财务会计课件 from Professor CarterChapter05.docx
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财务会计课件 from Professor CarterChapter05.docx
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财务会计课件fromProfessorCarterChapter05
Chapter5
ClosingProcess
Inthischapteryouwillseehowaccountingsystemsareorganizedtokeepresultsofdifferentaccountingperiodsseparatefromoneanother.Theprocessthatproducesfinancialstatementsrelatedtoseparateaccountingperiodsistheclosingprocess.
TheAccountingProcess(sofar)
Inthefirstfourchapters,wesawthegoalofacompany'sfinancialaccountingsystemistoprovideinformationaboutthecompany'sresourcesandwheretheycamefrom.Theinformationisprovidedintheformoffinancialstatements.Togenerateinformationforfinancialstatements,accountingsystemsareorganizedaroundtheaccountingequation:
Assets
=
Liabilities
+
Stockholders'Equity
Theequalityoftheaccountingequationisconstantlymaintainedthroughthedebitsequalcreditsprocess.Inbrief,inordertoproduceinformationforfinancialstatements,accountingsystems:
1.organizedatatobereportedbyusingachartofaccountsandageneralledger.
2.analyzebusinessevents,ortransactions,andconvertthemintodebitsandcreditsthroughthepreparationofjournalentries.Thejournalentriesarerecordedinthegeneraljournal.
3.postthejournalentriestothegeneralledger.
4.verifythedatainthegeneralledgeraccountswillresultinabalancedaccountingequationthroughthepreparationofatrialbalance.
5.reviewdatainthetrialbalanceforreasonablenessandprepareadjustingentriestocorrectanyunreasonableaccountbalances.
6.posttheadjustingentriestothegeneralledger.
7.verifythedatainthegeneralledgeraccountswillresultinabalancedaccountingequationthroughthepreparationofanadjustedtrialbalance.
Oncetheadjustedtrialbalanceisprepared,itispossibletoproducereasonablefinancialstatementsfromtheadjustedtrialbalancedata.TheworkinChapter4resultedintheParksComputerServiceCorporation'sSeptemberfinancialstatements,presentedagaininExhibits5-1,5-2,and5-3.
Exhibit5-1
ParksComputerServiceCorporation
IncomeStatement
fortheMonthEndedSeptember30
Revenues
FeesRevenue
$3,300
OperatingExpenses
SuppliesExpense
$170
UtilitiesExpense
$60
TelephoneExpense
$45
WagesExpense
$450
RentExpense
$325
InsuranceExpense
$120
TotalOperatingExpenses
$1,170
IncomeBeforeTaxes
$2,130
IncomeTaxesExpense
$425
NetIncome
$1,705
FromtheParksComputerServiceCorporation'sincomestatementwesawmanagementusedthecompany'sresourcesinSeptembertogenerate$1,705ofadditionalresources(netincome).Theincomestatementshowedmanagementbroughtinresourcesof$3,300(feesrevenue)andused$1,595ofresources(totaloperatingexpensesof$1,170+incometaxesexpenseof$425).
Exhibit5-2
ParksComputerServiceCorporation
StatementofRetainedEarnings
fortheMonthEndedSeptember30
RetainedEarnings,Sept.1
$900
NetIncomeforSeptember
$1,705
Subtotal
$2,605
Dividends
$75
RetainedEarnings,Sept.30
$2,530
FromtheParksComputerServiceCorporation'sstatementofretainedearningswesawofthe$1,705resourcesgeneratedthroughmanagementoperationsinSeptember(netincome),$75weredistributedtotheowner(dividends).BytheendofSeptember,thecompanyretainedinthebusiness$2,530oftheresourcesgeneratedthroughmanagementoperationsinSeptemberandpriormonths.
Exhibit5-3
ParksComputerServiceCorporation
BalanceSheet
September30
Assets
Liabilities&Stockholders'Equity
Cash
$10,755
Liabilities
AccountsReceivable
$1,210
AccountsPayable
$240
Supplies
$320
UnearnedFeesRevenue
$100
PrepaidRent
$650
IncomeTaxesPayable
$425
PrepaidInsurance
$360
TotalLiabilities
$765
TotalAssets
$13,295
Stockholders'Equity
CommonStock
$10,000
RetainedEarnings
$2,530
TotalStockholders'Equity
$12,530
TotalLiabilities&Stockholders'Equity
$13,295
Thecompany'sbalancesheetshowedonSeptember30thecompanyhadresources(assets)of$13,295.$765ofresourceswereborrowed(liabilities).$10,000ofresourceswereinvestedbytheowner(commonstock).$2,530ofresourcesweregeneratedthroughmanagementoperationsandretainedinthecompany(retainedearnings).
BeginningaNewReportingPeriod
ClosingfeesrevenueaccountNowthatyouarefamiliarwithhowtheaccountingsystemworkstoprovidereasonableinformationintheformoffinancialstatements,thenextimportantquestionis:
Whathappenswhenthecompanycontinuestooperateinthenextreportingperiod?
Forexample,iftheParksComputerServiceCorporation'sSeptemberincomestatementshowedmanagementgenerated$3,300offeesrevenueinSeptember,whathappenswhenmanagementservicescustomersinOctober?
Shouldthe$3,300feesrevenuebecarriedoverintoOctober?
Examinethecompany'sgeneralledgerfeesrevenueaccountpresentedbelow.The$3,300balanceinthefeesrevenueaccountappearedonthecompany'sSeptember30adjustedtrialbalanceandontheSeptemberincomestatement.
AccountName:
FeesRevenue
AccountNumber:
411
Posting
Balance
Date
Item
Ref.
Debits
Credits
Debits
Credits
Sept.1
Balance
0
5
Servicesprovided
J1
700
700
19
Servicesprovided
J1
1,400
2,100
29
Servicesprovided
J2
900
3,000
30
Servicesprovided
J3
300
3,300
Considerwhatwouldhappenifthecompanyprovided$4,250ofadditionalservicestocustomersinOctober,preparedtheproperjournalentries,andpostedthemtothegeneralledger.TheOctober31generalledgerfeesrevenueaccountwouldappearasfollows.
AccountName:
FeesRevenue
AccountNumber:
411
Posting
Balance
Date
Item
Ref.
Debits
Credits
Debits
Credits
Sept.1
Balance
0
5
Servicesprovided
J1
700
700
19
Servicesprovided
J1
1,400
2,100
29
Servicesprovided
J2
900
3,000
30
Servicesprovided
J3
300
3,300
Oct.2
Servicesprovided
J1
600
3,900
9
Servicesprovided
J2
1,200
5,100
17
Servicesprovided
J2
900
6,000
26
Servicesprovided
J3
1,100
7,100
31
Servicesprovided
J4
450
7,550
IftheParksComputerServiceCorporationweretoprepareatrialbalanceattheendofOctober,thefeesrevenueaccountbalancewouldappearasa$7,550creditbalance.IfthisamountweretobeusedontheOctoberincomestatement,itwouldsuggestmanagementhadbroughtinresourcesof$7,550byprovidingservicestocustomersinOctober.Abriefreviewofthegeneralledgerfeesrevenueaccount,however,clearlyshows$7,550ofresourceswerenotbroughtinbymanagementinOctober.InOctober,thecompanyprovidedcustomerservicesof$4,250($600onOctober2,$1,200onthe9th,$900onthe17th,$1,100onthe26th,and$450onthe31st).$3,300oftheservicesrecordedasfeesrevenuehadbeenprovidedbymanagementinSeptember.Therefore,toreportfeesrevenueof$7,550ontheOctoberincomestatementwouldbeunreasonable.Inorderforthemorereasonablefeesrevenueamountof$4,250toappearontheOctoberincomestatement,the$3,300ofSeptember'sfeesrevenuemustberemovedfromthefeesrevenueaccount.Thisisaccomplishedaspartoftheclosingprocess.ThejournalentryrequiredtopreventSeptember's$3,300offeesrevenuefromappearingintheOctoberfeesrevenueaccountisasfollows.
Date
Description
PostingRef.
Debits
Credits
Sept.30
FeesRevenue
411
$3,300
IncomeSummary
399
$3,300
Closefeesrevenue
Severalpointsshouldbenotedintheabovejournalentry.First,theentrywasrecordedattheendofSeptember.Businessisanongoingprocess:
onceoneperiodisover,anotherbeginsimmediately.Inordertoproperlyaccountforthiscontinuousprocess,oncethefinancialstatementsforaperiodareprepared,closingentriesfortheperiodcanbeimmediatelypreparedtoeliminatethatperiod’seffectsfromthegeneralledgeraccounts.Asaresult,inanewreportingperiodtheaccountswillreflectonlytheactivitiesofthenewperiod.
Asecondpointtonoteinthejournalentryisthefeesrevenueaccountwasdebitedfor$3,300.Thisdebitisrequiredbecausethefeesrevenueaccounthada$3,300creditbalanceonSeptember30beforetheclosingentrywasmade.Toeliminateorreduceacreditbalance,adebitisrequired.
Thethirdpointtonoteisthecredittoanewaccount,incomesummary.Remember,netincomeiscalculatedasthedifferencebetweenrevenuesandexpenses.Oneoftheresultsoftheclosingprocessisnetincomebrieflyappearsinanaccountcalledincomesummary.Netincomegetsintotheincomesummaryaccountasrevenuesaccountsandexpensesaccountsareclosed.
IftheaboveentrytoclosethefeesrevenueaccounthadbeenrecordedinthegeneraljournalandpostedtothegeneralledgerinSeptember,thefeesrevenueaccountattheendofOctoberwouldhaveappearedasfollows.
AccountName:
FeesRevenue
AccountNumber:
411
Posting
Balance
Date
Item
Ref.
Debits
Credits
Debits
Credits
Sept.1
Balance
0
5
Servicesprovided
J1
700
700
19
Servicesprovided
J1
1,400
2,100
29
Servicesprovided
J2
900
3,000
30
Servicesprovided
J3
300
3,300
30
Closefeesrevenue
J6
3,300
0
Oct.2
Servicesprovided
J1
600
600
9
Servicesprovided
J2
1,200
1,800
17
Servicesprovided
J2
900
2,700
26
Servicesprovided
J3
1,100
3,800
31
Servicesprovided
J4
450
4,250
Asyoucanseeinthegeneralledger,whentheproperjournalentrywaspreparedandpostedtoclosethefeesrevenueaccountattheendofSeptember,bytheen
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