基础会计学英文版参考资料

Cash Basis
Revenues are recognized when earned and expenses are recognized when incurred.
Revenues are recognized when cash is received and expenses are recorded when cash is paid.
4/8/2020
11
3 - 12
P1
Prepaid (Deferred) Expenses
Resources paid for prior to
receiving the actual benefits.
Here is the check for my 24-month insurance policy.
Summary of Expenses
Rent Gasoline Advertising Salaries Utilities and . . . .
$1,000 500
2,000 3,000
450 ....
Now that we have recognized the revenue, let's see what expenses
artificial time periods
Revenue-Recognition Principle
Revenue recognized in the accounting period in
which it is earned
Matching Principle
Expenses matched with revenues in the same period when efforts are
2015. The expense is matched with the periods benefited by the insurance coverage.
4/8/2020
7
3- 8
C2 Recognizing Revenues and Expenses
The revenue recognition principle states that we recognize revenue when the product or service is delivered to our customer.
3. For example, a company may pay monthly rent on the first day of each month. This payment creates a prepaid expense on the first day of the month that fully expires by the end of the month.
December.
What adjustment is required?
Supplies
126
Supplies Expense
652
Bought 9,720 Dec. 31 1,050 Dec. 31 1,050
Bal. 8,670
4/8/2020
14
3 - 15
P1
Other Prepaid Expenses
4/8/2020
12
3 - 13
P1
Prepaid Insurance
(a) On 12/1/13, FastForward paid $2,400 for insurance for 2years (24-months, December 2013 through November 2015). FastForward recorded the expenditure as Prepaid Insurance on
We have delivered the product to our customer, so I think we should record
the revenue earned.
4/8/2020
8
3- 9
C2 Recognizing Revenues and Expenses
The expense recognition (or matching) principle aims to record expenses in the same accounting period as the revenues that are earned as a result of those expenses. This matching of expenses with the revenue benefits is a major part of the adjusting process.
2
3- 3
C1
The Accounting Period
4/8/2020
3
3- 4
C2 Accrual Basis versus Cash
Basis
Accrual Basis
Cash Basis
Revenues are recognized when earned and expenses are recognized when incurred.
Depreciation =
Expense
Useful Life
4/8/20பைடு நூலகம்0
16
3 - 17
P1
Depreciation
On December 1, 2013, FastForward purchased equipment for $26,000 cash. The equipment has an estimated useful life of four years (48 months) and FastForward expects to sell the equipment at the end
Depreciation is the process of allocating the cost of a plant asset over its useful life in a systematic and rational manner.
Straight-Line
Asset Cost - Salvage Value
covered by the policy.
4/8/2020
6
3- 7
C2 Accrual Basis versus Cash Basis
On the accrual basis, $100 of insurance expense is recognized in 2013, $1,200 in 2014, and $1,100 in
12/1/13.
What adjustment is required?
Prepaid Insurance
637
Insurance Expense
128
Dec. 1 2,400 Dec. 31 100
Dec. 31 100
Bal.
2,300
4/8/2020
13
3 - 14
P1
Supplies
(b) During 2013, FastForward purchased $9,720 of supplies. FastForward recorded the expenditures in the asset account, “Supplies.” On December 31, 2013, a count of the supplies indicated $8,670 on hand, so $1,050 of supplies were used during
expended to generate revenues
4/8/2020
10
3 - 11
C3
Framework for Adjustments
An adjusting entry is recorded to bring an asset or liability account balance to its proper amount.
Non-GAAP
Accounting
4/8/2020
5
3- 6
C2 Accrual Basis versus Cash Basis
On December 1, 2013, FastForward paid $2,400 cash for a twenty-four month business insurance policy.
of its life for $8,000 cash.
(c) Let's record depreciation expense for the month ended December 31, 2013.
Dec. 2013 Depreciation
Expense
$26,000 - $8,000
=
Adjusting entries for accruals
Why adjusting entries are necessary
Major types of adjusting entries
Purpose of an adjusted trial balance
Alternate treatment of prepayments & accruals
STUDY OBJECTIVES
After studying this chapter, you should understand:
Time period assumption Accrual basis of accounting