CHAPTER3 Adjusting the Accounts
|
|
- Stephanie Ball
- 5 years ago
- Views:
Transcription
1 CHAPTER3 Adjusting the Accounts Timing Issues Accountants divide the economic life of a business into artificial time periods (Time Period Assumption) Jan. Feb. Mar. Apr. Dec. Generally a month, a quarter, or a year. Also known as the Periodicity Assumption SO 1 Explain the time period assumption.
2 Timing Issues Timing Issues Fiscal and Calendar Years Review Monthly and quarterly time periods are called interim The time period assumption states that: periods. Public companies must prepare both quarterly and annual financial statements. a. revenue should be recognized in the accounting period in which it is earned. b. expenses should be matched with revenues. Fiscal Year = Accounting time period that is one year in length. c. the economic life of a business can be divided into artificial time periods. Calendar Year = January 1 to December 31. d. the fiscal year should correspond with the calendar year. 3-5 SO 1 Explain the time period assumption. 3-6 SO 1 Explain the time period assumption. Timing Issues Timing Issues Accrual- vs. Cash-Basis Accounting Accrual- vs. Cash-Basis Accounting Accrual-Basis Accounting Cash-Basis Accounting Transactions recorded in the periods in which the Revenues recognized when cash is received. events occur. Revenues are recognized when earned, rather than when cash is received. Expenses are recognized when incurred, rather than Expenses recognized when cash is paid. Cash-basis accounting is not in accordance with generally accepted accounting principles (GAAP). when paid. 3-7 SO 2 Explain the accrual basis of accounting. 3-8 SO 2 Explain the accrual basis of accounting.
3 Timing Issues Timing Issues Recognizing Revenues and Expenses Recognizing Revenues and Expenses Revenue Recognition Principle Expense Recognition Principle Recognize revenue in the accounting period in which it is earned. In a service enterprise, revenue is considered to be earned at the time the service is performed. Match expenses with revenues in the period when the company makes efforts to generate those revenues. Let the expenses follow the revenues. 3-9 SO 2 Explain the accrual basis of accounting SO 2 Explain the accrual basis of accounting. Timing Issues Illustration 3-1 GAAP relationships in revenue and expense recognition 3-11 SO 2 Explain the accrual basis of accounting SO 2 Explain the accrual basis of accounting.
4 Timing Issues Review One of the following statements about the accrual basis of accounting is false. That statement is: a. Events that change a company s financial statements are recorded in the periods in which the events occur. b. Revenue is recognized in the period in which it is earned. c. The accrual basis of accounting is in accord with generally accepted accounting principles. d. Revenue is recorded only when cash is received, and expenses are recorded only when cash is paid. Adjusting entries are necessary because the trial balance may not contain up-to-date and complete data. Ensure that the revenue recognition and expense recognition principles are followed. Required every time a company prepares financial statements. Will include one income statement account and one balance sheet account SO 2 Explain the accrual basis of accounting SO 3 Explain the reasons for adjusting entries. Review Adjusting entries are made to ensure that: a. expenses are recognized in the period in which they are incurred. b. revenues are recorded in the period in which they are earned. Types of Adjusting Entries Deferrals 1. Prepaid Expenses. Expenses paid in cash and recorded as assets before they are used or consumed. Accruals Illustration 3-2 Categories of adjusting entries 3. Accrued Revenues. Revenues earned but not yet received in cash or recorded. c. balance sheet and income statement accounts have correct balances at the end of an accounting period. d. all of the above. 2. Unearned Revenues. Cash received and recorded as liabilities before revenue is earned. 4. Accrued Expenses. Expenses incurred but not yet paid in cash or recorded SO 3 Explain the reasons for adjusting entries SO 4 Identify the major types of adjusting entries.
5 Types of Adjusting Entries Trial Balance Each account is analyzed to determine whether it is complete and upto-date. Adjusting Entries for Deferrals Deferrals are either: Prepaid expenses OR Unearned revenues. Illustration SO 4 Identify the major types of adjusting entries Prepaid Expenses Prepaid Expenses Payment of cash, that is recorded as an asset because service or benefit will be received in the future. Expire either with the passage of time or through use. Adjusting entry: Cash Payment BEFORE Expense Recorded Increase (debit) to an expense account and Prepayments often occur in regard to: insurance rent Decrease (credit) to an asset account. Illustration 3-4 supplies equipment advertising buildings
6 Illustration: Pioneer Advertising Agency purchased supplies costing $2,500 on October 5. Pioneer recorded the payment by increasing (debiting) the asset Supplies. This account shows a balance of $2,500 in the October 31 trial balance. An inventory count at the close of business on October 31 reveals that $1,000 of supplies are still on hand. Illustration 3-5 Oct. 31 Supplies expense 1,500 Supplies 1, SO 5 Illustration: On October 4, Pioneer Advertising Agency paid $600 for a oneyear fire insurance policy. Coverage began on October 1. Pioneer recorded the payment by increasing (debiting) Prepaid Insurance. This account shows a balance of $600 in the October 31 trial balance. Insurance of $50 ($600 / 12) expires each month. Illustration 3-6 Oct. 31 Insurance expense 50 Prepaid insurance SO 5
7 Depreciation Buildings, equipment, and vehicles (assets with long lives) are recorded as assets, rather than an expense, in the year acquired. Illustration: For Pioneer Advertising, assume that depreciation on the equipment is $480 a year, or $40 per month. Companies report a portion of the cost of the asset as an expense (depreciation expense) during each period of the asset s useful life. Oct. 31 Depreciation expense 40 Accumulated depreciation 40 Depreciation does not attempt to report the actual change in the value of the asset. Accumulated Depreciation is called a contra asset account Illustration 3-7 Statement Presentation Accumulated Depreciation is a contra asset account. Appears just after the account it offsets (Equipment) on the balance sheet. Normal balance of a contra asset account is a credit. Illustration SO
8 Illustration 3-9 Unearned Revenues Receipt of cash that is recorded as a liability because the revenue has not been earned. Cash Receipt BEFORE Revenue Recorded Unearned revenues often occur in regard to: Rent Magazine subscriptions Airline tickets Customer deposits Unearned Revenues Adjusting entry is made to record the revenue that has been earned and to show the liability that remains. Results in a decrease (debit) to a liability account and an increase (credit) to a revenue account. Illustration 3-10 Illustration: Pioneer Advertising Agency received $1,200 on October 2 from R. Knox for advertising services expected to be completed by December 31. Unearned Service Revenue shows a balance of $1,200 in the October 31 trial balance. Analysis reveals that the company earned $400 of those fees in October. Oct. 31 Unearned service revenue 400 Service revenue
9 Illustration 3-11 Illustration SO Adjusting Entries for Accruals Accruals are made to record Revenues earned OR Expenses incurred in the current accounting period that have not been recognized through daily entries SO 6 Prepare adjusting entries for accruals.
10 Accrued Revenues Revenues earned but not yet received in cash or recorded. Accrued Revenues Adjusting entry shows the receivable that exists and records the revenues earned. Revenue Recorded Accrued revenues often occur in regard to: Rent Interest BEFORE Cash Receipt Services performed Adjusting entry: Increases (debits) an asset account and Increases (credits) a revenue account. Illustration SO 6 Prepare adjusting entries for accruals SO 6 Illustration: In October Pioneer Advertising Agency earned $200 for advertising services that had not been recorded. Illustration 3-14 Oct. 31 Accounts receivable 200 Service revenue 200 On November 10, Pioneer receives cash of $200 for the services performed. Nov. 10 Cash 200 Accounts receivable SO 6 Prepare adjusting entries for accruals SO 6
11 Illustration 3-15 Accrued Expenses Expenses incurred but not yet paid in cash or recorded. Expense Recorded BEFORE Cash Payment Accrued expenses often occur in regard to: Rent Taxes Interest Salaries 3-41 SO 6 Prepare adjusting entries for accruals SO 6 Prepare adjusting entries for accruals. Accrued Expenses Adjusting entry records the obligation and recognizes the expense. Adjusting entry: Increase (debit) an expense account and Increase (credit) a liability account. Illustration: Pioneer Advertising Agency signed a three-month note payable in the amount of $5,000 on October 1. The note requires Pioneer to pay interest at an annual rate of 12%. Illustration 3-16 Oct. 31 Interest expense 50 Interest payable SO SO 6 Prepare adjusting entries for accruals.
12 Illustration SO Illustration: Pioneer Advertising Agency last paid salaries on October 26; the next payment of salaries will not occur until November 9. The employees receive total salaries of $2,000 for a five-day work week, or $400 per day. Thus, accrued salaries at October 31 are $1,200 ($400 x 3 days). Illustration 3-19 Illustration SO 6 Prepare adjusting entries for accruals SO 6
13 Summary of Basic Relationships Illustration 3-21 Illustration SO 6 Prepare adjusting entries for accruals SO 6 Prepare adjusting entries for accruals. The Adjusted Trial Balance Illustration 3-25 Adjusted Trial Balance Prepared after all adjusting entries are journalized and posted. Purpose is to prove the equality of debit balances and credit balances in the ledger. Is the primary basis for the preparation of financial statements SO 7 Describe the nature and purpose of the adjusted trial balance. 3-52
14 The Adjusted Trial Balance The Financial Statements Review Which of the following statements is incorrect concerning the adjusted trial balance? a. An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made. b. The adjusted trial balance provides the primary basis for the preparation of financial statements. c. The adjusted trial balance lists the account balances segregated by assets and liabilities. d. The adjusted trial balance is prepared after the adjusting entries have been journalized and posted. Financial Statements are prepared directly from the Adjusted Trial Balance. Balance Sheet Income Statement Owner s Equity Statement 3-53 SO 7 Describe the nature and purpose of the adjusted trial balance SO 7 Describe the nature and purpose of the adjusted trial balance. Illustration 3-26 Illustration SO SO 7
15 APPENDIX3A Alternative Treatment of Prepaid Expenses and Unearned Revenues When a company prepays an expense, it debits that amount to an expense account. When a company receives payment for future services, it credits the amount to a revenue account. APPENDIX3A Prepaid Expenses Company may choose to debit (increase) an expense account rather than an asset account. This alternative treatment is simply more convenient. Illustration 3A SO 8 Prepare adjusting entries for the alternative treatment of deferrals SO 8 Prepare adjusting entries for the alternative treatment of deferrals. APPENDIX3A Unearned Revenues Company may credit (increase) a revenue account when they receive cash for future services. Illustration 3A-5 APPENDIX3A Summary of Additional Adjustment Relationships Illustration 3A SO 8 Prepare adjusting entries for the alternative treatment of deferrals SO 8 Prepare adjusting entries for the alternative treatment of deferrals.
16 IFRS A Look at IFRS Key Points Companies applying IFRS also use accrual-basis accounting to ensure that they record transactions that change a company s financial statements in the period in which events occur. Similar to GAAP, cash-basis accounting is not in accordance with IFRS. IFRS also divides the economic life of companies into artificial time periods. Under both GAAP and IFRS, this is referred to as the time period assumption. IFRS requires that companies present a complete set of financial statements, including comparative information annually. IFRS A Look at IFRS Key Points GAAP has more than 100 rules dealing with revenue recognition. Many of these rules are industry specific. In contrast, revenue recognition under IFRS is determined primarily by a single standard. Despite this large disparity in the amount of detailed guidance devoted to revenue recognition, the general revenue recognition principles required by GAAP that are used in this textbook are similar to those under IFRS. As the Feature Story illustrates, revenue recognition fraud is a major issue in U.S. financial reporting. The same situation occurs in other countries, as evidenced by revenue recognition breakdowns at Dutch software company Baan NV, Japanese electronics giant NEC, and Dutch grocer AHold NV IFRS A Look at IFRS Key Points A specific standard exists for revenue recognition under IFRS (IAS 18). In general, the standard is based on the probability that the economic benefits associated with the transaction will flow to the company selling the goods, providing the service, or receiving investment income. In addition, the revenues and costs must be capable of being measured reliably. GAAP uses concepts such as realized, realizable (that is, it is received, or expected to be received), and earned as a basis for revenue recognition. Under IFRS, revaluation of items such as land and buildings is permitted. IFRS allows depreciation based on revaluation of assets, which is not permitted under GAAP IFRS A Look at IFRS Key Points The terminology used for revenues and gains, and expenses and losses, differs somewhat between IFRS and GAAP. For example, income is defined as: Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from shareholders. Expenses are defined as: Decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity other than those r elating to distributions to shareholders.
17 3-65 IFRS A Look at IFRS Looking into the Future The IASB and FASB are now involved in a joint project on revenue recognition. The purpose of this project is to develop comprehensive guidance on when to recognize revenue. Presently, the Boards are considering an approach that focuses on changes in assets and liabilities (rather than on earned and realized) as the basis for revenue recognition IFRS A Look at IFRS GAAP: a. provides very detailed, industry-specific guidance on revenue recognition, compared to the general guidance provided by IFRS. b. provides only general guidance on revenue recognition, compared to the detailed guidance provided by IFRS. c. allows revenue to be recognized when a customer makes an order. d. requires that revenue not be recognized until cash is received. IFRS A Look at IFRS Which of the following statements is false? a. IFRS employs the periodicity assumption. b. IFRS employs accrual accounting. c. IFRS requires that revenues and costs must be capable of being measured reliably. d. IFRS uses the cash basis of accounting. IFRS A Look at IFRS As a result of the revenue recognition project being undertaken by the FASB and IASB: a. revenue recognition will place more emphasis on when revenue is earned. b. revenue recognition will place more emphasis on when revenue is realized. c. revenue recognition will place more emphasis on when changes occur in assets and liabilities. d. revenue will no longer be recorded unless cash has been received
18 Copyright Copyright 2011 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein. 3-69
Adjusting The Accounts
3 Adjusting The Accounts Learning Objectives 1 2 Explain the accrual basis of accounting and the reasons for adjusting entries. Prepare adjusting entries for deferrals. 3 Prepare adjusting entries for
More informationAdjusting the Accounts
3-1 Chapter 3 Adjusting the Accounts Learning Objectives After studying this chapter, you should be able to: 1. Explain the time period assumption. 2. Explain the accrual basis of accounting. 3. Explain
More informationCHAPTER4. The Recording Process. PreviewofCHAPTER4. Using a Worksheet. Steps in Preparing a Worksheet
CHAPTER4 The Recording Process 4-1 4-2 PreviewofCHAPTER4 Using a Worksheet Steps in Preparing a Worksheet Multiple-column form used in preparing financial statements. Not a permanent accounting record.
More informationIntermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield. Slide 3-2
3-1 C H A P T E R 3 THE ACCOUNTING INFORMATION SYSTEM Intermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield 3-2 Learning Objectives 1. Understand basic accounting terminology. 2. Explain double-entry
More informationChapter 3 Adjusting the Accounts 高立翰
Chapter 3 Adjusting the Accounts 高立翰 Study Objectives 1. Explain the time period assumption. 2. Explain the accrual basis of accounting. ( 不考 ) 3. Explain the reasons for adjusting entries. 4. Identify
More informationTHE ACCOUNTING INFORMATION SYSTEM
Study Objectives THE ACCOUNTING INFORMATION SYSTEM 1. Analyze the effect of business transactions on the basic accounting equation. 2. Explain what an account is and how it helps in the recording process.
More informationThe Recording Process
Prepared by Coby Harmon University of California, Santa Barbara Westmont College 2-1 2 The Recording Process Learning Objectives After studying this chapter, you should be able to: [1] Explain what an
More informationPREVIEW OF CHAPTER 5-2
5-1 PREVIEW OF CHAPTER 5 5-2 Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 5 and Statement of Cash Flows Statement of Financial Position LEARNING OBJECTIVES After studying this
More informationThe Recording Process
2-1 Chapter 2 The Recording Process Learning Objectives After studying this chapter, you should be able to: [1] Explain what an account is and how it helps in the recording process. [2] Define debits and
More informationChapter 17 Accounting for Accruals and Deferrals
Chapter 17 Accounting for Accruals and Deferrals o Understand Accrual and Deferrals o Accrued Expense o Accrued Revenue o Deferred Expense o Deferred Revenue 1 Accruals and Deferrals Accruals Expenses
More informationAccounting for Receivables
9 Accounting for Receivables Learning Objectives 1 2 3 4 Explain how companies recognize accounts receivable. Describe how companies value accounts receivable and record their disposition. Explain how
More informationChapter 4 Question Review 1
Chapter 4 Question Review 1 Chapter 4 Questions Multiple Choice 1. The final step in the accounting cycle is to prepare: a. closing entries. b. financial statements. c. a post-closing trial balance. d.
More informationCHAPTER 3. Adjusting the Accounts 6, 7 1 8, 9, 10, 11, 12, 13, 18, 19, , 18 6A 12, 13 14, 15
CHAPTER 3 Adjusting the Accounts ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems B Problems *1. Explain the time period assumption. *2. Explain
More informationCP:
Adeng Pustikaningsih, M.Si. Dosen Jurusan Pendidikan Akuntansi Fakultas Ekonomi Universitas Negeri Yogyakarta CP: 08 222 180 1695 Email : adengpustikaningsih@uny.ac.id 5-1 5-2 PREVIEW OF CHAPTER 5 5-3
More informationPRINCIPLES OF FINANCIAL ACCOUNTING CANADIAN EDITION
WEYGANDT. KIO. KIMMEL. TRENHOLM. KINNEAR. BARLOW. ATKINS PRINCIPLES OF FINANCIAL ACCOUNTING CANADIAN EDITION Chapter 3 Adjusting the Accounts PART 1 Prepared by: Debbie Musil Kwantlen Polytechnic University
More informationThe Adjustment Process and Financial Statements Irwin/McGraw-Hill
Chapter 4 The Adjustment Process and Financial Statements Business Background: The Accounting Cycle Phase 1: During the Accounting Period. Start of the Accounting Period! Perform transaction analysis.!
More informationCHAPTER 3 Adjusting the Accounts
Solutions Manual Financial and Managerial Accounting, 2nd Edition Weygandt Kimmel Kieso Completed Instant download SOLUTIONS MANUAL for Financial and Managerial Accounting, 2nd Edition by Jerry J. Weygandt,
More informationSection A: Multiple-Choice Questions (2 marks each; Total 30 marks)
Name: Student ID: Section A: Multiple-Choice Questions (2 marks each; Total 30 marks) Choose the one best answer. 1. The accounting process involves all of the following except ( d ) a. identifying economic
More informationAccounting Principles
Accounting Principles Second Canadian Edition Weygandt Kieso Kimmel Trenholm Prepared by: Carole Bowman, Sheridan College CHAPTER 2 THE RECORDING PROCESS THE ACCOUNT An account is an individual accounting
More informationCHAPTER3. Adjusting the Accounts. Apago PDF Enhancer. Study Objectives. Feature Story WHAT WAS YOUR PROFIT?
CHAPTER3 Study Objectives After studying this chapter, you should be able to: [1] Explain the time period assumption. [2] Explain the accrual basis of accounting. [3] Explain the reasons for adjusting
More informationStatement of Cash Flows
13-1 13 Statement of Cash Flows Learning Objectives 1 2 Discuss the usefulness and format of the statement of cash flows. Prepare a statement of cash flows using the indirect method. 3 Analyze the statement
More informationAccounting for Receivables
8-1 Chapter 8 Accounting for Receivables 8-2 Learning Objectives After studying this chapter, you should be able to: 1. Identify the different types of receivables. 2. Explain how companies recognize accounts
More informationChapter 3: The Measurement Fundamentals of Financial Accounting
1 Chapter 3: The Measurement Fundamentals of Financial Accounting 2 Basic Assumptions Basic assumptions are foundations of financial accounting measurements The basic assumptions are Economic entity Fiscal
More informationC H A P T E R 5 BALANCE SHEET AND STATEMENT OF CASH FLOWS. Balance Sheet and Statement of of Cash Flows. Usefulness of the Balance Sheet
C H A P T E R 5 BALANCE SHEET AND STATEMENT OF CASH FLOWS Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield 5-1 5-2 Balance Sheet and Statement of of Cash Flows Balance Sheet Balance Sheet
More informationInvestments. 1. Discuss why corporations invest in debt and share securities.
12-1 Chapter 12 Investments Learning Objectives After studying this chapter, you should be able to: 1. Discuss why corporations invest in debt and share securities. 2. Explain the accounting for debt investments.
More informationChapter 6 Accounting Adjustments and Working papers
Chapter 6 Accounting Adjustments and Working papers Topics 1. Cash basis vs. Accrual Basis 2. Accrued Income 3. Accrued Expenses 4. Prepaid Expenses 5. Unearned Income 6. Depreciation 7. Supply Expenses
More informationIntroduction to Fund Accounting
Classification of of Nonbusiness Organizations Introduction to Accounting for nonbusiness organizations. Five Major Classifications 1. Governmental units. 2. Hospitals and other health care providers.
More informationLiabilities. Chapter 10. Learning Objectives. After studying this chapter, you should be able to:
10-1 Chapter 10 Liabilities 10-2 Learning Objectives After studying this chapter, you should be able to: 1. Explain a current liability, and identify the major types of current liabilities. 2. Describe
More informationAccounting 1A Class Notes Chapter 3 The Adjusting Process
Source Documents General Journal General Ledger Trial Balance Adjusting Entries Difference between TRANSACTIONS and ADJUSTMENTS Transactions occur through-out the accounting cycle and normally involve
More informationChapter 3 The Adjusting Process
Instant download and all chapters Solution Manual Horngren s Financial Managerial Accounting 4th Edition Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura https://testbankdata.com/download/solution-manual-horngrens-financialmanagerial-accounting-4th-edition-tracie-l-nobles-brenda-l-mattison-ella-maematsumura/
More informationPrinciples of Accounting II
Principles of Accounting II Lecture 1 Adjusting the Accounts Basic Accounting Equation What the business owns = What the business owes Assets = Liabilities (owed to creditors)+ Owners Equity (residual
More informationCP:
Adeng Pustikaningsih, M.Si. Dosen Jurusan Pendidikan Akuntansi Fakultas Ekonomi Universitas Negeri Yogyakarta CP: 08 222 180 1695 Email : adengpustikaningsih@uny.ac.id 22-1 22-2 PREVIEW OF CHAPTER 22 22-3
More informationPREVIEW OF CHAPTER Slide 4-2
4-1 PREVIEW OF CHAPTER 4 4-2 Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 4 Related Information Income Statement and LEARNING OBJECTIVES After studying this chapter, you should
More informationA. II. B. I. III. A. B.
II. A. B. I. III. A. B. Adjusting the Accounts Chapters 3 and 4 "Cash" Basis vs. "Accrual" Basis: Cash Accrual Revenue Expenses Generally Accepted Accounting Principles (GAAP) require using the basis.
More informationCHAPTER 3 Selected Solutions. The Accounting Information System. Brief Topics Questions Exercises Exercises Problems
CHAPTER 3 Selected Solutions The Accounting Information System ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Brief Topics Questions Exercises Exercises Problems 1. Transaction identification. 1, 2, 3, 5,
More informationChapter 14. Statement of Cash Flows
1 Chapter 14 Statement of Cash Flows 2 Figure 14-1 3 Definition of Cash Cash consists of coin, currency, and available funds on deposit at the bank. Negotiable instruments such as money orders, certified
More informationSolution to Problem 31 Adjusting entries. Solution to Problem 32 Closing entries.
Solution to Problem 31 Adjusting entries. 1. Utilities expense 27,000 Accounts payable 27,000 2. Rent revenue 4,000 Unearned revenue 4,000 3. Supplies 2,000 Supplies expense 2,000 4. Interest receivable
More informationImportant Terminology
Important Terminology Recognition When we "recognize" a revenue or expense, it means that we record the amount in our general ledger and the amount is included in our income statement. Deferral When we
More informationFinancial Accounting s Conceptual Foundations
Economics /Management 4 Financial Accounting Financial Accounting s Conceptual Foundations L-2 A highly-stylized Information System Basic Functions (all info systems): 1. Collection of transactions data
More informationAccounting in Action. Chapter 1. Learning Objectives. After studying this chapter, you should be able to:
1-1 Chapter 1 Accounting in Action Learning Objectives After studying this chapter, you should be able to: 1. Explain what accounting is. 2. Identify the users and uses of accounting. 3. Understand why
More informationChapter 10. Introduction to Liabilities: Economic Consequences, Current Liabilities and Contingencies
1 Chapter 10 Introduction to Liabilities: Economic Consequences, Current Liabilities and Contingencies 2 Liabilities What is a liability? FASB - Probable future sacrifice of economic benefits arising from
More informationChapter 11. Corporations: Organization, Share Transactions, Dividends, and Retained Earnings. Learning Objectives
11-1 Chapter 11 Corporations: Organization, Share Transactions, Dividends, and Retained Earnings Learning Objectives After studying this chapter, you should be able to: 1. Identify the major characteristics
More informationRevenue Recognition PREVIEW OF CHAPTER LEARNING OBJECTIVES. Intermediate Accounting 15th Edition Kieso Weygandt Warfield
Irsan Lubis - Dosen Perbanas Institute 18 Revenue Recognition LEARNING OBJECTIVES After studying this chapter, you should be able to: 1. Apply the revenue recognition principle. 2. Describe accounting
More information2. Which of the following is an external user of accounting information? A) Labor unions. B) Finance directors. C) Company officers. D) Managers.
Name: Date: 1. The study of accounting is not useful for a business career unless your career objective is to become an accountant. A) True B) False 2. Which of the following is an external user of accounting
More informationChapter 10. Introduction to Liabilities: Economic Consequences, Current Liabilities and Contingencies
1 Chapter 10 Introduction to Liabilities: Economic Consequences, Current Liabilities and Contingencies 2 Liabilities What is a liability? Probable future sacrifice of economic benefits arising from present
More informationSome deferred items for which adjusting entries would be made include: Prepaid insurance Prepaid rent Office supplies Depreciation Unearned revenue
WWW.VUTUBE.EDU.PK Paper 1 MIDTERM EXAMINATION Spring 2009 FIN621- Financial Statement Analysis (Session - 1) Question No: 1 ( Marks: 1 ) - Please choose one Which of the following is the acronym for GAAP?
More informationDo you subscribe to any magazines? Most of us subscribe
C H A P T E R 3 The Adjusting Process AP Photo/Jeff Kravitz M A R V E L E N T E R T A I N M E N T, I N C. Do you subscribe to any magazines? Most of us subscribe to one or more magazines such as Cosmopolitan,
More informationCommecs College Macro Plan ( )
Commecs College Macro Plan (-) Subject: Accounting Class: XI Sections: AZIZ TABBA, BUKHARI Unit No. Start Date 1 Aug 01, End Date Aug 03, Number Of Periods Topic/Chapter Contents Objectives By the end
More informationT Accounts Very useful to understand how the double-entry system works. They are the basic representations of the accounts and have three parts:
Recap from Week 2 Rules Of Double-entry Bookkeeping T Accounts Very useful to understand how the double-entry system works. They are the basic representations of the accounts and have three parts: Title
More informationAccounting Principles
Accounting Principles Second Canadian Edition Weygandt Kieso Kimmel Trenholm Prepared by: Carole Bowman, Sheridan College CHAPTER 4 COMPLETION OF THE ACCOUNTING CYCLE WORK SHEET A work sheet is a multiple-column
More informationTH E ACCO U NTI NG LEARNING OBJECTIVES. Needed: A Reliable Information System. After studying this chapter, you should be able to:
2760T_c03_066-129.qxd 11/4/08 9:31 PM Page 66 C H A P T E R 3 TH E ACCO U NTI NG I N F O R M ATI O N SYSTE M LEARNING OBJECTIVES After studying this chapter, you should be able to: 1 Understand basic accounting
More informationChapter 3. Learning Objectives. Distinguish accrual accounting from cash-basis accounting. Objective 1. The Adjusting Process
PowerPoint to accompany Chapter 3 The Adjusting Process Learning Objectives 1. Distinguish accrual accounting from cash-basis accounting. 2. Make adjusting entries at the end of the accounting period.
More informationChapter. Chapter. Accounting and the Time Value of Money. Time Value of Money. Basic Time Value Concepts. Basic Time Value Concepts
Accounting and the Time Value Money 6 6-1 Prepared by Coby Harmon, University California, Santa Barbara Basic Time Value Concepts Time Value Money In accounting (and finance), the term indicates that a
More informationLearning Outcomes. The Basic Accounting Cycle
Chapter 2: Review of the Accounting Process Part 3: Accounting Cycle with Emphasis on Year End Activities Intermediate Accounting 1 Dr. Chula King Learning Outcomes After completing this part, you should
More informationECON 3A---FALL 2007 MIDTERM #2 ANSWER QUESTIONS #1-25 ON GREEN SCANTRON AND THE REST IN THE SPACE PROVIDED-PLEASE.
ECON 3A---FALL 2007 MIDTERM #2 Name: PERM #: ANSWER QUESTIONS #1-25 ON GREEN SCANTRON AND THE REST IN THE SPACE PROVIDED-PLEASE. 1. Gross profit equals the difference between A) net sales revenues and
More informationProfessor Authored Problems Intermediate Accounting I Acct 341/541. Accounting Cycle
Professor Authored Problems Intermediate Accounting I Acct 341/541 Accounting Cycle Problem 17 Accounting cycle definitions. Please provide (1) complete, clear, accurate definitions, and (2) a good example.
More informationdownload from https://testbankgo.eu/p/
CHAPTER 3 ADJUSTING THE ACCOUNTS SUMMARY OF QUESTIONS BY OBJECTIVES AND BLOOM S TAXONOMY Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements 1. 1 C 9. 2 C 17. 5 C 25. 5 K 33. 3
More informationPREVIEW OF CHAPTER 2-2
2-1 PREVIEW OF CHAPTER 2 2-2 Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 2 for Financial Reporting Conceptual Framework LEARNING OBJECTIVES After studying this chapter, you should
More informationThe Accounting Cycle. End of the Period C AT EDRÁTICO U PR R I O P I EDRAS S EG. S EM
The Accounting Cycle End of the Period E DWIN R ENÁN MALDONADO C AT EDRÁTICO U PR R I O P I EDRAS S EG. S EM. 2 017-18 Textbook: Financial Accounting, Spiceland This presentation contains information,
More informationTHE ACCOUNTING CYCLE: Accruals and Deferrals
Chapter 4 THE ACCOUNTING CYCLE: Accruals and Deferrals Presented by: Endra M. Sagoro Economic Faculty YSU endra_ms@uny.ac.id At the end of the period, we need to make adjusting entries to get the accounts
More informationCHAPTER1. Accounting in Action. PreviewofCHAPTER1. What is Accounting?
CHAPTER1 Accounting in Action 1-1 1-2 PreviewofCHAPTER1 What is Accounting? Purpose of accounting is to: 1. identify, record, and communicate the economic events of an 2. organization to 3. interested
More informationBusiness Background Management is responsible for preparing...
Business Background Management is responsible for preparing... Financial Statements High Quality = Relevance + Reliability... Are useful to investors and creditors. Business Background Revenues are recorded
More informationCompleting the accounting cycle
Chapter 5 Completing the accounting cycle PowerPoint presentation by Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd Learning Objectives 1. Understand all the steps in the complete
More informationCompleting the accounting cycle
Chapter 5 Completing the accounting cycle PowerPoint presentation by Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd THE COMPLETE ACCOUNTING CYCLE 1. Recognise and record transactions
More informationChapter 11. Notes, Bonds, and Leases
1 Chapter 11 Long- Term Liabilities Notes, Bonds, and Leases 2 Long- Term Liabilities Many companies finance their operations and growth opportunities through the use of long term debt instruments: Notes
More informationIntermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield 7-2
7-1 C H A P T E R 7 CASH AND RECEIVABLES Intermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield 7-2 Learning Objectives 1. Identify items considered cash. 2. Indicate how to report cash and
More informationSeminar on Bookkeeping Basics
Seminar on Bookkeeping Basics (Handout) Our materials are copyright AccountingCoach, LLC and are for personal use by the original purchaser only. We do not allow our materials to be reproduced or distributed
More informationAdjusting the Accounts
HOSP 1860 (Financial Acct) Learning Centre Adjusting the Accounts Anytime we prepare financial statements or reach the end of an accounting period, there are account adjustments that need to be made to
More information3. Balance sheet accounts are referred to as temporary accounts because their balances are always changing.
Chapter 02 Review of the Accounting Process True / False Questions 1. Owners' equity can be expressed as assets minus liabilities. True False 2. Debits increase asset accounts and decrease liability accounts.
More informationACC100 Introduction to Accounting
ACC100 Introduction to Accounting Week 5 Adjusting Entries and the Trial Balance Chapter 4 Adjusting entries Study Group Australia Pty Limited, SGA1286-F2/10/12 2 Learning Outcomes On completion of this
More informationPREVIEW OF CHAPTER 20-2
20-1 PREVIEW OF CHAPTER 20 20-2 Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 20 Accounting for Pensions and Postretirement Benefits LEARNING OBJECTIVES After studying this chapter,
More informationMIDTERM EXAMINATION Spring 2009 FIN621- Financial Statement Analysis (Session - 3)
MIDTERM EXAMINATION Spring 2009 FIN621- Financial Statement Analysis (Session - 3) Question No: 1 ( Marks: 1 ) - Please choose one Which of the following statement shows the revenues and expenses of the
More informationACCT-112 Final Exam Practice Solutions
ACCT-112 Final Exam Practice Solutions Question 1 Jan 1 Cash 200,000 H. Happee, Capital 200,000 Jan 2 Prepaid Insurance 10,000 Cash 10,000 Jan 15 Equipment 15,000 Cash 5,000 Notes Payable 10,000 Jan 30
More informationPresentation of Financial Performance
Sourced from: http://www.clipartpanda.com/categories/income-clipart Presentation of Financial Performance Module 2 Topic 3 Learning Objectives Explain the purpose and importance of measuring financial
More informationWeek 3. Topic 3 Chapter 3. ACT102 Introduction to Accounting. Accounting for end of financial period adjustments 21/02/2018
ACT102 Introduction to Accounting Week 3 Accounting for end of financial period adjustments Topic 3 Chapter 3 2 RECAP Topic 2: Recording Business Transactions The accounting equation must always balance
More informationThe Accounting Cycle Accruals and Deferrals
The Accounting Cycle Accruals and Deferrals Chapter 4 McGraw-Hill/Irwin PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J.
More informationCHAPTER 3 THE ADJUSTING PROCESS
1. a. Under cash-basis accounting, revenues are reported in the period in which cash is received and expenses are reported in the period in which cash is paid. b. Under accrual-basis accounting, revenues
More information- A resource - Controlled by the entity - As a result of a past event - From economic benefits are expected to flow to the entity.
Elements and recognition criteria 1. Identify the definition for each of these elements: a. Assets b. Liabilities c. Equity d. Income e. Expenses - A resource - Controlled by the entity - As a result of
More informationWAYNESBORO AREA SCHOOL DISTRICT ADVANCED ACCOUNTING
COURSE NAME: Advanced UNIT: Departmentalized (4 Chapters plus a simulation project) NO. OF DAYS: 60 KEY LEARNING(S): Recording Departmental Purchases, Cash Payments, Sales, and Cash Receipts; Calculating
More informationThe Accounting Cycle: Accruals and Deferrals
The Accounting Cycle: Accruals and Deferrals Chapter 4 McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Adjusting Entries Adjusting entries are needed whenever revenue
More informationPREVIEW OF CHAPTER 14-2
14-1 PREVIEW OF CHAPTER 14 14-2 Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 14 Non-Current Liabilities LEARNING OBJECTIVES After studying this chapter, you should be able to:
More informationChapter 4. The Accounting Cycle Adjusting Entries Closing Process Net Profit Margin Ratio
Chapter 4 The Accounting Cycle Adjusting Entries Closing Process Net Profit Margin Ratio The Accounting Cycle Accounting cycle process Records individual transactions Produces the four basic financial
More informationChapter 2 Review of the Accounting Process
True/False Questions 1. Owners' equity can be expressed as assets minus liabilities. True Learning Objective: 1 Level of Learning: 1 2. Debits increase asset accounts and decrease liability accounts. True
More informationAccounting Cycle Review Problem. Michelle Clark. Accounting 1110 Section 401. Fall 2014
Accounting Cycle Review Problem Michelle Clark Accounting 1110 Section 401 Fall 2014 General Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT Record Transactions, Adjusting Entries, Closing Entries
More informationReview of a Company s Accounting System
CHAPTER 3 O BJECTIVES After reading this chapter, you will be able to: 1 Understand the components of an accounting system. 2 Know the major steps in the accounting cycle. 3 Prepare journal entries in
More informationFinancial Statement Analysis
14-1 Chapter 14 Financial Statement Analysis 14-2 Learning Objectives After studying this chapter, you should be able to: 1. Discuss the need for comparative analysis. 2. Identify the tools of financial
More informationAdjustments, Financial Statements and the Quality of Earnings
Adjustments, Financial Statements and the Quality of Earnings Chapter 4 Accounting Cycle 4-2 1 Unadjusted Trial Balance Listing of all the balance sheet and income statement accounts, usually in financial
More informationChapter 3 the Adjusting Process. Learning Objective 1 Describe the nature of the adjusting process.
1 Chapter 3 Adjusting Process Chapter 3 the Adjusting Process Learning Objective 1 Describe the nature of the adjusting process. Nature of the Adjusting Process General concept: revenues are earned when
More informationAdjustments, Financial Statements, and the Quality of Earnings
Adjustments, Financial Statements, and the Quality of Earnings Chapter 4 McGraw-Hill/Irwin 2009 The McGraw-Hill Companies, Inc. Understanding the Business Management is responsible for preparing... Financial
More informationAccounting Principles Dr. Mishari Alfraih. Adjusting the Accounts
Accrual- vs. Cash-Basis Accounting Accrual-Basis Accounting Adjusting the Accounts Transactions recorded in the periods in which the events occur Revenues are recognized when earned, rather than when cash
More informationDisclaimer: This resource package is for studying purposes only EDUCATON
Disclaimer: This resource package is for studying purposes only EDUCATON Chapter 1 Objective of Accounting: 1. To identify and measure activities of a business entity in order to evaluate its performance
More informationChapter 5 Accrual Adjustments and Financial Statement Preparation. Revenue recognition Matching expenses to revenues Expenses related to periods
Chapter 5 Accrual Adjustments and Financial Statement Preparation Revenue recognition Matching expenses to revenues Expenses related to periods 1 The Measurement of Income major function of accounting
More informationChapter 5: Using Financial Statement Information
1 Chapter 5: Using Financial Statement Information 2 Control and Prediction Financial accounting numbers are useful in two fundamental ways: They help investors and creditors influence and monitor the
More informationWeygandt, Kieso, Kimmel, Trenholm, Kinnear, Barlow, Atkins: Principles of Financial Accounting, Canadian Edition CHAPTER 4
CHAPTER 4 Completion of the Accounting Cycle ASSIGNMENT CLASSIFICATION TABLE Study Objectives 1. Prepare closing entries and a postclosing trial balance. 2. Explain the steps in the accounting cycle including
More informationChapter 11 Current Liabilities and Contingencies
Chapter 11 Current Liabilities and Contingencies Chapter 11 Current Liabilities and Contingencies M. Problems P11-1. Suggested solution: Item Liability Financial or non-financial obligation? Explanation
More informationChapter 5 Accrual Adjustments and Financial Statement Preparation. Revenue recognition Matching expenses to revenues Expenses related to periods
Chapter 5 Accrual Adjustments and Financial Statement Preparation Revenue recognition Matching expenses to revenues Expenses related to periods 1 The Measurement of Income major function of accounting
More informationFAQ: Statement of Cash Flows
Question 1: What sources are used when the statement of cash flows is being prepared, and what information does each source provide? Answer 1: The statement of cash flows is prepared differently from the
More informationLearning Objectives. LO1 Prepare the heading of a work sheet. LO2 Prepare the trial balance section of a work sheet.
Learning Objectives LO1 Prepare the heading of a work sheet. LO2 Prepare the trial balance section of a work sheet. Lesson 6-1 Consistent Reporting The accounting concept Consistent Reporting is applied
More informationGuide to Bookkeeping Concepts
Guide to Bookkeeping Concepts Your AccountingCoach PRO membership includes lifetime access to all of our materials. Take a quick tour by visiting www.accountingcoach.com/quicktour. Table of Contents (click
More informationPE 3 1A Page 131 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusted entry.
PE 3 1A Page 131 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusted entry. A. Accumulated Depreciation yes B. Albert Stucky, Drawings No C. Office equipment
More information