會計專業(yè)英語（第2版）課件 第2章

會計專業(yè)英語Chapter2AccountingCycle

Tounderstandaccountinginformation,weneedtoknowhowanaccountingsystemcapturesrelevantdataabouttransactions,andthenclassifiesrecords,andreportsdata.2.1AccountingEquationandDouble-entryAccountingTheaccountingsystemreflectstwobasicaspectsofafirm:whatitownsandwhatitowes.Assetsareresourcesthatownedorcontrolledbyacompanyandcouldbringbenefitstoitinthefuture,suchascash,supplies,equipment,andland.Theclaimsonacompany’sassets(whatitowesofafirm)areseparatedintoliabilitiesandequity.Liabilitiesarewhatacompanyowesitscreditorinfuturepayments,productsorservices.Equity(alsocalledowner’sequityorcapital)referstotheclaimsofitsowner(s).2.1.1AccountingEquation

Therelationofassets,liabilities,andequityisreflectedinthefollowingaccountingequation:Assets=Liabilities+EquityInthisequation,liabilitiesareusuallyshownbeforeequitybecausecreditors’claimsmustbepaidbeforetheclaimsofowners.Theaccountingequationappliestoalltransactionsandevents,toallformsofcompaniesandorganizations,andtoallpointsoftime.Themechanicrequiringthateverytransactionshouldberecordedinthedebitsideandcreditsideofoneormoreaccountswiththeequalamount.Thedouble-entrysystemisbasedontheaccountingequation.2.1.2Double-entrySystem

Assets=Liabilities+Owner’sequityDebitforCreditforDebitforCreditforDebitforCreditforIncreasesDecreasesDecreasesIncreasesDecreasesIncreasesTheincreaseordecreaseofdifferenttypesofaccountswouldberecordedasfollows:Therecordingofaccountingtransactionsunderdouble-entrysystemmaybeformulatedinthefollowingfourrules(1)Theincreaseofassetshouldbedebitedtoassetaccountsandthedecreaseofassetshouldbecredited.(2)Theincreaseofliabilityandowners’equityitemsshouldbecreditedtoliabilityandowners’equityaccountsandthedecreaseshouldbedebited.(3)Asrevenueseventuallyincreaseowners’equity,theincreaseofrevenueshouldbecreditedtoarevenueaccount,andthedecreaseshouldbedebited.(4)Asexpenseseventuallydecreaseowners’equity,theincreaseofexpenseshouldbedebitedtoanexpenseaccount,andthedecreaseshouldbecredited.Theaccountingcycleistheaccountingprocedures(orsteps)inpreparingfinancialstatement.Thereasonforthenameofcycleisthattheproceduresarerepeatedduringeachreportingperiodbythesamesequence.Theaccountingcyclestartswithanalyzingtransactionsandendswithpreparingfinancialstatements.2.2DefinitionofAccountingCycle

Theaccountingcyclegenerallyconsistsofthefollowingprocedures.(1)Analyzingtransactionsandeventsastheyoccur.(2)Journalizingtransactionsinajournal.(3)Postingjournalentriestotheappropriateledger.(4)Preparinganunadjustedtrialbalance.(5)Preparingadjustingjournalentriesandpostingthemtotheledger.(6)Preparinganadjustedtrialbalance.(7)Preparingclosingjournalentriesandpostingtotheledger.(8)Preparingpost-closingtrailbalance.(9)Preparingfinancialstatements.(10)Preparingreversingentriesinthenextperiodifnecessary.Tohaveabetterillustrationoftheproceduresinanaccountingcycle,weshowthesestepsintheExhibit2-1.Journalisachronologicalrecordofeachbusinesstransactioninorderofdate.Sometimesthejournalisalsocalledthebookoforiginalentry,becauseitistheaccountingrecordinwhichtransactionsarefirstrecorded.Journalscanbeclassifiedintogeneraljournalsandspecialjournals.Aspecialjournalisanaccountingjournaldesignedtorecordaspecifictypeoftransaction.Ageneraljournalisusedfortransactionsthatdonotfitoneofthespecialjournals.2.3.1JournalsThegeneraljournalhasadisadvantagedifferenttypesoftransactionswillberecordedinascatteredsituationwhichisdetrimentalforcompaniestoreflectandcontrolimportantandregulartransactions.CompaniesneedtousespecialjournalsThecommonspecialjournalincludessalesjournalcashjournalpurchasesjournalThecollectionofallaccountsandtheirbalancesinaninformationsystemiscalledaledger.Aledgerisalsocalledbooksoffinalentry.Itrecordsclassifiedandsummarizedfinancialinformationfromjournalsandshowstheircurrentbalances.Theledgeraccountisaseparatepageinaledgerthatrecordsincreasesanddecreasesineachbalancesheetitem,classifiedunderassets,liabilities,orowners’equity.Theledgeraccountcanbeclassifiedintogeneralledgeraccountandsubsidiaryledgeraccount.2.3.2Ledgers

Thegeneralledgeraccountisanaccountorrecordusedtosortandstorebalancesheetandincomestatementtransactions.ExamplesofgeneralledgerincludetheassetaccountssuchasCash,AccountsReceivable,Inventory,Investments,LandandEquipment.ExamplesofthegeneralledgerliabilityaccountsincludeAccountsPayable,NotesPayable,andAccruedExpensesPayable.ExamplesofincomestatementaccountsincludeSalesRevenue,ServiceRevenues,SalariesExpense,RentExpense,AdvertisingExpense,InterestExpense,andLossonDisposalofAssets.1.GeneralLedgerAccountThesubsidiaryledgeraccountisalsocalledsupportingledgeraccount,whichcontainsthedetailedinformationtosupportageneralledgeraccount.2.SubsidiaryLedgerAccountToensurethattheledgerisup-to-date,entriesshouldbepostedfromjournaltoledgerassoonaspossible.Thismightbedonedaily,weekly,orwheneverisrequired.Allentriesmustbepostedtotheledgerbeforefinancialstatementsarepreparedtoensurethattheaccountbalancescouldbetransferredintothecorrespondingledgeraccountstimelyandcorrectly.3.PostingJournalEntriestoLedgeraccountsAccordingtotheaccrual-basisaccountingprincipleandthematchingprinciple,allrevenuesearedandexpensesincurredduringthesameperiodmustbereportedregardlesswhethertherelatedcashtorevenuesorexpensesisreceivedorpaid.Therefore,itisnecessarytopreparetheadjustingjournalentriesattheendofanaccountingperiod.Therearefourtypesofadjustingjournalentries,includingprepaidexpenses,unearnedrevenues,accruedexpenses,andaccruedrevenues.2.4Adjusting

Prepaidexpensesarepaymentsofexpensesinadvance,whichrefertoitemspaidforinadvanceinordertoreceivetheirbenefits.Prepaidexpensesareassets.Whentheseassetsareused,theircostswillbecomeexpenses.2.4.1PrepaidExpenses

Withthepassageoftime,thebenefitsoftherentgraduallyexpire,andaportionofthePrepaidRentassetbecomesexpense.OnJan.31,20×7,thePrepaidRentaccountshouldbedecreasedbytheportionthathasbeenusedup.Theusedupportionis$2

000(24

000/12×1),sotheadjustingjournalentryshouldtransfer$2,000ofPrepaidExpensetoRentExpense.Thespecificadjustingentryis：RentExpense 2

000

PrepaidRent 2

000Depreciationistheprocessofallocatingthecostsoffixedassetsovertheirexpectedusefullives.Theadjustingjournalentryofdepreciationissimilartothatforprepaidexpenses.Themaindifferenceofthemisthelengthoftime.Prepaidexpensesusuallyexpirewithinoneyear,whilemostofthefixedassetskeepbeingusefulforseveralyears.SupposethatNCo.purchasedamachinefor$15

000onNov.120×7.Machine 15

000

Cash 15

000Themachineisexpectedtohaveausefullifeoffiveyearsandhavenoresidualvalueattheendofthisperiod.Thedepreciationmethodofthiscompanyisstraight-linemethodwhichmeansthemonthlydepreciationwillbe$250(15

000÷(5×12)).Thenthedepreciationofthefirstdepreciablemonthis$250($15

000÷60)anditwillberecordedbythisentry:DepreciationExpense 250

AccumulatedDepreciation 250Accruedexpensesareexpensesthathaveoccurredinaperiodbuthavenotbeenpaid.Accruedexpensemustbereportedintheincomestatementoftheperiodwhenincurred.Commonexamplesofaccruedexpensesareaccruedsalary,accruedinterest,accruedrent,andaccruedtaxes.2.4.2AccruedExpenses

SupposethatNCo.have20employeesandpays$100perdayperemployeeor$500forafive-dayworkweekbeginningfromMondayandendingonFriday.ItsemployeesarepaideverytwoweeksonFriday.ThesalariesofJanuary,20×7ispaidonthe12th,26thofJanuaryandthe9thofFebruary.AttheendofJanuary,theemployeehasearnedthreeworkdays’(Jan.29,30,31)salaryof$6

000($100×3×20),yetthissalarycosthasnotbeenpaidorrecorded.

Tomakethefinancialstatementcomplete,NCo.shouldmakethefollowingadjustingentrytoaccountforaccruedsalary.SalaryExpense 6

000

AccruedSalary 6

000AccruedrevenuesRevenuesbeforereceivingcashorotherassetsIncludingservicerevenueprovidedbutnotbilledtoclientsattheendofaperiod,rentrevenueonpropertyrentedtoothersbutnotreceivedincash,andsoon.ExampleAssumethatNCo.agreedtoprovideservicestoaclientforafeeof$6

000fromJanuary17toFebruary15(30days).Inthecontract,theagreementisthatcashwillbepaidwhentheservicehasbeencompletelyprovided.OnJanuary31,20×7,NCo.hasprovided15daysservice.Sincethecontractedserviceshavenotyetbeenentirelyprovided,NCo.hasneitherbilledtheclientnorrecordedtheservicesalreadyprovided.However,asthe15-dayservicerevenuehasearned,NCo.mustrecordthispartoftheexpectedbillingasrevenueinthatperiod,eventhoughthereisnobillingorcollection.So,onJan.31,NCo.mustreport$3

000($6

000×15÷30)intheincomestatement.ThebalancesheetmustreflectthattheclientowesNCo.$3,000byaccountsreceivable.AccountsReceivable 3

000

ServiceRevenue 3

0002.4.3AccruedRevenuesUnearnedRevenuesThecashorotherassetsreceivedbeforeearningtherevenuecreatesunearnedrevenue,whichisaliabilityandmeansthecompanyowesproductsorservicestocustomers.Onlywhenproductsorservicesareprovided,canthebusinessearnandrecognizetherevenue.ExampleSupposethatNCo.received$300onDec.17unearnedrentrevenueforonemonth(Dec.1720×7—Jan.1520×8).Theentrytorecordthecashreceivedinadvanceis:Cash 300

UnearnedRentRevenue 3002.4.4UnearnedRevenuesOnDec.31,20×7,ahalfofamonth’sRentRevenuehasbeenearned.Accordingly,$150oftheUnearnedRentRevenue($300×15÷30)mustbereportedasearnedrevenueintheIncomeStatementandtheleft$150($300-$150)shouldbereportedintheBalanceSheetasaliability.Theadjustingjournalentryisasfollows.UnearnedRentRevenue 150

RentRevenue 150Animportantstepattheendofanaccountingperiod,whichgetstheaccountsreadyforthenextperiod.Intheclosingprocess,wemustidentifyaccountsforclosing,recordandposttheclosingentries,andprepareapost-closing

trialbalanceTwomajorpurposesFirst,byresettingrevenues,expenseofcurrentperiod,theincomecouldbemeasuredproperlybytheseaccountsinthenextperiod.Second,ithelpstosummarizeaperiod’srevenuesandexpenses.2.5ClosingProcessAtemporaryaccountisageneralledgeraccountthatbeginswithazerobalanceineachaccountingperiod.closingtheaccountAttheendofeachaccountingperiod,thebalancesoftemporaryaccountswillbetransferredtoanotheraccount.Theclosingprocessappliesonlytotemporaryaccounts.Generally,incomestatementaccountsaretemporaryaccounts.Apermanentaccountageneralledgeraccountthatdoesnotneedtobeclosedattheendofaccountingperiod.Inotherwords,itcarriesitsendingbalanceintothenextperiod.Generally,balancesheetaccountsarepermanentaccounts.2.5.1TemporaryandPermanentAccountsPostingclosingentriesTotransferringtheendingbalanceofrevenue,expense,andwithdrawaccountstopermanentaccountsItisnecessarytopostclosingentriesattheendofeachperiod.Thereasonsareasfollows.(1)Revenue,expense,andwithdrawaccountsaretemporaryaccounts,andtheyneedtobewithzerobalancesatthebeginningofeachperiod.(2)Owner’sequitymustreflectrevenuesandexpensesformedinpriorperiods.Whencloserevenue,expense,andwithdrawaccountsFirstly,transfertheirbalancestoincomesummaryaccount.Secondly,transferwithdrawalaccountbalanceequityaccount.Whentheseclosingentrieshavebeenposted,allofrevenues,expenses,withdrawals,andincomesummaryaccounthaveazerobalance.2.5.2PostingClosingEntriesThedoubleentryaccountingrequiresthesumofdebitaccountbalancesequaltothesumofcreditaccountbalances.Atrialbalanceisalistofaccountsandtheirbalancesatapointoftime,anditcouldbeusedtoconfirmthis.2.6TrialBalance

(1)Listeachaccount’stitleanditsbalancefromtheledgerintoatrialbalance.Ifanaccounthasazerobalance,itcouldbeomitted.(2)Sumupallthedebitbalancesandcreditbalancesintrialbalance.(3)Checkwhetherthetotaldebitbalancesequalthetotalcreditbalances.2.6.1StepsinPreparingaTrialBalance

Ifthetrialbalancedoesnotbalance,theerrormustbefoundoutandcorrected.Howcouldyousearchforandcorrecterrors?Theefficientwayistocheckthejournalizing,posting,andthetrialbalancepreparationinreverseorder.Detailedwaystosearchforerrors.(1)Verifywhetherthetrialbalancecolumnshavebeencorrectlyadded.(2)

Verifywhethertheaccountbalancesareaccuratelyenteredfromtheledger.(3)Checkwhetheradebt(orcredit)balanceismistakenlylistedinthetrialbalanceasacredit(ordebit).(4)Recomputethebalanceofeachaccountintheledger.(5)Verifywheth