英语

The Differences between English and Accounting English
1. Knowledge
2. Profession
3. Working Environment
How to study Accounting English
Master:
1. The Professional Words and Expressions
2. The Journal Entries
3. The Ledger Entries
4. The Financial Statement
5. The Presentation
The Content of Course
1. Accounting and the Business Environment
2. Recording Business Transactions
3. The Adjusting Process
4. Completing the Accounting Cycle
5. The Balance Sheet
6. The Income Statement
7. The Statement of Cash Flows
8. The Financial Statement Analysis
The First Chapter Accounting and the Business Environment
The Learning Objective:
Ⅰ. Accounting: The Language of Business
Ⅱ. Types of Business Organizations
Ⅲ. Accounting Regulation and Principles
Ⅰ. Accounting: The Language of Business
(Ⅰ) Accounting is the information system that measures business activity, processes the information into reports, and communicates the results to decisions makers.
Accounting is “the language of business.” The better you understan d the language, the better your decisions will be, and the better you can manage your finances.
For example, how will you decide whether to borrow money? You had better consider your income: the concept of income comes straight from accounting.
(Ⅱ) Decision makers: The users of Accounting Information
Decision makers need information. The bigger the decision, the greater the need. Here are some decision makers who use accounting information:
A. Individuals
Individuals use accounting information to manage your bank account, evaluate a new job prospect, and decide whether to rent or buy a house.
B. Businesses
Managers use accounting information to set goals for their organization.
C. Investors
Investors provide the money to get a business going. To decide whether to invest, the accounting information is the key point, that is, the information of the income statement.
D. Creditors
Before lending money, a bank evaluates the borrower’s ability to make the payment. The borrower’s ability come from the accounting in formation.
(Ⅲ) Financial Accounting and Management Accounting
Accounting can be divided into two fields –financial accounting and management accounting.
Financial accounting provides information for people outside the company. Lenders and outside investors are not part of day-to-day management. These people use the company’s financial statements.
Management accounting focuses on information for internal decision makers, such as the company’s executives and the administrators of a hospital.
Ⅱ. Types of Business Organizations
A business can have one of three forms of organization: proprietorship, partnership, or corporation. We should understand the differences among the three. (Ⅰ) Proprietorship
A proprietorship has a single owner, called the proprietor, who is often the manager. Proprietorships tend to be small retail stops or professional business, such as physicians, attorneys, and accountants.
(Ⅱ) Partnership
A partnership joins two or more individuals as co-owners. Each owner is a partner. Many retail establishments and professional organizations of physicians, attorneys, and accountants are partnerships.
(Ⅲ) Corporation
A corporation is a business owned by stockholders, or shareholders. These are the people who own shares of ownership in the business.
Corporation differ significantly from proprietorships and partnerships in another way. If a proprietorship or a partnership can not pay its debts, lenders can take the owners’ personal assets to satisfy the business’s obligation.
But if a corporation goes bankrupt, lenders cannot take the personal assets of the stockholders.
Ⅲ. Accounting Regulation and Principles
(Ⅰ) Regulating Accounting
All professions have regulations. Let’s see the organizations that most influence the accounting profession.
GAAP: Generally Accepted Accounting Principles. GAAP is the “law” of accounting –rules for providing the information that is acceptable to the majority of western countries.
FASB:Financial Accounting Standard Board. FASB formulates the accounting standards of USA, that is, the GAAP.
IASB:International Accounting Standard Board. IASB formulates the accounting standards in the world.
MOF: Ministry of Finance. MOF formulates the accounting standards of CHINA. Basic Accounting Profession: Teller Cashier Bookkeeper.
CPAS:Certified Public Accountants. CPAS are professional accountants who are licensed to serve the general public. CPAS are responsible for provide audit, tax, and consulting services to general public.
CAS: Chapter Accountants.
(Ⅱ) Accounting Principles
To be useful, information must be relevant, reliable and comparable. We begin the discussion of GAAP by introducing basic accounting concept and principles.
1.The Accounting Entity Assumption (会计主体假设)
The accounting entity means that a business is accounted for separately from other business, including its owner.
Consider a retail store. Assume James started such retail store on his own. Suppose he began with 5,000 obtained from a bank loan. Following the entity concept, James would account for the 5,000 separately from his personal assets, such as his clothing, house, and automobile.
2.The Reliability Principle (可靠性原则)
The reliability principle means that the accounting information must be based on the most reliable data. In other words, the accounting data should be verifiable(有据可寻的).
For example, a business bank loan(贷款) is supported by a promissory note. This is objective evidence of the loan. Without the reliability principle, accounting data might be based on whims.
Besides, invoices, receipts, cash register tapes and credit notes are all the evidences.
3.The Cost Principle (成本原则)
The cost principle states that acquired assets and services should be recorded at their actual cost (also called historic-al cost).
For example, assume that you get a good deal and pay only 2,000 for equipment that would have cost you 3,000 elsewhere. The Cost Principle requires you to record the equipment at its actual cost of $2,000, not the $3,000 that you believe the equipment is worth.
The cost principle also holds that the accounting records should maintain the historical cost of an asset over its useful life.
4.The Going-Concern Assumption (持续经营假设)
Under the going-concern principle, accountants assume that the business will
remain in operation long enough to use existing resources for their intended purpose.
5.The Consistent Principle (一致性原则/可比性原则)
The Consistent Principle assumes that accountants consistently apply accounting procedures from one period to the next.
For example, the depreciation methods should be remained the same from one period to the next. If the straight-line method is explored at the beginning of the period, other methods are not allowed to used during such period.
The Second Chapter Recording Business Transactions
The Learning Objective:
Ⅰ. The Account, the Journal, and the Ledger
Ⅱ. Double-Entry Accounting
Ⅲ. Flow of Accounting Information
Ⅳ. Analyzing and Processing Transactions
Ⅰ. The Account, the Journal, and the Ledger
(Ⅰ)Account–the detailed record of the changes in a particular asset, liability, or owner’s equity. The basic summary device of accounting is the account. (账户或会计科目)
Journal– the chronological(按时间顺序排列的) record of transactions. (日记账) Ledger – the record holding all the accounts. (分类账)
Trial Balance– the list of all the accounts with their balances.(试算平衡表) (Ⅱ) Accounting Equation
Assets=Liabilities + Owner’s Equity
1. Assets are economic resources that will benefit the business in the future.
Cash:The Cash account is a record of the cash effects of transactions. Cash includes money, such as a bank account balance and checks. (Cash at Bank) Notes Receivable: A business may sell goods or services and receive a promissory note. A note receivable is a written promise that the customer will pay a fixed amount of money by a certain date.
Accounts Receivable: A business may sell goods or services in exchange for an oral or implied promise of future cash receipt. Such credit sales(赊销) are made on credit (“on account”).
Prepaid Expenses: A business often pays certain expenses, such as rent and insurance, in advance. A prepaid expense is an asset because the prepayment provides a future benefit for the business.
Prepaid Expenses include Prepaid Rent, Prepaid Insurance, Office Supplies(办公室耗用品).
Land, Building, Equipment, Furniture, and Fixture are the Fixed Assets. (Plant Assets)
There is a closing relationship between fixed assets and depreciation.
2. A liability is an economic obligation (a debt) payable to an individual or an organization outside the business.
Notes Payable: The Notes Payable account is the opposite of Notes Receivable. Notes Payable represents amounts the business must pay because it signed promissory notes to borrow money or to purchase goods or services.
Accounts Payable: The Accounts Payable account is the opposite of Accounts Receivable.
Accrued Liabilities(应计负债): An accrued liability is a liability for an expense that has not been paid. Taxes Payable, Interest Payable, and Salaries Payable are liability account for most companies.
3. The owner’s claim to the assets of the business is called Owner’s Equi ty. In a proprietorship or a partnership, owner’s equity is split into separate accounts for the owner’s capital balance.
Capital: The capital ending balance equals the owner’s investment in the business plus net income or minus any net losses and owne r’s withdrawals(所有者的个人支出).
Withdrawals: When Gay Gillen withdraws cash from the business for personal use, the travel agency’s assets and owner’s equity decrease.
Revenues: Sales Revenue(销售收入), Service Revenue(服务收入).
Expenses: Salaries Expense(工资费用), Rent Expense(租金费用), Advertising Expense(广告费用), Utilities Expense(管理费用).
Ⅱ. Double-Entry Accounting
(Ⅰ)Accounting is based on a double-entry system, which means that we record the dual effects of a business transaction. Each transaction affects at least two accounts.
Consider a cash purchase of supplies. What are the dual effects?
The purchase (1) decrease cash and (2) increase supplies.
How about a credit purchase of supplies?
Cash
(Left side) (Right side)
Debit Credit Dr = Debit Cr = Credit
(Ⅱ)The most widely used account format is called the T-account,for it takes the form of the capital letter “T”.
The left side of the account is called the debit side, and the right side is called the credit side.
Assets Liabilities and Equity
(Debit) (Credit) Debit) (Credit)
Increase Decrease Decrease Increase
(Ⅲ)The account element (会计要素) governs how we record increases and decreases. For any given account, increases are recorded on one side, and decreases are recorded on the other side.
The rules which are presented above are referred to as the rules of debit and credit. (借贷记账法)
Cash Gay Bell, Capital
Increase Increase
By 30,000 By 30,000
Example 1:
Gay Bell Travel received $30,000 cash from Bell and gave him the owner’s equity in the business. It is important to mention that the accountants are accounting for the business rather than the person, Bell.
There is a helpful learning procedure which we should follow:
(1)Which accounts of the business are affected?
(2)By what kinds of account category and what amounts?
(3) On what side (debit or credit)?
Example 2:
Gay Bell Travel purchases land for an office location, paying cash of 20,000. Example 3:
Gay Bell Travel buys stationery and other office supplies, agreeing to pay 500 on account within 30 days.
(1)Which accounts of the business are affected?
(2)By what kinds of account category and what amounts?
(3) On what side (debit or credit)?
Land Cash
Increase Decrease
By 20,000 By 20,000
Office Supplies Accounts Payable
Increase Increase
By 500 By 500
Exercises 1:
Gay Bell Travel pays $300 to the store where he purchased500 worth of office supplies in Example 3.
Exercises 2:
Bell withdraws 2,000 cash from the business for personal use.
(1)Which accounts of the business are affected?
(2)By what kinds of account category and what amounts?
(3) On what side (debit or credit)?
Ⅲ. Flow of Accounting Information
(Ⅰ)Transaction Occurs
Source Documents Prepared
Transaction Analysis Takes Place
Transaction Entered in the Journal
Amounts Posted to the Ledger
Transfers the balance into the Trial Balance
(Ⅱ)Transaction Analysis, Journalizing, and Posting to the Accounts Transaction 1:
Kings Travel, Inc. received $30,000 cash that King invested to begin his travel agency on Jan 7.
Accounting Equation:
Assets = Liabilities + Owner’s Equity
+30,000 = 0 + +30,000
Journal Entry:
Jan 7
Dr Cash 30,000
Cr King, Capital 30,000
Transaction 2:
On Jan 13, the business paid $20,000 cash for land as a future office location. Accounting Equation:
Assets = Liabilities + Owner’s Equity
+20,000 = 0 + 0
-20,000
Journal Entry:
Jan 13
Dr Land 20,000
Cr Cash 20,000
Transaction 3:
The business purchased $500 office supplies on account payable at the end of January. Accounting Equation:
Assets = Liabilities + Owner’s Equity
+500 = +500 + 0
Journal Entry:
Jan 31
Dr Office Supplies 500
Cr Account Payable 500
Transaction 4:
The business paid $300 on the account payable created in Transaction3 at the beginning of February.
Accounting Equation:
Assets = Liabilities + Owner’s Equity
-300 = -300 + 0
Journal Entry:
Feb 1
Dr Account Payable 300
Cr Cash 300
Transaction 5:
The King remodeled their personal residence.
This is not a transaction of the travel agency, so the business makes no Journal Entry. Transaction 6:
King withdraws 2,000 cash from the business for personal use in the middle of February.
Accounting Equation:
Assets = Liabilities + Owner’s Equity
-2,000 = 0 + -2,000
Journal Entry:
Feb 14
Dr King, Withdrawals 2,000
Cr Cash 2,000
Cash
(1)30,000 (2)20,000
(4)300
(6)2,000
Bal.7,700
Accounts Payable
(4)300 (3)500
Bal.200
Office Supplies
(3)500
Bal.500
Land
(2)20,000
Bal.20,000
King, Capital
(1)30,000
Bal.30,000
King, Withdrawals
(6)2,000
Bal.2,000
On August 1, 20X6, Liz Shea opens Shea’s Research Service. She owns the proprietorship. During its first 10 days of operations, the business completes these transactions:
a. To begin operations, Shea deposits 40,000 of personal fundsin a bank account titled Shea’s Research Service. The business receives the cash and gives Shea capital(owner’s equity).
b. Pays 30,000 cash for a small building to be used as an office.
c. Purchases office supplies for 500 on account.
d. Pays cash of 6,000 for office furnitur
e.
Required:
1. Journalize these transactions and post to the accounts. Key the journal entries by letter.
2. Show all the T-accounts after posting.
3. Prepare the trial balance of Shea’s Research Service at August 10, 20X6.
Ⅳ. Analyzing and Processing Transactions
1. Brett Wilkinson invested 10,000 cash in a business bank account to open his law practice.
2. Wilkinson performed service for a client and collected 3,000 cash.
3. Wilkinson performed service for a client and billed the client for 500 on account receivable.
4. Wilkinson earned 700 service revenue by advising a client. Wilkinson received 300 cash immediately and billed the remaining 400 to the client.
5. Wilkinson paid the following cash expenses: office rent, 900; employee salary, 1,500; and utilities, 500.
6. Wilkinson received a telephone bill for 100 and will pay this expense next week.
7. Wilkinson collected 200 cash from the client in transaction 3.
8. Wilkinson paid the telephone bill from transaction 6.
9. Wilkinson withdrew 1,000 cash for personal use.
Required:
1. Journalize these transactions and post to the accounts. Key the journal entries by number
2. Show all the T-accounts after posting.
3. Prepare the trial balance of Brett Wilkinson law practice
Emily Smith started her practice as a registered dietician on Sep 3 of the current year. During the first month of operation, the business completed the following
transactions:
Sep3 Smith transferred $20,000 cash from her personal bank account to a business account titled Emily Smith, Agency. The business gave Smith owner’s equity in the firm.
4 Purchased supplies, $200, and furniture,$1,800, on account.
6 Performed services for a hospital and received $4,000.
7 Paid $15,000 cash to acquire land for a future office site.
10 Performed a nutritional analysis for a hotel and received its promise to pay the $800 within one week.
Sep 14 Paid for the furniture purchased September 4 on account.
15 Paid secretary’s salary, $600.
17 Received partial collection from client on account, $500.
20 Prepared a travel plan for a school on account, $800.
28 Received $1,500 cash for consulting with Gamble.
30 Paid secretary’s salary, $600.
30 Paid rent expense, $500.
30 Withdrew $2,900 for personal use.
Sep. 3
Dr Cash 20,000
Cr Emily Smith, Capital 20,000
Sep. 4
Dr Supplies 200
Dr Furniture 1,800
Cr Accounts Payable 2,000
Sep. 6
Dr Cash 4,000
Cr Service Revenue 4,000
Sep. 7
Dr Land 15,000
Cr Cash 15,000
Sep. 10
Dr Accounts Receivable 800
Cr Service Revenue 800
Sep. 14
Dr Accounts payable 1,800
Cr Cash 1,800
Sep. 15
Dr Salary expense 600
Cr Cash 600
Sep. 17
Dr Cash 500
Cr Accounts Receivable 500
Sep. 20
Dr Accounts Receivable 800
Cr Service Revenue 800
Sep. 28
Dr Cash 1,500
Cr Service Revenue 1,500
Sep. 30
Dr Salary expense 600
Cr Cash 600
Sep. 30
Dr Rent expense 500
Cr Cash 500
Sep. 30
Dr Emily Smith, Withdrawals 2,900
Cr Cash 2,900
11。