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Class_5_Income_Statement_Upload

Class_5_Income_Statement_Upload - Intro to Accounting...

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W2261/4261 Zhang                                   Intr 1 Intro to Accounting & Finance W2261/4261, Columbia University Lecture 5 Jan 30, 2007
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W2261/4261 Zhang                                   Int 2 In Today’s Class: Income  Statement 1. Entry Adjustments. 2. Preparing the income statement 3. Interpreting and analyzing the income statement
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W2261/4261 Zhang                                   Int 3 Recall the example Journalizing the transactions by Miller Corp .
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W2261/4261 Zhang                                   Int 4
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W2261/4261 Zhang                                   Int 5
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W2261/4261 Zhang                                   Int 6
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W2261/4261 Zhang                                   Int 7
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W2261/4261 Zhang                                   Int 8 Posting Journal Entries
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W2261/4261 Zhang                                   Int 9
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W2261/4261 Zhang                                   Int 10 Adjusting and Correcting Entries Transactions trigger the making of an entry in the accounts. Passage of time may also trigger the need to make entries. E.g. interest expense. These entries are usually made at the end of the period. Examples include: 1. Recognition of accrued revenues and receivables, 2. Interest calculations, 3. Recognition of accrued expenses and payables, 4. Allocation of prepaid operating costs, and 5. Recognition of depreciation.
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W2261/4261 Zhang                                   Int 11 Recognition of Accrued Revenues  and Receivables A firm earns revenue as it renders services. If part of the service has been rendered in one accounting period and the remainder in others, accrual accounting calls for apportioning the revenue among the appropriate periods. For example, a firm earns rental revenue as the tenant occupies the property. If the rental period spans two accounting periods, accrual accounting calls for splitting the rent revenue between the two in proportion to the rental time.
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W2261/4261 Zhang                                   Int 12
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