A Premier of Accounting会计入门基础英文版.docVIP

A Premier on Accounting Originally prepared by Prof. Phillip Stocken of the Wharton School, the University of Pennsylvania, for his students Note: This premier on accounting provides those without any accounting background an introduction to how accounting works. You should consult an introductory accounting textbook for details, for example, Harrison and Horngren “Financial Accounting”, 3rd edition. The Stickney and Weil book is also ok. THE ACCOUNTING PROCESS Major Objectives: Understand the accounting process Know how to prepare a (simple) balance sheet and income statement Understand the relations between the various financial statements Understand the concepts of the key terms in accounting: cash, assets, liability, equity, revenue, expense, income, earnings, profit (loss), dividend, debit, credit, accrual accounting, etc. INTRODUCTION Accounting Process is the system for capturing, processing, summarizing and reporting events in the financial statements Jan. 1-Dec. 31 - Analyze business transactions Make journal entries to record these transactions Post the journal entries to T-account, or ledger Prepare unadjusted trial balance of accounts Make adjusting journal entries Prepare adjusted trial balance of accounts Make closing entries Dec. 31--- Prepare financial statements for the period COMPREHENSIVE EXAMPLE General Enterprises was involved with the following events during January and February: Company issues 80,000 shares of $1 par value common stock for $90,000. Company purchases $5,000 of merchandise inventory for $2,500 cash and $2,500 on account. 3. On January 31, Company purchases a new automobile for $12,000 cash. The automobile is expected to have a useful life of five years with no salvage value. 4. On January 31, Company borrows $20,000 at 9 percent, due in two years. 5. Company signs a long-term agreement to purchase $20,000 of merchandise; purchases are to begin in two months. 6. On February 1, Company pays $3,000 cash for two years of insu