会计英文部分.pptVIP

Chapter 3 The adjusting process Nature of adjusting process Accounting period concept requires that revenues and expenses be reported in the proper period. To determine the proper period, accountants use Generally Accepted Accounting Principles (GAAP). The use of accrual basis of accounting is required by GAAP. Accrual basis of accounting Revenues are reported in the income statement in which they are earned . For example, revenues are reported in when the service are provided . Cash may or may not be received from customers during the period .(revenue recognition concept) Expenses are reported in the same period as the revenues to which they related. For example, utility expenses incurred in December are reported as an expense and matched against December’s revenue even thought the utility bill may not be paid until next month. (matching concept) 2 Types of accounting requiring accounts Four basic types of accounts requiring adjusting entries: Prepaid expenses, Accrued revenues, Unearned revenues , Accrued expense Prepaid insurance Dec1 NetSolution paid $2400 as a premium on a one-year insurance policy. Dr. Prepaid insurance 2400 Cr. Cash 2400 At the end of December: Dr. Insurance Expense 200 Cr. Prepaid insurance 200 Unearned revenues are advance receipt of future revenue and are recorded as liabilities when cash is received . Dec1 NetSolution received $360 from a local retailer to rent land for three months. Dr. Cash 360 Cr. Unearned revenue 360 At the end of December: Dr. Unearned revenue 120 Cr. Rent revenue 120 Accrued revenue Netsolution signed an agreement with Dankner Co. on December 15. The agreement provide that Netsolution will answer computer questions and render assistants to Dankner Co. employees. The service will be billed on the fifteenth of each accounting at