基础会计学第三单元课件英文版.pptVIP

The contra-account, accumulated depreciation, will be shown as a reduction in the cost of the asset, equipment. Cost of a plant asset less accumulated depreciation is known as book value. So the asset, equipment, will be shown on the balance sheet at its net amount, or book value, of $25,625. Because the contra account appears on the balance sheet it will not be closed at the end of the period. It will be carried forward to 2014 and used to accumulate the depreciation related to the equipment. Now let’s move on to the second category of adjusting entries, deferred revenues. The term unearned revenues refers to cash received in advance of providing products and services. Unearned revenues, also called deferred revenues, are liabilities. When accounting for deferred revenues, we are faced with a transaction where cash is received in advance of providing a product or service. In other words, we have received the cash, but have done nothing to earn it. In our example, we will examine accounting for the receipt of cash prior to our company rendering any services. When we render consulting services, we will prepare an adjustment for deferred revenues (a liability). We always debit, or reduce, a liability account and credit, or increase, a revenue account. Let’s move on to our consulting example. On December 26, 2013, FastForward agrees to provide consulting services to a client for a fixed fee of $3,000 for 60 days. On this date, FastForward makes an entry to debit, or increase, to the cash account and a credit, or increase, to a liability account called unearned revenue. We know the use of the word unearned revenue may be a little confusing for now, but remember that the key word is unearned. The company has done nothing to earn the consulting fees. Let’s post the entry to the ledger account, unearned revenue. Remember, the unearned revenue account is a liability account and will remain a liability until the consulting services are rendered. Now, let’s look at the a