会计英语unit10 Revenue, Expense Profit

Unit10Revenue,Expense&ProfitⅠRevenueRevenuesarecashinflowsorotherenhancementsofassetsofanentityorsettlementofitsliabilitiesoracombinationofbothinthenormaloperationofbusinessactivities.Thoseinflowsresultinincreasesinequity,otherthanincreasesrelatingtocontributionsfromequityparticipants.2Revenueincludesonlythegrossinflowsofeconomicbenefitsreceivedandreceivablebytheentityonitsownaccount.Amountscollectedonbehalfofthirdpartiessuchassalestaxes,goodsandservicestaxesandvalueaddedtaxesarenoteconomicbenefitswhichflowtotheentityanddonotresultinincreasesinequity.Theyareexcludedfromrevenue.3RecognitionofrevenueRevenueRecognitionPrinciple:Revenuesarerecognizedwhentheyarerealizedorrealizable,andareearned(usuallywhengoodsaretransferredorservicesrendered),nomatterwhencashisreceivedAmount:Revenueshallbemeasuredatthefairvalueoftheconsiderationreceivedorreceivable4SaleofgoodsRevenuefromthesaleofgoodsshallberecognizedwhenallthefollowingconditionshavebeensatisfied:(a)theentityhastransferredtothebuyerthesignificantrisksandrewardsofownershipofthegoods;(b)theentityretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwithownershipnoreffectivecontroloverthegoodssold;(c)theamountofrevenuecanbemeasuredreliably;(d)itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheentity;and(e)thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably.5Revenuefromsaleofgoods(1)CashsaleDr.CashCr.Salesrevenue6Dr.AccountsReceivableCr.Salesrevenue(2)CreditsaleDr.CashSalesDiscountCr.AccountsReceivable7(2)CreditsaleDr.BadDebtExpenseCr.ProvisionforBadDebts8RenderingofservicesRevenuefromservicesmayberecognizedwhentheserviceisactuallycompleted.Whentheoutcomeofatransactioninvolvingtherenderingofservicescanbeestimatedreliably,revenueassociatedwiththetransactionshallberecognizedbyreferencetothestageofcompletionofthetransactionattheendofthereportingperiod.Whentheoutcomeofthetransactioninvolvingtherenderingofservicescannotbeestimatedreliably,revenueshallberecognizedonlytotheextentoftheexpensesrecognizedthatarerecoverable.9Theoutcomeofatransactioncanbeestimatedreliablywhenallthefollowingconditionsaresatisfied:(a)theamountofrevenuecanbemeasuredreliably;(b)itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheentity;(c)thestageofcompletionofthetransactionattheendofthereportingperiodcanbemeasuredreliably;and(d)thecostsincurredforthetransactionandthecoststocompletethetransactioncanbemeasuredreliably.10RevenuefromserviceDr.CashCr.ServiceRevenue11Interest,royaltiesanddividendsRevenuearisingfromtheusebyothersofentityassetsyieldinginterest,royaltiesanddividendsshallberecognizedwhen:(a)itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheentity;and(b)theamountoftherevenuecanbemeasuredreliably.12Interestsanddividendsshouldberecognizedoncetheyaredeclaredoraccrued.Dr.Interest/DividendReceivableCr.InvestmentIncome13ⅡExpenseExpensesaredecreasesineconomicbenefitsduringtheaccountingperiodintheformofoutflowsordepletionsofassetsorincurrenceofliabilitiesthatresultindecreasesinequity,otherthanthoserelatingtodistributionstoequityparticipants.14RecognitionofExpense(1)MatchingPrinciple(2)Allocation(3)ImmediateRecognition15(1)MatchingPrincipleThematchingprincipleallowsbetterevaluationofactualprofitabilityandperformance(showshowmuchwasspenttoearnrevenue),andreducesnoisefromtimingmismatchbetweenwhencostsareincurredandwhenrevenueisrealized.Somecostscanbedirectlytracedtotherevenuethey’vecontributedtoyield.Matchingprincipledictatesexpensesmatchrevenuestheyhelptoproducedinthesameperiod.Forexample,broker’sfeeandrawmaterials.16(2)AllocationIfthereisnoclearcause-and-effectlinkbetweencostandrevenue,theallocationruleisagoodchoicebecauseitapportionstotalexpensestobenefitingyearstomatchtheexpensesandrevenues.Forexample,depreciation.17(3)ImmediateRecognitionSomeothercostscannotberelatedtoanyproductionofrevenue,neitherdotheybenefitfutureperiods.Forthesetypesofcosts,immediaterecognitionisemployed.Forexample,Dismisswelfare.18ClassificationofExpenses(1)OperatingExpenses(2)General&AdministrativeExpenses(3)FinancialExpenses19(1)OperatingExpensesOperatingexpensesgenerally,consistsoftransportation,insurance,rent,advertising,salesservices,salariespaidtoemployees,etc.OperatingExpensesaccountshouldbesetup.Thedebitsiderecordsoccurredorpaidoperatingexpense.Itisatemporaryaccountwhichshouldbeclearedattheendofeachaccountingperiod.20Inarealestatecontext,operatingexpensesarecostsassociatedwiththeoperationandmaintenanceofanincomeproducingproperty.OperatingexpensesincludeLicensefees,maintenanceandrepairs,suchassnowremoval,trashremoval,janitorialservice,pestcontrol,andlawncareAdvertising,officeexpenses,supplies,attorneyfeesandlegalfees,utilities,suchastelephoneInsurance,propertymanagement,includingaresidentmanagerPropertytaxes,travelandvehicleexpenses21ExampleAshlandIncorporatedpaidincash$10,000foradvertisement.Dr.Operatingexpenses—Advertising10,000Cr.Cash10,00022(2)General&Admin