会计循环2第二章补充.ppt

Prior Periods Current Period Future Periods Transaction Liability will be paid. End of Current Period Adjusting Entry Recognizes expenses incurred, and Records liability for future payment. Accruing Unpaid Expenses Examples Include: Interest Wages and Salaries Property Taxes Hey, when do we get paid? Accruing Unpaid Expenses Monday, May 29 Friday, June 2 $3,000 Wages Expense On May 31, Webb Co. owes wages of $3,000. Pay day is Friday, June 2. Wednesday, May 31 Accruing Unpaid Expenses Initially, an expense and a liability are recorded. Accruing Unpaid Expenses Income Statement Cost incurred this period to generate revenue. Balance Sheet Liability to be paid in a future period. Accruing Unpaid Expenses Monday, May 29 Friday, June 2 $5,000 Weekly Wages Let’s look at the entry for June 2. Wednesday, May 31 $2,000 Wages Expense $3,000 Wages Expense Accruing Unpaid Expenses The liability is extinguished when the debt is paid. Accruing Unpaid Expenses 4 4 4 4 4 4 3 4 THE ACCOUNTING CYCLE:Accruals and Deferrals Chapter4 At the end of the period, we need to make adjusting entries to get the accounts up to date for the financial statements. Adjusting entries are needed whenever revenue or expenses affect more than one accounting period. Every adjusting entry involves a change in either a revenue or expense and an asset or liability. Adjusting Entries Converting assets to expenses Accruing unpaid expenses Converting liabilities to revenue Accruing uncollected revenues Types of Adjusting Entries Prior Periods Current Period Future Periods Transaction Paid future expenses in advance (creates an asset). End of Current Period Adjusting Entry Recognizes portion of asset consumed  as expense, and Reduces balance of asset account. Converting Assets to Expenses Examples Include: Depreciation Supplies Expiring Insurance Policies Converting Assets to Expenses Jan. 1 Dec. 31 $2,400 Insurance Policy Coverage for 12 Months $200 Monthly Insuranc