Kế toán, kiểm toán - Chapter two: The effect of revenue and expenses

CHAPTER TWOThe Effect of Revenue and Expenses1. Analyze business transactions involving revenue and expenses.2. Record the effects of revenue and expenses in the accounting equation.3. Compute net income or net loss.THE EFFECT OF REVENUE AND EXPENSESObjectives:3Revenue, Expenses, and Net IncomeThe employment services provided by Rebecca Van Lieu will produce revenue, or income.In producing the income the business will incur business costs, or expenses.4Revenue, Expenses, and Net Income (Continued)The revenue remaining after the expenses have been deducted is net income, or net profit.The amounts that a firm’s customers have promised to pay in the future is an asset known as accounts receivable.5Revenue, Expenses, and Net Income (Continued)Money received from customers from credit sales is referred to as money received on account.In Chapter 1 we learned that the liability incurred by a business when it promises to pay its creditors is called accounts payable.6TransactionAt the end of the first week of operations, Rebecca Van Lieu received $1,000 for resume preparation and job placements.7Transaction AnalysisThe asset cash is increased by $1,000.Owner’s equity is increased by $1,000.8TransactionAt the end of the first week of operations, Van Lieu pays a salary of $300 to her assistant. This expense causes changes in the assets and the owner’s equity.9Transaction AnalysisThe asset Cash is decreased by $300.Owner’s equity is decreased by $300 in expenses.10Accounting TerminologyAccounts ReceivableExpensesNet IncomeNet LossPaid on AccountReceived on AccountRevenue11Chapter SummaryThe inflow of assets received from business operations--usually from providing services or selling goods--is known as revenue. The costs of business operations are called expenses.Revenue can be obtained in the form of cash or accounts receivable. 12Chapter Summary(continued)Accounts receivable are amounts that customers have promised to pay in the future for services or goods bought on credit.The difference between revenue and expenses is net income, or net profit.13Chapter Summary(continued)When revenue is greater than expenses, there is a net income.When expenses are greater than revenue, there is a net loss.14Chapter Summary(continued)Net income results in an increase in the owner’s equity. Additional investments also cause an increase in the owner’s equity.Net loss results in a decrease in the owner’s equity.151. Revenue is the amount that customers have promised to pay in the future for services or goods bought on credit.2. Revenue can be obtained in the form of cash or accounts receivable. 3. Net income results in a decrease in the owner’s equity.Topic QuizAnswer the following true/false questions:TRUEFALSEFALSE16 Investigating on the InternetSources of information about net income or loss can be accessed at various corporate websites.As a research assignment, access a website from a major corporation and report those sources of information that might concern profit and loss.17(Return to Topic Quiz)1. Revenue is the amount that customers have promised to pay in the future for services or goods bought on credit.FALSEIt is accounts receivable.18(Return to Topic Quiz)3. Net income results in a decrease in the owner’s equity.FALSENet income increases the owner’s equity19