财务会计概念与应用英文版Lecture4研讨.pptVIP

* * * * * * * * COPYRIGHT ? 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. * Chapter 4 Completing the Accounting Cycle Albrecht, Stice, Stice, Swain * Periodic Reporting Fiscal Year 12-month accounting period. Calendar Year When an entity closes its books on December 31. Beginning of Year End of Year * Accrual Accounting What do we do when transactions span more than one period? Accrual Accounting! Revenues and expenses are recorded as they are earned and incurred, not necessarily when cash is received or paid. Better measures a firm’s performance than does cash flow data. * Revenue Recognition Recognize revenue when: The earning process is substantially complete. Cash has either been collected or collection is reasonably assured. 1. 2. * The Matching Principle All costs and expenses incurred in generating revenues must be recognized in the same reporting period as the related revenues. If revenues are recognized. Related costs and expenses should be recognized. * Example: Accrual- vs. Cash-Basis Accounting Bond Consulting Reported Income for 2009 During 2009, Bond Consulting billed its client for $48,000. On December 31, 2009, it had received $41,000, with the remaining $7,000 to be received in 2010. Total expenses during 2009 were $31,000 with $3,000 of these costs not yet paid at December 31. Determine net income under both methods. Accrual-Basis Accounting Revenues earned $48,000 Expenses incurred 31,000 Income $17,000 Cash-Basis Accounting Cash receipts $41,000 Cash disbursement 28,000 Income $13,000 * Adjusting Entries Entries required at the end of each accounting period to adjust the accounts to their proper amounts. Unrecorded receivables. Unrecorded liabilities. Prepaid expenses. Unearned revenues. Each adjusting entry involves at least one income statement account and one balance sheet account. * Precision Manage