会计英语Chapter 3 The Accounting Cycle
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5
会计英语
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The ledger is an accounting record that includes all the ledger accounts—that is, a separate account for each item included in the company’s financial statements.
1
会计英语
出版社 经管分社
8.Prepare adjusted trial balance. 9.State the rules of debit and credit for balance sheet accounts. 10.Explain the double－entry system of accounting. 11.Prepare financial statements. 12.Explain the purposes of closing entries; prepare these entries. 13.Prepare post－closing trial balance.
会计英语
出版社 经管分社
Chapter 3 The Accounting Cycle
1.Explain what accounting cycle is. 2.Describe the steps in the accounting cycle. 3.Describe a ledger account and a ledger. 4.Post journal entries to ledgers. 5.Explain the purpose of a journal and its relationship to the ledger. 6.Prepare a trial balance. 7.Make adjusting entries and explain the nature of adjusting entries.
Assets = Liabilities + Owners’ Equity Debit Balances = Credit balances
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会计英语
出版社 经管分社
If the equation is to remain in balance, any change in the left side of the equation (assets) must be accompanied by an equal change in the right-hand (either liabilities or owners’ equity). According to the debit and credit rules that we have just described, increases in the left side of the equation (assets) are recorded by debits, while increases in the right side (liabilities and owners’ equity) are recorded by credits.
2
会计英语
出版社 经管分社
The accounting procedures in the accounting
cycle may be summarized as follows: （1）Analyzing transactions is the first step in the accounting cycle. （2）Journalize (record) transactions， thus creating a chronological record of events. （3）Post journal entries to the ledger, thus creating a record classified by accounts. （4）Prepare a trial balance, thus proving the equality of debits and credits in the ledger
the ledger account. （7）Prepare financial statements. （8）Journalize and post closing entries. （9）Prepare an after－closing trial balance.
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会计英语
出版社 经管分社
3.1 The Ledger
1)Determining the Balance of T Account 2)Debit Balance in Asset Accounts
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会计英语
出版社 经管分社
3)Credit Balances in Liability and owrers’ Equity Accounts
Increases in liability and owners’ equity accounts are recorded by credit entries and decreases in these accounts are recorded by debits. The relationship between entries in these accounts and their position on the balance sheet may be summed up as follows:
7
会计英语
出版社 经管分社
In its simplest form, an account has only three elements: ①a title; ②a left side, which is called the debit side; and ③a right side, which is called the credit side. This form of an account, illustrated below is called a T account because of its resemblance to the letter “T”. In a computerized system, of course, the elements of each account are stored and formatted electronically.
account.
3
会计英语
出版社 经管分社
（5）Make end－of－period adjusting entries.
（6）Prepare an adjusted trial balance, proving again the equality of debits and credits in
11
会计英语
出版社 经管分社
(1)liabilities and owners’ equity belong on the right side of the balance sheet,
(2)an increase in a liability or an owners’ equity account is recorded on the right (credit) side of the account, and
(3)liability and owners’ equity accounts normally have credit (right－hand) balances.
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会计英语
出版社 经管分社
4)Concise Statement of the Debit and Credit Rules
The use of debits and credits to record changes in assets, liabilities, and owners’ equity may be summarized as follows: Asset Accounts Liability & Owners’ Equity Accounts
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会计英语
出版社 经管分社
3.1.1 The Use of the Ledger Accounts
A ledger account is a means of accumulating in one place all the information about changes in specific financial statement items, such as a particular asset or liability. For example, the Cash account provides a company’s current cash balance, a record of its cash receipts, and a record of its cash disbursements.
3.1.2 Debit and Credit Entries
An amount recorded on the left side of an account is called a debit, or a debit entry. Likewise, any amount entered on the right side is called a credit, or a credit entry. In simple terms, debits refer to the left side of an account, and credits refer to the right side of an account.
An accounting system includes a separate record for each item that appears in the financial statements. For example, a separate record is kept for the asset cash, showing all increases and decreases in cash resulting from the many transactions in which cash is received or paid. A similar record is kept for every other asset, for every liability, for owners’ equity, and for every revenue and expense account appearing in the income statement.
9
会计英语
出版社 经管分社
Each debit and credit entry in the Cash account represents a cash receipt or a cash payment. The amount of cash owned by the business at a given date is equal to the balance of the amount on the date.
13
会计英语
出版社 经管分社
5)Double－Entry Accounting—The Equality of Debits and Credits
The rules for debits and credits are designed so that every transaction is recorded by equal dollar amounts of debits and credits. The reason for this equality lies in the relationship of the debit and credit rules to the accounting equation:
会计英语
出版社 经管分社
The ledger is an accounting record that includes all the ledger accounts—that is, a separate account for each item included in the company’s financial statements.
1
会计英语
出版社 经管分社
8.Prepare adjusted trial balance. 9.State the rules of debit and credit for balance sheet accounts. 10.Explain the double－entry system of accounting. 11.Prepare financial statements. 12.Explain the purposes of closing entries; prepare these entries. 13.Prepare post－closing trial balance.
会计英语
出版社 经管分社
Chapter 3 The Accounting Cycle
1.Explain what accounting cycle is. 2.Describe the steps in the accounting cycle. 3.Describe a ledger account and a ledger. 4.Post journal entries to ledgers. 5.Explain the purpose of a journal and its relationship to the ledger. 6.Prepare a trial balance. 7.Make adjusting entries and explain the nature of adjusting entries.
Assets = Liabilities + Owners’ Equity Debit Balances = Credit balances
14
会计英语
出版社 经管分社
If the equation is to remain in balance, any change in the left side of the equation (assets) must be accompanied by an equal change in the right-hand (either liabilities or owners’ equity). According to the debit and credit rules that we have just described, increases in the left side of the equation (assets) are recorded by debits, while increases in the right side (liabilities and owners’ equity) are recorded by credits.
2
会计英语
出版社 经管分社
The accounting procedures in the accounting
cycle may be summarized as follows: （1）Analyzing transactions is the first step in the accounting cycle. （2）Journalize (record) transactions， thus creating a chronological record of events. （3）Post journal entries to the ledger, thus creating a record classified by accounts. （4）Prepare a trial balance, thus proving the equality of debits and credits in the ledger
the ledger account. （7）Prepare financial statements. （8）Journalize and post closing entries. （9）Prepare an after－closing trial balance.
4
会计英语
出版社 经管分社
3.1 The Ledger
1)Determining the Balance of T Account 2)Debit Balance in Asset Accounts
10
会计英语
出版社 经管分社
3)Credit Balances in Liability and owrers’ Equity Accounts
Increases in liability and owners’ equity accounts are recorded by credit entries and decreases in these accounts are recorded by debits. The relationship between entries in these accounts and their position on the balance sheet may be summed up as follows:
7
会计英语
出版社 经管分社
In its simplest form, an account has only three elements: ①a title; ②a left side, which is called the debit side; and ③a right side, which is called the credit side. This form of an account, illustrated below is called a T account because of its resemblance to the letter “T”. In a computerized system, of course, the elements of each account are stored and formatted electronically.
account.
3
会计英语
出版社 经管分社
（5）Make end－of－period adjusting entries.
（6）Prepare an adjusted trial balance, proving again the equality of debits and credits in
11
会计英语
出版社 经管分社
(1)liabilities and owners’ equity belong on the right side of the balance sheet,
(2)an increase in a liability or an owners’ equity account is recorded on the right (credit) side of the account, and
(3)liability and owners’ equity accounts normally have credit (right－hand) balances.
12
会计英语
出版社 经管分社
4)Concise Statement of the Debit and Credit Rules
The use of debits and credits to record changes in assets, liabilities, and owners’ equity may be summarized as follows: Asset Accounts Liability & Owners’ Equity Accounts
6
会计英语
出版社 经管分社
3.1.1 The Use of the Ledger Accounts
A ledger account is a means of accumulating in one place all the information about changes in specific financial statement items, such as a particular asset or liability. For example, the Cash account provides a company’s current cash balance, a record of its cash receipts, and a record of its cash disbursements.
3.1.2 Debit and Credit Entries
An amount recorded on the left side of an account is called a debit, or a debit entry. Likewise, any amount entered on the right side is called a credit, or a credit entry. In simple terms, debits refer to the left side of an account, and credits refer to the right side of an account.
An accounting system includes a separate record for each item that appears in the financial statements. For example, a separate record is kept for the asset cash, showing all increases and decreases in cash resulting from the many transactions in which cash is received or paid. A similar record is kept for every other asset, for every liability, for owners’ equity, and for every revenue and expense account appearing in the income statement.
9
会计英语
出版社 经管分社
Each debit and credit entry in the Cash account represents a cash receipt or a cash payment. The amount of cash owned by the business at a given date is equal to the balance of the amount on the date.
13
会计英语
出版社 经管分社
5)Double－Entry Accounting—The Equality of Debits and Credits
The rules for debits and credits are designed so that every transaction is recorded by equal dollar amounts of debits and credits. The reason for this equality lies in the relationship of the debit and credit rules to the accounting equation: