财务基础知识2.pptx

财务基础知识2.pptx

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RecordingBusinessTransactions,LearningObjectives:

Understandthedual-entryrecordingframeworkandDiscusstheaccrualbasisofaccounting,DiscussionSection#2FinancialReportingEWMBA-202LopoMartinez,1,ACCOUNTINGPROCESS,EVENTS,TRANSACTIONS,FINANCIALSTATEMENTS,JOURNAL,LEDGER,DOCUMENTATION,Journalizing,Posting,FINANCIALSTATEMENTS,TheAccuracySummary,TRIALBALANCE,1.Journalizing2.Posting3.Preparingatrialbalance4.Recordingadjustingentries5.Preparingfinancialstatements,2,DebitsandCredits,AccountTitle,Debit,Credit,（Dr.）,（Cr.）,LeftSide,RightSide,Debit（dr.）-anentryorbalanceontheleftsideofanaccountCredit（cr.）-anentryorbalanceontherightsideofanaccount,Onedebit,Onecredit,Eachtransactionisrecordedwithatleast:

Totaldebitsmustequaltotalcredits.,and,DR,CR,3,DebitsandCreditsintheAccounts,=,NetIncome,4,MechanicsofDoubleEntryAccounting,Canyouidentifythetypeoftransactionbelow?

+,-,+,+,+,-,+,-,1,2,3,4,Noticethatineachofthetransactions,theequationbalances（+and-）Noticealsothatthedebitsandcreditsareequalineachtransaction,=,+,Assets,Liabilities,OwnersEquity,DebitforIncreases,CreditforDecreases,Debitfordecreases,Debitfordecreases,CreditforIncreases,CreditforIncreases,5,+,-,5,JournalEntries,Accountantsrecordatransactionbymakingajournalentry.AjournalentryshowsbothsidesofthetransactionwiththenameoftheACCOUNTSandtheirrespectivedebitorcredit.,OnJan2,thefirmissues10,000sharesofcommonstockfor$100,000cashOnJan5,itpays$60,000cashtopurchaseequipment,6,ToyExample,ToystransactionsforJanuary2002areasfollows:

1）Jan2-Thefirmissues10,000sharesofcommonstocksfor$100,000cash.2）Jan5-Pays$60,000cashtopurchaseequipment.3）Jan15-Purchasesmerchandiseinventorycosting$15,000fromsupplieronaccount.4）Jan21-Payssupplierin（3）$8,000oftheamountdue.5）Jan28-Thefirmborrows$30,000fromabank.6）Jan31-Thefirmsreceives$3,000fromacustomerforagoodtobedeliveredinMarch.,7,100,000

（1）,CASH（A）,

（1）100,000,COMMONSTOCK（OE）,Transaction1Assets=Liabs.+OE+100,000（cash）=+100,000（commonstock）,LedgerPostingProcedure-UsingT-Accounts,JournalEntries,T-Accounts,8,

（2）60,000,CASH（A）,

（1）100,00060,000

（2）,EQUIPMENT（A）,Transaction2Assets=Liabs.+OE-60,000（cash）+60,000（equipment）=,LedgerPostingProcedure-UsingT-Accounts,JournalEntries,T-Accounts,9,15,000（3）,INVENTORY（A）,（3）15,000,ACC.PAYABLE（L）,Transaction3Assets=Liabs.+OE+15,000（inventory）=+15,000（acc.payable）,LedgerPostingProcedure-UsingT-Accounts,JournalEntries,T-Accounts,10,（4）8,00015,000（3）,CASH（A）,

（1）100,00060,000

（2）8,000（4）,ACC.PAYABLE（L）,Transaction4Assets=Liabs.+OE-8,000（cash）=-8,000（acc.payable）,LedgerPostingProcedure-UsingT-Accounts,JournalEntries,T-Accounts,11,30,000（5）,CASH（A）,

（1）100,00060,000

（2）（5）30,0008,000（4）,LOANPAYABLE（L）,Transaction5Assets=Liabs.+OE+30,000（cash）=+30,000（loanpayable）,LedgerPostingProcedure-UsingT-Accounts,JournalEntries,T-Accounts,12,3,000（6）,CASH（A）,

（1）100,00060,000

（2）（5）30,0008,000（4）（6）3,000,ADV.CUSTOMERS（L）,Transaction6Assets=Liabs.+OE+3,000（cash）=+3,000（adv.customers）,LedgerPostingProcedure-UsingT-Accounts,JournalEntries,T-Accounts,13,T-AccountsandBalanceSheetasatJan31,2002,

（1）100,00060,000

（2）（5）30,0008,000（4）（6）3,000Bal.65,000,CASH（A）,ADV.CUSTOMERS（L）,LOANPAYABLE（L）,3,000（6）3,000Bal.,30,000（5）30,000Bal.,EQUIPMENT（A）,INVENTORY（A）,（3）15,000Bal.15,000,

（2）60,000Bal.60,000,COMMONSTOCK（OE）,100,000

（1）100,000Bal.,ACC.PAYABLE（L）,（4）8,00015,000（3）7,000Bal.,BalanceSheetASSETSCurrentsAssetsCash65,000Inventory15,000PPEEquipment60,000TotalAssets140,000LIABILITIESANDOECurrentLiabilitiesAccountsPayable7,000AdvfromCustomers3,000Long-termLiabilitiesLoanPayable30,000TotalLiabilities40,000OWNERSEQUITYCommonStock100,000TotalLiabilitiesandOE140,000,14,THETRIALBALANCE,Alistingofallaccountswiththeirrelatedbalances.Ittestswhetherdebitsandcreditsareequal.,CASH（A）65,000INVENTORY（A）15,000EQUIPMENT（A）60,000ACCOUNTSPAYABLE（L）7,000ADVANCESFROMCUSTOMERS（L）3,000LOANPAYABLE（L）30,000COMMONSTOCK（OE）100,000TOTAL140,000140,000,BALANCEACCOUNTTITLESDEBITCREDIT,TRIALBALANCETOYCORPORATIONASATJAN31,2002,15,AccrualBasisVs.CashBasis,AccrualBasisRevenuesarerecognizedwhenearnedandexpensesarerecognizedwhenincurred.,CashBasisRevenuesarerecognizedwhencashisreceivedandexpensesrecordedwhencashispaid.,Intuitiveandeasy.ProvidesinformationontheliquiditySubjecttomanipulation,forexample,thefirmcandelayhavingtorecognizeanexpensebypostponingcashpayment.,Moredifficultconceptually.Providesinformationonlong-termprofitability.Subjecttomanipulationbythechoiceofrecognitionrules,16,RealizationPrinciple,MatchingPrinciple,FundamentalPrinciplesforIncomeMeasurement,TellsuswhentorecognizeRevenues,TellsuswhentorecognizeExpenses,Differenceisnetincome,IncomeMeasurement,Revenuesarerecognizedintheperiodwhentheyarerealized.,Expensesincurredtogainrevenuesarematchedagainstrevenuesinthesameperiodthatrevenuesarerecognized,17,RevenuesRecognition,Whendoestheaccountantrecognizerevenue?

Revenuesarerecognizedwhensomecriticaleventoccurs.Textbook（SW）-Whenbothofthefollowingaremet:

1.Thefirmhasperformedallormostoftheservicesorithasdeliveredthegoods,thatis,ithasearnedtherevenue.2.Thefirmhasreceivedagood,serviceorrightinexchangeandcanreasonablymeasurethevalueofthegood,serviceorright.Apromisetopay（suchasareceivable）isaright.,PurchaseofMerchandise,CollectionofCash,DeliveryofMerchandise,SaleofMerchandise,OperatingProcessforaFirmsAcquisitionandSaleofMerchandise,18,MatchingPrinciple,MatchingCosts（Expenses）AgainstRevenue,FundamentalPrinciplesforIncomeMeasurement,RationalandSystematicDepreciationAmortizationofgoodwill,CauseandEffectCostofgoodssoldInsuranceInterestExpense,ImmediateRecognitionResearch&developmentAdvertisingLosses,19,Anadjustingentryisrecordedtobringanassetorliabilityaccountbalancetoitsproperamount.,Transactionswherecashispaidorreceivedbeforearelatedexpenseorrevenueisrecognized.,AdjustingAccountsattheendoftheAccountingPeriod,Transactionswherecashispaidorreceivedafterarelatedexpenseorrevenueisrecognized.,20,Adjusting-PrepaidExpenses,Resourcespaidforpriortoreceivingtheactualbenefits.,ASSET,EXPENSE,InsuranceExpense,21,Adjusting-AccruedExpensesandPayables,Servicesreceivedbutnotpaid,LIABILITIE,EXPENSE,SalariesExpense,22,Adjusting-AccruedRevenuesandReceivables,Revenuesearnedinaperiodthatarebothunrecordedandnotyetreceived.,ExamplesRentasatenantusesitsrentalpropertyInterestasaborrowerusesitsfunds,23,