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会计英语
ACCOUNTING
辽宁对外经贸学院外语系
李海红
UNIT ONE Financial Position and Accounting Equation
 Financial position: economic resources belonging to a
company and the claims (equities) against those resources
at a point in time.
 Economic resources = equities
 Economic resources =creditor’s equity + owner’s equity
 Accounting equation: assets = liabilities + owner’s equity
 four types of transactions that affect
owner’s equity
Owner’s investments
Owner’s
equity
revenues
Owner’s withdrawals
expenses
 The full form of accounting equation:
 Assets=Liabilities + Owner’s Equity +
Revenue - Expenses
Owner’s equity
 Definition: the residual interest in the assets
of an entity that remains after deducting its
liabilities.
 Owner’s equity = assets – liabilities
 Owner’s equity = net assets
Liabilities
 Definition: probable future sacrifices of
economic benefits arising from present
obligations of a particular entity to transfer
assets or provide services to other entities in
the future as a result of past transactions or
events.
 Kinds of liabilities: current liabilities and
long-term liabilities
Assets
 Definition : probable future economic
benefits obtained or controlled by a
particular entity as a result of past
transactions or events; economic resources
owned by a business that are expected to
benefit future operations.
 Kinds of assets:current assets, fixed assets
and intangible assets.
 Economic resources are referred to as assets
and creditors’ equities are referred to as
liabilities.
 Equities: creditor’s equity and owner’s equity
 Current assets: cash, accounts receivable,
inventories,
 Fixed assets: land, buildings,and equipment
 Intangible assets: patent, trademark and
brand name, copyright, franchise
 Current liabilities: accounts payable,
salaries payable, taxes payable,
 Long-term liabilities: bonds payable
CLASSROOM EXERCISES
 Indicate below whether each account is an
assets (A), liabilities (L), or a part of
owner’s equity (OE).
 Cash
 Salaries Payable
 Accounts Receivable
 Johnson, Capital
 Land
 Accounts Payable
 Supplies
 Classroom exercises:
 1. Identify the following transactions by type of owner’s




equity transaction by marking each as either an owner’s
investment (I), owner’s withdrawal (W), revenue (R),
expense (E) or not an owner’s equity transaction (NOE).
a. Received cash for providing a service.
b. Took assets out of business from a personal account.
C. Received cash from a customer previously billed for a
service.
d. Transferred assets to the business from a personal accout.
 e. Paid service station for gasoline.
 f. Performed a service and received a
promise of payment.
 g. Paid cash to purchase equipment.
 h. Paid cash to employee for services
performed.
Part 2 ILLUSTRATIVE
TRANSACTIONS
 Transactions
 1. John begins his business by depositing
$50,000 in a bank account in the name of
Shannon Realty. (investment)
 Assets
1
Bal
= Liabilities + Owner’s Equity
$50,000
$50,000
. $50,000
$50,000
2.
John purchases a lot for $10,000
and a small building on the lot for
$25,000 with cash.(purchase of assets
with cash)
Assets
= Liabilities + Owner’s Equity
$50,000
$50,000
2. +10,000 (land)
+25,000 (building)
-35,000 (cash)
Bal. $50,000
$50,000
 3. John buys some office supplies for
 $500 on credit. (Purchase of assets by
incurring a liability)

Assets
=
Liabilities + Owner’s Equity
$50,000
3. +$500 (supplies)
Bal. $50,500
$50,000
+$500(accounts payable)
$500
$50,000
 4. John pays $200 of the $500 owed for
the supplies. (payment of a liabilities)

Assets
=
$50,500
-$200 (cash)
Bal. $50,300
Liabilities + Owner’s Equity
$500
$50,000
-$200(accounts payable)
$300
$50,000
 5. Shannon Realty sells a house and receives a
commission in cash of $1,500.
 Assets
=
$50,300
Liabilities +
$300
5. +$1,500 (cash)
Bal. $51,800
Owner’s Equity
$50,000
+$1,500(revenue)
$300
$51,500
 6. John sells a house calling for a commission
of $2,000, but John agrees to wait for the
payment. (revenue on credit)
Assets
=
$51,800
Liabilities +
$300
Owner’s Equity
$51,500
$2,000 (accounts receivable)
$2,000 (revenue)
Bal. 53,800
$53,500
$300
 7. A few
days later Shannon receives $1,000
from the client.
Assets
=
Liabilities +
$53,800
$300
Owner’s Equity
$53,500
7. +$1,000(cash)
-$1,000(accounts receivable)
bal. $53,800
$300
$53,500
 8. John Shannon pays $1,000 to rent some
equipment for the office .
 Assets
=
Liabilities
 $53,800
$300
 8. -$1,000(cash)

 bal. $52,800
$300
+
Owner’s Equity
$53,500
-$1,000(expense)
$52,500
 9. John pays $400 in wages to a part-time
helper. (expense)
 Assets
=
 $52,800
9. -$400(cash)
Bal.$52,400
Liabilities +
$300
$300
Owner’s Equity
$52,500
-$400(expense)
$52,100
 10. John hasn’t paid the bill of utility
expense of $300.


Assets
=
$52,400
10.
Bal. $52,400
Liabilities + Owner’s Equity
$300
$52,100
+$300(accounts payable)-$300(expense)
$600
$51,800
 11. John withdraws $600 in cash from
Shannon Realty and deposits it in his
personal account.
 Assets
 $52,400
=
11.-$600(cash)
Ba.$51,800
Liabilities +
$600
$600
Owner’s Equity
$51,800
-$600(capital)
$51,200
Classroom exercises
 Charlene Rudek finished law school in June and
immediately set up her own law practice. During
the first month of operation she completed the
following transactions:
 1.Began the law practice by placing $2,000 in a
bank account established for the business.
 2.Purchased a law library for $900 cash.
 3.Purchased office supplies for $400 on credit.

 4.Accepted $500 in cash for completing a contract.
 5.Billed clients $1,950 for services rendered
during the month.
 6.Paid $200 of the amount owed for office
supplies.
 7.Received $1,250 in cash from one client who
had been previously billed for services rendered.
 8.Paid rent expense for the month in the amount of
$1,200.
 9.Withdrew $400 from the practice for personal
use.
 On a sheet of paper, list the numbers 1
through 10, with columns for Assets,
Liabilities, and Owner’s Equity. In the
columns, indicate whether each transaction
caused an increase (+), a decrease (-), or no
change (NC) in assets, liabilities, and
owner’s equity.
 During the month of April, Grissom Co.




had the following transactions:
1.Paid salaries for April, $1,800.
2.Purchased equipment on credit, $3000.
3.Purchased supplies with cash, $100.
4.Additional investment by owner, $4,000.
 5.Paid for part of equipment previously
purchased on credit, $1,000.
 6.Received payment for services
performed, $600.
 7.Billed customers for services performed,
$1,600.
 8.Withdrew cash, $1,500.
 9.Received payment from customers billed
previously, $300.
 10.Received utility bill, $70.
 .
Part 3 Professional Ethics and
Accounting Profession
李海红
Professional Ethics and the
Accounting Profession
 Revisions:
1. Accounting equation
2. Use accounting equation to analyze the
transactions.
Accounting Profession
 Ethics
 Management Accounting
 Public Accounting
 Government and other Not-for-Profit
Accounting
 Accounting Education
 Ethics
Ethics is the application of a code of
conduct to everyday life. It addresses the
question of whether actions are good or bad,
right or wrong. Ethics actions are the results
of individual decisions and you are faced
with many ethical situations every day.
 Management Accounting
an accountant who is employed by a
business is said to be in management
accounting. A small business may have only
one person doing this work, though a
medium-size or large company may have
hundreds of accountants working under a
chief accounting officer called a controller,
treasurer, or financial vice president.
 Public Accounting
the field of public accounting offers services
in auditing, taxes, and management consulting
to the public for a fee.
 Government and Other Not-for-Profit
Accounting
Agencies and departments at all levels of
government hire accountants to prepare
reports that officials can responsibly carry
out their duties.
Not-for-Profit organizations are hospitals,
colleges, universities, and foundations.
 Accounting Education
Training new accountants is a challenging
and rewarding career, and today instructors
of accounting are in great demand.in many
schools holding the CPA, CMA, or CIA
certificate will help and instructor to
advance professionally.
Part 4Accounts

李海红
Revisions
 1. Professional ethics
 2. The classification of the accounting
profession
Accounts
 Assets: Cash
Notes Receivable
Accounts Receivable
Prepaid Expenses
Land
Buildings
Equipment
Cash
 Cash is the title of the account used to
record increases and decreases in cash. Cash
consists of money or any medium of
exchange that a bank will accept at face
value for deposit.
 Cash: coins, currency, checks, postal and
express money orders, money deposited in a
bank or banks, cash on hand.
Notes Receivable
 A promissory note is a written promise to
pay a definite sum of money at a fixed
future date. Accounts due from others in the
form of promissory notes are recorded in an
account called Notes Receivable.
Accounts Receivable
 Accounts Receivable is incurred by Credit
Sales, or Sales on Account. Credit sales
increase Accounts Receivable.
Prepaid Expenses
 Prepaid Insurance
 Office Supplies
 Prepaid Rent
 Store Supplies
 Prepaid Taxes
Land
 Land account is used to record purchases of
property to be used in the ordinary
operations of the business.
Buildings
 Purchase of structures to be used in the
business are recorded in an account called
Buildings.
 Although a building cannot be separated
from the land it occupies, it is important to
maintain separate accounts for the land and
the buildings.
Equipment
 Office Equipment: desks, chairs, office
machines, filing cabinets, and typewriters.
 Store Equipment:cash registers counters,
showcases, shelves, and similar items.
 Machinery and Equipment: lathes, drill
presses and other equipment.
 Trucks and Automobiles.
Part 6 Liability and Owner’s
Equity
李海红
Revisions
 Assets: Cash
Notes Receivable
Accounts Receivable
Prepaid Expenses
Land
Buildings
Equipment
Liability
 Notes Payable
 Accounts Payable
 Other Short-Term Liabilities
 Long-term Liabilities
Owner’s Equity
 Capital Account
 Withdrawals Account
 Revenues and Expense
Notes Payable
 Notes Payable is the opposite of Notes
Receivable.
 It is used to record increases and decreases
in promissory note amounts owed to
creditors within the next year or operating
cycle.
Accounts Payable
 Accounts Payable is the opposite of
Accounts Receivable. It comes from Credit
Purchase.
Other Short-Term Liability
 Wages Payable
 Taxes Payable
 Rent Payable
 Interest Payable
 Unearned Fees
 Customer Deposit
 Unearned Revenue
Capital Account
 When someone invests in his or her own
company, the amount of the investment is
recorded in a capital account.
Withdrawal Account
 A person who invests in a business usually
expects to earn an income an to use at least
part of the assets earned from profitable
operations to pay personal living expenses.
Revenue and Expense Accounts
 Revenues increase owner’s equity, and
expenses decrease owner’s equity:
Commissions Earned
Advertising Fees Earned
Wages Expense
Supplies Expense
Rent Expense
Advertising Expense
T- Account and Double-Entry
System
李海红
Revisions
 Assets accounts
 Liabilities accounts
 Owner’s Equity accounts
T – account and Double-Entry
System
 Evolution of the double-entry system
 The T-account
辽宁对外经贸学院精品课（高职课）
会计英语
主讲人：李海红讲师
?
The accounting equation?
Assets = Liabilities + Owner’s Equity
The basic rules of
T-account?
Assets = Liabilities + Owner’s Equity
Debit Credit
Debit Credit
for for
for for
Increase Decrease Decrease Increase
Debit Credit
for for
Decrease Increase
JOURNALS and
JOURNALIZING
 Journals: general journal; special-purpose
journal
 Journalizing: the process of recording
transactions in a journal.
H
Examples
 The following transactions for the Joan
Miller Advertising Agency happened in
January:
 January 1. Joan Miller invested $10,000 to
start her own advertising agency.
 January 2. Rented an office, paying two
month’s rent, $800.
 January 5. Purchased office equipment from
Morgan Equipment for $3,000, paying $1,500 in
cash and agreeing to pay the rest next month.
 January 6. Purchased on credit art supplies for
$1,800 and office supplies for $800 from Taylor
Supply Company.
 January 19. Performed a service by placing several
major advertisement for Ward Department Stores.
The fee of $2,800 is billed now but will be collected
next month.

S
Homework
 Record the following transactions in the
general journal.
 January 8. Paid $480 for a one-year insurance
policy with coverage effective January 1.
 January 9. Paid Taylor Supply Company
$1,000 of the amount owed.
 January 10. Performed a service by placing
advertisements for an automobile dealer in the
newspaper and collected a fee of $1,400.
 January 12. Paid the secretary two weeks’
wages, $600.
 January 15. Accepted $1,000 as an advance
fee for
 art work to be done for another agency.
.
 January 25. Joan Miller withdrew $1,400
from the
 business for personal living expenses.
 January 26. Paid the secretary two more
weeks’wages, $600.
 January 29. Received and paid the utility
bill of $100.
 January 30. Received (but did not pay) a
telephone bill, $70.
General Journal
Date
Description
Post.
Debit Credit
Ref.
2005
Jan.
1
Cash
Joan Miller, Capital
Investment in business
111 $10,000
311
$10,000
Date
Description
Post.
Debit Credit
Ref.
2005
Jan.
2 Prepaid Rent
Cash
Paid the office rent
in advance
117
111
$800
$800
Date
Description
Post.
Debit Credit
Ref.
2005
Jan.
19 Accounts Receivable
113 $4,200
Advertisement Fees Earned 411
Revenue earned , to be
collected later
$4,200
Date
Description
Post.
Debit Credit
Ref.
2005
Jan.
5 Office Equipment
Cash
Accounts Payable
Partial payment of
office equipment
146
111
212
$3000
$1,500
$1,500
Date
Description
Post.
Debit Credit
Ref.
2005
Jan.
6 Art Supplies
Office Supplies
Accounts Payable
Purchase of supplies
on credit
115
116
212
$1,800
$800
$2,600
Date
Description
Post.
Debit Credit
Ref.
Year
Month Day
The name of the
accounts debited
and credited
A brief explanation
of the transactions
Debit Credit
amount amount
Revisions
 1. Posting
 2. Ledgers
The Trial Balance
 The equality of debit and credit balances
in the ledger should be tested periodically
by preparing a trial balance.
 The steps in preparing a trial balance
follow:
 1. Determine the balance of each account in
the ledger.
 2. List each ledger account that has a
balance, with the debit balances in the left
column and the credit balances in the right
column. Accounts are listed in the order
they appear in the ledger.
 3. Add each column.
 4. Compare the totals of each column.
 Joan Miller Advertising Agency
Trial Balance
January 31, 2005
Cash
Accounts Receivable
Art Supplies
Office Supplies
Prepaid Rent
Prepaid Insurance
Art Equipment
Office Equipment
$1,720
2,800
1,800
800
800
480
4,200
3,000
Accounts Payable
Unearned Art Fees
Joan Miller, Capital
Joan Miller, Withdrawal
Advertising Fees Earned
Office Wages Expense
Utility Expense
Telephone Expense
$3,170
1,000
10,000
1,400
4,200
1,200
100
70
The Measurement of Business
Income
 Net Income
Net income is the net increase in owner’s
equity resulting from the operations of the
company. Net income, in its simplest form,
is measured by the difference between
revenues and expenses:
Net income=revenues-expenses
 Revenues: in the simplest case, they equal
the price of goods sold and services
rendered during period of time.
 Expenses: expenses are the costs of the
goods and services used up in the course of
gaining revenues. Often called the cost of
doing business, expenses include the costs
of goods sold, the costs of activities
necessary to carry on the business.
The Adjustment
 1. Apportioning recorded expenses between
two or more accounting periods. (deferrals)
Prepaid Rent
Prepaid Insurance
Art Supplies and Office Supplies
Depreciation of Plant and Equipment
 2. Apportioning recorded revenues between
two or more accounting periods:
Unearned art fees
Prepaid Rent
 Rent Expense
Prepaid Rent
400
400
Prepaid Insurance
 Insurance Expense
 Prepaid Insurance
40
40
Art Supplies and Office Supplies
 Art Supplies Expense
500
Art Supplies
500
Office Supplies Expense 200
Office Supplies
200
Depreciation of Plant and
Equipment
 Depreciation Expense,
Art Equipment
70
Accumulated Depreciation,
Art Equipment
70
Depreciation Expense,
Office Equipment
50
Accumulated Depreciation,
Office Equipment
50
Practice
 During the month of May, Grissom Agency
had the following transactions:
 1.Paid salaries for April, $1,800.
 2.Purchased equipment on credit, $3000.
 3.Purchased supplies with cash, $100.
 4.Additional investment by owner, $4,000.
 5.Paid for part of equipment previously
purchased on credit, $1,000.
6.Received payment for services
performed, $600.
7.Billed customers for services
performed, $1,600.
8.Withdrew cash, $1,500.
9.Received payment from customers
billed previously, $300.
10.Received utility bill, $700.
 Michael Yang finished law school in June and
immediately set up his own law practice. During
the first month of operation he completed the
following transactions:
 1. Began the law practice by placing $2,000
 in a bank account established for the
 business.
 2. Purchased a law library for $900 cash.
 3. Purchased office supplies for $400 on
 credit.
 4. Accepted $500 in cash for completing a contract.











5. Billed clients $1,950 for services rendered
during the month.
6. Paid $200 of the amount owed for office
supplies.
7. Received $1,250 in cash from one client
who had been previously billed for
services rendered.
8. Paid rent expense for the month in the amount
of $1,200.
9. Withdrew $400 from the practice for personal
use.
 T.EN Framing was started by Jack Wang in
a shopping center. In the first month, he
completed the following transactions:
 1. Deposited $12,000 in a bank account in
 the name of the center to start a business.
 2. Paid current month’s rent, $600.
 3. Purchased store equipment on credit,
 $2,700.
 4. Purchased framing supplies for cash,
 $3,200.








5. Received framing revenues, $1,200.
6. Billed customers for framing services,
$700.
7. Paid utility expenses, $350.
8. Received payment from customers in 6,
$700.
9. Made payment on store equipment
purchased in transaction3, $2,000.
10. Withdrew cash for personal expenses, $700.