中山大学会计基础lesson04-en.ppt

Lesson4

AdjustingAccountsforFinancialStatementTaskTeamofFUNDAMENTALACCOUNTINGSchoolofBusiness,SunYat-senUniversity1

OutlineDescribethepurposeofadjustingaccountsattheendoftheperiod.Prepareandexplainadjustingentriesforprepaidexpenses,amortization,unearnedrevenues,accruedexpenses,andaccruedrevenues.Explainhowaccountingadjustmentslinktofinancialstatements.Explainandprepareanadjustedtrialbalance.2

Definition:thecontinuedlifeofabusinessisdividedintotimeperiodsofequallength.Review:TimeperiodconceptThisyearincomestatementNextyearincomestatementLastyearincomestatementPastperiodCurrentperiodFutureperiodDec.31,B/SdateDec.31,B/Sdategoingconcern(businesswillnotstop)3

Review:RevenueRecognitionPrincipleRevenueisrecordedatthetimeitisearnedregardlessofwhethercashoranotherassethasbeenexchanged.4

Review:MatchingPrincipleExpensesaretobematchedinthesameaccountingperiodastherevenuestheyhelpedtoearn.5

AccrualandcashbasisTheaccrualbasisofaccountingmatchesrevenuesearnedwithexpensesincurred.Thecashbasismatchesrevenuesreceivedwithexpensespaid.Itisnotsatisfactoryformostbusinessesbecauseitresultsinfinancialstatementsthatarenotcomparablefromperiodtoperiod,exceptwhentheamountsofprepaid,unearned,andaccrueditemsarenotmaterial.6

Adjust:AStepinAccountingcycle1.AnalyzeTransactions2.Journalize3.Post4.Unadjustedtrialbalance5.Adjust6.Adjustedtrialbalance7.Preparefinancestatements8.CloseNowthatwehavecoveredthetrialbalance,let’sdiscussadjustingentries.7

WhyNeedtoAdjustSomeeventsarenotevidencedbytheobviousdocuments.theeffectsoftheseeventsarerecordedattheendoftheaccountingperiodbymeansofadjustingentries.Thepurposeofadjustingtheaccountsattheendofperiodistomaketheaccountinginformationcomparablefromperiodtoperiod.8

WhyNeedtoAdjustAdjustmentsareba