《ch03 Financial Accounting 财务会计.ppt》由会员分享，可在线阅读，更多相关《ch03 Financial Accounting 财务会计.ppt（71页珍藏版）》请在三一办公上搜索。
1、CHAPTER 3,ADJUSTING THE ACCOUNTS调整账户,Study Objectives,Time period assumptionAccrual basis of accountingAdjusting entriesDescribe the nature and purpose of an adjusted trial balance.,The time period assumption assumes that the economic life of a business can be divided into artificial time periods.Ac
2、counting time periods 会计期间 are generally a month,a quarter,or a year.,TIME-PERIOD ASSUMPTION期间假设,The accounting time period of one year in length is usually known as a fiscal year财政年度.The accounting period used by most businesses coincides with the calendar year(January 1 to December 31).,TIME-PERIO
3、D ASSUMPTION期间假设,Example,You run a small business for CD sales.You sold ten CD to a customer for$50 in March,but the customer would pay$50 in April.How do you recognize your revenue?Depend on the system you choose.,Cash-BASIS OF ACCOUNTING现金收付制会计,Under cash-basis accounting现金收付制,revenue is recorded
4、only when cash is received,and expenses are recorded only when paid.Example:Under cash-basis accounting,your revenue$50 is recognized in April,not in March.,Cash-BASIS OF ACCOUNTING现金收付制会计,Example:you paid$1200 for insurance in January of 2006 for the year.Under cash-basis accounting,this amount$120
5、0 would be as expense in January,not be allocated over the following months.Generally accepted accounting principles do not take cash-basis accounting because the cash basis often causes misleading financial statements,ACCRUAL BASIS OF ACCOUNTING应计制会计,The revenue recognition principle收入确认原则 states t
6、hat revenue should be recognized in the accounting period in which it is earned.Example:Under accrual-basis accounting,your revenue$50 is recognized in March,not in April.,REVENUE RECOGNITION PRINCIPLE收入确认原则,In a service business,revenue is considered to be earned at the time the service is performe
7、d.,The practice of expense recognition费用确认 is referred to as the matching principle.The matching principle dictates that efforts(expenses)be matched with accomplishments(revenues).,THE MATCHING PRINCIPLE配比原则,Revenues earnedthis month,are offset against.,expensesincurred inearning therevenue,THE MATC
8、HING PRINCIPLE配比原则,Mismatch between revenue,expenses and cash,You finished your service in March,but the customer did pay cash to you yet.The service was valued as$40,000.Your customer paid$1200 cash in March for a contract,but your service did not do it.At end of March,you should pay employees wage
9、s$20,000,but did not pay it.You paid$1200 in March for insurance for the year.,How to deal with These mismatch?,You should make adjustment At the end of month or year,ADJUSTING ENTRIES调整分录,Adjusting entries are made in order for:Revenues to be recorded in the period in which they are earned,and for.
10、Expenses to be recognized in the period in which they are incurred.,ADJUSTING ENTRIES,Adjusting entries are required each time financial statements are prepared.Adjusting entries can be classified as:prepayments 先付型(prepaid expenses or unearned revenues)oraccruals 应计型(accrued revenues or accrued exp
11、enses),Prepayments,Prepaid Expenses 先付费用-expenses paid in cash and recorded as assets before they are used or consumed.Unearned Revenues预收款-revenues received in cash and recorded as liabilities before they are earned.,Accruals,Accrued Revenues 应计收入-revenues earned but not yet received in cash or rec
12、orded.Accrued Expenses 应计费用-expenses incurred but not yet paid in cash or recorded.,PIONEER ADVERTISING AGENCY,INC.,Trial Balance,October 31,2002,Debit,Credit,Cash,$15,200,Advertising Supplies,2,500,Prepaid Insurance,600,Office Equipment,5,000,Notes Payable,$5,000,Accounts Payable,2,500,Unearned Rev
13、enue,1,200,Common Stock,10,000,Retained Earnings,-0-,Dividends,500,Service Revenue,10,000,Salaries Expense,4,000,Rent Expense,900,$28,700,$28,700,TRIAL BALANCE,The Trial Balance is the starting place for adjusting entries.,PREPAYMENTS,Prepayments are either prepaid expenses or unearned revenues.Adju
14、sting entries for prepayments are required to record the portion of the prepayment that representsthe expense incurred orthe revenue earned in the current accounting period,Prepaid Expenses,Unearned Revenues,ADJUSTING ENTRIES FOR PREPAYMENTS,PREPAID EXPENSES,Prepaid expenses are expenses paid in cas
15、h and recorded as assets before they are used or consumed.Prepaid expenses expire with the passage of time or through use and consumption.An asset-expense account relationship exists with prepaid expenses.,PREPAID EXPENSES,Prior to adjustment,assets are overstated 高估and expenses are understated低估.Th
16、e adjusting entry调整分录 results in a debit to an expense account and a credit to an asset account.Examples of prepaid expenses include supplies易耗品,insurance保险,and depreciation折旧.,Adjustment,October 31,an inventory count reveals that$1,000 of$2,500 of supplies are still on hand.,ADJUSTING ENTRIES FOR P
17、REPAYMENTS SUPPLIES,Beginning inventory:2500,Ending inventory:1000,Inventory used=ending inventory beginning inventory=2500 1000=1500,ADJUSTING ENTRIES FOR PREPAYMENTS SUPPLIES,Journal Entry,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS SUPPLIES,DR advertising supplies CR,Oct 5 2500,Oct 31 1000,Oct 31 1
18、500,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS SUPPLIES,DR supplies expense CR,Oct 31 1500,Adjustment,October 31,an analysis of the policy reveals that$50 of insurance expires each month,ADJUSTING ENTRIES FOR PREPAYMENTS Insurance,ADJUSTING ENTRIES FOR PREPAYMENTS Insurance,Journal Entry,Posting,ADJU
19、STING ENTRIES FOR PREPAYMENTS Insurance,DR prepaid insurance CR,Oct 4 600,Oct 31 550,Oct 31 50,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS Insurance,DR insurance expense CR,Oct 31 50,DEPRECIATION 折旧,Depreciation is the process of allocating the cost of an asset to expense over its useful life in a rat
20、ional and systematic manner.The purchase of equipment or a building is viewed as a long-term prepayment长期先付款 of services and,therefore,is allocated in the same manner as other prepaid expenses.,DEPRECIATION,Depreciation is an estimate估计 rather than a factual measurement of the cost that has expired.
21、In recording depreciation,Depreciation Expense is debited and a contra asset account资产备抵帐户,Accumulated Depreciation累计折旧,is credited.,Depreciation expense,Accumulated Depreciation,XXX,XXX,DEPRECIATION,In the balance sheet,Accumulated Depreciation is offset 相抵 against the asset account.The difference
22、between the cost of the asset and its related accumulated depreciation is referred to as the book value账面价值 of the asset.,Adjustment,October 31,depreciation on the office equipment is estimated to be$480 a year,or$40 per month.,ADJUSTING ENTRIES FOR PREPAYMENTS Depreciation,ADJUSTING ENTRIES FOR PRE
23、PAYMENTS Depreciation,Journal Entry,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS Depreciation,DR accumulate depreciation CR,Oct 31 40,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS depreciation,DR depreciation expense CR,Oct 31 40,UNEARNED REVENUES,Unearned revenues are revenues received in cash and recorde
24、d as liabilities before they are earned.Unearned revenues are subsequently earned by rendering a service to a customer.A liability-revenue负债-收入 account relationship exists with unearned revenues.,UNEARNED REVENUES,Prior to adjustment,liabilities are overstated高估 and revenues are understated低估.The ad
25、justing entry results in a debit to a liability account and a credit to a revenue account.Examples of unearned revenues include rent,magazine subscriptions,and customer deposits for future services.,Adjustment,October 31,analysis reveals that,of$1,200 in fees,$400 has been earned in October.,ADJUSTI
26、NG ENTRIES FOR PREPAYMENTS Unearned revenue,ADJUSTING ENTRIES FOR PREPAYMENTS unearned revenue,Journal Entry,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS Unearned revenue,DR unearned revenue CR,Oct 2 1200,Oct 31 400,Oct 31 800,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS unearned revenue,DR service revenu
27、e CR,Oct 31 10000,Oct 31 10400,Oct 31 400,ACCRUALS,The second category of adjusting entries is accruals应计项目Adjusting entries for accruals are required to record revenues earned and expenses incurred in the current period.The adjusting entry for accruals will increase both a balance sheet and an inco
28、me statement account.,ADJUSTING ENTRIES FOR ACCRUALS,Accrued Revenues,Accrued Expenses,ACCRUED REVENUES,Accrued revenues may accumulate with the passing of time or through services performed but not billed or collected.An asset-revenue account relationship exists with accrued revenues.Prior to adjus
29、tment,assets and revenues are understated低估.The adjusting entry requires a debit to an asset account and a credit to a revenue account.,Adjustment,October 31,the agency earned$200 in fees for advertising services that were not billed to clients before October 31.,ADJUSTING ENTRIES FOR PREPAYMENTS Ac
30、crued revenue,ADJUSTING ENTRIES FOR PREPAYMENTS Accrued revenue,Journal Entry,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS Accrued revenue,DR accounts receivable CR,Oct 31 200,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS unearned revenue,DR service revenue CR,Oct 31 10000,Oct 31 10600,Oct 31 400,Oct 31 20
31、0,ACCRUED EXPENSES,Accrued expenses are expenses incurred but not yet paid or recorded.A liability-expense account relationship existsPrior to adjustment,liabilities and expenses are understated低估The adjusting entry results in a debit to an expense account and a credit to a liability account.,Adjust
32、ment,October 31,the portion of the interest to be accrued on a 3-month note payable is calculated to be$50.,ADJUSTING ENTRIES FOR PREPAYMENTS Accrued expense,ADJUSTING ENTRIES FOR PREPAYMENTS Accrued expense,Journal Entry,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS Accrued expense,DR interest expense
33、CR,Oct 31 50,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS accrued expense,DR interest payable CR,Oct 31 50,Adjustment,October 31,accrued salaries are calculated to be$1,200,ADJUSTING ENTRIES FOR PREPAYMENTS Accrued salaries,ADJUSTING ENTRIES FOR PREPAYMENTS Accrued salaries,Journal Entry,Posting,ADJUST
34、ING ENTRIES FOR PREPAYMENTS Accrued salaries,DR salaries expense CR,Oct 31 1200,Oct 26 4000,Oct 5200,Posting,ADJUSTING ENTRIES FOR PREPAYMENTS accrued expense,DR salaries payable CR,Oct 31 1200,ADJUSTED TRIAL BALANCE调整后的试算平衡表,An Adjusted Trial Balance is prepared after all adjusting entries have bee
35、n journalized and posted.It shows the balances of all accounts at the end of the accounting period and the effects of all financial events that have occurred during the period.,ADJUSTED TRIAL BALANCE调整后的试算平衡表,It proves the equality of the total debit and credit balances in the ledger after all adjus
36、tments have been made.Financial statements can be prepared directly from the adjusted trial balance.,PIONEER ADVERTISING AGENCY,INC.,Trial Balances,October 31,2002,Before,After,Adjustment,Adjustment,Debit,Credit,Debit,Credit,Cash,$15,200,$15,200,Accounts Receivable,200,Advertising Supplies,2,500,1,0
37、00,Prepaid Insurance,600,550,Office Equipment,5,000,5,000,Accumulated Depreciation-Office Equipment,$,40,Notes Payable,$5,000,5,000,Accounts Payable,2,500,2,500,Interest Payable,50,Unearned Revenue,1,200,800,Salaries Payable,1,200,Common Stock,10,000,10,000,Retained Earnings,0,0,Dividends,500,500,Se
38、rvice Revenue,10,000,10,600,Salaries Expense,4,000,5,200,Advertising Supplies Expense,1,500,Rent Expense,900,900,Insurance Expense,50,Interest Expense,50,Depreciation Expense,40,$28,700,$28,700,$30,190,$30,190,TRIAL BALANCE AND ADJUSTED TRIAL BALANCE COMPARED,Homework,Q9,Q10BE3-4,BE3-5E3-3,E3-4,E3-5P3-1A,
