管理会计英语英文版2ppt课件

Depreciation is the process of allocating the
cost of a fixed asset as an expense in the years when the asset helps generate revenue.
Depreciation is an application of the matching principle. Because land has an unlimited life, it is not depreciated
Thus, the change in owners’ equity is explained by net income, owner contributions, and owner withdrawals. Because owners’ equity must equal assets minus liabilities (net assets), the changes in one side of the equation must equal the changes in the other side. Therefore, changes in net income, owner contributions, and owner withdrawals also explain changes in net assets.
owner’s equity, net income explains most of the change that takes place in owner’s equity during a period. Contributions and withdrawals by owners also affect owner’s equity.
MODULE 2 Financial Statements
Analysis
Review Financial Statements
Financial statements report on the financial performance and condition of an organization.
Because buildings and equipment are long-lived assets, it would not make sense to treat their entire cost as expenses in the year they are acquired. On the other hand, because buildings and equipment gradually lose their economic value over time, it does not make sense to wait until the end of their service lives to recognize their declining usefulness to the firm. As a consequence, accountants gradually and systematically reduce the reported values of buildings and equipment on successive balance sheets in order to allocate expenses to individual years of asset use. The reduction in the reported value of buildings and equipment during a period is called depreciation expense.
Straight-Line Method
The straight-line (SL) method allocates an equal
amount of depreciation expense to each year in an asset’s life. This method is based on the rationale that each year benefits equally from the asset’s services.
Balance Sheet
As you know, the balance sheet reports assets, liabilities, and owners’ equity at a moment in time. The income statement summarizes revenue and expense transactions that occur during a period of time. Since revenue and expense transactions affect
There are several commonly used methods: straight-line, units-of-production , sum-of-theyears’ digits and declining-balance.
Methods of Calculat源自文库ng
Depreciation
There are four major financial statements Income Statement Balance Sheet Statement of Owner’s Equity Statement of Cash Flows
Income Statement
Statement of Owner’s Equity
depreciation expense per year=
(Cost - Salvage value) Useful life in years