武汉理工大学：《会计学》课程教学课件（英文）04 Revenues and Monetary Assets

Chapter 4Revenues andMonetary AssetsWHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school Chapter 4 Revenues and Monetary Assets

Chapter ObjectivesAccounting periodAccrual basis accountingThree more accounting concepts-the conservatism concept;the materiality concept;the realization concept;Revenue measurement;MonetaryassetsWHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school Chapter Objectives Accounting period Accrual basis accounting Three more accounting concepts —the conservatism concept; —the materiality concept; —the realization concept; Revenue measurement; Monetary assets

1. The Accounting Period(Assumption) An organization'sactivities can be divided into specifictime periods such as a month, aquarter, a semi-annual, or a yearMost organizations use a year as theirprimary accounting period andadopt a fiscal yearWHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school  (Assumption) An organization’s activities can be divided into specific time periods such as a month, a quarter, a semi-annual, or a year.  Most organizations use a year as their primary accounting period and adopt a fiscal year 1. The Accounting Period

TAnnually2Semiannually231QuarterlyFebMarAprMayJunJulAugSepOctNovDecJanMonthlyWHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 Annually 1 2 Monthly Quarterly Semiannually Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2. Accrual Basis AccountingWhen we divide business activitiesinto arbitrary fixed periods of time,it is often necessary to havespecial accounting for transactionsthat cross from one time period tothe next.WHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school When we divide business activities into arbitrary fixed periods of time, it is often necessary to have special accounting for transactions that cross from one time period to the next. 2. Accrual Basis Accounting

Accrual Basis vs. Cash BasisAccrualBasisCashBasisRevoRevenuesareueszedwrecognized whenrerpghen福cath is Nceivdandearnedandexpensesrdedex,arerecognizedwhenensesecwhenpaid.incurred.NotGAAPWHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school Accrual Basis vs. Cash Basis Accrual Basis Revenues are recognized when earned and expenses are recognized when incurred. Cash Basis Revenues are recognized when cash is received and expenses recorded when cash is paid. Not GAAP

Accrual Basis vs. Cash BasisFastForward paid $2,400 for a 24-month insurancepolicy beginning December 1, 2009Example:Onthe cashbasis theentire $2,4o0 would berecognizedas insurance expensein2009No insuranceexpensefromthispolicywouldberecognizedin2010or2011,periods covered by the policyWHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school Accrual Basis vs. Cash Basis Example: FastForward paid $2,400 for a 24-month insurance policy beginning December 1, 2009. On the cash basis the entire $2,400 would be recognized as insurance expense in 2009. No insurance expense from this policy would be recognized in 2010 or 2011, periods covered by the policy

1Cash Basis1InsuranceExpense2009FebMarJanApr$$$$--、-JunJulMayAug$-$$$---OctNovDecSep$$$$ 2,400--WHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school Cash Basis Jan Feb Mar Apr $ - $ - $ - $ - May Jun Jul Aug $ - $ - $ - $ - Sep Oct Nov Dec $ - $ - $ - $ 2,400 Insurance Expense 2009

11Accrual BasisExpense2009InsuranceSepOctNovDec$$$$1002010InsuranceExpenseFebMarJanApr$$$$100100100100JulMayJunAug$$$$100100100100OctSepNovDec$$$$100100100100WHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school Accrual Basis Sep Oct Nov Dec $ - $ - $ - $ 100 Jan Feb Mar Apr $ 100 $ 100 $ 100 $ 100 May Jun Jul Aug $ 100 $ 100 $ 100 $ 100 Sep Oct Nov Dec $ 100 $ 100 $ 100 $ 100 Insurance Expense 2009 Insurance Expense 2010

Accrual Basis vs. Cash Basis2011InsuranceExpenseJanFebMarApr$$$$100100100100JulMayJunAug$$$$100100100100SepOctNovDec$$$$100100100Onthe accrual basis$1ooof insuranceexpense is recognized in 2009,$1,200 in2010, and $1,100 in 2011.The expense is matched withthe periodsbenefited by the insurance coverageWHUTAccountingdepartmentofmanagementschool

WHUT Accounting department of management school Accrual Basis vs. Cash Basis Jan Feb Mar Apr $ 100 $ 100 $ 100 $ 100 May Jun Jul Aug $ 100 $ 100 $ 100 $ 100 Sep Oct Nov Dec $ 100 $ 100 $ 100 $ - Insurance Expense 2011 On the accrual basis $100 of insurance expense is recognized in 2009, $1,200 in 2010, and $1,100 in 2011. The expense is matched with the periods benefited by the insurance coverage