LOGO. 河南财政税务高等专科学校 2 Chapter 15. The Balance Sheet 简要介绍三个主要财务报表 编制资产负债表的主要目的 资产负债表的主要内容 如何编制常规的资产负债表 知识点复习.

Presentation on theme: "LOGO. 河南财政税务高等专科学校 2 Chapter 15. The Balance Sheet 简要介绍三个主要财务报表 编制资产负债表的主要目的 资产负债表的主要内容 如何编制常规的资产负债表 知识点复习."— Presentation transcript:

1 LOGO

2 河南财政税务高等专科学校 2 Chapter 15. The Balance Sheet 简要介绍三个主要财务报表 编制资产负债表的主要目的 资产负债表的主要内容 如何编制常规的资产负债表 知识点复习

3 河南财政税务高等专科学校 3 Introduction to Financial Statements Income Statement Balance Sheet Statement of Cash Flows Three primary financial statements. We will use a corporation to describe these statements.

4 河南财政税务高等专科学校 4 Introduction to Financial Statements Describes where the enterprise stands at a specific date. Income Statement Balance Sheet Statement of Cash Flows 描述

5 河南财政税务高等专科学校 5 Introduction to Financial Statements Depicts the revenue and expenses for a designated period of time. Income Statement Balance Sheet Statement of Cash Flows 描述 指定的

6 河南财政税务高等专科学校 6 Introduction to Financial Statements Depicts the ways cash has changed during a designated period of time. Income Statement Balance Sheet Statement of Cash Flows

7 河南财政税务高等专科学校 7 The purpose of the Balance Sheet Limitations:  The balance sheet does not portray the market value of the entity as a going concern nor its liquidation value.  Resources such as employee skills and reputation are not recorded in the balance sheet. Limitations:  The balance sheet does not portray the market value of the entity as a going concern nor its liquidation value.  Resources such as employee skills and reputation are not recorded in the balance sheet. Usefulness:  The balance sheet describes many of the resources a company has for generating future cash flows.  It provides liquidity information useful in assessing a company’s ability to pay its current obligations.  It provides long-term solvency information relating to the riskiness of a company with regard to the amount of liabilities in its capital structure. Usefulness:  The balance sheet describes many of the resources a company has for generating future cash flows.  It provides liquidity information useful in assessing a company’s ability to pay its current obligations.  It provides long-term solvency information relating to the riskiness of a company with regard to the amount of liabilities in its capital structure. Reports a company’s financial position on a particular date.

8 河南财政税务高等专科学校 8 The Balance Sheet a listing of an organisaztion’s assets( 资 产 ), liabilities ( 负债 ) and owners’ equity ( 业主权益 ) on a given date. It is designed to portray( 描述描绘 ) the financial position of the organization at a particular time (e.g. on Jan. 31, 2010). Income statement Statement of financial position Statement of Cash Flows

9 河南财政税务高等专科学校 9 The Balance Sheet Heading Body

10 河南财政税务高等专科学校 10 Balance sheet accounts-- accounting elements 资产负债表账户 -- 会计要素 Balance sheet: 1.Asset 2.Liabilities 3.owner’s equity Income statements: 1.Revenue 2.Expense 3.Net income

11 河南财政税务高等专科学校 11 1.Asset 资产  Assets are probable future economic benefits obtained or controlled by a company as a result of past transactions or events and whose cost (or fair value) at the time of acquisition can be objectively measured  资产是由过去的交易或事项形成的、可能 带来将来经济利益流入的、取得成本

12 河南财政税务高等专科学校 12 Four key point in the definition:  An asset must be acquired in a transaction,  An asset must be an economic resource  The resource must be controlled by the entity  Its cost ( or fair value )at the time of acquisition must be objectively measurable.

13 河南财政税务高等专科学校 13 (1)Current asset 流动资产  Cash and other assets that are expected to be realized in cash or sold or consumed during the normal operating cycle of the entity or within one year, whichever is longer, are called current assets.  在一个正常营业周期或一年以内（以长者 为限）可以进行变现或消耗的现金和其他 资产，称之为流动资产。

14 河南财政税务高等专科学校 14  Cash consists of funds that are readily available for disbursement. Cash is money in the form of cash or bank deposits. (e.g. checking and /or money market account)  现金包括各种待结算的资金，通常以现金 或银行存款的形式存在（如：支票账户或 货币资金账户）

15 河南财政税务高等专科学校 15  Short-term investments are an entity investment in another entity’s stock or debt (i.e. bonds) that are both readily marketable and expected to be converted into cash within a year  短期投资是一个公司对另一个公司的以股 票或债券进行的一年以内市场可变现的投 资。

16 河南财政税务高等专科学校 16 Accounts receivable Accounts receivable are the amounts due from customers for goods they purchased on credit. 应收账款是客户因赊购货物所欠的款项  Allowance for doubtful accounts 坏账准备  Notes receivable 应收票据  Other receivables 其他应收款

17 河南财政税务高等专科学校 17 Inventories are the aggregate of those items that either:  Held for sale in the ordinary course of business  In process of production for such sale  Are soon to be consumed in the production of goods or services that will be available for sale.  存货包括这样一些项目 ：一般经营环节持有的 代售资产，生产过程的在产品，和代售产品或服 务在生产过程中被耗用的部分

18 河南财政税务高等专科学校 18  Prepaid expenses represent assets representing advance payment of the expenses of future accounting periods.  预付费用是为将来会计期间发生费用的预 先支付款项

19 河南财政税务高等专科学校 19 （ 2 ） property ， plant and equipment 固定资产  The entity has acquired these assets— Property, plant and equipment --In order to use them to produce goods and service that will generate future cash flows.  固定资产是企业取得的、用于生产和提供 劳务，并且会带来将来现金流入的资产。

20 河南财政税务高等专科学校 20 （ 3 ） other asset 其他资产  Another type of noncurrent asset is investment  There are securities of one company owned by another in order either to control the other company or in anticipation of earning a long- term return from the investment.  另一种非流动资产是投资  投资商一个公司未来控制另一个公司或为了获得 长期收益而拥有另一个公司的证券

21 河南财政税务高等专科学校 21  Intangible assets include goodwill, patents, copyrights, trademarks, franchises an similar valuable but nonphysical things controlled by the business  无形资产包括商誉、专利权、版权、商标、特 许经营权和由企业控制的有价值的非实物形态 资产。

22 河南财政税务高等专科学校 22 LIABILITIES  Liabilities are probable future sacrifices of economic benefits arising from present obligations of a company to transfer assets or provide services to other entities in the future as a result of past transaction or events.  负债是由过去的交易或事项形成的，需要通 过转出资产或提供劳务，并且会给企业带来 将来经济利益流出的现时义务。

23 河南财政税务高等专科学校 23  Creditor  Accounts payable  Notes payable  On account  债权人  应付账款  应付票据  赊

24 河南财政税务高等专科学校 24 (1)Current liabilities 流动负债  Liabilities that are expected to be satisfied or paid during the normal operating cycle or within one year, whichever is longer, are called current liabilities.  在一个营业周期内或一年（以长者为限） 期望被偿还或支付的债务，称为流动负债。

25 河南财政税务高等专科学校 25  Short-term borrowings are monetary amounts due within one year for repayment of bank loans, notes payable and other commercial paper.  短期借款是一年内需要偿付的银行贷款、 应收票据和其他商业票据等货币款项。

26 河南财政税务高等专科学校 26  Accounts payable represent the claims of suppliers arising from their furnishing goods or services to the entity for which they have not yet been paid  应付账款是由于供应商提供商品或劳务给 企业，但还未支付款项而产生的供应商的 索求权

27 河南财政税务高等专科学校 27  Accrued expenses represent amounts that have been earned by outside parties but have not yet been paid by the entity,also called accrued liabilities.  应计费用是那些已经被外部当事人挣得， 但还未被企业支付的款项。  Taxes payable shows the amount that the entity owes government agencies for taxes  应交税金是企业欠政府机关的税费款项

28 河南财政税务高等专科学校 28 unearned revenues represent the liability that arises because the entity has received advance payment for good or service it has agreed to render in future  未实现收入（或预收款项）是犹豫企业提前收到 的款项而引起的债务，它需要将来提供货物或劳 务来偿还  Current portion of long-term debt represents that part of a long-term loan that is due within the next 12 months.  一年内到期的长期负债是指长期负债在 12 个月内 到期的部分。

29 河南财政税务高等专科学校 29 （ 2 ） noncurrent liabilities 非流动负债  Also called long-term debt.  Long term borrowings are monetary amounts for bank loans, notes payable and other commercial paper that does not have to be repaid within one year  长期借款是超过一年偿付的银行贷款、应 收票据和其他商业汇票等款项。

30 河南财政税务高等专科学校 30 Owner’s equity 所有者权益  The owners’ equity section of the balance sheet shows the amount the owners have invested in the entity  资产负债表上的所有者权益部分代表业主 投资在企业的款项  股东权益： Shareholders’ equity （股份的多少） Stockholders’ equity （股份的比重）

31 河南财政税务高等专科学校 31 （ 1 ） paid in capital 缴入资本  Contributed capital is the amount the owners have invested directly I the business by purchasing shares of stock as these shares were issued by the corporation.  缴入资本，指业主通过购买公司发行的股 票份额而直接投资于企业的款项。

32 河南财政税务高等专科学校 32 Capital stock represents the amounts that the stockholders originally invested in the business in exchanged for shares of the company’s stock. Retained earnings, in contrast, represent the increase in owners’ equity that has accumulated over the years as a result of profitable operations. 股本代表股东原始投资于企业而拥有公司股份的款 项。相对而言，留存收益代表理念企业经营收益 累计而增加所有者权益的部分。

33 河南财政税务高等专科学校 33 Three General Classifications Assets, Liabilities, and Stockholders’ Equity Companies further divide these classifications: Classification in the Balance Sheet Balance Sheet Illustration 5-1

34 河南财政税务高等专科学校 34 The Balance Sheet

35 河南财政税务高等专科学校 35 The Accounting Equation 会计等式 Assets = Liabilities + Owners’ Equity $259,000 = $79,000 + $180,000 Assets = Liabilities + Owners’ Equity $259,000 = $79,000 + $180,000

36 河南财政税务高等专科学校 36 The Accounting Equation 会计等式 Assets = Liabilities + Owners’ Equity Total Assets Increase Total Liabilities and Owner's Equity Increase

37 河南财政税务高等专科学校 37 The Accounting Equation 会计等式 Assets = Liabilities + Owners’ Equity Total Liabilities and Owner's Equity Decrease Total Assets Decrease

38 河南财政税务高等专科学校 38 The Accounting Equation 会计等式 Assets = Liabilities + Owners’ Equity One Asset Increase Another Asset Decrease

39 河南财政税务高等专科学校 39 The Balance Sheet Assets are economic resources of an organization that can usefully be expressed in monetary terms.

40 河南财政税务高等专科学校 40 Balance Sheet Liabilities are debts that represent negative future cash flows for the enterprise. 代表

41 河南财政税务高等专科学校 41 Balance Sheet Owners’ equity represents the owner’s claim to the assets of the business. 要求权

42 河南财政税务高等专科学校 42 According to FASB ( 财务会计准 则委员会 ) Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. According to FASB ( 财务会计准 则委员会 ) Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. Definition of Asset

43 河南财政税务高等专科学校 43 2 overall categories: current assets 流动资产 and non current (long-term) assets 非流动（长期）资产. Current assets include cash and other assets that will typically become cash or be consumed in one year or one operating cycle, whichever is longer. Asset Classifications 经营周期 总的来说

44 河南财政税务高等专科学校 44 Balance Sheet Douglas Trading Company’s current assets are listed in the typical order of maturity （到期） or collectibility （可 收回程度）

45 河南财政税务高等专科学校 45 1.Cash 2.Cash Equivalents 3.Short-term Investments 4.Receivables 5.Inventories 6.Prepaid Expenses 1.Cash 2.Cash Equivalents 3.Short-term Investments 4.Receivables 5.Inventories 6.Prepaid Expenses Current Assets Will be converted to cash or consumed within one year or the operating cycle, whichever is longer. Current Assets Cash equivalents include certain negotiable items such as commercial paper, money market funds, and U.S. treasury bills.

46 河南财政税务高等专科学校 46 Operating Cycle of a Typical Manufacturing Company Use cash to acquire raw materials Convert raw materials to finished product Deliver product to customer Collect cash from customer

47 河南财政税务高等专科学校 47 Cash $ Every business needs enough cash to pay its bills!

48 河南财政税务高等专科学校 48 Cash Coins and paper money Checks 支票 Money orders 汇票 Travelers’ checks Bank credit card sales Cash is defined as any deposit banks will accept.

49 河南财政税务高等专科学校 49 Combined （与 …… 结合） with cash on balance sheet Reporting Cash in the Balance Sheet Liquid short- term investments Stable （稳定 的） market values Matures within 90 days of acquisition Cash Equivalents 现金等价物

50 河南财政税务高等专科学校 50 Account Receivable Accounts receivable ( 应收账款 ) represent credit sales that have not been collected yet. converted into cash as soon as the customers or clients pay their bills  They are converted into cash as soon as the customers pay their bills (their accounts)

51 河南财政税务高等专科学校 51 Uncollectible Accounts If a company makes credit sales to customers, some accounts inevitably will turn out to be uncollectible. PAST DUE

52 河南财政税务高等专科学校 52 Current Assets Inventory represents items that have been purchased or manufactured for sale to customers. Prepaid expenses （预付费用 )represents unexpired assets such as insurance, rent, and supplies are normally consumed during the operating cycle rather than converted into cash.

53 河南财政税务高等专科学校 53 Non current /long-term Assets used in operating an organization and may be further classified into fixed assets (or property, plant and equipment) and intangible assets.

54 河南财政税务高等专科学校 54 Noncurrent Assets 1.Investments 2.Property, Plant, & Equipment 3.Intangible Assets 4.Other Assets 1.Investments 2.Property, Plant, & Equipment 3.Intangible Assets 4.Other Assets Not expected to be converted to cash or consumed within one year or the operating cycle, whichever is longer. Noncurrent Assets

55 河南财政税务高等专科学校 55 Noncurrent Assets Other Assets Include long-term prepaid expenses and any noncurrent assets not falling in one of the other classifications. Investments Not used in the operations of the business. Include both debt and equity securities of other corporations, land held for speculation, noncurrent receivables, and cash set aside for special purposes. Property, Plant, and Equipment Are tangible, long-lived, and used in the operations of the business. Include land, buildings, equipment, machinery, and furniture as well as natural resources such as mineral mines, timber tracts, and oil wells. Reported at original cost less accumulated depreciation (or depletion for natural resources). Intangible Assets Used in the operations of the business but have no physical substance. Include patents, copyrights, and franchises. Reported net of accumulated amortization. ©

56 河南财政税务高等专科学校 56 Depreciable assets are normally shown at their original cost. The total amount of depreciation expense recognized to that date is called accumulated depreciation （累计折旧） Non current /long-term Assets subtracted from the initial cost of the asset subtracted from the initial cost of the asset net book value of the asset

57 河南财政税务高等专科学校 57 Noncurrent assets without physical substance. Useful life is often difficult to determine. Usually acquired for operational use. Often provide exclusive rights or privileges 特权. Intangible Assets 无形资产 Characteristics

58 河南财政税务高等专科学校 58  Patents 专利  Copyrights 著作权， 版权  Goodwill 商誉  Trademarks 商标 and Trade Names Record at current cash equivalent cost, including purchase price, legal fees, and filing fees. Intangible Assets

59 河南财政税务高等专科学校 59 The amount by which the purchase price exceeds the fair market value of net assets acquired. Occurs when one company buys another company. Only purchased goodwill is an intangible asset. Intangible Assets – Goodwill Goodwill 商誉

60 河南财政税务高等专科学校 60 Eddy Company paid $1,000,000 to purchase all of James Company’s assets and assumed liabilities of $200,000. The acquired assets were appraised at a fair value of $900,000. Intangible Assets – Goodwill What amount of goodwill should be recorded on Eddy Company books? a.$100,000. b.$200,000. c.$300,000. d.$400,000. What amount of goodwill should be recorded on Eddy Company books? a.$100,000. b.$200,000. c.$300,000. d.$400,000.

61 河南财政税务高等专科学校 61 What amount of goodwill should be recorded on Eddy Company books? a.$100,000. b.$200,000. c.$300,000. d.$400,000. What amount of goodwill should be recorded on Eddy Company books? a.$100,000. b.$200,000. c.$300,000. d.$400,000. Intangible Assets – Goodwill

62 河南财政税务高等专科学校 62 Test your Understanding I Please classify the following items Current Assets or Long-term Assets Please classify the following items Current Assets or Long-term Assets 1.Cash 2.land 3.Note receivable 4.Marketable security 5.Building 6.Prepaid rent 7.Patents 8.Goodwill 9.Supply on hand 10.Equipment 1.Cash 2.land 3.Note receivable 4.Marketable security 5.Building 6.Prepaid rent 7.Patents 8.Goodwill 9.Supply on hand 10.Equipment

63 河南财政税务高等专科学校 63 Test your Understanding I Current Assets 1.Cash 3.Note receivable 4.Marketable security 6.Prepaid rent 9. Supply on hand Current Assets 1.Cash 3.Note receivable 4.Marketable security 6.Prepaid rent 9. Supply on hand Long-term Assets 2. Land 5. Building 7. Patents 8. Goodwill 10.Equipment Long-term Assets 2. Land 5. Building 7. Patents 8. Goodwill 10.Equipment

64 河南财政税务高等专科学校 64 Test your Understanding II Use the given information of X Trading Company, and prepare a balance sheet for the current month Capital stock ( 股本 ) $180000 Accounts receivable $ 34000 Inventory $98000 Prepaid insurance$ 5000 Equipment $57000 Accrued salaries payable $4000 Accounts payable $59000 Note payable $16000 Cash $65000

65 河南财政税务高等专科学校 65 I.O.U. The Nature of Liabilities Defined as debts or obligations arising from past transactions or events. (e.g. the purchase of a fixed asset or a circulating asset).

66 河南财政税务高等专科学校 66 I.O.U. Maturity = 1 year or lessMaturity > 1 year Current Liabilities Noncurrent Liabilities Types of Liabilities Liabilities include current liabilities and non-current/long-term liabilities

67 河南财政税务高等专科学校 67 Current Liabilities 流动负债 Current liabilities are those obligations that require to pay - by the use of existing current assets of the creation of the other current liabilities. - within the normal operating cycle or one year, whichever is longer, Current Liabilities 流动负债 Current liabilities are those obligations that require to pay - by the use of existing current assets of the creation of the other current liabilities. - within the normal operating cycle or one year, whichever is longer,

68 河南财政税务高等专科学校 68 Current Liabilities 1.Accounts Payable 2.Notes Payable 3.Accrued Liabilities 4.Unearned Revenues 5.Current Maturities of Long-Term Debt 1.Accounts Payable 2.Notes Payable 3.Accrued Liabilities 4.Unearned Revenues 5.Current Maturities of Long-Term Debt Obligations expected to be satisfied through current assets or creation of other current liabilities within one year or the operating cycle, whichever is longer. Current Liabilities

69 河南财政税务高等专科学校 69 Sales tax is expressed as a stated percentage of the sales price on goods sold to customers by a retailer The retailer (or selling company) collects the tax from the customer when the sale occurs and periodically(usually monthly) remits the collections to the state’s department of revenue Thus, the retailer serves as a collection agent for the taxing authority Sales tax is expressed as a stated percentage of the sales price on goods sold to customers by a retailer The retailer (or selling company) collects the tax from the customer when the sale occurs and periodically(usually monthly) remits the collections to the state’s department of revenue Thus, the retailer serves as a collection agent for the taxing authority Sales Tax Payable 应付销售税

70 河南财政税务高等专科学校 70 In UK, sale tax rate is 17.5% When you bought goods in supermarket, You paid $1175. For the supermarket, sales Revenue is: 1175/(1+17.5%) =1000 Sales tax = 1175 – 1000 = 175 In UK, sale tax rate is 17.5% When you bought goods in supermarket, You paid $1175. For the supermarket, sales Revenue is: 1175/(1+17.5%) =1000 Sales tax = 1175 – 1000 = 175 Sales Tax Payable 应付销售税

71 河南财政税务高等专科学校 71 The term payroll 工资 pertains to all wages and salaries payable owed to employees. Withholding taxes 预扣税 - Must be withheld from employees’ gross pay - Consist of social security (FICA) taxes 社会保障税 and federal and state income taxes 联邦和州所得税， and - Are credited to appropriate liability accounts Payroll and Payroll Taxes Payable 工资及相关的税

72 河南财政税务高等专科学校 72 Net Pay Payroll Liabilities Medicare Taxes State and Local Income Taxes FICA Taxes Federal Income Tax Voluntary Deductions Gross Pay

73 河南财政税务高等专科学校 73 Deferred 延期 revenue is recorded. a liability account. Cash is received in advance. Cash is sometimes collected from the customer before the revenue is actually earned. Unearned Revenue 未实现收入 ( 或预收款项） Earned revenue is recorded. As the earnings process is completed..

74 河南财政税务高等专科学校 74 Current Maturities of Long- Term Debt Another item classified as a current liability is current maturities of long-term debt 一年内到期的长期负债 Current maturities of long- term debt are often identified on the balance sheet as long- term debt due within one year

75 河南财政税务高等专科学校 75 Long-term /Non-current Liabilities 长期 / 非流动负债 Long-term liabilities are those amount of debts not due for a relative long time, typically more than one year. Bonds or long-term notes are most common forms. Bonds 债券 are a form of interest bearing notes payable issued by  corporations, and  Governmental agencies Long-term /Non-current Liabilities 长期 / 非流动负债 Long-term liabilities are those amount of debts not due for a relative long time, typically more than one year. Bonds or long-term notes are most common forms. Bonds 债券 are a form of interest bearing notes payable issued by  corporations, and  Governmental agencies

76 河南财政税务高等专科学校 76 Long-term Liabilities 1.Long-term Notes 2.Mortgages 3.Long-term Bonds 4.Pension Obligations 5.Lease Obligations 1.Long-term Notes 2.Mortgages 3.Long-term Bonds 4.Pension Obligations 5.Lease Obligations Obligations that will not be satisfied within one year or operating cycle, whichever is longer. Long-Term Liabilities

77 河南财政税务高等专科学校 77 The acquisition of assets is financed from two sources: Funds from creditors, with a definite due date, and sometimes bearing interest. Funds from owners DEBT EQUITY Distinction Between Debt and Equity

78 河南财政税务高等专科学校 78 Large debt needs are often filled by issuing bonds. Long-Term Debt

79 河南财政税务高等专科学校 79 Stockholder Control is not affected Tax savings results Earnings per share on common stock may higher Advantages of Bonds 债券 over common stock 普通股股票 From the standpoint of the corporation seeking long-term financing

80 河南财政税务高等专科学校 80 A long-term note may be secured by a document called a mortgage 抵押 that pledges title to specific assets as security (collateral 担保 ) for a loan Long-term notes payable 长期应付票据 are similar to short-term interest-bearing notes payable except that the terms of the notes exceed one year Accounting for Long-term Notes Payable

81 河南财政税务高等专科学校 81 Accounting for Long-term Notes Payable Mortgage notes payable are widely used in :  the purchase of homes by individuals and  the acquisition of plant assets by many small and some large companies In the balance sheet, the reduction in principal for the next year is reported as a current liability, and the remaining unpaid principal balance is classified as a long-term liability Mortgage notes payable are widely used in :  the purchase of homes by individuals and  the acquisition of plant assets by many small and some large companies In the balance sheet, the reduction in principal for the next year is reported as a current liability, and the remaining unpaid principal balance is classified as a long-term liability

82 河南财政税务高等专科学校 82 Devon Co. borrows $100,000 from First Bank. The loan will be repaid in 20 years and has an annual interest rate of 8%. Is this a current liability or a noncurrent liability? Devon Co. borrows $100,000 from First Bank. The loan will be repaid in 20 years and has an annual interest rate of 8%. Is this a current liability or a noncurrent liability? Liabilities – Question

83 河南财政税务高等专科学校 83 Devon Co. borrows $100,000 from First Bank. The loan will be repaid in 20 years and has an annual interest rate of 8%. Is this a current liability or a noncurrent liability? Devon Co. borrows $100,000 from First Bank. The loan will be repaid in 20 years and has an annual interest rate of 8%. Is this a current liability or a noncurrent liability? Liabilities – Question The obligation will not be paid within one year or one operating cycle, so it is a noncurrent liability.

84 河南财政税务高等专科学校 84 Definition of Owner’s Equity Owner’s Equity 业主权益 is referred to as the net assets of the business, which is defined as the difference between the assets and liabilities - A residual 剩余的 claim Owner’s Equity 业主权益 is referred to as the net assets of the business, which is defined as the difference between the assets and liabilities - A residual 剩余的 claim

85 河南财政税务高等专科学校 85 Forms of Business Organizations Sole Proprietorship 独资 Sole Proprietorship 独资 Partnership 合资 Partnership 合资 Corporation 股份有限公司 Corporation 股份有限公司

86 河南财政税务高等专科学校 86 Reporting Ownership Equity in the Balance Sheet Sole Proprietorship Partnership Corporation

87 河南财政税务高等专科学校 87 Owner withdraw money or property quite informally in sole proprietorship and Partnership. More formally in corporation - Declare a dividend by board of directors 董事会 - Then distribute dividend Owners’ withdrawals

88 河南财政税务高等专科学校 88 There are 2 Journal entries for dividends actually distributed to owners (1) Declaration of dividends Dr. Dividends Cr. Dividends payable (2) Payment of dividends Dr. Dividends payable Cr. Cash. There are 2 Journal entries for dividends actually distributed to owners (1) Declaration of dividends Dr. Dividends Cr. Dividends payable (2) Payment of dividends Dr. Dividends payable Cr. Cash. Accounting for Dividend Payable

89 河南财政税务高等专科学校 89 The Statement of Owners’ Equity DOUGLAS TRADING COMPANY Statement of Owner's Equity For the Month Ended Jan. 31,2010 K. Douglas, Capital - Jan.1 $120,000 Add: Capital Contributed in January$40,000 Net Income for January 36,000 76,000 $196,000 Less: Capital Withdrawn in January 16,000 K. Douglas, Capital - Jan.31 $ 180,000 Balance Sheet: Owner’s Equity K. Douglas, Capital $180,000 Income statement

90 河南财政税务高等专科学校 90 On Jan 21, McBryan and his family invested $8,000 in Overnight Auto Service and received 800 shares of stock.

91 河南财政税务高等专科学校 91 On Jan 20, Overnight Auto Service purchased the land for $52 000 cash.

92 河南财政税务高等专科学校 92 On Jan 22, Overnight purchased the abandoned bus garage for $36 000. Overnight made a cash down payment of $6 000 and issued a 90-day non- interest –bearing note payable for the $30 000 balance owned.

93 河南财政税务高等专科学校 93 Purchase on account: a deferral of payments Installment payment Purchase on account: a deferral of payments Installment payment On Jan 23, Overnight purchased tools and automotive repair equipment on account. The purchase was $13,800, due within 60 days.

94 河南财政税务高等专科学校 94 On Jan 24, Overnight sold the excess tools for $1,800, a price equal to Overnight’s cost. Ace made no down payment but to pay the amount due within 45 days.

95 河南财政税务高等专科学校 95 On Jan 26, Overnight received $600 from Ace Towling as partial settlement of its account receivable from Ace.

96 河南财政税务高等专科学校 96 On Jan 27, Overnight made a partial payment of $6,800 on its account payable to Snappy tools.

97 河南财政税务高等专科学校 97 On Jan 31, Overnight record the $22,000 accumulated service revenue for January.

98 河南财政税务高等专科学校 98 On Jan 31, Overnight paid $200 utilities and $1,200 wages.

99 河南财政税务高等专科学校 99  Definition of current liabilities, long-term liabilities and owners’ equity  To present the owners’ equity in the balance sheet, a corporation segregates the capital stock (owners’ investment) and any retained earnings, while a sole proprietorship or partnership does not have to do this.  When the owners withdraw cash, it will reduce both assets and the owners’ equity account.  Definition of current liabilities, long-term liabilities and owners’ equity  To present the owners’ equity in the balance sheet, a corporation segregates the capital stock (owners’ investment) and any retained earnings, while a sole proprietorship or partnership does not have to do this.  When the owners withdraw cash, it will reduce both assets and the owners’ equity account. Key Points

100 河南财政税务高等专科学校 100 Key Points  If the owners’ withdrawals happen in a corporation, there will be 2 transactions.  First declaration of a dividend reduces the retained earnings portion of the owners’ equity and creates a liability called Dividend Payable on a corporation’s balance sheet.  Second, Payment of a dividend eliminates the liabilities and reduces assets.  The net income （ or net loss ） for a period in the income statement is an input into the statement of owners’ equity, while the ending owners’ equity balance on this statement is an input into the balance sheet at the end of the period.  If the owners’ withdrawals happen in a corporation, there will be 2 transactions.  First declaration of a dividend reduces the retained earnings portion of the owners’ equity and creates a liability called Dividend Payable on a corporation’s balance sheet.  Second, Payment of a dividend eliminates the liabilities and reduces assets.  The net income （ or net loss ） for a period in the income statement is an input into the statement of owners’ equity, while the ending owners’ equity balance on this statement is an input into the balance sheet at the end of the period.

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