Accounting26th ch 06

KẾ TOÁN 26E giúp nâng cao tư duy của học sinh với nội dung giải quyết từng giai đoạn của quá trình học tập từ động lực đến thành thạo. Hệ thống tích hợp này thúc đẩy sinh viên học tập, cung cấp các cơ hội thực hành để chuẩn bị tốt hơn cho các kỳ thi và giúp sinh viên đạt được thành thạo với các công cụ để giúp họ tạo kết nối và nhìn thấy bức tranh lớn. Hệ thống học tập hoàn chỉnh được xây dựng xung quanh cách sinh viên sử dụng sách giáo khoa và tài nguyên trực tuyến để học, nghiên cứu và hoàn thành bài tập về nhà, cho phép họ đạt được thành công cuối cùng trong khóa học này. Nội dung mới bao gồm Triển lãm động do tác giả viết cho phép sinh viên thấy các kết nối và mối quan hệ hơn bao giờ hết Triển lãm động cho phép sinh viên thay đổi các biến trong một kịch bản và xem cách thay đổi gợn qua hệ thống kế toán, giúp sinh viên hiểu các khái niệm liên quan đến nhau như thế nào. Ngoài nhiều tài sản kỹ thuật số mới được tạo cho phiên bản này, nội dung sách giáo khoa cũng đã được sửa đổi để bao gồm tiêu chuẩn ghi nhận doanh thu mới và nhấn mạnh hơn vào các công ty dịch vụ trong các chương kế toán quản lý.

C H A P T E R

©2016

Operating Cycle

• The operating cycle is the process by which a

company spends cash, generates revenues, and

receives cash either at the time the revenues are

generated or later by collecting an accounts

receivable.

• The operating cycle of a service and merchandising business differs in that a merchandising business must purchase merchandise for sale to customers.

• The revenue activities of a service business involve

providing services to customers.

o On the income statement for a service business, the revenues from services are reported as fees earned

o The operating expenses incurred in providing the services are subtracted from the fees earned to arrive at net

income

o When this merchandise is sold, the revenue is reported as

o The cost of merchandise sold is subtracted from sales to

arrive at gross profit, which is the profit before deducting operating expenses

o Merchandise on hand (not sold) at the end of an accounting period is called merchandise inventory (current asset)

Purchases Transactions

(slide 1 of 3)

• There are two systems for accounting for merchandise transactions: perpetual and periodic.

o In a perpetual inventory system, each purchase and sale

of merchandise is recorded in the inventory account and related subsidiary ledger

o In a periodic inventory system, the inventory does not

show the amount of merchandise available for sale and the amount sold

Purchases Transactions

(slide 2 of 3)

• Under the perpetual inventory system, cash purchases

of merchandise are recorded as follows:

• Purchases of merchandise on account are recorded as follows:

Purchases Transactions

(slide 3 of 3)

• The terms of purchases on account are normally

indicated on the invoice or bill that the seller sends the buyer.

• The terms for when payments for merchandise are to

be made are called the credit terms

o If payment is required on delivery, the terms are cash or net cash

o Otherwise, the buyer is allowed an amount of time, known

as the credit period, in which to pay

 The credit period usually begins with the date of the sale as shown

on the invoice.

30 days.

 The terms are expressed as 2/10, n/30 and are read as “2%

discount if paid within 10 days, net amount due within 30 days.”

• Since buyers normally take all purchases discounts,

Merchandise Inventory is debited for the net purchase price under the perpetual inventory system.

o That is, the buyer debits Merchandise Inventory for the

amount of the invoice less the discount

Purchases Returns and Allowances

o In both cases, the buyer normally sends the seller a debit

seller of reasons for the return (purchase return) or to

request a price reduction (purchase allowance)

Purchases Returns and Allowances

(slide 2 of 2)

• The buyer may use the debit memo as the basis for recording the return or allowance or wait for

approval from the seller (creditor).

• In either case, the buyer debits Accounts Payable and credits Merchandise Inventory.

• Before paying an invoice, a buyer may return

merchandise or be granted a price allowance for an invoice with a purchase discount

o In this case, the amount of the return is recorded at its

invoice amount less the discount

• Assume that on March 3, NetSolutions sells

merchandise for $1,800 These cash sales are

recorded as a debit to Cash and a credit to Sales.

Cash Sales

• Using the perpetual inventory system, the cost of

merchandise sold and the decrease in merchandise inventory are also recorded.

o In this way, the merchandise inventory account indicates the amount of merchandise on hand (not sold)

• Sales may be made to customers using credit cards such as MasterCard or VISA

o Such sales are recorded as cash sales

• Any processing fees charged by the clearinghouse or issuing bank are periodically recorded as a debit to Credit Card Expense and a credit to Cash.

Sales on Account

• NetSolutions sold merchandise on account for

$18,000 The cost of the merchandise sold was

$10,800.

Customer Discounts

• A seller may grant customers a variety of discounts, called customer discounts , to encourage customers to act in a way benefiting the seller.

• A sales discount encourages customers to pay their invoice early

o For example, a seller may offer credit terms of 2/10, n/30, which provides a 2% sales discount if the invoice is paid

within 10 days

Customer Returns and Allowances

• Merchandise sold may be returned to the seller

(returns) In other cases, the seller may reduce the

initial selling price (allowances)

• From a seller’s perspective, these are termed

customer returns and allowances , sometimes called sales returns and allowances.

• In some cases, a customer that is due a refund has an outstanding account receivable balance

o In this case, the seller may credit the customer’s accounts receivable rather than pay cash

• The ownership of the merchandise may pass to the buyer when the seller delivers the merchandise to the freight carrier

o In this case, the terms are said to be FOB (free on board) shipping

point This term means that the buyer pays the freight costs from the shipping point to the final destination.

• The ownership of the merchandise may pass to the buyer when the buyer receives the merchandise

o In this case, the terms are said to be FOB (free on board) destination This term means that the seller pays the freight costs from the shipping point to the buyer’s final destination.

• The seller may prepay the freight, even though the terms are FOB shipping point The seller will then add the freight to the invoice

Sales Taxes

• Almost all states levy a tax on sales of merchandise.

• The liability for the sales tax is incurred when the sale

is made.

o At the time of a cash sale, the seller collects the sales tax

o When a sale is made on account, the seller charges the tax

to the buyer by debiting Accounts Receivable

o The seller credits the sales account for the amount of the

sale and credits the tax to Sales Tax Payable

o The seller pays to the taxing authority (state) the amount of the sales tax collected by debiting Sales Tax Payable and crediting Cash

Trade Discounts

• Wholesalers are companies that sell merchandise to other businesses rather than to the public Many

publish sales catalogs with periodic price updates.

o These updates may include large discounts from the catalog list prices

• In addition, wholesalers often offer special discounts

to government agencies or businesses that order large quantities Such discounts are called trade discounts

• Sellers and buyers do not normally record the list

prices of merchandise and trade discounts in their

accounts.

Multiple-Step Income Statement

Single-Step Income Statement

Balance Sheet

• The balance sheet may be presented with assets on the left-hand side and the liabilities and owner’s

equity on the right-hand side.

o This form of the balance sheet is called the account form

• The balance sheet may also be presented in a

downward sequence in three sections.

o This form of the balance sheet is called the report form

Adjusting Entry for Inventory Shrinkage

• Under the perpetual inventory system, the merchandise

inventory account is continually updated for purchase and sales transactions

• As a result, the balance of the merchandise inventory account is the amount of merchandise available for sale at that point in time

• However, retailers normally experience some loss of inventory due to shoplifting, employee theft, or errors

• Thus, the physical inventory on hand at the end of the

accounting period is usually less than the balance of

Merchandise Inventory

o This difference is called inventory shrinkage or inventory shortage.

a temporary account with a debit balance, it is credited for its balance.

3 Debit Income Summary for the amount of its balance (net income) and credit the owner’s capital account The accounts debited and credited are reversed if there is a net loss.

4 Debit the owner’s capital account for the balance of the drawing

account and credit the drawing account.

• After the closing entries are posted to the accounts, a

post-closing trial balance is prepared, which includes the asset,

contra asset, liability, and owner’s capital accounts

Financial Analysis and Interpretation:

Ratio of Sales to Assets

• The ratio of sales to assets measures how effectively

a business is using its assets to generate sales.

• A high ratio indicates an effective use of sales.

• The ratio of sales to assets is computed as follows:

Average Total Assets

Appendix: Periodic Inventory System

• Under the periodic inventory system, purchases are normally recorded at their invoice amount in a

Purchases account

o If the invoice is paid within the discount period, the discount

is recorded in a separate account called Purchases

Discounts

o Likewise, purchase returns are recorded in a separate

account called Purchase Returns and Allowances

o The sales of merchandise are not recorded in the inventory account At the end of the period, a physical count of

merchandise inventory on hand is taken and used to

determine the cost of merchandise sold

o Freight paid is recorded in a Freight-In account

Appendix: Closing Entries Under

the Periodic Inventory System

• The four closing entries under the periodic inventory system are as follows:

1 Debit each temporary account with a credit balance, such as Sales, for its

balance and credit Income Summary Since Purchases Discounts and Purchases Returns and Allowances are temporary accounts with credit balances, they are debited for their balances In addition, Merchandise Inventory is debited for its end-of-period balance based on the end-of-period physical inventory.

2 Credit each temporary account with a debit balance, such as the various

expenses, and debit Income Summary Since Freight In is a temporary account with a debit balance, it is credited for its balance In addition, Merchandise Inventory is credited for its balance as of the beginning of the period.

3 Debit Income Summary for the amount of its balance (net income) and credit the owner’s capital account The accounts debited and credited are reversed if

there is a net loss.

4 Debit the owner’s capital account for the balance of the drawing account and credit the drawing account.