金融英语中级考试笔记会计.docx

金融英语中级考试笔记会计.docx

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金融英语中级考试笔记会计

CHAPTER1

Assets：

thingsownedbyabusinesswhichcarriedavalue，theycanbeconsideredaseconomicresources，providingbenefitstothebusiness.

Liabilities：

amountowedbyabusinesstovariousparties，theycanbeconsideredasdebtsorobligationsownedbythebusinesstooutsidebodies.

Posting：

recordingtransactionsandenteringaccountsareoftencalled“posting”。

Atrailbalance：

isthereforedefinedasalistofbalancesofledgeraccountsworkedoutperiodicallytotestthecalculationaccuracyofaccount.---------everyaccountintheledgerislabelled（withdebitorcredit）---------theitemscancomeinanyorder---------whenthedebitbalanceagreewiththecreditbalances,itconfirmthattherehasbeenadebitentryforeverycreditentryinthepostingoftheaccount---------itisaninterimsummaryoftheinformationshownbytheaccount，itshouldcarrydate.---------themaindifferencebetweentrialbalancestatementsandbalancesheetsisthatinthetrialbalance，allaccountsintheledgerareshownassimplebalances（debitorcredit）whereasinthebalancesheet，theyareshownnotasdebitorcreditbalancesbutasassetsandliabilitiesrespectively.---------trialbalanceisunabletodetectthefollowingtypeoferrors:

1）omissionintherecordingoftheaccountingdata

2）anentryismadeintothewrongaccountofthesamegroup

3）anentryisenteredintothewronggroupoftheaccount

4）therearemistakesinthebookoforiginalentryinamount

5）mistakeismadeonthewrongsideinthebookoforiginalentry

6）mistakeiscoveredupbyasamemistake

Nominalaccount：

donotrepresentanassetoraliability.Theysimplystoreupinformationneededtoworkoutaprofitorlossforthebusinessattheyearend.Nominalaccountincludes：

purchases，sale，rent，wages，lightsandothersuchexpenses.Thenominalaccountswillgiveustheinformationneededtocalculatetheprofitorlossperiodically.Attheendofafinancialyear，thenominalaccountsarewrittenoffbytransferringtheamountstothetradingandprofitandlossaccount，leavinghenominalaccountsempty.

Journal：

thejournal，orthebookoforiginalentry，isachronologicalrecord，showingforeachtransactionthedebitandcreditchangesinspecificledgeraccounts.Thedebitandcreditentriesrecordedinthejournalaretransferredtotheaccountsintheledgeratappropriateintervals.Structureofjournal：

date，accountingtitlesandexplanation，ledgerpage，debit，credit.

CHAPTER2

Purchasesinaccountingmeansthepurchaseofthosegoodswhichthefirmbuys，andthemainobjectiveistosellthem.

Salesinaccountingmeansthesaleofthosegoodswhichthefirmnormallydealswithandwhichwereacquiredwithresalebeingthemainobjective.

Creditoranddebtor

Apersontowhommoneyisowedforgoodsisknownascreditor，whileapersonwhoowesthefirmmoneyisknownasadebtor.

Balancingoffaccounts

Itistheprocessofcalculatinghowmuchthebalanceofanaccountshouldbecarriedforwardtothenestperiod.Ifthedebittotalisgreater，thedifferenceshouldbeenteredintothedebitsideoftheaccount.

CorrectionofErrors

Errorsofcommission（notaffectingthetrialbalanceagreement）

i.e.inthewrongperson'saccount

Errorsofprinciple（notaffectingthetrialbalanceagreement）

i.e.enteredinthewrongtypeofaccount：

motorormotorexpense

Errorsoforiginalentry（notaffectingthetrialbalanceagreement）

Sucherrorsaremadewheretheoriginalamountisincorrect.

Errorsofomission（notaffectingthetrialbalanceagreement）

Sucherrorsaremadewheretransactionsarenotenteredintothebooksatall.

Compensatingerrors（notaffectingthetrialbalanceagreement）

Sucherrorsaremadewheremistakescanceleachotherout

Completereversalofentries（notaffectingthetrialbalanceagreement）

Suchmistakesaremadewherethecorrectamountareenteredinthecorrectaccounts，buteachitemisshownonthewrongsideofeachaccount.Wehavetomaketheamounttwicetheamountoftheerror.

Chapter3accountingandaccountingcycles

Accountingistheprocessofprovidingquantitativeinformationaboutbusinessentitiestohelpusersinmakingdecisionsregardingtheallocationofeconomicresources.

Theprocessofaccountingconsistsof：

1.Identification——theobservationofactivityandtheselectionofparticulareventsthatareevidenceofeconomicactivitiestoanentity.

2.Measurement——thequantificationfotheeventsinmonetaryterms

3.Recording——thekeepingofachronologicaldiaryofthemeasuredevents.

4.Communication——thepreparationanddistributionoffinancialstatementstousers.

Financialaccounting：

involvestherecordingandpresentationoffactualtransactions.

Managerialaccounting：

involvestheuseoffinancialinformationtointerpretitsimplicationsfordecision-makingpurposes.

Formsofbusinessorganizations：

Soleproprietorship：

isownedandusuallymanagedbyoneindividual，partnershiphasmorethanoneowner；limitedcompanyisaseparatelegalentitythatisownedbymanyindividuals，calledshareholders，whoareissuedsharesofcapitalasevidenceoftheirownership.

Account

Anaccountisabusinessdocumentusedtorecordadretainmonetaryinformationaboutacompany'stransaction.Thecompany’sfullsetofaccountsarekeptinageneralledgerandaccountsaresometimescalledgeneralledgeraccounts.

Posting

Itistheprocessoftransferringthedebitandcreditinformationrecordineachjournalentrytotheproperaccountsinthegeneralledger.

Accountingperiod

Itistheperiodoftimeforwhichthenetprofitofacompanyiscomputed.Anaccountingperiodoflessthanoneyeariscalledinterimperiod.

Revenue

Itisderivedfromthechargetocustomersforgoodsorservicesprovided，resultinginincreaseinassetsordecreaseinliabilities.

Expense

Theyarethecostofpurchasinggoodsorservicesusedinrunningthebusiness，resultingindecreaseinassetsorincreaseinliabilities.

Accrualaccountingandcashbaseaccounting

1.Inaccrualaccounting，revenuesarerecordedintheperiodinwhichgoodsorservicesareprovided，regardlessofwhencashisreceived.Therevenuesandexpensesofthesameperiodarematchedsothatthecompany'sprofitcanbedetermined.

2.Underthecashbasisaccountingsystem，netprofitisthedifferencebetweencashreceiptfromoperationsandcashpaymentsmadeduringtheaccountingperiod.Itmaydistortthenetprofit.

Depreciation

1.Provisionfordepreciationistheprocessofallocationofthecostofa

physicalassettoeachaccountingperiodinwhichtheassetisused.

2.Depreciationrepresentstheportionconsumedduringtheaccounting

period.

3.Whendepreciationexpenseisdebited，theprovisionfordepreciationiscredited.

4.Provisionfordepreciationrepresentsthetotaldepreciationexpensesrecordedsincetheassetwaspurchased.

Chapter4accountingprinciples

Businessentityassumption

1.economiceventscanbeidentifiedwithaparticularunitofaccountability.

2.Accountingismainlyconcernedwiththebusinessorganizationasaseparateentity.

3.Therevenuesandexpensesofabusinessareregardedasaffectingitsassetsandliabilitiesbutnottheindividualinvestor'sassetsandliabilities.

Monetaryunitassumption

1.onlytransactiondatacapableofbeingexpressedintermsofmoneyshouldbeincludedintheaccountingrecordsandtheunitofmeasurementremainsconstantoveraspecificperiodoftime.

2.Theuseofthemonetarynitassumptionhastwomajorlimitations.First，itlimitsthescopeofaccountingreports，i.e.goodwill.Second，thepurchasingpowerofmoneycontinuallychanges.

Periodicassumption

1.theeconomiclifeofabusinesscanbedividedintoartificialtimeperiods.

2.Wemustthereforeprepareperiodicreportsonoperationsandfinancialpositionfordecision-makerssuchasmanagementandotherparties.

3.Theaccountingperiodconceptcreatesmanydifficulties.i.e.adjustedentriesareneededtoreportnetincomeforaperiodoftime.Theinventorycosting，estimatingbaddebtprovisions，andselectingdepreciationmethodsarealsodirectlyrelatedtomeasuringperiodicprofit.

Goingconcernassumption

1.Thebusinesswillcontinueinoperationlongenoughtocarryoutits

existingobjectivesandcommitments.

2.Thegoingconcernassumptionalsosupportstherecordingofprepaidexpensesasassetsalthoughinmostcasestheprepaymentscannotbesold.

3.Theassumptionjustifiesourrecordingfixedassetsatcostanddepreciatingthemwithoutreferencetotheircurrentreplacementcosts.

4.Whentheabilityofabusinesstocontinueasagoingconcernisdoubtful，thisfactshouldbedisclosedinanotetothefinancialstatement.

5.Thefinancialstatementsshouldbepreparedfromthequittingconcernorevenliquidationpointofviewinsteadofagoingconcernpointofview.

Contingentliabilities

Contingentliabilitiesarepotentialobligationsthatwillbecomeliabilitiesonlyifcertaineventshappeninthefuture.Iftheliabilitiesareprobableandtheamountoftheliabilitiescanbereasonablyestimated，itshouldberecordedintheaccounts.

Capitalexpenditureandrevenueexpenditure

Capitaexpenditureistheamountofinvestmentbyabusinessinitsassetsretainedforthepurposeofearningprofits，whicharetermedfixedassets.

Revenueexpenditurearethosecostsincurredinrunningabusinessonacurrentordailybasis.

Chapter5accountingfortradingcompanies

Creditmemo（creditnote）——salesreturn

Debitmemo——purchasereturn

Perpetualinventorysystemandperiodicinventorysystem

*Inaperpetualinventorysystem，acontinuousrecordiskeptforthecostofgoodssoldandthecostofstockonhand.