Kế toán, kiểm toán - Chapter four: Revenue and expense accounts

CHAPTER FOURREVENUE AND EXPENSE ACCOUNTS1. Record debits and credits in revenue, expense, and withdrawal accounts.2. Explain the rules of debit and credit.3. Apply the rules of debit and credit for revenue, expense, and withdrawals on owner’s equity.REVENUE AND EXPENSE ACCOUNTSObjectives:3Recording RevenueThe increase in the owner’s equity that results from revenue is recorded in a separate revenue account.4Recording ExpensesSeparate expense accounts should be used to record costs of doing business.5Recording the Owner’s WithdrawalsThe owner of a business may use cash or other assets personally. This is recorded in the withdrawal account.6The Rules of Debit and CreditAssetsBalance side is debit sideIncrease side is debit sideDecrease side is credit side7The Rules of Debit and Credit (continued)LiabilitiesBalance side is credit sideIncrease side is credit sideDecrease side is debit side8The Rules of Debit and Credit (continued)Owner’s EquityBeginning investment is on credit sideIncreases are on credit sideDecrease are on debit side9The Rules of Debit and Credit (continued)Revenue AccountsIncreases in owner’s equity through revenue are on the credit sideDecreases in owner’s equity through reduction of revenue are on the debit side10The Rules of Debit and Credit (continued)Expense AccountsDecreases in owner’s equity through expenses on the debit sideIncreases in owner’s equity through reduction of expense on the credit side11TransactionRebecca Van Lieu tested and screened job applicants for $800 on credit for a client, Donald Lynch.12Transaction AnalysisThe increase in the asset Accounts Receivable is recorded as a debit to the Accounts Receivable account.Because revenue was earned, owner’s equity increased and is reflected by a credit to revenue.13TransactionRebecca Van Lieu received $400 on account from Donald Lynch. 14Transaction AnalysisThis transaction involves only an exchange of one asset (accounts receivable) for another (cash).It is recorded by debiting the Cash account and crediting the Accounts Receivable account.15Transaction Analysis (continued)16TransactionRebecca Van Lieu withdrew $500 in cash from her business for her personal use.17Transaction AnalysisOwner’s equity is decreased by $500 by debiting the Withdrawals account.The asset Cash is decreased by $500 by crediting the Cash account18Accounting TerminologyOwner’s equity accountsWithdrawals19Chapter SummaryMany business transactions involve earning revenue and incurring expenses.A separate account is opened for each major revenue and expense.A separate withdrawal account is opened to record the owner’s withdrawals.20Chapter Summary (continued)At the end of the period of operations, all revenue and expenses are totaled.Net income or loss is derived after subtracting expenses from revenue and increases or decreases the owner’s equity.21Chapter Summary (continued)Withdrawals are subtracted from the net income to show the net increase or decrease in the owner’s equity.221. The balance side of a revenue account is the debit side.2. The balance side of an expense account is the debit side. 3. If withdrawals exceed net income, the owner’s equity is increased.Topic QuizAnswer the following true/false questions:TRUEFALSEFALSE23 Investigating on the InternetSources of information about revenue and expense accounts can be accessed at a website for a business.As a research assignment, access the corporate website and report those sources of information that might concern revenue and expense accounts used in the operation of the business.24(Return to Topic Quiz)1. The balance side of a revenue account is the debit side.FALSEThe balance side of a revenue account is the credit side.25(Return to Topic Quiz)3. If withdrawals exceed net income, the owner’s equity is increased.FALSEThe owner’s equity is decreased.26