财务会计(英文版·原书第版)ch.ppt

CHAPTER3,ADJUSTINGTHEACCOUNTS,FinancialAccounting,SixthEdition,Explainthetimeperiodassumption.Explaintheaccrualbasisofaccounting.Explainthereasonsforadjustingentries.Identifythemajortypesofadjustingentries.Prepareadjustingentriesfordeferrals.Prepareadjustingentriesforaccruals.Describethenatureandpurposeofanadjustedtrialbalance.,StudyObjectives,AdjustingtheAccounts,TimingIssues,TheBasicsofAdjustingEntries,TheAdjustedTrialBalanceandFinancialStatements,TimeperiodassumptionFiscalandcalendaryearsAccrual-vs.cash-basisaccountingRecognizingrevenuesandexpenses,TypesofadjustingentriesAdjustingentriesfordeferralsAdjustingentriesforaccrualsSummaryofjournalizingandposting,PreparingtheadjustedtrialbalancePreparingfinancialstatements,Generallyamonth,aquarter,orayear.Fiscalyearvs.calendaryearAlsoknownasthe“PeriodicityAssumption”,TimingIssues,Accountantsdividetheeconomiclifeofabusinessintoartificialtimeperiods(TimePeriodAssumption).,LO1Explainthetimeperiodassumption.,Jan.,Feb.,Mar.,Apr.,Dec.,.,Thetimeperiodassumptionstatesthat:,a.revenueshouldberecognizedintheaccountingperiodinwhichitisearned.b.expensesshouldbematchedwithrevenues.c.theeconomiclifeofabusinesscanbedividedintoartificialtimeperiods.d.thefiscalyearshouldcorrespondwiththecalendaryear.,Review,TimingIssues,LO1Explainthetimeperiodassumption.,Accrual-BasisAccountingTransactionsrecordedintheperiodsinwhichtheeventsoccur.Revenuesarerecognizedwhenearned,ratherthanwhencashisreceived.Expensesarerecognizedwhenincurred,ratherthanwhenpaid.,TimingIssues,Accrual-vs.Cash-BasisAccounting,LO2Explaintheaccrualbasisofaccounting.,Cash-BasisAccountingRevenuesarerecognizedwhencashisreceived.Expensesarerecognizedwhencashispaid.Cash-basisaccountingisnotinaccordancewithgenerallyacceptedaccountingprinciples(GAAP).,TimingIssues,Accrual-vs.Cash-BasisAccounting,LO2Explaintheaccrualbasisofaccounting.,RevenueRecognitionPrinciple,TimingIssues,RecognizingRevenuesandExpenses,LO2Explaintheaccrualbasisofaccounting.,Companiesrecognizerevenueintheaccountingperiodinwhichitisearned.Inaserviceenterprise,revenueisconsideredtobeearnedatthetimetheserviceisperformed.,MatchingPrinciple,TimingIssues,RecognizingRevenuesandExpenses,LO2Explaintheaccrualbasisofaccounting.,Matchexpenseswithrevenuesintheperiodwhenthecompanymakeseffortstogeneratethoserevenues.“Lettheexpensesfollowtherevenues.”,TimingIssues,LO2Explaintheaccrualbasisofaccounting.,GAAPrelationshipsinrevenueandexpenserecognition,Illustration3-1,Oneofthefollowingstatementsabouttheaccrualbasisofaccountingisfalse.Thatstatementis:Eventsthatchangeacompanysfinancialstatementsarerecordedintheperiodsinwhichtheeventsoccur.Revenueisrecognizedintheperiodinwhichitisearned.Theaccrualbasisisinaccordancewithgenerallyacceptedaccountingprinciples.Revenueisrecordedonlywhencashisreceived,andexpenseisrecordedonlywhencashispaid.,Review,TimingIssues,LO2Explaintheaccrualbasisofaccounting.,Adjustingentriesmakeitpossibletoreportcorrectamountsonthebalancesheetandontheincomestatement.Acompanymustmakeadjustingentrieseverytimeitpreparesfinancialstatements.,TheBasicsofAdjustingEntries,LO3Explainthereasonsforadjustingentries.,Revenues-recordedintheperiodinwhichtheyareearned.Expenses-recognizedintheperiodinwhichtheyareincurred.Adjustingentries-neededtoensurethattherevenuerecognitionandmatchingprinciplesarefollowed.,TheBasicsofAdjustingEntries,LO3Explainthereasonsforadjustingentries.,Adjustingentriesaremadetoensurethat:a.expensesarerecognizedintheperiodinwhichtheyareincurred.b.revenuesarerecordedintheperiodinwhichtheyareearned.c.balancesheetandincomestatementaccountshavecorrectbalancesattheendofanaccountingperiod.d.alloftheabove.,Review,TimingIssues,LO3Explainthereasonsforadjustingentries.,TypesofAdjustingEntries,DeferralsPrepaidExpenses.Expensespaidincashandrecordedasassetsbeforetheyareusedorconsumed.UnearnedRevenues.Cashreceivedandrecordedasliabilitiesbeforerevenueisearned.AccrualsAccruedRevenues.Revenuesearnedbutnotyetreceivedincashorrecorded.AccruedExpenses.Expensesincurredbutnotyetpaidincashorrecorded.,LO4Identifythemajortypesofadjustingentries.,TrialBalanceEachaccountisanalyzedtodeterminewhetheritiscompleteandup-to-date.,TrialBalance,LO4Identifythemajortypesofadjustingentries.,Deferralsareeither:PrepaidexpensesorUnearnedrevenues.,AdjustingEntriesforDeferrals,LO5Prepareadjustingentriesfordeferrals.,Paymentofcash,thatisrecordedasanassetbecauseserviceorbenefitwillbereceivedinthefuture.,AdjustingEntriesfor“PrepaidExpenses”,insurancesuppliesAdvertisingrent,CashPayment,ExpenseRecorded,BEFORE,LO5Prepareadjustingentriesfordeferrals.,Prepaymentsoftenoccurinregardto:,buildingpurchasesequipmentpurchases,PrepaidExpensesCoststhatexpireeitherwiththepassageoftimeorthroughuse.Adjustingentries(1)torecordtheexpensesthatapplytothecurrentaccountingperiod,and(2)toshowtheunexpiredcostsintheassetaccounts.,AdjustingEntriesfor“PrepaidExpenses”,LO5Prepareadjustingentriesfordeferrals.,AdjustingEntriesfor“PrepaidExpenses”,LO5Prepareadjustingentriesfordeferrals.,Illustration3-4Adjustingentriesforprepaidexpenses,Increases(debits)anexpenseaccountandDecreases(credits)anassetaccount.,Example(Insurance):OnOct.4th,PioneerAdvertisingpaid$600foraone-yearfireinsurancepolicy.ShowthejournalentrytorecordthepaymentonOct4th.,Cash,600,Prepaidinsurance,600,Oct.4,Debit,Credit,PrepaidInsurance,600,600,Debit,Credit,Cash,AdjustingEntriesfor“PrepaidExpenses”,LO5Prepareadjustingentriesfordeferrals.,Example(Insurance):OnOct.4th,PioneerAdvertisingpaid$600foraone-yearfireinsurancepolicy.ShowtheadjustingjournalentryrequiredatOct.31st.,Prepaidinsurance,50,Insuranceexpense,50,Oct.31,Debit,Credit,PrepaidInsurance,600,50,Debit,Credit,InsuranceExpense,50,550,AdjustingEntriesfor“PrepaidExpenses”,LO5Prepareadjustingentriesfordeferrals.,DepreciationBuildings,equipment,andvehicles(long-livedassets)arerecordedasassets,ratherthananexpense,intheyearacquired.Companiesreportaportionofthecostofalong-livedassetasanexpense(depreciation)duringeachperiodoftheassetsusefullife(MatchingPrinciple).,AdjustingEntriesfor“PrepaidExpenses”,LO5Prepareadjustingentriesfordeferrals.,Example(Depreciation):OnOct.2nd,PioneerAdvertisingpaid$5,000forofficeequipmentthathasanexpectedusefullifeof10years.ShowthejournalentrytorecordthepurchaseoftheequipmentonOct.2nd.,Cash,5,000,Equipment,5,000,Oct.2,Debit,Credit,Equipment,5,000,5,000,Debit,Credit,Cash,AdjustingEntriesfor“PrepaidExpenses”,LO5Prepareadjustingentriesfordeferrals.,Example(Depreciation):OnOct.2nd,PioneerAdvertisingpaid$5,000forofficeequipmentthathasanexpectedusefullifeof10years.ShowtheadjustingjournalentryrequiredatOct.31st.Theequipmenthasa$200salvagevalue.($5,000-$200salvagevalue/5yrs/12months=$40),Accumulateddepreciation-officeequipment,40,Depreciationexpense,40,Jan.31,Debit,Credit,DepreciationExpense,40,40,Debit,Credit,AccumulatedDepreciation,40,AdjustingEntriesfor“PrepaidExpenses”,LO5Prepareadjustingentriesfordeferrals.,Depreciation(StatementPresentation)AccumulatedDepreciationisacontraassetaccount.Appearsjustaftertheaccountitoffsets(Equipment)onthebalancesheet.,AdjustingEntriesfor“PrepaidExpenses”,LO5Prepareadjustingentriesfordeferrals.,Officeequipment$5,000Less:Accumulateddepreciation-OfficeEquipment40$4,960,Receiptofcashthatisrecordedasaliabilitybecausetherevenuehasnotbeenearned.,AdjustingEntriesfor“UnearnedRevenues”,rentmagazinesubscriptionscustomerdepositsforfutureservice,CashReceipt,RevenueRecorded,BEFORE,saleofairlineticketsschooltuition,Unearnedrevenuesoftenoccurinregardto:,LO5Prepareadjustingentriesfordeferrals.,UnearnedRevenuesCompanymakesanadjustingentrytorecordtherevenuethathasbeenearnedandtoshowtheliabilitythatremains.Theadjustingentryforunearnedrevenuesresultsinadecrease(adebit)toaliabilityaccountandanincrease(acredit)toarevenueaccount.,LO5Prepareadjustingentriesfordeferrals.,AdjustingEntriesfor“UnearnedRevenues”,LO5Prepareadjustingentriesfordeferrals.,Illustration3-10Adjustingentriesforunearnedrevenues,Decrease(adebit)toaliabilityaccountandIncrease(acredit)toarevenueaccount.,AdjustingEntriesfor“UnearnedRevenues”,Example:OnOct.2nd,PioneerAdvertisingreceived$1,200fromR.KnoxforservicestobecompletedbyDecember31.ShowthejournalentrytorecordthereceiptonOct2nd.,UnearnedRevenue,1,200,Cash,1,200,Oct.2,Debit,Credit,Cash,1,200,1,200,Debit,Credit,UnearnedRevenue,AdjustingEntriesfor“UnearnedRevenues”,LO5Prepareadjustingentriesfordeferrals.,Example:OnOct.2nd,PioneerAdvertisingreceived$1,200fromR.KnoxforservicestobecompletedbyDecember31.ShowtheadjustingjournalentryrequiredonOct.31st.,ServiceRevenue,400,UnearnedRevenue,400,Oct.31,Debit,Credit,ServiceRevenue,400,1,200,Debit,Credit,UnearnedRevenue,400,800,AdjustingEntriesfor“UnearnedRevenues”,LO5Prepareadjustingentriesfordeferrals.,Madetorecord:RevenuesearnedandExpensesincurredinthecurrentaccountingperiodthathavenotbeenrecognizedthroughdailyentries.,AdjustingEntriesforAccruals,LO6Prepareadjustingentriesforaccruals.,Revenuesearnedbutnotyetreceivedincashorrecordedatthestatementdate.,AdjustingEntriesfor“AccruedRevenues”,interestrentservicesperformed,BEFORE,Accruedrevenuesoftenoccurinregardto:,CashReceipt,RevenueRecorded,Adjustingentryresultsin:,LO6Prepareadjustingentriesforaccruals.,AccruedRevenuesAnadjustingentryservestwopurposes:(1)Itshowsthereceivablethatexistsatthebalancesheetdate,and(2)Itrecordstherevenuesearnedduringtheperiod.,AdjustingEntriesfor“AccruedRevenues”,LO6Prepareadjustingentriesforaccruals.,Illustration3-13Adjustingentriesforaccruedrevenues,Increases(debits)anassetaccountandIncreases(credits)arevenueaccount.,LO6Prepareadjustingentriesforaccruals.,AdjustingEntriesfor“AccruedRevenues”,Example:InOctoberPioneerAdvertisingearned$200foradvertisingservicesthathavenotbeenrecorded.ShowthejournalentrytorecordtheaccruedrevenuesinOctober.,ServiceRevenue,200,AccountsReceivable,200,Oct.31,LO6Prepareadjustingentriesforaccruals.,Debit,Credit,AccountsReceivable,200,200,Debit,Credit,ServiceRevenue,AdjustingEntriesfor“AccruedRevenues”,Expensesincurredbutnotyetpaidincashorrecordedatthestatementdate.,AdjustingEntriesfor“AccruedExpenses”,interestrent,BEFORE,Accruedexpensesoftenoccurinregardto:,CashPayment,ExpenseRecorded,taxessalaries,Adjustingentryresultsin:,LO6Prepareadjustingentriesforaccruals.,AccruedExpensesAnadjustingentryservestwopurposes:(1)Itrecordstheobligationsthatexistatthebalancesheetdate,and(2)Itrecognizestheexpensesofthecurrentaccountingperiod.,AdjustingEntriesfor“AccruedExpenses”,LO6Prepareadjustingentriesforaccruals.,Illustration3-16Adjustingentriesforaccruedexpenses,Increases(debits)anexpenseaccountandIncreases(credits)aliabilityaccount.,LO6Prepareadjustingentriesforaccruals.,AdjustingEntriesfor“AccruedExpenses”,Notespayable,5,000,Cash,5,000,Oct.1,Debit,Credit,Cash,5,000,5,000,Debit,Credit,NotesPayable,Example:OnOct1st,PioneerAdvertisingsigneda$5000,3-monthnotepayableatarateof12%peryear.Thetotalinterestdueonthenoteatitsduedateis$150($5,000X12%X3/12).ShowthejournalentrytorecordtheborrowingonOct.1st.,AdjustingEntriesfor“AccruedExpenses”,LO6Prepareadjustingentriesforaccruals.,Example:OnOct1st,PioneerAdvertisingsigneda$5000,3-monthnotepayableatarateof12%peryear.Thetotalinterestdueonthenoteatitsduedateis$150($5,000 x12%/12months).ShowtheadjustingjournalentryrequiredonOct.31st.,Interestpayable,50,Interestexpense,50,Oct.31,Debit,Credit,InterestExpense,50,50,Debit,Credit,InterestPayable,AdjustingEntriesfor“AccruedExpenses”,LO6Prepareadjustingentriesforaccruals.,AccruedExpensesAnadjustingentryservestwopurposes:(1)Itrecordstheobligations,and(2)itrecognizestheexpenses.,AdjustingEntriesfor“AccruedExpenses”,LO6Prepareadjustingentriesforaccruals.,Afteralladjustingentriesarejournalizedandpostedthecompanypreparesanothertrialbalancefromtheledgeraccounts(AdjustedTrialBalance).Itspurposeistoprovetheequalityofdebitbalancesandcreditbalancesintheledger.,TheAdjustedTrialBalance,LO7Describethenatureandpurposeofanadjustedtrialbalance.,Whichofthefollowingstatementsisincorrectconcerningtheadjustedtrialbalance?Anadjustedtrialbalanceprovestheequalityofthetotaldebitbalancesandthetotalcreditbalancesintheledgerafteralladjustmentsaremade.Theadjustedtrialbalanceprovidestheprimarybasisforthepreparation