《会计英语分录》课件.pptVIP

调整分录 Prior Periods Current Period Future Periods Transaction Paid cash in advance of incurring expense (creates an asset). End of Current Period Converting Assets to Expenses Examples Include: Depreciation Supplies Expiring Insurance Policies Converting Assets to Expenses Jan. 1 Dec. 31 $2,400 Insurance Policy Coverage for 12 Months $200 Monthly Insurance Expense On January 1, Webb Co. purchased a one-year insurance policy for $2,400. Converting Assets to Expenses Initially, costs that benefit more than one accounting period are recorded as assets. Converting Assets to Expenses The costs are expensed as they are used to generate revenue. Converting Assets to Expenses Income Statement Cost of assets used this period to generate revenue. Balance Sheet Cost of assets that benefit future periods. Converting Assets to Expenses Depreciation is the systematic allocation of the cost of a depreciable asset to expense. Depreciable assets are physical objects that retain their size and shape but lose their economic usefulness over time. The Concept of Depreciation The portion of an asset’s utility that is used up must be expensed in the period used. Cash (credit) Fixed Asset (debit) On date when initial payment is made . . . The asset’s usefulness is partially consumed during the period. At end of period . . . Depreciation Expense (debit) Accumulated Depreciation (credit) The Concept of Depreciation On May 2, 2007, JJ’s Lawn Care Service purchased a lawn mower with a useful life of 50 months for $2,500 cash. Using the straight-line method, calculate the monthly depreciation expense. Depreciation Is Only an Estimate JJ’s Lawn Care Service would make the following adjusting entry. Depreciation Is Only an Estimate JJ’s $15,000 truck is depreciated over 60 months as follows: Depreciation Is Only an Estimate Accumulated depreciation would appear on the balance sheet as follows: Learning Objective LO4 To prepare adjusting entries to convert liabilities to revenue. Prior Period