財務(wù)會計學(xué)英文課件：ch3 Accrual Accounting

1、Chapter 3Accrual AccountingAccrual vs. Cash Basis AccountingACCRUAL ACCOUNTINGCASH BASIS Records impact of transactions when they occur Required by IAS1 Presentation of Financial Statements Records: Revenue when earned Expenses when incurred Use by virtually all businesses Records transactions only

2、if cash is involved Cash receipts Cash payments Ignores underlying economic activities Used by very small operationsCopyright 2014 Pearson Education2Relate accrual accounting and cash flowsCopyright 2014 Pearson Education3Accrual accounting Records both cash and non-cash transactionsCash transaction

3、sNon-cash transactionsCollecting payments from customersSales on accountReceiving cash from interest earnedPurchases of inventory on accountPaying salaries, rent, and other expensesAccrual of expenses incurred but not yet paidBorrowing moneyDepreciation expensePaying off loansUsage of prepaid rent,

4、insurance, and suppliesIssuing sharesEarning of revenue when cash was collected in advanceCopyright 2014 Pearson Education4Time Period Concept Accounting information is reported at regular intervals Basic accounting period is one year Calendar year January 1 December 31 Fiscal year 12-month period e

5、nding on a date other than December 31 Interim periods Month or quarterCopyright 2014 Pearson Education5Apply the revenue and matching principlesCopyright 2014 Pearson Education6Time-period concept2010 Pearson Prentice Hall. All rights reserved.1-7Ensures that accounting information is reported at r

6、egular intervalsIAS 1 requires an entity to present a complete set of financial statements at least annually.Companies also prepare financial statements for interim periods of less than a year.Copyright 2014 Pearson EducationRevenue Recognition PrincipleThe entity has transferred to the buyer the si

7、gnificant risks and rewards of ownership of the goodsThe entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods soldThe amount of revenue can be measured reliably;It is probable that the economic benefits associat

8、ed with the transaction will flow to the entityThe costs incurred or to be incurred in respect of the transaction can be measured reliably.Copyright 2014 Pearson Education8When should revenue be recorded?Matching PrincipleIdentify expenses incurredMeasure the expensesMatch against revenues earnedCop

9、yright 2014 Pearson Education9Adjust the accountsCopyright 2014 Pearson Education10Adjusting the Accounts Financial statements issued at end of period Several accounts on trial balance need to be brought up-to-date Certain transactions have not been recordedCopyright 2014 Pearson Education11Categori

10、es of AdjustmentsDeferralsDepreciationAccrualsCopyright 2014 Pearson Education12Deferrals Business has paid or received cash in advancePrepaid expense Recorded as an asset when purchased Expensed when used or expiredUnearned revenue Recorded as a liability when payment is received Recorded as revenu

11、e when earnedCopyright 2014 Pearson Education13Prepaid Expenses Recorded as assets when purchasedJOURNALDateAccounts and explanationDebitCreditJun 1Prepaid rent3,000 Cash3,000Paid three months rent in advanceJun 30Rent expense1,000 Prepaid rent1,000To record rent expenseCopyright 2014 Pearson Educat

12、ion14Prepaid Expenses Recorded as assets when purchasedJOURNALDateAccounts and explanationDebitCreditJun 2Supplies700 Cash700Paid cash for suppliesJun 30Supplies expense300 Prepaid rent300To record rent expenseCopyright 2014 Pearson Education15Prepaid RentPrepaid rentJun 1$3,000Jun 30$1,000$2,000Ren

13、t expense$1,000Jun 30Amount expiredAmount remainingBalance SheetIncome StatementCopyright 2014 Pearson Education16SuppliesSuppliesJun 2$700Jun 30$300$400Supplies expense$300Jun 30Amount usedAmount on handBalance SheetIncome StatementCopyright 2014 Pearson Education17Depreciation Allocates cost of Pr

14、operty, Plant and Equipment (PPE) to expense over useful lives Represents wear-and-tear and obsolescence Examples of PPE: Buildings Equipment FurnitureCopyright 2014 Pearson Education18Accumulated Depreciation Sum of all depreciation expense Increases over plant assets life Contra-asset Normal credi

15、t balance Always has a companion account Book value Cost of plant asset less accumulated depreciationCopyright 2014 Pearson Education19DepreciationJOURNALDateAccounts and explanationDebitCreditJun 2Equipment24,000 Cash24,000Jun 30Depreciation expense400 Accumulated depreciation400Copyright 2014 Pear

16、son Education20DepreciationEquipmentJun 2$24,000Depreciation Expense$400Jun 30Balance SheetIncome StatementAccumulated DepreciationJun 30$400Copyright 2014 Pearson Education21Book ValueBalance SheetDecember 31, 2010Equipment$24,000Less: Accumulated Depreciation(400)Book value$23,600Copyright 2014 Pe

17、arson Education22AccrualsAccrued expenses Record expense before paying cash Salaries, interest, and income taxesAccrued revenues Record revenue before collecting cash Earned and will collect next periodCopyright 2014 Pearson Education23Accrued Expenses Record expense before paying cashJuneSunMonTueW

18、edThurFriSat123456789101112131415161718192021222324252627282930Copyright 2014 Pearson Education24Accrued SalariesJOURNALDateAccounts and explanationDebitCreditJun 15Salaries expense900 Cash900To pay salaryJun 1Jun 30Jun 15$15,000 weekly salaries$900$900Copyright 2014 Pearson Education25Accrued Salar

19、iesJOURNALDateAccounts and explanationDebitCreditJun 30Salaries expense900 Salary Payable900To accrue salary expenseJun 1Jun 30Jun 15$15,000 weekly salaries$900$900Copyright 2014 Pearson Education26Accrued Revenue Revenue earned but not yet receivedJOURNALDateAccounts and explanationDebitCreditJun 3

20、0Accounts receivable ($600 x )300 Service revenue300To accrue service revenue.Copyright 2014 Pearson Education27Unearned Revenue Receive cash before revenue is earned Creates a liability Business owes customer a good or serviceJOURNALDateAccounts and explanationDebitCreditDec 1Cash400 Unearned servi

21、ce revenue400Received cash for revenue in advance.Copyright 2014 Pearson Education28Unearned Revenue When revenue is earned Liability is reduced Revenue is increasedJOURNALDateAccounts and explanationDebitCreditJun 30 Unearned revenue200 Service revenue200To record unearned service revenue that has

22、been earned.Copyright 2014 Pearson Education29Prepaids and AccrualsPREPAIDS CASH FIRSTFIRSTLATERPrepaid expensesPrepaid expenseExpense CashPrepaid expenseUnearned revenuesCashUnearned revenueUnearned revenueRevenueACCRUALS CASH LATERFIRSTLATERAccrued expensesExpensePayable PayableCashAccrued revenue

23、sReceivableCashRevenueReceivableCopyright 2014 Pearson Education30Summary of the Adjusting Process Two purpose of adjusting process Measure income Update balance sheet Every adjusting entry affects at least one: Revenue or expense Asset or liabilityCopyright 2014 Pearson Education31Summary of Adjust

24、ing EntriesType of AccountCategory of AdjustmentDebitCreditPrepaid expenseExpenseAssetDepreciationExpenseContra assetAccrued expenseExpenseLiabilityAccrued revenueAssetRevenueUnearned revenueLiabilityRevenueCopyright 2014 Pearson Education32Exercise 3-22AJOURNALDateAccounts and explanationDebitCredi

25、t(a) Interest expense9,500 Interest payable9,500(b)Interest receivable4,500 Interest revenue4,500(c)Unearned rent revenue3,400 Rent revenue3,400Copyright 2014 Pearson Education33Exercise 3-22AJOURNALDateAccounts and explanationDebitCredit(d) Salary expense5,400 Salary payable5,400(e)Supplies expense

26、2,100 Supplies2,100(f)Depreciation expense20,000 Accumulated depreciation20,000Copyright 2014 Pearson Education34Exercise 3-22ABalance SheetDecember 31, 20X6Equipment$100,000Less: Accumulated Depreciation(20,000)Book value$80,000Copyright 2014 Pearson Education35The Adjusted Trial Balance Prepared a

27、fter adjustments are journalized and posted Useful step in preparing financial statementsCopyright 2014 Pearson Education36Prepare the financial statementsCopyright 2014 Pearson Education37The Financial StatementsIncome Statement Lists revenues & expensesStatement of Changes in Equity Shows chan

28、ges in components of equityBalance Sheet Reports assets, liabilities and shareholders equityCopyright 2014 Pearson Education38Flow of Data in Financial StatementsIncome StatementRevenues $,$Less: Expenses($,$)Net Income$,$Statement Changes in EquityBeginning equity balance $,$Plus: Net income$,$Less

29、: Dividends($,$)Ending equity balance$,$Copyright 2014 Pearson Education39Flow of Data in Financial StatementsStatement of Changes in EquityBeginning equity balance $,$Plus: Net income$,$Less: Dividends($,$)Ending equity balance$,$Balance SheetCurrent assets$,$Liabilities$,$PPE$,$ Share Capital$,$Ot

30、her assets$,$ Retained earnings$,$Total assets$,$Total liabilities & shareholders equity$,$Copyright 2014 Pearson Education40Close the booksCopyright 2014 Pearson Education41Closing the books Prepares the accounts for next period Temporary accounts are set to zero and closed into Retained earnin

31、gs Permanent accounts are not closedCopyright 2014 Pearson Education42Temporary ClosedRevenues, expenses and dividendsPermanentNot closedAssets, liabilities and equityCopyright 2014 Pearson Education43Closing Entries2010 Pearson Prentice Hall. All rights reserved.Close DividendsDebit Retained earnin

32、gsCredit DividendsClose ExpensesDebit Retained earningsCredit each expense accountClose RevenuesDebit each revenue accountCredit Retained earningsCopyright 2014 Pearson Education44Problem 3-67AJOURNALDateAccounts and explanationDebitCredit Sales revenue95,000 Retained earnings95,000Retained earnings35,700 Advertising expense10,900 Depreciation expense1,700 Interest expense900 Salary expense17,800 Supplies expense4,400Copyright 2014 Pearson Education45Problem 3-67AJOURNALDateAccounts and explanationD