1、金融英语中级考试笔记会计CHAPTER 1Assets： things owned by a business which carried a value，they can be considered as economic resources， providing benefits to the business.Liabilities： amount owed by a business to various parties， they can be considered as debts or obligations owned by the business to outside bo
2、dies.Posting： recording transactions and entering accounts are often called “posting”。A trail balance： is therefore defined as a list of balances of ledger accounts worked out periodically to test the calculation accuracy of account.-every account in the ledger is labelled (with debit or credit )-th
3、e items can come in any order-when the debit balance agree with the credit balances, it confirm that there has been a debit entry for every credit entry in the posting of the account-it is an interim summary of the information shown by the account，it should carry date.-the main difference between tr
4、ial balance statements and balance sheets is that in the trial balance， all accounts in the ledger are shown as simple balances （debit or credit ）whereas in the balance sheet， they are shown not as debit or credit balances but as assets and liabilities respectively. -trial balance is unable to detec
5、t the following type of errors:1） omission in the recording of the accounting data2） an entry is made into the wrong account of the same group3） an entry is entered into the wrong group of the account4） there are mistakes in the book of original entry in amount5） mistake is made on the wrong side in
6、 the book of original entry6） mistake is covered up by a same mistakeNominal account： do not represent an asset or a liability. They simply store up information needed to work out a profit or loss for the business at the year end. Nominal account includes： purchases ，sale， rent， wages， lights and ot
7、her such expenses. The nominal accounts will give us the information needed to calculate the profit or loss periodically. At the end of a financial year，the nominal accounts are written off by transferring the amounts to the trading and profit and loss account， leaving he nominal accounts empty.Jour
8、nal： the journal，or the book of original entry ， is a chronological record，showing for each transaction the debit and credit changes in specific ledger accounts. The debit and credit entries recorded in the journal are transferred to the accounts in the ledger at appropriate intervals. Structure of
9、journal： date ， accounting titles and explanation， ledger page ， debit ， credit.CHAPTER 2Purchases in accounting means the purchase of those goods which the firm buys，and the main objective is to sell them.Sales in accounting means the sale of those goods which the firm normally deals with and which
10、 were acquired with resale being the main objective.Creditor and debtorA person to whom money is owed for goods is known as creditor， while a person who owes the firm money is known as a debtor.Balancing off accountsIt is the process of calculating how much the balance of an account should be carrie
11、d forward to the nest period. If the debit total is greater， the difference should be entered into the debit side of the account.Correction of ErrorsErrors of commission （not affecting the trial balance agreement）i.e. in the wrong persons accountErrors of principle （not affecting the trial balance a
12、greement）i.e. entered in the wrong type of account： motor or motor expenseErrors of original entry （not affecting the trial balance agreement）Such errors are made where the original amount is incorrect.Errors of omission （not affecting the trial balance agreement）Such errors are made where transacti
13、ons are not entered into the books at all.Compensating errors （not affecting the trial balance agreement）Such errors are made where mistakes cancel each other outComplete reversal of entries （not affecting the trial balance agreement）Such mistakes are made where the correct amount are entered in the
14、 correct accounts， but each item is shown on the wrong side of each account. We have to make the amount twice the amount of the error.Chapter 3 accounting and accounting cyclesAccounting is the process of providing quantitative information about business entities to help users in making decisions re
15、garding the allocation of economic resources.The process of accounting consists of ：1. Identificationthe observation of activity and the selection of particular events that are evidence of economic activities to an entity.2. Measurement the quantification fo the events in monetary terms3. Recording
16、the keeping of a chronological diary of the measured events.4. Communication the preparation and distribution of financial statements to users.Financial accounting ： involves the recording and presentation of factual transactions.Managerial accounting ：involves the use of financial information to in
17、terpret its implications for decision-making purposes.Forms of business organizations：Sole proprietorship： is owned and usually managed by one individual ， partnership has more than one owner； limited company is a separate legal entity that is owned by many individuals， called shareholders， who are
18、issued shares of capital as evidence of their ownership.AccountAn account is a business document used to record ad retain monetary information about a companys transaction. The companys full set of accounts are kept in a general ledger and accounts are sometimes called general ledger accounts.Postin
19、gIt is the process of transferring the debit and credit information record in each journal entry to the proper accounts in the general ledger.Accounting periodIt is the period of time for which the net profit of a company is computed. An accounting period of less than one year is called interim peri
20、od.RevenueIt is derived from the charge to customers for goods or services provided， resulting in increase in assets or decrease in liabilities.ExpenseThey are the cost of purchasing goods or services used in running the business ， resulting in decrease in assets or increase in liabilities.Accrual a
21、ccounting and cash base accounting1. In accrual accounting ，revenues are recorded in the period in which goods or services are provided， regardless of when cash is received. The revenues and expenses of the same period are matched so that the companys profit can be determined.2. Under the cash basis
22、 accounting system， net profit is the difference between cash receipt from operations and cash payments made during the accounting period. It may distort the net profit.Depreciation1. Provision for depreciation is the process of allocation of the cost of aphysical asset to each accounting period in
23、which the asset is used.2. Depreciation represents the portion consumed during the accountingperiod.3. When depreciation expense is debited， the provision for depreciation is credited.4. Provision for depreciation represents the total depreciation expenses recorded since the asset was purchased.Chap
24、ter 4 accounting principlesBusiness entity assumption1. economic events can be identified with a particular unit of accountability.2. Accounting is mainly concerned with the business organization as a separate entity.3. The revenues and expenses of a business are regarded as affecting its assets and
25、 liabilities but not the individual investors assets and liabilities.Monetary unit assumption1. only transaction data capable of being expressed in terms of money should be included in the accounting records and the unit of measurement remains constant over a specific period of time.2. The use of th
26、e monetary nit assumption has two major limitations. First ， it limits the scope of accounting reports， i.e. goodwill. Second， the purchasing power of money continually changes.Periodic assumption1. the economic life of a business can be divided into artificial time periods.2. We must therefore prep
27、are periodic reports on operations and financial position for decision-makers such as management and other parties.3. The accounting period concept creates many difficulties . i.e. adjusted entries are needed to report net income for a period of time. The inventory costing， estimating bad debt provi
28、sions， and selecting depreciation methods are also directly related to measuring periodic profit.Going concern assumption1. The business will continue in operation long enough to carry out itsexisting objectives and commitments.2. The going concern assumption also supports the recording of prepaid e
29、xpenses as assets although in most cases the prepayments cannot be sold.3. The assumption justifies our recording fixed assets at cost and depreciating them without reference to their current replacement costs.4. When the ability of a business to continue as a going concern is doubtful， this fact sh
30、ould be disclosed in a note to the financial statement.5. The financial statement s should be prepared from the quitting concern or even liquidation point of view instead of a going concern point of view.Contingent liabilitiesContingent liabilities are potential obligations that will become liabilit
31、ies only if certain events happen in the future. If the liabilities are probable and the amount of the liabilities can be reasonably estimated， it should be recorded in the accounts.Capital expenditure and revenue expenditureCapita expenditure is the amount of investment by a business in its assets
32、retained for the purpose of earning profits， which are termed fixed assets.Revenue expenditure are those costs incurred in running a business on a current or daily basis.Chapter 5 accounting for trading companiesCredit memo （credit note）sales returnDebit memopurchase returnPerpetual inventory system and periodic inventory system*In a perpetual inventory system， a continuous record is kept for the cost of goods sold and the cost of stock on hand.
