会计英语

Chapter 14 REVENUES AND EXPENSES 了解收入和费用的概念 掌握收入的组成 掌握收入的账务处理 掌握费用的组成 掌握费用的账务处理

THE DEFINITION OF REVENUES AND EXPENSES OBJECTIVE ONE

THE DEFINITION OF REVENUES AND EXPENSES Revenue is the only element which can bring cash in. Net sales = Gross sales － (Sales discounts + Sales returns and allowances)

THE DEFINITION OF REVENUES AND EXPENSES B. GROCERY STORE Partial Income Statement For the Year Ended December 31, 2011 Operating revenues Gross sales $28200 Less: Sales discounts $600 Sale returns and allowances 700 1300 Net Sales $26900

THE DEFINITION OF REVENUES AND EXPENSES Revenues-where are revenues from? Sale of a product from inventory Revenue from fees or service Sales Rendering a service Revenue from sales Service Revenue Sale of an asset other than inventory Gain or loss on disposition Gain/loss on disposal of assets

THE DEFINITION OF REVENUES AND EXPENSES Expenses are the items should be deducted from revenues to obtain net income. Cost of goods sold Operating expenses

COMPOSITION OF REVENUES OBJECTIVE TWO

COMPOSITION OF REVENUES Determining Revenues When There Are Trade Discounts Trade discount is a percentage deduction, or discount, from the specified list price or catalog price of merchandise. The list price less all trade discounts is the gross revenue should be recorded in the account. List price, 200 basketball at $6 $1200 Less: Trade discount, 30% 360 Gross invoice price $840

COMPOSITION OF REVENUES Determining Revenues When There Are Sales Discounts and Sales Returns and Allowance A cash discount is a deduction from the gross invoice price that can be taken only if the invoice is paid within a specified period of time. A cash discount is called a sales discount by the seller and a purchase discount by the buyer. Sales Returns and Allowances is a contra revenue account used to record the selling price of merchandise returned by buyers or reductions in selling prices granted.

COMPOSITION OF REVENUES Determining Revenues When There Are Sales Discounts and Sales Returns and Allowance Cash discount terms are often stated as follows: 2/10,n/30-----means a discount of 2% of the gross invoice price of the merchandise may be taken if payment is made within 10 days following the invoice date. The gross invoice price is due 30 days from the invoice date.

COMPOSITION OF REVENUES Determining Revenues When There Are Sales Discounts and Sales Returns and Allowance Assume that on July 12 a business sold merchandise for $2000 on account; terms are 2/10,n/30. a check in payment of the account was received on July 21 (nine days after invoice date) in the amount $1960. The revenue earned is computed as follows: Sales discount=$2000×2%=$40 Revenue = 2000 – 40=1960

COMPOSITION OF REVENUES Determining Revenues When There Are Sales Discounts and Sales Returns and Allowance Assume that on July 12 a business sold merchandise for $2000 on account; terms are 2/10,n/30. a check in payment of the account was received on July 21 (nine days after invoice date) in the amount $1960. $300 of goods are returned. The revenue earned is computed as follows: Sales discount=$2000×2%=$40 Revenue = 2000 – 40=1960 Net sales=1960-300=1660

ACCOUNTING PROCESS FOR REVENUES OBJECTIVE THREE

ACCOUNTING PROCESS FOR REVENUES When sales happens, the accounting process should be performed as follows: Dr. Cash/Accounts Receivable Cr. Sales

ACCOUNTING PROCESS FOR REVENUES Accounting Process for Revenue When There Are Trade Discounts List price, 200 basketball at $6 $1200 Less: Trade discount, 30% 360 Gross invoice price $840 Dr. Cash 840 Cr. Sales 840

ACCOUNTING PROCESS FOR REVENUES Determining Revenues When There Are Sales Discounts and Sales Returns and Allowance Assume that on July 12 a business sold merchandise for $2000 on account; terms are 2/10,n/30. a check in payment of the account was received on July 21 (nine days after invoice date) in the amount $1960. $300 of goods are returned. The revenue earned is computed as follows: Sales discount=$2000×2%=$40 Revenue = 2000 – 40=1960 Net sales=1960-300=1660

ACCOUNTING PROCESS FOR REVENUES Accounting Process For Sales Discounts Cash Discounts Inducements for prompt payment Gross Method vs. Net Method

ACCOUNTING PROCESS FOR REVENUES Accounting Process For Sales Discounts Gross Method: Under this method, companies recognize sales discounts only when they receive payment within the discount period. Net Method: Under this method, sales discounts are taken reflect penalties added to an established price to encourage prompt payment..

ACCOUNTING PROCESS FOR REVENUES Accounting Process For Sales Discounts Gross Method Net Method Sales of $10000, terms 2/10, n/30 Accounts Receivable 10000 Sales 10000 Accounts Receivable 9800 Sales 9800 Payment received within discount period Cash 9800 Sales Discount 200 Accounts Receivable 10000 Cash 9800 Accounts Receivable 9800 Payment received after discount period Cash 10000 Accounts Receivable 10000 Cash 10000 Accounts Receivable 9800 Sales Discount Forfeited 200

ACCOUNTING PROCESS FOR REVENUES Determining Revenues When There Are Sales Discounts and Sales Returns and Allowance Assume that on July 12 a business sold merchandise for $2000 on account; terms are 2/10,n/30. a check in payment of the account was received on July 21 (nine days after invoice date) in the amount $1960. $300 of goods are returned. The revenue earned is computed as follows: July 12 Dr. Accounts Receivable 2000 Cr. Sales 2000 July 21 Dr. Cash 1660 Sales Discount 40 Sales R&A 300 Cr. Accounts Receivable 2000

COMPOSITION OF EXPENSES OBJECTIVE FOUR

COMPOSITION OF EXPENSES Operating expenses Selling expenses Sales salaries Delivery expense Advertising expense etc Administrative expenses Salaries for office Rent Insurance Cost of goods sold COMPOSITION OF EXPENSES

COMPOSITION OF EXPENSES Classify the following items into cost of goods sold, selling expenses, and administrative expenses by putting a tick in the blank. √ √ √ √ √ √ √ √

ACCOUNTING PROCESS FOR EXPENSES OBJECTIVE FIVE

ACCOUNTING PROCESS FOR EXPENSES For example, a company pays $7,000 office rent, in cash, for the current period. Journal entry should be: Dr. Rent Expense 7,000 Cr. Cash 7,000 The company pays employee salaries in cash of $40,000. The journal entry should be: Dr. Salaries Expense 40,000 Cr. Cash 40,000

PRESENTATION OF SALES AND EXPENSES IN FS REVIEW

FOR THE YEAR ENDED DECEMBER 31, 2010 ABC Company INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2010 Sales Revenue Sales Less: Sales discount Sales returns and allowances Net sales revenue Cost of Goods Sold Operating Expenses Selling expenses Sales salaries expenses Sales office salaries Advertising expenses Freight and transportation-out Depreciation of sales equipment Administrative Expenses Officers’ salaries Insurance expenses Depreciation of building Depreciation of office equipment Net income for the year 202,644 59,200 38,315 41,209 9005 186,000 17,029 18,059 16000 $24,241 56,427 350,373 237088 $3,053,081 80668 2972,413 1982541 587461 $402,411

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