财务会计ch03.ppt
2023/4/13,财务会计,财务会计,财务会计,CHAPTER 3,ADJUSTING THE ACCOUNTS,Financial Accounting,Sixth Edition,财务会计,Explain the time period assumption.Explain the accrual basis of accounting.Explain the reasons for adjusting entries.Identify the major types of adjusting entries.Prepare adjusting entries for deferrals.Prepare adjusting entries for accruals.Describe the nature and purpose of an adjusted trial balance.,Study Objectives,财务会计,Adjusting the Accounts,Timing Issues,The Basics of Adjusting Entries,The Adjusted Trial Balance and Financial Statements,Time period assumptionFiscal and calendar yearsAccrual-vs.cash-basis accountingRecognizing revenues and expenses,Types of adjusting entriesAdjusting entries for deferralsAdjusting entries for accrualsSummary of journalizing and posting,Preparing the adjusted trial balancePreparing financial statements,财务会计,Generally a month,a quarter,or a year.Fiscal year vs.calendar yearAlso known as the“Periodicity Assumption”,Timing Issues,Accountants divide the economic life of a business into artificial time periods(Time Period Assumption).,LO 1 Explain the time period assumption.,Jan.,Feb.,Mar.,Apr.,Dec.,.,财务会计,The time period assumption states that:,a.revenue should be recognized in the accounting period in which it is earned.b.expenses should be matched with revenues.c.the economic life of a business can be divided into artificial time periods.d.the fiscal year should correspond with the calendar year.,Review,Timing Issues,LO 1 Explain the time period assumption.,财务会计,Accrual-Basis AccountingTransactions recorded in the periods in which the events occur.Revenues are recognized when earned,rather than when cash is received.Expenses are recognized when incurred,rather than when paid.,Timing Issues,Accrual-vs.Cash-Basis Accounting,LO 2 Explain the accrual basis of accounting.,财务会计,Cash-Basis AccountingRevenues are recognized when cash is received.Expenses are recognized when cash is paid.Cash-basis accounting is not in accordance with generally accepted accounting principles(GAAP).,Timing Issues,Accrual-vs.Cash-Basis Accounting,LO 2 Explain the accrual basis of accounting.,财务会计,Revenue Recognition Principle,Timing Issues,Recognizing Revenues and Expenses,LO 2 Explain the accrual basis of accounting.,Companies recognize revenue in the accounting period in which it is earned.In a service enterprise,revenue is considered to be earned at the time the service is performed.,财务会计,Matching Principle,Timing Issues,Recognizing Revenues and Expenses,LO 2 Explain the accrual basis of accounting.,Match expenses with revenues in the period when the company makes efforts to generate those revenues.“Let the expenses follow the revenues.”,财务会计,Timing Issues,LO 2 Explain the accrual basis of accounting.,GAAP relationships in revenue and expense recognition,Illustration 3-1,财务会计,One of the following statements about the accrual basis of accounting is false.That statement is:Events that change a companys financial statements are recorded in the periods in which the events occur.Revenue is recognized in the period in which it is earned.The accrual basis is in accordance with generally accepted accounting principles.Revenue is recorded only when cash is received,and expense is recorded only when cash is paid.,Review,Timing Issues,LO 2 Explain the accrual basis of accounting.,财务会计,Adjusting entries make it possible to report correct amounts on the balance sheet and on the income statement.A company must make adjusting entries every time it prepares financial statements.,The Basics of Adjusting Entries,LO 3 Explain the reasons for adjusting entries.,财务会计,Revenues-recorded in the period in which they are earned.Expenses-recognized in the period in which they are incurred.Adjusting entries-needed to ensure that the revenue recognition and matching principles are followed.,The Basics of Adjusting Entries,LO 3 Explain the reasons for adjusting entries.,财务会计,Adjusting entries are made to ensure that:a.expenses are recognized in the period in which they are incurred.b.revenues are recorded in the period in which they are earned.c.balance sheet and income statement accounts have correct balances at the end of an accounting period.d.all of the above.,Review,Timing Issues,LO 3 Explain the reasons for adjusting entries.,财务会计,Types of Adjusting Entries,DeferralsPrepaid Expenses.Expenses paid in cash and recorded as assets before they are used or consumed.Unearned Revenues.Cash received and recorded as liabilities before revenue is earned.AccrualsAccrued Revenues.Revenues earned but not yet received in cash or recorded.Accrued Expenses.Expenses incurred but not yet paid in cash or recorded.,LO 4 Identify the major types of adjusting entries.,财务会计,Trial Balance Each account is analyzed to determine whether it is complete and up-to-date.,Trial Balance,LO 4 Identify the major types of adjusting entries.,财务会计,Deferrals are either:Prepaid expenses or Unearned revenues.,Adjusting Entries for Deferrals,LO 5 Prepare adjusting entries for deferrals.,财务会计,Payment of cash,that is recorded as an asset because service or benefit will be received in the future.,Adjusting Entries for“Prepaid Expenses”,insurancesuppliesAdvertisingrent,Cash Payment,Expense Recorded,BEFORE,LO 5 Prepare adjusting entries for deferrals.,Prepayments often occur in regard to:,building purchasesequipment purchases,财务会计,Prepaid ExpensesCosts that expire either with the passage of time or through use.Adjusting entries(1)to record the expenses that apply to the current accounting period,and(2)to show the unexpired costs in the asset accounts.,Adjusting Entries for“Prepaid Expenses”,LO 5 Prepare adjusting entries for deferrals.,财务会计,Adjusting Entries for“Prepaid Expenses”,LO 5 Prepare adjusting entries for deferrals.,Illustration 3-4Adjusting entries for prepaid expenses,Increases(debits)an expense account and Decreases(credits)an asset account.,财务会计,Example(Insurance):On Oct.4th,Pioneer Advertising paid$600 for a one-year fire insurance policy.Show the journal entry to record the payment on Oct 4th.,Cash,600,Prepaid insurance,600,Oct.4,Debit,Credit,Prepaid Insurance,600,600,Debit,Credit,Cash,Adjusting Entries for“Prepaid Expenses”,LO 5 Prepare adjusting entries for deferrals.,财务会计,Example(Insurance):On Oct.4th,Pioneer Advertising paid$600 for a one-year fire insurance policy.Show the adjusting journal entry required at Oct.31st.,Prepaid insurance,50,Insurance expense,50,Oct.31,Debit,Credit,Prepaid Insurance,600,50,Debit,Credit,Insurance Expense,50,550,Adjusting Entries for“Prepaid Expenses”,LO 5 Prepare adjusting entries for deferrals.,财务会计,DepreciationBuildings,equipment,and vehicles(long-lived assets)are recorded as assets,rather than an expense,in the year acquired.Companies report a portion of the cost of a long-lived asset as an expense(depreciation)during each period of the assets useful life(Matching Principle).,Adjusting Entries for“Prepaid Expenses”,LO 5 Prepare adjusting entries for deferrals.,财务会计,Example(Depreciation):On Oct.2nd,Pioneer Advertising paid$5,000 for office equipment that has an expected useful life of 10 years.Show the journal entry to record the purchase of the equipment on Oct.2nd.,Cash,5,000,Equipment,5,000,Oct.2,Debit,Credit,Equipment,5,000,5,000,Debit,Credit,Cash,Adjusting Entries for“Prepaid Expenses”,LO 5 Prepare adjusting entries for deferrals.,财务会计,Example(Depreciation):On Oct.2nd,Pioneer Advertising paid$5,000 for office equipment that has an expected useful life of 10 years.Show the adjusting journal entry required at Oct.31st.The equipment has a$200 salvage value.($5,000-$200 salvage value/5 yrs/12 months=$40),Accumulated depreciation-office equipment,40,Depreciation expense,40,Jan.31,Debit,Credit,Depreciation Expense,40,40,Debit,Credit,Accumulated Depreciation,40,Adjusting Entries for“Prepaid Expenses”,LO 5 Prepare adjusting entries for deferrals.,财务会计,Depreciation(Statement Presentation)Accumulated Depreciationis a contra asset account.Appears just after the account it offsets(Equipment)on the balance sheet.,Adjusting Entries for“Prepaid Expenses”,LO 5 Prepare adjusting entries for deferrals.,Office equipment$5,000Less:Accumulated depreciation-Office Equipment 40$4,960,财务会计,Receipt of cash that is recorded as a liability because the revenue has not been earned.,Adjusting Entries for“Unearned Revenues”,rentmagazine subscriptionscustomer deposits for future service,Cash Receipt,Revenue Recorded,BEFORE,sale of airline ticketsschool tuition,Unearned revenues often occur in regard to:,LO 5 Prepare adjusting entries for deferrals.,财务会计,Unearned RevenuesCompany makes an adjusting entry to record the revenue that has been earned and to show the liability that remains.The adjusting entry for unearned revenues results in a decrease(a debit)to a liability account and an increase(a credit)to a revenue account.,LO 5 Prepare adjusting entries for deferrals.,Adjusting Entries for“Unearned Revenues”,财务会计,LO 5 Prepare adjusting entries for deferrals.,Illustration 3-10Adjusting entries for unearned revenues,Decrease(a debit)to a liability account and Increase(a credit)to a revenue account.,Adjusting Entries for“Unearned Revenues”,财务会计,Example:On Oct.2nd,Pioneer Advertising received$1,200 from R.Knox for services to be completed by December 31.Show the journal entry to record the receipt on Oct 2nd.,Unearned Revenue,1,200,Cash,1,200,Oct.2,Debit,Credit,Cash,1,200,1,200,Debit,Credit,Unearned Revenue,Adjusting Entries for“Unearned Revenues”,LO 5 Prepare adjusting entries for deferrals.,财务会计,Example:On Oct.2nd,Pioneer Advertising received$1,200 from R.Knox for services to be completed by December 31.Show the adjusting journal entry required on Oct.31st.,Service Revenue,400,Unearned Revenue,400,Oct.31,Debit,Credit,Service Revenue,400,1,200,Debit,Credit,Unearned Revenue,400,800,Adjusting Entries for“Unearned Revenues”,LO 5 Prepare adjusting entries for deferrals.,财务会计,Made to record:Revenues earned and Expenses incurred in the current accounting period that have not been recognized through daily entries.,Adjusting Entries for Accruals,LO 6 Prepare adjusting entries for accruals.,财务会计,Revenues earned but not yet received in cash or recorded at the statement date.,Adjusting Entries for“Accrued Revenues”,interestrentservices performed,BEFORE,Accrued revenues often occur in regard to:,Cash Receipt,Revenue Recorded,Adjusting entry results in:,LO 6 Prepare adjusting entries for accruals.,财务会计,Accrued RevenuesAn adjusting entry serves two purposes:(1)It shows the receivable that exists at the balance sheet date,and(2)It records the revenues earned during the period.,Adjusting Entries for“Accrued Revenues”,LO 6 Prepare adjusting entries for accruals.,财务会计,Illustration 3-13Adjusting entries for accrued revenues,Increases(debits)an asset account and Increases(credits)a revenue account.,LO 6 Prepare adjusting entries for accruals.,Adjusting Entries for“Accrued Revenues”,财务会计,Example:In October Pioneer Advertising earned$200 for advertising services that have not been recorded.Show the journal entry to record the accrued revenues in October.,Service Revenue,200,Accounts Receivable,200,Oct.31,LO 6 Prepare adjusting entries for accruals.,Debit,Credit,Accounts Receivable,200,200,Debit,Credit,Service Revenue,Adjusting Entries for“Accrued Revenues”,财务会计,Expenses incurred but not yet paid in cash or recorded at the statement date.,Adjusting Entries for“Accrued Expenses”,interestrent,BEFORE,Accrued expenses often occur in regard to:,Cash Payment,Expense Recorded,taxessalaries,Adjusting entry results in:,LO 6 Prepare adjusting entries for accruals.,财务会计,Accrued ExpensesAn adjusting entry serves two purposes:(1)It records the obligations that exist at the balance sheet date,and(2)It recognizes the expenses of the current accounting period.,Adjusting Entries for“Accrued Expenses”,LO 6 Prepare adjusting entries for accruals.,财务会计,Illustration 3-16Adjusting entries for accrued expenses,Increases(debits)an expense account and Increases(credits)a liability account.,LO 6 Prepare adjusting entries for accruals.,Adjusting Entries for“Accrued Expenses”,财务会计,Notes payable,5,000,Cash,5,000,Oct.1,Debit,Credit,Cash,5,000,5,000,Debit,Credit,Notes Payable,Example:On Oct 1st,Pioneer Advertising signed a$5000,3-month note payable at a rate of 12%per year.The total interest due on the note at its due date is$150($5,000 X 12%X 3/12).Show the journal entry to record the borrowing on Oct.1st.,Adjusting Entries for“Accrued Expenses”,LO 6 Prepare adjusting entries for accruals.,财务会计,Example:On Oct 1st,Pioneer Advertising signed a$5000,3-month note payable at a rate of 12%per year.The total interest due on the note at its due date is$150($5,000 x 12%/12 months).Show the adjusting journal entry required on Oct.31st.,Interest payable,50,Interest expense,50,Oct.31,Debit,Credit,Interest Expense,50,50,Debit,Credit,Interest Payable,Adjusting Entries for“Accrued Expenses”,LO 6 Prepare adjusting entries for accruals.,财务会计,Accrued ExpensesAn adjusting entry serves two purposes:(1)It records the obligations,and(2)it recognizes the expenses.,Adjusting Entries for“Accrued Expenses”,LO 6 Prepare adjusting entries for accruals.,财务会计,After all adjusting entries are journalized and posted the company prepares another trial balance from the ledger accounts(Adjusted Trial Balance).Its purpose is to prove the equality of debit balances and credit balances in the ledger.,The Adjusted Trial Balance,LO 7 Describe the nature and purpose of an adjusted trial balance.,财务会计,Which of the following statements is incorrect concerning the adjusted trial balance?An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made.The adjusted trial balance provides the primary basis for the preparation of financial statements.The adjusted trial balance lists the account balances segregated by assets and liabilities.The adjusted trial balance is prepared after the adjusting entries have been journalized and posted.,Review,Timing Issues,LO 7 Describe the nature and purpose of an adjusted trial balance.,财务会计,Financial Statements are prepared directly from the Adjusted Trial Balance.,Balance Sheet,Income Statement,Statement of Cash Flows,Retained Earnings Statement,Preparing Financial Statements,LO 7 Describe the nature and purpose of an adjusted trial balance.,财务会计,Income Statement,Preparing Financial Statements,LO 7 Describe the nature and purpose of an adjusted trial balance.,财务会计,Retained Earnings Statement,Preparing Financial Statements,LO 7 Describe the nature and purpose of an adjusted trial balance.,财务会计,Balance Sheet,Preparing Financial Statements,LO 7 Describe the nature and purpose of an adjusted trial balance.,
