CPA会计英语教学课件8.pptVIP

Accounting English Many of business transaction affect the net income of more than one period, therefore, it is often necessary to adjust some account balances at the end of each accounting period in order to achieve proper matching of costs and expenses with the relative revenue earned to determine a meaningful net income figure fore each accounting period. Part 3 Exercises a. Why is the adjusting step of the accounting cycle necessary ? Accounting English It occurs after the journals have been posted and a trial balance of ledger accounts has been taken, but before financial statements are prepared. Part 3 Exercises b. When does the adjusting step occur? Accounting English Under accrual basis: revenues are recognized when earned; expenses are recognized when goods and services are used. Under cash basis: revenues are recognized when cash is collected; expenses are recognized when cash is paid for the goods and services. Part 3 Exercises c. How do the accrual basis and cash basis of accounting differ? Accounting English The four types of adjustments are: (1) Apportioning recorded costs to periods benefited. (2) Apportioning recorded revenue to periods in which it is earned. (3) Accruing unrecorded expenses (4) Accruing unrecorded revenue Part 3 Exercises d. What four different types of adjustments are frequently needed at the end of an accounting period? Accounting English (1) To transfer beginning inventory to Income Summary account. (2) To record ending inventory. Part 3 Exercises e. How to describe the adjusting procedure for merchandise inventory records under a periodic inventory system? Accounting English  Simmons Inc., whose accounting year ends on June 30, had the following balances in its ledger at June 30 of the current year: Inventory $20,000; Prepaid Insurance $1,200; Office Supplies on hand $500 Data for the year-end adjustments are as follows: Inventory, June 30 $1