Accounting English
Unit 7
Liabilities and owner’s equity
Questions
1、What is meant by “Liabilities ” ?
2、Explain the terms:current liabilities,payroll
accounting,Long-term liabilities.
3、Tell the Characteristics of the partnership.
4、What is the distribution of partnership
profits and losses?
5、Talk about the Liquidation of a partnership.
Current liabilities (1)
Current liabilities are debts or obligations
that will be paid within one year or the
operating cycle，whichever is longer.
Including： trade accounts payable, notes
payable, dividends payable, sale and
excise taxes payable, current portions of
long-term debt, accrued liabilities, payroll
liabilities, and deferred revenues.
Current liabilities (2)
Typical current liabilities include the following.
1．Known liabilities of a definite amount：
a． Accounts payable
b． Short—term notes payable
c． Cash dividends payable
d． Advances and funds held as short-term deposits
e． Accrued liabilities
f． Deferred revenues(revenues collected in advance)
g． Long—term debt due within one year
2．Known liabilities, amount dependent on operation：．
h． Taxes(income，sales，and social security)
Text
i． Bonus obligations
j． Accrued liabilities for expenses incurred
but not yet paid
3．Known liabilities of an estimated amount：
k． Guarantee and warranty obligations
l． Premium obligations
m．Contingent liabilities
Payroll accounting
The three general types of liabilities
associated with payroll accounting
are：
(1) liabilities for employee compensation,
(2) liabilities for employee payroll withholdings,
(3) liabilities for employer payroll taxes.
Long-term liabilities
Liabilities that do not require the use of funds
within one year (or the next operating cycle，
whichever is longer) for their liquidation are
designated long-term debts．
Including： bonds，notes，equipment purchase
obligations，permanent customer deposits，some
obligations under pension and deferred compensation
plans，certain types of lease obligations，deferred
income taxes，and some deferred revenue items.
The computation of bond price is as
follows：
Bond Price
=Present value of the bond’s face
amount + Present value of the
future cash interest Payments
Partnerships
According to Uniform Partnership Act, a
partnership is an association of two or more
persons to carry on as co-owners of a
business for profit.
The partnership has the following characteristics:
1、Voluntary Association
2、Partnership Agreement
3、Limited Life
4、Unlimited Liability
5、Co-ownership of Partnership Property
6、Participation in Profits and Losses
Execises 1
Give a brief explanation for the following terms.
(1) imprest system
(2) bank reconciliation statement
(3) Matching principle
(4) Working capital
(5) Revenue expenditure
Execises 2
Translate the following statements into Chinese.
(1) Accounting principles are not like physical laws;
they do not exist in nature, awaiting discovery man.
Rather, they are developed by man, in light of what
we consider to be the most important objectives of
financial reporting. In many ways generally
accepted accounting principles are similar to the
rules established for an organized sport shuch as
football or basketball.
(2) Accounting have devised procedures whereby the
flows of cash receipts and payments are spread
over a period of time in a certain way to derive
income, which is representative of the economic
performance of the firm for the given period. The
income concept as applied in the real world
involves numerous decisions and judgmenmts.
Question(3d)
Unit 8
The
corporation
The definition of corporation
What is a “Corporation”？
A corporation is a legal "entity" created
separately from those who own and
operate it. Like an “artificial person”the
entity separates a corporation's debts
and taxes from its owners (shareholders)
thereby offering the greatest personal
liability protection of all business entities.
Advantages of a Corporation
①、Limited Liability of Stockholders
②、Ready Transfer of Ownership
③、Continuous existence
④、Separate Legal Entity
⑤、Ease of Raising Capital
Disadvantages of a Corporation
Federal and state income taxes，which normally exceed
50 percent of a corporation’s income，constitute the
greatest disadvantage of the corporate form as follows：
①、Federal Income Tax
②、 State Income Tax
③、Right to do Business
④、Franchise Tax
⑤、Taxes on Dividends
Corporate terminology
1、The stockholders
2、The board Of directors
3、A share of stock includes
(1)、Authorized shares
(2)、Unissued shares
(3)、Subscribed shares
4、Treasury stock
5、Outstanding stock
Stock
1、 Typical stocks include the following：
(1)Common stock and preferred stock
(2)Capital stock and treasury stock
2、 Corporations’ earnings are accumulated separately from their
paid-in equity capital．Some of the major terms related to retained
earnings are：
(1)Cash dividends
(2)Stock dividends
(3)Appropriations
3、Stock value includes：
(1)Book Value
(2)Market Value
Exercise 1
Translate the following Chinese statements into
English.
(1) 财务报表反映一个企业的财务状况和经营成果，是
根据公认会计准则编制的。这些报表是为许多不同的
决策者，许多不同的目的而提供的。纳税申报单则反
映应税收益的计算，是由税法和税则规定的概念。在
许多情况下，税法和公认会计准则相似，但两者却存
在实质上的不同。
(2) 审计师不保证财务报表的准确性，他们仅就财务报
表的公允性发表专家意见。然而注册会计师事务所的
声誉来自于他们对审计工作的一丝不苟和审计报告的
可靠性。
Unit 9 Cost accounting and banking accounting
Cost accounting
Manufacturing cost elements include：
1、Direct Material costs
2、Direct Labor Costs：machine operators ,maintenance
people ,managers and supervisors ,support personnel ,and other
people performing the material handling ,inspection ,and storage
functions .
3、Indirect labor costs: life truck driver’s wages, maintenance
and inspection labor, engineering labor, machine helpers.
4、Indirect materials and supplies: Nails, rivers, small tools.
5、Other indirect factory costs: building maintenance,machinery and
tool maintenance, property taxes, property insurance, pension costs，
depreciation on plant and equipment.
Brief introduction to banking accounting
1、A bank is a government-licensed financial institution(citation needed) whose
primary activity is to lend in order to increase economic growth.
2、The first state deposit bank, Banco di San Giorgio (Bank of St.George), was
founded in 1407 at Genoa, Italy.
3、The economic functions of banks include:
(1)issue of money
(2)netting and settlement of payments
(3) credit intermediation
(4) credit quality improvement
(5) maturity transformation
4、 The requirements for the issue of a bank license vary between jurisdictions
but typically include:
(1)Minimum capital
(2)Minimum capital ratio
Exercises
1、Bonds payable issue and recording interest
expenses.The ABC Company sold $600000 of its
9.5%, 12 years bonds on April 1, 2000, at 106. The
semi-annual interest payment dates are April 1 and
October 1. The effective interest rate is
approximately 8.9%. The company’s fiscal year
ends December 31.
Required:Prepare journal entries to record:
(1) The issue of the bonds on April 1,2000
(2) The first interest payment on October 1, 2000
(3) The Amortization of premium or discount and
interest expenses on December 31, 2001.
2、Statement of Cash Flows.
The net income of the ZY Company for 1999 was
$260000. Additional data available relative to
activities for the year are given below:
A. Depreciation expenses for the year, $90000;
B. Loss on sale of machinery used in operations
was $2400;
C. Accounts receivable increased by $2000;
D. Accounts payable increased by $8400;
E. Patent amortization for the year was $14800;
F. Amortization of premium on bonds payable for
the year was $4600.
Required
Prepare the cash flows from operating activities
section of a statement of cash flows under the
indirect method.
3、Determining Revenue and Capital Expenditures.
The controller for XYZ Co. asks you to review the Repair and Maintenance
Expenses account to determine if all of the charges are appropriate. The
account contains many transactions totaling $215,540. All of the
transactions are considered material.
Required:You examine three of the transactions. Indicate
whether each transaction is properly charged to the reqair
and maintenance account and, if not, indicate why not and to
which account the transaction should be charged. The three
transactions as follows:
Item Date
Amount
Decription
(1)、 01/03/2008 $10000 Two-year service contract on
office equipment
(2)、 05/18/2008 $38500 Sealing roof leaks over entire
production plant
(3)、 10/20/2008 $48500 Purchase a crane for the
assembly departement