The whole process:
Analyze transactions-> Record transactions-> Summarize transactions-> Report transactions
Entries->Post->Trial Balance->Financial Report
A. Analyze Transactions
1. Transactions are recorded in:
a. General Journal 日記賬 Chronological record of an organization’s transactions and how each transaction affects the balances in particular accounts
b. General Ledger 總賬Collection of all ledger accounts that supports an organization’s financial statements
c. Ledger Account(Subsidiary Ledger) 分類賬Listing of all the increases and decreases in a particular account
2. T-Account
Account:An organized format used by companies to accumulate the dollar effects of
transactions
a.account format: T-Account
Left side: increase Right side: decrease
b.T-Account:
Visualization of every account; A tool used to represent an account.
The left side of the T-account is always the?debit side.
The right side of the?T-account is always the credit side.
c. debit & credit
Debits are simply entries on the left.
Credits are simply entries on the right.
這個定義仿佛在逗我。。。 對我來說基本上就是區分正負的約定
d.Expanded Accounting Equation:
Each account uses T-Account format.
3. Double-Entry Accounting
There must be at least one debit and one credit. The (total) debits must always equal the (total) credits.
B. Record Transactions
1. Journal?
Journal : A? chronological ?record of all business activities. A book of? original entry . Transactions are? first entered in this book to show which accounts should be debited and which should be credited.
Rules:
a.Provide a reference date for each transaction.
b.Debits are written first.
c.Credits are indented and written after debits.
d.Total debits must equal total credits.
2. Journal Entries: A 4-steps process
a. Identify which accounts are involved
b. For each account, determine if it is increased or decreased
c. For each account, determine if it is recorded as debit entry or credit entry
d.?For each account, determine by how much it will change
C. Summarize Transactions
1. Post Journals to ledgers
Ledger :A? classified ?record of all transactions. A book of? final entry . Transactions are? posted in the ledger after the same have been recorded in the journal.
Journal and Posting–A simplified format: just use T-Account!
2. Prepare Trial Balance : 試算平衡表?
The trial balance lists all account?balances in the general ledger . If the books are in balance, the total debits will equal the total credits.
remark：平時不做，只在期末時（制表）做，相當於壹個草稿用來手工查（部分）錯，由於現在電子記賬，已經基本沒有用了
3. Closing the accounts ?結賬
remark:收入就是收入，費用就是費用，都不屬於所有者權益，記賬時壹定是分開記的，只有在期末結賬時才會影響到所有者權益。
a. Perpetual (real) accounts vs. Temporary (nominal) accounts
Perpetual (real) accounts 永久性賬戶/實賬戶
Report the cumulative increases and decreases in? BS accounts?from the date of organization .
Not closed to a zero balance at the period’s end.
Balances are carried forward to next period.
Temporary (nominal) accounts 臨時性賬戶/虛賬戶
(revenues, expenses, and dividends)?closed to a zero balance at the end of each period.
At period’s end,?adjustments are made, the IS is prepared, and balances are then closed to Retained Earnings .
The closing process applies only to temporary accounts.
b.Why we need to close the Accounts?
It?transfers?the balances of the “temporary” stockholders’ equity accounts ( revenues and expenses )?to?the “permanent” stockholders’ equity account ( retained earnings )
It makes the revenues and expense accounts have a?zero balance, which readies them for the next period’s transactions
c.?Recording Closing Entries
Close Revenue accounts to Income Summary .
Close Expense accounts to Income Summary .
Close Income Summary account to Retained Earnings .
Close Dividend to Retained Earnings.
4. Correcting Entries
a.?Types of Errors
No entry is made when one should have been made
If erroneous entry is made, could be:
? Correct amounts to incorrect accounts
? Incorrect amounts to correct accounts?
? Transaction omitted
? GAAP is misapplied
b. Types of accounts involved
? Permanent?
– always open so correct anytime?
? Temporary
– If accounts not closed, simple correction
– If accounts are closed, use Retained Earnings or just wait (self correcting after 2 years)
c. Correcting entry
Correct entry;?Erroneous entry;?Correcting entry;
Correcting entry : A journal entry that cancels a previous erroneous entry and adds the correct amounts to the correct accounts; Recorded in the general journal and posted in the general ledger as a regular entry is posted
d. Correction of Errors
What was recorded? What should have been recorded?
Correcting entry depends on? where we are in time ?
Made and discovered in same fiscal year :?the temporary account Rent Expense is still open (not been closed to Retained Earnings)
Made in one fiscal year, discovered next fiscal year :?Do nothing (after 2nd year, will be correct), or
From HW:
1.bill 賬單； notes 票據；沒提notes不要想著記notes payable
2.telephone, water, electricity壹般記在utilities expense
3.個人獨資撤資壹般不記xxx, capital ; 記xxx, withdrawal/drawing
4.Contra account 抵消賬戶：壹定與主賬戶相伴，與主賬戶相反（目的是沖減主賬戶的余額）
? Contra Asset Account 資產抵消賬戶：比如累計折舊Accumulated Depreciation（想要留下原始數據，所以通過credit這個賬戶來折舊）；累計折舊不能清零，balance裏的總資產是要算減掉折舊之後的
5.超募->留在銀行吃利息（或買理財產品)->interest expense有可能為負
6.list /sticker price->price tag
7.sign a contract, 還是先記收到的賬
8.intangible asset無形資產：franchise, copyright, patent...
9.入股不壹定都以現金入股，patent, equipment入股都是可能的
Product Cost :
Services industries have no goods, so they don't COSG. They use Cost of Sales as a counterpart.
Component:Material (component cost), direct labor, manufacturing cost, storage cost(mostly, but of course it depends)
Accounting: recorded as inventory first, transferred to COGS after sales !!!
Period Cost:
Is rent expense period cost ?
When a company incurs rent for its manufacturing operations, the rent is a product cost.
?If the rent is for items involved in the selling function, the rent is a period cost
if the rent is for items in the administrative function of the company, the rent is a period cost
Accounting: recorded as expense directly !!!