This is the prescribed textbook for your course.    Available NOW at your campus bookstore! 2003 McGraw-Hill Australia Pt...
Chapter   1BALANCE DAY ADJUSTMENTSLEARNING OUTCOME: TO REVISE GENERAL JOURNAL ENTRIES FOR BALANCE DAY ADJUSTMENTS        ...
KEY TERMS     accrued expenses     accrued revenue     balance date     balance day adjustments     balance day entri...
THE ACCRUAL CONCEPT Assumes that transactions are recorded in  the period when revenue is earned and  expenses are incurr...
TYPES OF BALANCE DAYADJUSTMENTS1. Accrued revenue            Revenue earned but                               not yet rec...
TYPES OF BALANCE DAYACCOUNTS 1. Asset account               Accrued revenue    (DEBIT)                     Prepaid expen...
EXAMPLE Accrued revenue         Commission is due to be paid in July on a property         sold in June    General Journa...
EXAMPLE   Prepaid expenses           Insurance expense account includes an amount of           $3000 which relates to Jul...
EXAMPLE Accrued expenses         Wages to be paid in July include $1000 for employees         who worked on 29 June.     ...
EXAMPLE Revenue received in advance         Fees received in June included a deposit of $2000 for         a project start...
BALANCE DAY ADJUSTMENTS AFFECTSTATEMENT OF FINANCIAL POSITIONPrepaid              DEBIT       ASSETexpenseAccrued         ...
OTHER BALANCE DAYENTRIES Closing inventories Bad and doubtful debts Depreciation Provision for annual leave Provision...
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Ppt ch01 (1)

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Ppt ch01 (1)

  1. 1. This is the prescribed textbook for your course. Available NOW at your campus bookstore! 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 1
  2. 2. Chapter 1BALANCE DAY ADJUSTMENTSLEARNING OUTCOME: TO REVISE GENERAL JOURNAL ENTRIES FOR BALANCE DAY ADJUSTMENTS © 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, 2 slides prepared by Kaye Watson
  3. 3. KEY TERMS  accrued expenses  accrued revenue  balance date  balance day adjustments  balance day entries  prepaid expenses  revenue in advance 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 3
  4. 4. THE ACCRUAL CONCEPT Assumes that transactions are recorded in the period when revenue is earned and expenses are incurred NOT When the cash is received and expenses are paid 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 4
  5. 5. TYPES OF BALANCE DAYADJUSTMENTS1. Accrued revenue  Revenue earned but not yet received2. Accrued expenses  Expenses incurred but not yet paid3. Revenue in advance  Revenue received but4. Prepaid expenses not yet earned  Expenses paid but not yet incurred 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 5
  6. 6. TYPES OF BALANCE DAYACCOUNTS 1. Asset account  Accrued revenue (DEBIT)  Prepaid expenses 2. Liability account  Revenue in advance (CREDIT)  Accrued expenses 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 6
  7. 7. EXAMPLE Accrued revenue Commission is due to be paid in July on a property sold in June General Journal Date Details Debit Credit ($) ($) 30 June Accrued revenue 4000 Commission revenue 4000 Commission accrued but not yet received 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 7
  8. 8. EXAMPLE  Prepaid expenses Insurance expense account includes an amount of $3000 which relates to July, August and September in the next financial year General Journal Date Details Debit Credit ($) ($) 30 June Prepaid expenses 3000 Insurance expense 3000 Prepaid insurance expense 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 8
  9. 9. EXAMPLE Accrued expenses Wages to be paid in July include $1000 for employees who worked on 29 June. General Journal Date Details Debit Credit ($) ($) 30 June Wage expense 1000 Accrued wages 1000 Wages accrued 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 9
  10. 10. EXAMPLE Revenue received in advance Fees received in June included a deposit of $2000 for a project starting in August General Journal Date Details Debit Credit ($) ($) 30 June Fee revenue 2000 Revenue received in 2000 advance Deposit on project 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 10
  11. 11. BALANCE DAY ADJUSTMENTS AFFECTSTATEMENT OF FINANCIAL POSITIONPrepaid DEBIT ASSETexpenseAccrued STATEMENT DEBIT ASSETrevenue OF FINANCIALAccrued POSITION AT CREDIT LIABILITYexpense JUNE 30Revenue CREDIT LIABILITYin advance 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 11
  12. 12. OTHER BALANCE DAYENTRIES Closing inventories Bad and doubtful debts Depreciation Provision for annual leave Provision for long service leave 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a 12
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