财务会计入门英文版PPT.pptx

Adjusting the AccountsLearning ObjectivesDescribe the steps in the accounting cycle.Revisit, learn, and apply the definitions of income and expense and the criteria for income and expense recognition.Explain why adjusting entries are needed and identify the major types of adjusting entries.Prepare adjusting entries and an adjusted trial balance.Show how an adjusted trial balance can be used to prepare end of period financial statements.LO 1: The Accounting Cycle Record accounting events in journal; post to General Ledger.Prepare Trial Balance.Record adjusting journal entries; post to Ledger; prepare Adjusted Trial Balance.Prepare Financial Statements.Record closing journal entries; post to Ledger; prepare Post Closing Trial Balance.Begin the new accounting period by returning to the first step.LO 2: Recording Income and ExpensesThe story begins with the accounting period…The length of the accounting period and when it ends affects the amount of income and expenses recognised.But what IS an accounting period? LO 2: Recording Income and ExpensesAccountants divide the economic life of a business into artificial time periods (Time Period Assumption).. . . . .Jan.Feb.Mar.Apr.Dec.Generally a month, a quarter, or a yearFiscal or financial year vs. calendar yearAlso known as the “Periodicity Assumption”LO 2: Recording Income and ExpensesDuring the accounting period, we record all accounting events (including those affecting income and expense accounts) according to the rules of accrual accounting. What is income? Recall… Increases in economic benefits...net assets increase...Resulting in equity increases (other than owner contributions) Income includes both revenues and gains.LO 2: Recording Income and ExpensesWhat are expenses? Recall…Decreases in economic benefits...net assets decrease...Resulting in equity decreases (other than owner distributions). Expenses include losses. LO 2: Recording Income and ExpensesWhen?The assessment of whether/not to recognise revenu