recognized when cash is received and expenses are recorded when cash is paid.AccountingAccrual Basis versus Cash BasisNon-GAAPNon-GAAPC 2Accrual BasisRevenues are recognized when earned and expenses are recog

4、nized when incurred.第4页/共44页Accrual Basis versus Cash BasisOn December 1,2013,FastForward paid$2,400 cash for a twenty-four month business insurance policy.Using the cash basis,the entire$2,400 would be recognized as insurance expense in 2013.No insurance expense from this policy would be recognized

5、 in 2014 or 2015,periods covered by the policy.C 2第5页/共44页Accrual Basis versus Cash BasisOn the accrual basis,$100 of insurance expense is recognized in 2013,$1,200 in 2014,and$1,100 in 2015.The expense is matched with the periods benefited by the insurance coverage.C 2第6页/共44页We have delivered thep

6、roduct to our customer,so I think we should recordthe revenue earned.Recognizing Revenues and ExpensesC 2The revenue recognition principle states that we recognize revenue when the product or service is delivered to our customer.第7页/共44页Recognizing Revenues and ExpensesThe expense recognition(or mat

7、ching)principle aims to record expenses in the same accounting period as the revenues that are earned as a result of those expenses.This matching of expenses with the revenue benefits is a major part of the adjusting process.Summaryof ExpensesRentGasolineAdvertisingSalariesUtilitiesand.$1,0005002,00

8、03,000450.Now that we haverecognized the revenue,lets see what expenseswe incurred togenerate that revenue.C 2第8页/共44页Time-Period AssumptionEconomic life of businesscan be divided intoartificial time periodsRevenue-Recognition PrincipleRevenue recognized in the accounting period inwhich it is earned

9、Matching PrincipleExpenses matched with revenuesin the same period when efforts are expended to generate revenuesGAAP Relationships In Revenue&Expense Recognition第9页/共44页 An adjusting entry is recorded to bring an asset or liability account balance to its proper amount.Framework for AdjustmentsC 3第1

10、0页/共44页Here is the checkfor my 24-monthinsurance policy.Prepaid(Deferred)ExpensesResources paid for prior to receiving the actual benefits.P 1第11页/共44页Prepaid Insurance (a)On 12/1/13,FastForward paid$2,400 for insurance for 2-years(24-months,December 2013 through November 2015).FastForward recorded

11、the expenditure as Prepaid Insurance on 12/1/13.What adjustment is required?637128P 1第12页/共44页Supplies (b)During 2013,FastForward purchased$9,720 of supplies.FastForward recorded the expenditures in the asset account,“Supplies.”On December 31,2013,a count of the supplies indicated$8,670 on hand,so$1

12、,050 of supplies were used during December.What adjustment is required?126652P 1第13页/共44页Other Prepaid Expenses1.Other prepaid expenses,such as Prepaid Rent,are accounted for exactly as Insurance and Supplies.2.We should note that some prepaid expenses are both paid for and fully used up within a si

13、ngle period.3.For example,a company may pay monthly rent on the first day of each month.This payment creates a prepaid expense on the first day of the month that fully expires by the end of the month.4.In these special cases,we can record the cash paid with a debit to the expense account instead of

14、an asset account.P 1第14页/共44页Straight-LineDepreciationExpense=Asset Cost -Salvage Value Useful LifeDepreciation Depreciation is the process of allocating the cost of a plant asset over its useful life in a systematic and rational manner.P 1第15页/共44页Depreciation On December 1,2013,FastForward purchas

15、ed equipment for$26,000 cash.The equipment has an estimated useful life of four years(48 months)and FastForward expects to sell the equipment at the end of its life for$8,000 cash.(c)Lets record depreciation expense for the month ended December 31,2013.Dec.2013DepreciationExpense=$26,000 -$8,000 48

16、months=$375 per monthP 1第16页/共44页EquipmentDepreciation Expense12/1 26,00012/31 375Accumulated Depreciation12/31 375DepreciationP 1Contra asset account第17页/共44页Equipment is shown net of accumulated depreciation.$DepreciationP 1第18页/共44页Unearned(Deferred)RevenuesWe will apply this cashyou gave us towa

17、rdsyour total consulting fees.Cash received in advance of providing products or services.P 1第19页/共44页Unearned(Deferred)RevenuesOn December 26,2013,FastForward agrees to provide consulting services to a client for a fixed fee of$3,000 for 60 days.On this date,the client pays the entire consulting fee

18、 in advance.FastForward makes the following entry:P 1第20页/共44页Unearned(Deferred)Revenues(d)On December 31,FastForward earns 5-days of consulting fees.Each day that passes results in consulting fees of$50($3,000 60),so FastForward earned($50 5 days)$250.P 1第21页/共44页Were about one-halfdone with this j

19、ob andwant to be paid forour work!Costs incurred in a period that areboth unpaid and unrecorded.Accrued ExpensesP 1第22页/共44页FastForwards employee earns$70 per day and is paid every two weeks on Friday.Year-end,12/31/13,falls on a Wednesday.The last payday of 2013 is Friday,12/26/13.From 12/26 until

20、year-end is three working days.The employee has earned$210 for Monday through Wednesday.He will not be paid until Friday 1/9/14.Accrued Salaries ExpensesP 1第23页/共44页(e)FastForwards employee has earned but not been paid on December 31,2013,$210.P 1Accrued Salaries Expenses第24页/共44页Future Payment ofAc

21、crued ExpensesOn January 9,2014,FastForward will pay the payroll for the two weeks from December 26,2013 through January 9,2014.Here is the journal entry for the payroll:P 1第25页/共44页Accrued Interest ExpensesFastForward borrowed$6,000 from First National Bank on December 1,2013.The note bears interes

22、t at the annual rate of 6%and is due to be repaid in one year.Lets accrue interest for the month ended December 31,2013.P 1第26页/共44页Yes,Ive completed yourconsulting job,but have nothad time to bill you.Accrued RevenuesRevenues earned in a period that are both unrecorded and not yet received.P 1第27页/

23、共44页Accrued Service Revenue(f)On December 12,2013,FastForward agrees to render consulting services under a 30-day fixed fee contract for$2,700($90 per day).All services are to be completed by January 10,2014,when the client will pay in full.P 1第28页/共44页Future Receipt of Service RevenuesOn January 10

24、,2014,FastForward completed its obligation under the consulting contract.The client was billed$2,700 and FastForward received$2,700 in cash.Revenue in January10 days$90=$900P 1第29页/共44页Links to Financial StatementsA 1第30页/共44页P 2第31页/共44页Preparing Financial StatementsLets use FastForwards adjusted t

25、rial balance to prepare the companys financial statements.P 3第32页/共44页P 31.Prepare the Income Statement第33页/共44页Note:Net Income from the Income Statement carries to the Statement of Changes in Owners Equity.P 32.Prepare the Statement of Owners Equitya第34页/共44页3.Prepare The Balance SheetP 3第35页/共44页G

26、lobal ViewBoth U.S.GAAP and IFRS include similar guidance for adjusting accounts.Although some variations exist in revenue and expense recognition.第36页/共44页Profit MarginThe profit margin ratio measures the companys net income to net sales.ProfitMargin=A 2Limited Brands,Inc.Net IncomeNet Sales第37页/共4

27、4页Assignments Individual:E3-2,E3-3,E3-4,E3-5,E3-6,E3-7Group Assignment:P3-2A,P3-3AClass Discussion:Why does the user of an income statement need to know the time period that it covers?第38页/共44页Appendix 3A:Alternative Accounting for PrepaymentsP4An alternative method is to record all prepaid expenses

28、with debits to expense accounts.The adjusting entry depends on how the original payment was recorded.第39页/共44页Appendix 3A:Alternative Accounting for PrepaymentsP4第40页/共44页Appendix 3A:Alternative Accounting for RevenuesP4An alternative method is to record all revenues to a liability account or a revenue account.The adjusting entry depends on how the original receipt was recorded.第41页/共44页Appendix 3A:Alternative Accounting for RevenuesP4第42页/共44页End of Chapter 3第43页/共44页感谢您的观看。第44页/共44页