财务会计专业英语-(3)

©2009TheMcGraw-HillCompanies,Inc.,AllRightsReservedADJUSTINGACCOUNTSANDPREPARINGFINANCIALSTATEMENTSChapter3McGraw-Hill/IrwinSlide2McGraw-Hill/IrwinSlide21234567891011121234Annually12MonthlyQuarterlySemiannuallyTHEACCOUNTINGPERIODJanFebMarAprMayJunJulAugSepOctNovDecC1McGraw-Hill/IrwinSlide3McGraw-Hill/IrwinSlide3AccountingACCRUALBASISVS.CASHBASISAccrualBasisRevenuesarerecognizedwhenearnedandexpensesarerecognizedwhenincurred.CashBasisRevenuesarerecognizedwhencashisreceivedandexpensesrecordedwhencashispaid.NotGAAPC2McGraw-Hill/IrwinSlide4McGraw-Hill/IrwinSlide4ACCRUALBASISVS.CASHBASISExample:FastForwardpaid$2,400fora24-monthinsurancepolicybeginningDecember1,2009.Onthecashbasistheentire$2,400wouldberecognizedasinsuranceexpensein2009.Noinsuranceexpensefromthispolicywouldberecognizedin2010or2011,periodscoveredbythepolicy.JanFebMarApr-$-$-$-$MayJunJulAug-$-$-$-$SepOctNovDec-$-$-$2,400$InsuranceExpense2009C2McGraw-Hill/IrwinSlide5McGraw-Hill/IrwinSlide5ACCRUALBASISVS.CASHBASISJanFebMarApr-$-$-$-$MayJunJulAug-$-$-$-$SepOctNovDec-$-$-$100$JanFebMarApr100$100$100$100$MayJunJulAug100$100$100$100$SepOctNovDec100$100$100$100$JanFebMarApr100$100$100$100$MayJunJulAug100$100$100$100$SepOctNovDec100$100$100$-$InsuranceExpense2009InsuranceExpense2010InsuranceExpense2011Ontheaccrualbasis$100ofinsuranceexpenseisrecognizedin2009,$1,200in2010,and$1,100in2011.Theexpenseismatchedwiththeperiodsbenefitedbytheinsurancecoverage.C2McGraw-Hill/IrwinSlide6McGraw-Hill/IrwinSlide6Wehavedeliveredtheproducttoourcustomer,soIthinkweshouldrecordtherevenueearned.RECOGNIZINGREVENUES&EXPENSESRevenueRecognitionPrincipleC2McGraw-Hill/IrwinSlide7McGraw-Hill/IrwinSlide7RECOGNIZINGREVENUES&EXPENSESRevenueRecognitionPrincipleMatchingPrincipleSummaryofExpensesRentGasolineAdvertisingSalariesUtilitiesand....$1,0005002,0003,000450....Nowthatwehaverecognizedtherevenue,let’sseewhatexpensesweincurredtogeneratethatrevenue.C2McGraw-Hill/IrwinSlide8McGraw-Hill/IrwinSlide8Anadjustingentryisrecordedtobringanassetorliabilityaccountbalancetoitsproperamount.ADJUSTINGACCOUNTSPrepaid(Deferred)expenses*Unearned(Deferred)revenuesAccruedexpenseAccruedrevenuesFrameworkforAdjustments*includingdepreciationPaid(orreceived)cashbeforeexpense(orrevenue)recognizedPaid(orreceived)cashafterexpense(orrevenue)recognizedAdjustmentsC3McGraw-Hill/IrwinSlide9McGraw-Hill/IrwinSlide9Hereisthecheckformy24-monthinsurancepolicy.PREPAID(DEFERRED)EXPENSESResourcespaidforpriortoreceivingtheactualbenefits.AssetExpenseUnadjustedBalanceCreditAdjustmentDebitAdjustmentP1McGraw-Hill/IrwinSlide10McGraw-Hill/IrwinSlide10PREPAIDINSURANCEOn12/1/09,FastForwardpaid$2,400forinsurancefor2-years(24-months,December2009throughNovember2011).FastForwardrecordedtheexpenditureasPrepaidInsuranceon12/31/09.Whatadjustmentisrequired?Dec.31InsuranceExpense100PrepaidInsurance100Torecordfirstmonth'sexpiredinsuranceDec.12,400Dec.31100Bal.2,300PrepaidInsurance637Dec.31100InsuranceExpense128P1McGraw-Hill/IrwinSlide11McGraw-Hill/IrwinSlide11SUPPLIESDuring2009,FastForwardpurchased$9,720ofsupplies.FastForwardrecordedtheexpendituresintheassetaccount,“Supplies.”OnDecember31,2009,acountofthesuppliesindicated$8,670onhand,so$1,050ofsupplieswereusedduringDecember.Whatadjustmentisrequired?Dec.31SuppliesExpense1,050Supplies1,050Torecordsuppliesusedduring2009Bought9,720Dec.311,050Bal.8,670Supplies126Dec.311,050SuppliesExpense652P1McGraw-Hill/IrwinSlide12McGraw-Hill/IrwinSlide12OTHERPREPAIDEXPENSES1.Otherprepaidexpenses,suchasPrepaidRent,areaccountedforexactlyasInsuranceandSupplies.2.Weshouldnotethatsomeprepaidexpensesarebothpaidforandfullyusedupwithinasingleperiod.3.Forexample,acompanymaypaymonthlyrentonthefirstdayofeachmonth.Thispaymentcreatesaprepaidexpenseonthefirstdayofthemonththatfullyexpiresbytheendofthemonth.4.Inthesespecialcases,wecanrecordthecashpaidwithadebittotheexpenseaccountinsteadofanassetaccount.P1McGraw-Hill/IrwinSlide13McGraw-Hill/IrwinSlide13Straight-LineDepreciationExpense=AssetCost-SalvageValueUsefulLifeDEPRECIATIONDepreciationistheprocessofallocatingthecostofaplantassetoveritsusefullifeinasystematicandrationalmanner.P1McGraw-Hill/IrwinSlide14McGraw-Hill/IrwinSlide14DEPRECIATIONOnDecember1,2009,FastForwardpurchasedequipmentfor$26,000cash.Theequipmenthasanestimatedusefullifeoffouryears(48months)andFastForwardexpectstoselltheequipmentattheendofitslifefor$8,000cash.Let’srecorddepreciationexpenseforthemonthendedDecember31,2009.Dec.2009DepreciationExpense=$26,000-$8,00048months=$375permonthP1McGraw-Hill/IrwinSlide15McGraw-Hill/IrwinSlide15Dr.Cr.Dec.31DepreciationExpense375AccumulatedDepreciation-Equipment375TorecordmonthlyequipmentdepreciationAccumulateddepreciationisacontraassetaccount.DEPRECIATIONOnDecember1,2009,FastForwardpurchasedequipmentfor$26,000cash.Theequipmenthasanestimatedusefullifeoffouryears(48months)andFastForwardexpectstoselltheequipmentattheendofitslifefor$8,000cash.Let’srecorddepreciationexpenseforthemonthendedDecember31,2009.P1McGraw-Hill/IrwinSlide16McGraw-Hill/IrwinSlide16EquipmentDepreciationExpense1/12