ch02 The Structure and Chart of Accounting

1、財會英語財會英語CH02 The Structure and Chart of AccountingContentsaccounting measurement account titles4123.accounting equationaccounting elementsLearning objectives: After completing this chapter , you should be able to : 1. Explain how the concepts of recognition, valuation, and classification apply to bu

2、siness transactions and why they are important factors in ethical financial reporting 2. Define accounting elements. 3. Understand accounting equation. 4. Understand the function of the account titles. To make an accounting measurement, the accountant must answer four basic questions: 1. What is mea

3、sured? 2. When should the measurement be made? 3. What value should be placed on what is measured? 4. How should what is measured be classified?What is measured? Accountants in industry, professional associations 專業(yè)人員協(xié)會專業(yè)人員協(xié)會, public accounting, government, and academic circles學術圈學術圈 debate the answ

4、ers to these questions constantly, and the answers change as new knowledge and practice require. But the basis of todays accounting practice rests on a number of widely accepted concepts and conventionsWhat is measured? Every system must define what it measures, and accounting is no exception. Basic

5、ally, financial accounting uses money to gauge the impact of business transactions 經(jīng)濟業(yè)務經(jīng)濟業(yè)務 on separate business entities. The objects of accounting measurement are business transactions.Business Transactions Business transactions are economic events that affect a businesss financial position. Busin

6、esses can have hundreds or even thousands of transactions every day. These transactions are the raw material of accounting reports. A transaction can be an exchange of value (a purchase, sale, payment, collection, or loan) between two or more parties. A transaction also can be an economic event that

7、 has the same effect as an exchange transaction but that does not involve an exchange. Tom owns and operates a minimart. Which of Toms actions described below are business transactions? Explain why any other actions are not considered transactions. 1. Tom reduces the price of a gallon of milk in ord

8、er to match the price offered by a competitor. 2. Tom pays a high school student cash for cleaning up the driveway behind the market. 3. Tom fills his sons car with gasoline in payment for his sons restocking the vending machines and the snack food shelves. 4. Tom pays interest to himself on a loan

9、he made to the business three years ago. to measure a business transaction, you must decide： when the transaction occurred (the recognition issue) what value to place on the transaction (the valuation issue) and how the components of the transaction should be categorized (the classification issue).T

10、he Role of Measurement IssuesRecognition The recognition issue refers to the difficulty of deciding when a business transaction should be recorded. The resolution of this issue is important because the date on which a transaction is recorded affects amounts in the financial statements. Events That A

11、re Not Recorded as Transactions A customer inquires about the availability of a service. A company hires a new employee. A company signs a contract to provide a service in the future. Events That Are Recorded as Transactions A customer buys a service. A company pays an employee for work performed. A

12、 company performs a service.Valuation The valuation issue focuses on assigning a monetary value to a business transaction and accounting for the assets and liabilities that result from the business transactions. fair value exchange priceClassification The classification issue has to do with assignin

13、g all the transactions in which a business engages to appropriate categories, or accounts. One of the most important classification issues in accounting is the difference between an expense and an asset,Accounting Elements Assets Liabilities owners equity Revenue Expense profit 資產(chǎn)資產(chǎn) 負債負債 所有者權益所有者權益

14、收入收入 費用費用 利潤利潤Assets Assets are the economic resources of a company that are expected to benefit the companys future operations. Certain kinds of assetsfor example, cash and money that customers owe to the company (called accounts receivable)are monetary items. Other assetsinventories (goods held fo

15、r sale), land, buildings, and equipmentare nonmonetary, physical items. Still other assetsthe rights granted by patents, trademarks, and copyrightsare nonphysical. Liabilities Liabilities are a businesss present obligations to pay cash, transfer assets, or provide services to other entities in the f

16、uture. Among these obligations are amounts owed to suppliers for goods or services bought on credit (called accounts payable應付賬款應付賬款), borrowed money (e.g., money owed on bank loans), salaries and wages owed to employees, taxes owed to the government, and services to be performed. As debts, liabilit

17、ies are claims recognized by law. That is, the law gives creditors the right to force the sale of a companys assets if the company fails to pay its debts. Creditors have rights over owners and must be paid in full before the owners receive anything, even if payment of the debt uses up all the assets

18、 of the business.Owners Equity Owners equity represents the claims by the owner of a business to the assets of the business. Theoretically ,irtkli . 理理論上論上 , owners equity is what would be left if all liabilities were paid, and it is sometimes said to equal net assets.Revenue The increase in capital

19、 resulting from the delivery of goods or rendering of services by the business. In amount, the revenues is equal to the cash and receivables gained in compensation for the goods delivered or services rendered.Expense The decrease in capital caused by the businesss revenue-producing operations. In am

20、ount, the expense is equal to the value of goods and services used up or consumed in obtaining fit The increase in capital resulting from profitable operation of a business, that is the excess of revenue over expenses for the accounting period. Generally, a company is successful if its re

21、venues exceed its expenses. When revenues exceed expenses, the difference is called net income. When expenses exceed revenues, the difference is called net loss.Financial position Financial position 財務狀況財務狀況 refers to a companys economic resources, such as cash, inventory, and buildings, and the cla

22、ims against those resources at a particular time. Another term for claims is equities. Every company has two types of equities: creditors equities, such as bank loans, and owners equity. The sum of these equities equals a companys resources: Economic Resources= Creditors Equities + Owners Equity Acc

23、ounting interprets and records the effects of business transactions. Accounting elements are the basic classification of the accounting object. It is necessary to take further classification to the accounting elements since the content of the accounting elements are diverse and complex.Account Title

24、 Account titles會計科目會計科目 refer to the items in which specific content of the accounting elements are classified and calculated. Account titles cover various transactions or events of all types of enterprises.The Function of the Account Titles (1) Account Titles Can Reflect the Change of the Accountin

25、g Elements (2) Establishing the Account Titles Is the Basic Requirements for Accounting (3) Account Titles Are the Basis of the Accounting Controls Common Chart of Accounts Assets Current assets 流動資產(chǎn) Cash and cash equivalents 現(xiàn)金和現(xiàn)金等價物 Cash Cash in bank 銀行存款 Other cash and cash equivalents Other city

26、 cash in bank 外埠存款 Cashiers cheque 銀行本票 Bank draft 銀行匯票 Credit card L/C guarantee deposits 信用證擔保存款 letter of credit Refundable deposits 存出保證金 Refundable 可退還的；可償還的 Common Chart of AccountsShort-term investments Short-term investments-stock Short-terrn investments-corporate bonds ; Short-term investme

27、nts,-corporate funds : Short-term investments-other Short-term investment depreciation reserve ;折舊準備 Short-term investments falling price reserves 跌價準備跌價準備 Note receivable 應收票據(jù) Bank acceptance 銀行承兌匯票 Trade acceptance 商業(yè)承兌匯票 Dividend receivable 應收股利 Interest receivable Account receivable 應收帳款 Other n

28、otes receivable 其他應收（票據(jù)）款 Common Chart of AccountsBad debt reserves 壞賬準備 Advance money 預付賬款 Cover deficit by state subsidies of receivable 彌補赤字應收的國家補貼 ； 應收補貼款 Inventories 存貨 Supplies purchasing 物資采購 Raw materials 原料，原材料 Low-value consumption goods 低值易耗品 Materials cost variance 材料成本差異 Semi-finished g

29、oods 半成品 Finished goods Differences between purchasing and selling price商品進銷差價 Work in process- outsourced 委托加工物資 Common Chart of AccountsTrust to and sell the goods on a commission basis 委托代銷商品 Commissioned and sell the goods on a commission basis受托代銷商品 Collect money and send out the goods by stage

30、s分期收款發(fā)出商品 Deferred and prepaid expenses待攤費用 Long-term investment Long-term investment on bonds長期債權投資 Long-term investment on stocks長期股權投資 Other investment on bonds 其他債權投資 Long-term investments depreciation reserves 長期投資減值準備 Stock rights investment depreciation reserves 股權投資減值準備 Creditors rights inve

31、stment depreciation reserves債權投資減值準備 Common Chart of AccountsFixed assets Accumulated depreciation累計折舊 Fixed assets depreciation reserves固定資產(chǎn)減值準備 Construction-in-process在建工程 Construction-in-process depreciation reserves在建工程減值準備 Liquidation of fixed assets固定資產(chǎn)清理 Intangible assets無形資產(chǎn) Intangible Asset

32、s depreciation reserves 無形資產(chǎn)減值準備 Goodwill 商譽 Tenure 土地使用權 Liabilities Current liability Short-term borrowing 短期借款 Notes payable應付票據(jù) Account payable 應付賬款 Deposit received 預收賬款 Dividends payable Tax payable Value added tax payable 應交增值稅 Other payables Bonds payableCommon Chart of AccountsOwners Equity

33、 Paid-up capital (or stock) 實收資本(或股本) Capital reserves 資本公積 Surplus reserves 盈余公積 Profits Current year profits 本年利潤 Undistributed profits 未分配利潤 Cost Cost of manufacture 生產(chǎn)成本 Manufacturing overhead 制造費用 Profit and Loss Prime operating revenue 主營業(yè)務收入 Other operating revenue 其他業(yè)務收入 Non-operating revenu

34、e 營業(yè)外收入 Main business costs The Classification of the Account Titles 1. Classified by Economic Content the account titles in the industrial enterprises are classified by economic content into five categories as follows: (1) Assets titles; (2) Liabilities titles; (3) Owners equity titles; (4) Cost ti

35、tles; (5) Profit titles.The Classification of the Account Titles 2. Classified by the Levels of Details Provided by the Information accountants must provide not only the summarized data and documents but also more details of the information. Consequently, accountants have to establish the general ac

36、count titles 總分類賬戶總分類賬戶 to summarize the information, and they have to set up the subsidiary account titles 明細分類賬戶明細分類賬戶 to show the details simultaneously. Being established and issued by the Ministry of Finance. classify the contents of the accounting elements broadly. established by the enterpris

37、e. classify the contents of the accounting elements in detailgeneral account titlessubsidiary account titlesThe Accounting EquationThe two sides of the equation must always be equal, or “in balance”How to use moneyHow to get moneyExample 2.1 During the month of January 2014, Mr. S. Smith, psychologi

38、st. 1. Invested $ 4,000 to open his counseling practice. 2. Bought supplies (stationery, pencils, and so on) for cash, $ 300. 3. Bought office furniture from Robinson Furniture Company on account賒帳賒帳 ,$ 2,000.Example 2.1 4. Received $ 2,500 in fees earned during the month. 5. Paid office rent for Ja

39、nuary, $ 500. 6. Paid salary for part-time help, $ 200. 7. Paid $1,200 to Robinson Furniture Company on account.Example 2.1 8. After taking an inventory at the end of the month, Smith found he had used $ 200 worth of supplies. 9. Withdrew $ 400 for personal use. Analyze and record these transactions

40、 Transaction (l): Mr. S. Smith invested $ 4,000 to open his practice. There are two accounts that are affected: the asset Cash is increased and the capital of the firm is increased by the same amountAssets =Liabilities+owners equitycashS. Smith, Capital$ 4,000$ 4,000 Transaction(2) : Bought supplies

41、 for cash $ 300. In this case, Mr. Smith is substituting one asset for another: he is receiving (+)the asset Supplies and paying out (-) the asset Cash. Note that the capital of $ 4,000 remains unchanged.Assets=Liabilities + owners equityCash + supplies S. Smith, Capital$ 4,000$ 4,000- $ 300 + $ 300

42、$ 4,000$ 3,700 + $ 300$ 4,000Transaction(3) : Bought office furniture from Robinson Furniture Company on account,$ 2,000. Mr. Smith is receiving the asset of Furniture but is not paying for it with the asset cash. Instead, he will owe the money to the Robinson Furniture Company. Therefore, he is lia

43、ble for this amount in the future, thus creating the liability Accounts Payable.Assets=Liabilities + owners equityCash + supplies + furnitureS. Smith, Capital$ 3,700 $ 300$ 4,000 +$2,000+$2,000$ 4,000$ 3,700 + $ 300 + $2,000+$2,000$ 4,000Transaction(4) : Received $ 2,500 in fees earned during the mo

44、nth. Because Mr. Smith received $ 2,500, the asset cash increased, and also his capital increased. It is important to note that he labels the $ 2,500 Fees Income to show its origin.Assets= Liabilities+ owners equityCash + supplies + furnitureAccounts payableS. Smith, Capital $ 3,700 $ 300 $2,000$2,0

45、00 + $ 4,000+ $ 2,500 + $ 2,500$ 6,200 + $ 300 +$2,000 = $2,000+ $ 6,500 Transaction(5) : Paid office rent for January, $500 When the word paid is stated, you know it means a deduction from cash, since Mr. Smith is paying out his asset Cash. Payment of expense is a reduction of capital. It is termed

46、 Rent Expense.Assets= Liabilities+ owners equityCash + supplies + furnitureAccounts payableS. Smith, Capital $ 6,200 $ 300 $2,000 $2,000 $ 6,500 - $ 500 - $ 500$ 5,700 + $ 300 +$2,000 = $2,000+ $ 6,000 Transaction (6) :Paid salary for part-time help, $ 200. Again the word paid means a deduction of c

47、ash and a reduction in capital. This time it refers to Salaries Expense.Assets= Liabilities+ owners equityCash + supplies + furnitureAccounts payableS. Smith, Capital $ 5,700 $ 300 $2,000 $2,000 $ 6,000 - $ 200 - $ 200$ 5,500 + $ 300 +$2,000 = $2,000+ $ 5,800 Transaction (7) :Paid $ 1,200 to Robinso

48、n Furniture Company on account. Here Mr. Smith is reducing the asset cash because he is paying $ 1,200, and he is also reducing the liability Accounts Payable. He will now owe $ 1,200 less.Assets= Liabilities+ owners equityCash + supplies + furnitureAccounts payableS. Smith, Capital $ 5,500 $ 300 $2

49、,000 $2,000 $ 5,800 - $ 1,200- $ 1,200 $ 4,300 + $ 300 +$2,000 = $800+ $ 5,800Transaction (8) :After taking an inventory at the end of the month, Smith found he had used $ 200 worth of supplies.The original amount of supplies purchased has been reduced to the amount that was found to be left at the

50、end of the month. Therefore, the difference was the amount used ( $300 - $100 = $200), It reduces the assets Supplies by $ 200 and reduces capital by the same amount. It is termed Supplies Expense.Assets= Liabilities+ owners equityCash + supplies + furnitureAccounts payableS. Smith, Capital $ 4,300

51、$ 300 $2,000 $800 $ 5,800 - $ 200 - $ 200 $ 4,300 + $ 100 +$2,000 = $800+ $ 5,600 Transaction (9) :Withdrew $ 400 for personal use. The withdrawal of cash is a reduction not only in Mr. Smiths cash position but also in his capital. This is not an expense but a personal withdrawal, a reduction of the

52、 amount invested.Assets= Liabilities+ owners equityCash + supplies + furnitureAccounts payableS. Smith, Capital $ 4,300 $ 100 $2,000 $800 $ 5,600 - $ 400 - $ 400 $ 3,900 + $ 100 +$2,000 = $800+ $ 5,200double-entry復式記賬復式記賬 In the double-entry system, each transaction must be recorded with at least on

53、e debit and one credit, and the total amount of the debits must equal the total amount of the credits. Because of the way it is designed, the whole system is always in balance. All accounting systems, no matter how sophisticated, are based on the principle of duality.Accounts Accounts 賬戶賬戶 are the b

54、asic storage units for accounting data and are used to accumulate amounts from similar transactions. An accounting system has a separate account for each asset, each liability, and each component of owners equity, including revenues and expenses. Whether a company keeps records by hand or by compute

55、r, managers must be able to refer to accounts so that they can study their companys financial history and plan for the future.The T Account The T account is a good place to begin the study of the double-entry system. Such an account has three parts: a title, which identifies the asset, liability, or

56、 owners equity account; a left side, which is called the debit side; and a right side, which is called the credit side. The T account, so called because it resembles the letter T, is used to analyze transactions and is not part of the accounting records. Any entry made on the left side of the accoun

57、t is a debit, and any entry made on the right side is a credit. The terms debit (abbreviated Dr.) and credit (abbreviated Cr.) are simply the accountants words for “l(fā)eft” and “right” (not for “increase” or “decrease”).The alignment of these parts resembles the letter T, and therefore the account for

58、m is called a T account.DEBITS AND CREDITS 借和貸借和貸 The terms debit and credit mean left and right, respectively The act of entering an amount on the left side of an account is called debiting the account and making an entry on the right side is crediting the account. When the debit amounts exceed the

59、 credits, an account has a debit balance余額余額; when the reverse is true, the account has a credit balanceRules of Double-Entry Accounting The two rules of the double-entry system are that every transaction affects at least two accounts and that total debits must equal total credits. 1. Debit increase

60、s in assets to asset accounts. Credit decreases in assets to asset accounts. 2. Credit increases in liabilities and owners equity to liability and owners equity accounts. Debit decreases in liabilities and owners equity to liability and owners equity accounts.Normal Balance正常余額 Normal balance is the