专业英语会计学Chap005.ppt

1、,THE ACCOUNTING CYCLE: REPORTING FINANCIAL RESULTS,Chapter5,Learning objectives,Limitation of income statement Closing entry Last three accounting cycle steps Profitability and liquidity,Net income also appears on the Statement of Retained Earnings.,This statement summarizes the increases and decrea

2、ses in Retained Earnings during the period.,Statement of Retained Earnings,Now, lets prepare the Balance Sheet.,Next, lets prepare the Statement of Cash Flows for JJs Lawn Care Service for May.,Notes to the Financial Statements,Examples of Items Disclosed Lawsuits pending Scheduled plant closings Go

3、vernmental investigations Significant events occurring after the balance sheet date Specific customers that account for a large portion of revenue Unusual transactions and related party transactions,Drafting Notes to the Financial Statements,Closing the Temporary Equity Accounts,Close Revenue accoun

4、ts to Income Summary. Close Expense accounts to Income Summary. Close Income Summary account to Retained Earnings. Close Dividends to Retained Earnings.,The closing process gets the temporary accounts ready for the next accounting period.,Lets prepare the closing entries for JJs Lawn Care Service.,C

5、losing the Temporary Equity Accounts,Since Sales Revenue has a credit balance, the closing entry requires a debit to the Sales Revenue account.,Closing Entries for Revenue Accounts,Closing Entries for Revenue Accounts,Since expense accounts have a debit balance, the closing entry requires a credit t

6、o the expense accounts.,Closing Entries for Expense Accounts,Closing Entries for Expense Accounts,Net Income,Since Income Summary has a $400 credit balance, the closing entry requires a debit to Income Summary.,Closing the Income Summary Account,Closing the Income Summary Account,Since the Dividends

7、 account has a debit balance, the closing entry requires a credit to the Dividends account.,Closing the Dividends Account,Closing the Dividends Account,After all closing entries are made, JJs After-Closing Trial Balance looks like this.,Evaluating the Business,Evaluating the Business,Monthly,Quarter

8、ly,Jan. 1,Dec. 31,Annually,Many companies prepare financial statements at various points throughout the year.,Interim Financial Statements,Preparing Financial Statements Covering Different Periods of Time,Case 5.2 Adequate Disclosure,Listed below are five items that may-or may not-require disclosure

9、 in the notes that accompany financial statements. A, Mandella Construction Co. uses the percentage-of-completion method to recognize revenue on long-term construction contracts. This is one of two acceptable methods of accounting for such projects. Over the life of the project, both methods produce

10、 the same overall results; but the annual results may differ substantially.,Case 5.2,B, One of the most popular artists at Spectaculare Comics is leaving the company and going to work for a competitor. C, Shortly after the balance sheet date, but before the financial statements are issued, one of Co

11、ast Foods two processing plants was damaged by a tornado. The plant will be out of service for at least three months.,Case 5.2,D, The management of Soft Systems believes that the company has developed systems software that will make Windows virtually obsolete. If they are correct, the companys profi

12、ts could increase by 10-fold or more. E, College Property Management (CPM) withheld a $500 security deposit from students who, in violation of their lease, kept a dog in their apartment. The students have sued CPM for this amount in small claims court.,Case 5.2,Instructions For each case, explain what, if any, d