1. Accounting English Lu_Xiufen E-mail: xiufenlu@126.com 13707884146xiufenlu@126.com

2. Lesson one Lesson Eight Adjusting Procedures Lesson Eight Adjusting Procedures

3. Accounting English Steps in the accounting cycle Analyze transactions from source documents Record in journalsPost to general ledger accounts Adjust the general ledger accounts Prepare financial statements Close temporary accounts

4. Accounting English Lesson Eight Adjusting Procedures Words and PhrasesWords and Phrases 1 presentation 2 Exercises 3 Summary 4

5. Accounting English Part 1 Words and Phrases Words to Drill Apportion Accrue Expire Align Terms Accrual basis accounting Cash basis accounting Periodic inventory system Perpetual inventory system

6. Accounting English Part 1 Words and Phrases Apportion---- v.t. divide; distribute; give as a share I have apportioned you different duties each day of the week. This sum of money is to be apportioned among the six boys. Apportioning recorded costs to periods benefited. Apportioning recorded revenue to periods in which it is earned.

7. Accounting English Part 1 Words and Phrases Accrue  v.t., v.i. come as a natural growth or development. If you keep your money in the Savings Bank, interest accrued. Accrued interest is interest due, but not yet paid or received. Accruing unrecorded expenses Accruing unrecorded revenue

8. Accounting English Part 1 Words and Phrases Expire  v.i. (of a period of time )come to an end When does your driving license expire? At the end of each accounting period, the estimated portion of the outlay that has expired during the period or that has benefited the period must be transferred from an asset account to an expense account.

9. Accounting English Part 1 Words and Phrases Align  v.t. bring, come, into agreement, close cooperation etc (with) Adjusting entries made to align revenue and expense with the appropriate periods consist of four types: (1) Apportioning recorded costs. (2) Apportioning recorded revenue. (3) Accruing unrecorded expenses. (4) Accruing unrecorded revenue.

10. Accounting English Terms --Accounting Basis 1 accrual basis accounting 2 cash basis accounting

11. Accounting English Terms --Accounting Basis Text Accountingsystem Accrual basis Cash basis Text Revenues are recognized when cash is collected; Expenses are recognized when cash is paid for the goods and services. Revenues are recognized when earned; Expenses are recognized when goods and services are used.

12. Accounting English Terms – Inventory System 1 Periodic inventory system 2 Perpetual inventory system

13. Accounting English Terms – Inventory Accounting System Text Inventorysystem Periodic Perpetual Text Maintain a continuous record in the inventory account, recording inventory when items are sold. Purchases are recorded as they occur, but the ending balance of inventory and the cost of good sold are not determined until the end of the period after counting inventory.

14. Accounting English Part 2 Presentation a. Why is the adjusting step of the accounting cycle necessary? b. When does the adjusting step occur? c. How to journalize the adjusting entries?

15. Accounting English Based upon accrual accounting Why is the adjusting step of the accounting cycle necessary?

16. Accounting English Part 2 Presentation ---Purpose of adjusting (Why) In order to achieve proper matching of costs and expenses with the relative revenue earned to determine a meaningful net income figure for each accounting period. P64

17. Accounting English Capture transaction data on source documents Capture transaction data on source documents Journalize transaction Journalize transaction Post transaction to the ledger Post transaction to the ledger Prepare trial balance Prepare trial balance Journalize and post adjusting entries Journalize and post adjusting entries Prepare financial statements Prepare financial statements Prepare adjusted trial balance Prepare adjusted trial balance Journalize and post closing entries Journalize and post closing entries Prepare post-closing trial balance Prepare post-closing trial balance Part 2 Presentation --- When

18. Accounting English Part 2 Presentation ---Four Types of Adjusting Entries 1 2 Apportioning recorded costs Apportioning recorded revenue Accruing unrecorded expenses Accruing unrecorded revenue 34

19. Accounting English Type 1--- Type 1---Apportioning recorded costs Apportioning recorded costs Expense Assets

20. Accounting English Type 1--- Type 1---Apportioning recorded costs 1a. Prepaid rent expired, $580. Rent Expense 580 Prepaid rent 580

21. Accounting English Type 1--- Type 1---Apportioning recorded costs 1b. Depreciation for the month, $700. Depreciation Expense 700 Accumulated Depreciation 700

22. Accounting English Type 1--- Type 1---Apportioning recorded costs 1c. Supplies used during the month, $ 880. Supplies Expense 880 Supplies on Hand 880

23. Accounting English Type 2--- Type 2--- Apportioning recorded revenue Apportioning recorded revenue revenue liability

24. Accounting English 2. Unearned service revenue earned, $900. Unearned Service Revenue 900 Service Revenue 900 Type 2--- Type 2--- Apportioning recorded revenue

25. Accounting English 3a. Employee salaries owed for two days of a five-day workweek; weekly payroll, $9,000. Salary Expense 3,600 Accrued Salary Payable 3,600 Type 3--- Type 3--- Accruing unrecorded expenses

26. Accounting English 3b. Accrued advertising expense at the end of this month, $1,000. Advertising Expense 1,000 Accounts Payable 1,000 Type 3--- Type 3--- Accruing unrecorded expenses

27. Accounting English 4. Interest revenue accrued, $3,900. Interest Receivable 3,900 Interest Revenue 3,900 Type 4--- Type 4--- Accruing unrecorded revenue

28. Accounting English Part 2 Presentation --- Adjust Merchandise Inventory How to adjust merchandise inventory? a.To transfer beginning inventory to Income Summary. b.To record ending inventory.

29. Accounting English Part 2 Presentation --- Adjust Merchandise Inventory 5a. To transfer beginning inventory $17,000 to Income Summary. Income Summary 17,000 Inventory 17,000

30. Accounting English Part 2 Presentation --- Adjust Merchandise Inventory 5b. To record ending inventory $15,000. Inventory 15,000 Income Summary 15,000

31. Accounting English Many of business transaction affect the net income of more than one period, therefore, it is often necessary to adjust some account balances at the end of each accounting period in order to achieve proper matching of costs and expenses with the relative revenue earned to determine a meaningful net income figure fore each accounting period. Part 3 Exercises a. Why is the adjusting step of the accounting cycle necessary ?

32. Accounting English It occurs after the journals have been posted and a trial balance of ledger accounts has been taken, but before financial statements are prepared. Part 3 Exercises b. When does the adjusting step occur?

33. Accounting English Under accrual basis: revenues are recognized when earned; expenses are recognized when goods and services are used. Under cash basis: revenues are recognized when cash is collected; expenses are recognized when cash is paid for the goods and services. Part 3 Exercises c. How do the accrual basis and cash basis of accounting differ?

34. Accounting English The four types of adjustments are: (1) Apportioning recorded costs to periods benefited. (2) Apportioning recorded revenue to periods in which it is earned. (3) Accruing unrecorded expenses (4) Accruing unrecorded revenue Part 3 Exercises d. What four different types of adjustments are frequently needed at the end of an accounting period?

35. Accounting English (1) To transfer beginning inventory to Income Summary account. (2) To record ending inventory. Part 3 Exercises e. How to describe the adjusting procedure for merchandise inventory records under a periodic inventory system?

36. Accounting English Simmons Inc., whose accounting year ends on June 30, had the following balances in its ledger at June 30 of the current year: Inventory $20,000; Prepaid Insurance $1,200; Office Supplies on hand $500 Data for the year-end adjustments are as follows: a.Inventory, June 30 $16,800 b.Prepaid Insurance, June 30 400 c.Office Supplies on Hand, June 30 320 d.Depreciation Expense for year, Furniture and Fixtures 700 e.Depreciation Expense for year, Delivery Equipment 900 f.Accrued Sales Salaries, June 30 300 g.Accrued Office Salaries, June 30 200 Require : Make the necessary adjusting entries in the general journal. Part 3 Exercises

37. Accounting English Part 4 Summary in order to achieve proper matching of costs and expenses with the relative revenue earned to determine a meaningful net income figure for each accounting period. a. It is necessary to adjust some accounts balances in order to achieve proper matching of costs and expenses with the relative revenue earned to determine a meaningful net income figure for each accounting period. occurs after the journals have been posted and a trial balance of ledger accounts has been taken, but before financial statements are prepared. b. The adjusting step occurs after the journals have been posted and a trial balance of ledger accounts has been taken, but before financial statements are prepared.

38. Accounting English Part 4 Summary c. The four different types of adjustments frequently needed at the end of an accounting period are: 1.Apportioning recorded costs to periods benefited. 2.Apportioning recorded revenue to periods in which it is earned. 3.Accruing unrecorded expenses 4.Accruing unrecorded revenue d. d. The adjusting procedure for merchandise inventory records under a periodic inventory system are: 1.To transfer beginning inventory to Income Summary account. 2.To record ending inventory.

39. Accounting EnglishHomework P69. 6