會(huì)計(jì)英語(yǔ)第六單元

UnitFour

AccountingCycle

(3)Adjustments

Objectives:1Explainhowthematchingconceptrelatestotheaccrualbasisofaccounting.2Explainwhyadjustmentsarenecessaryandlistthecharacteristicofadjustingentries.3Journalizeentriesforaccountsrequiringadjustment.4Summarizetheadjustmentprocessandprepareanadjustmenttrialbalance.一accountingperiod→cashbasis(receivedorpaid)accrualbasis(earnedorrelate):revenuerecognitionconcept→matchingprincipleGAAPrequiretheuseoftheaccrualbasis,smallservicebusinessesmayusethecashbasisbecausetheyhavefewreceivablesandpayables.Thematchingprinciplesupportsrecordingrevenuesandrelateexpensesinthesameperiod.二Attheendofanaccountingperiod,someaccountsintheledgerrequireupdating.Thejournalentriesthatbringtheaccountsuptogateattheendoftheaccountingperiodarecalledadjustingentries.三Fourtypicaladjustingentries:Deferrals---------arecreatedbyrecordingatransactioninawaythatdelaysordeferstherecognitionofanexpenseorarevenue.㈠Deferredexpenses(prepaidexpenses)→becomeexpenseovertime

(1)supplies

(2)

prepaidinsurance(3)prepaidadvertising(4)prepaidinterest㈡Deferredrevenues(unearnedrevenue)→becomerevenuesovertime

(1)unearnedrent(2)tuition(3)annualretailerfee(4)premium(5)magazinesubscriptionsAccruals---------arecreatedbyanunrecordedexpensethathasbeenincurredoranunrecordedrevenuethathasbeenearned.㈢Accruedexpenses(accruedliabilities)→expensehavebeenincurredbutnotrecorded(1)accruedwages(2)accruedinterestonnotespayable(3)accruedtaxes㈣Accruedrevenues(accruedassets)→revenuesearnedbutnotrecorded(1)feesforservices(2)unbilledcommissions(3)accruedinterestonnotesreceivable(4)accruedrentSummarize:1Howdoyoutellthedifferencebetweendeferralsandaccruals?

Ifcashisreceivedorpaidinthecurrentperiod,buttherevenueorexpenserelatestoafutureperiod,therevenueorexpenseisadeferreditem.Ifcashwillnotbereceivedorpaiduntilafutureperiod,buttherevenueorexpenserelatestothecurrentperiod,therevenueorexpenseisanaccrueditem.Currentaccountingperiod→(cashreceivedorpaid)(revenueorexpenseincurred)→futureaccountingperiod(revenueorexpenseincurred)(cashreceivedorpaid)2Alladjustingentriesaffectatleastoneincomestatementaccountandonebalancesheetaccount.四Examples:1AssumingthatonDecember31theamountofsuppliesonhandis$760,theamounttobetransferredfromtheassetaccounttotheexpenseaccountis$1240.(suppliesusedistheamountofadjustment)Dr.SuppliesExpense$1240Cr.Supplies$12402Thedebitbalanceof$2400inAprepaidinsuranceaccountrepresentsaDecember1prepaymentofinsurancefor24months.AttheendofDecembertheinsuranceforonemonthturnintoreality.Dr.InsuranceExpense$100Cr.PrepaidInsurance$100Attention:(1)thebalanceofaprepaid(deferred)expenseisanassetthatwillbecomeanexpenseinafutureperiod.(2)Whatistheeffectofomittingadjustingentries?Ontheincomestatement,SuppliesExpenseandInsuranceExpensewillbeunderstatedbyatotalof$1340.Onthebalancesheet,SuppliesandPrepaidInsurancewillbeoverstatedbyatotalof$1340.(3)

Prepaymentsofexpensesaresometimesmadeatthebeginningoftheperiodinwhichtheywillbeentirelyconsumed.3AccordingtoA’strialbalanceonDecember31,thebalanceintheunearnedrentaccountis$360.Thisrepresentsthereceiptofthreemonths’rentonDecember1forDec.Jan.Feb,AttheendofDecember$120rentshouldbeturnintoreality.Dr.UnearnedRent$120Cr.RentRevenue$120Inthecaseofwagesexpense,ifthelastdayofapaidperiodisnotthelastdayoftheaccountingperiod,theaccruedwagesexpenseandtherelatedliabilitymustberecordedintheaccountsbyanadjustingentry.4AttheendofDecember,accruedwagesforAwere$250.Dr.WagesExpense$250Cr.WagesPayable$250(1)wagesarepaidonthesecondandfourthFridaysforthetwo-weekperiodendingonthoseFridays.Thepaymentswere$950onDecember13and$1200onDecember27.(2)ThewagesaccruedforMondayandTuesday,December30and31,are$250.(3)WagespaidonFriday,January10,totals$1275.SundayMondayTuesdayWednesdayFourthdayFridaySaturday1234567891011121314151617181920212223242526272829303113-------wagesexpense(paid)$95027-------wagesexpense(paid)$120030,31--wagesexpense(accrued)$250Jan,10:Dr.WagesPayable$250Cr.Cash$2505AssumethatAsignedanagreementwithBonDecember15.TheagreementprovidesthatAwillbeoncalltoanswercomputerquestionsandrenderassistancetoB’semployees.TheservicesprovidedwillbebilledtoBonthefifteenthofeachmonthatarateof$20perhour.AsofDecember31,Ahadprovided25hoursofassistancetoB.Dr.AccountsReceivable$500Cr.FeesEarned$5006Fixedassetsareatypeoflong-termdeferredexpense.Thedecreasesinusefulnessiscalleddepreciation.Allfixedasset,expectland,losetheirusefulness.Theestimatedamountofdepreciationforthemonthisassumedtobe$50inDec.ofA.Dr.DepreciationExpense$50Cr.AccumulatedDepreciation__officeequipment$50

(contraaccountorcontraassetaccount)

Theremindervalueofofficeequipment$1750iscalledthebookvalueoftheassetornetbookvalue.Result:depreciationallocatesthecostofafixedassettoexpenseoveritsestimatedlife.Question:1IfA’sadjustmentforunearnedrenthadincorrectlybeenmadefor$180insteadof$120,whatwouldhavebeentheeffectonthefinancialstatements?Revenuewouldhavebeenoverstatedby$60;netincomewouldhavebeenoverstatedby$60;liabilitywouldhavebeenunderstatedby$60;andOwner’sequitywouldhavebeenoverstatedby$60.2whichoftheaccounts_____feesearned;misc.expenses;cash;wagesexpense;supplies;accountsreceivable;drawing;equipment;accumulateddepreciation______wouldnormallyrequireanadjustingentry?feesearned;

wagesexpense;

supplies;

accountsreceivable;

accumulateddepreciationSummaryofbasicadjustmentsTypesofadjustment

Adjustingentry

EffectofomittingitonBSandonIS

Deferredexpense

Dr.ExpenseCr.Assets

ExpenseunderstatedandnetincomeoverstatedAssetsoverstatedandowner’sequityoverstated

Deferredrevenue

Dr.LiabilityCr.Revenue

Liabilitiesoverstatedandowner’sequityunderstatedRevenuesunderstatedandnetincomeunderstated

Accruedexpense

Dr.ExpenseCr.Liability

ExpenseunderstatedandnetincomeoverstatedLiabilitiesunderstatedandowner’sequityoverstated

Accruedrevenue

Dr.AssetsCr.Revenue

Assetsunderstatedandowner’sequityunderstatedRevenuesunderstatedandnetincomeunderstated

FixedAssets

Dr.ExpenseCr.ContraAsset

ExpenseunderstatedandnetincomeoverstatedAssetsoverstatedandowner’sequityoverstated

9、春去春又回，新桃換舊符。在那桃花盛開(kāi)的地方，在這醉人芬芳的季節(jié)，愿你生活像春天一樣陽(yáng)光，心情像桃花一樣美麗，日子像桃子一樣甜蜜。3月-25