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1、,Team Leader: Laurel Teammates: Judy, Michelle, Lydia, Wendy, Sylvia,Group 5,Michelle,Laurel,Judy,Sylvia,Lydia,Wendy,权责发生制和收入确认,Accrual Accounting,and Revenue Recognition,Key words and phrases,Componentpart 组成部分 Complicationsproblems 复杂的问题 Illustrateshow 举例说明 Leasehire for an extend period 租赁 Projec
2、ted salesforecast sales 计划销售量 Generateproduce 产生 Fraudulentcriminal 欺诈行为 Manipulatechange for your own benefit 操控 Fictitiousmade up, unreal 虚假的 Instancecase, event 实例,Incur/incurredwhen some event happens 导致,Receiptproof of payment 收据 Invoiceproof of credit transaction发票，销售清单 Accounts receivable/deb
3、tors-credit customers who owe you money for inventory sales 应收账款 Accounts payable/creditorscredit suppliers who you owe money to for inventory purchases 应付账款 Accrual/accrued expensean expense that has been incurred but the actual amount is not yet known eg. telephone bill 预提费用 Deductsubtract, take a
4、way 扣除,Depreciationspreading cost of a fixed asset over its estimated useful economic life 折旧,Capital Allowancefull cost of purchasing a fixed asset can be treated as a expense for tax purpose only 资产的税务津贴 Validacceptable 有效的 Exceedbecome greater 超出 Give/given/giving rise to-causing引起，导致 Criteriarul
5、e, condition, constraint 标准,FASB(1984)SFAC No.1,Information about earnings and its components measured by accrual accounting provides a better indication of enterprise performance than information about current receipts and payments.,ALL listed companies in china and elsewhere are required to use ac
6、crual accounting. The main implications of this are that reported net income and net cash flow for a period will usually be different. Also, accounting profit and taxable profit will usually not be the same.,Question,Distinguish between accrual and cash accounting.,Why does accrual accounting usuall
7、y lead to different figures for accounting profit and taxable profit?,1.,2.,A basic assumption that revenues are recognized when earned and expenses are recognized when incurred without regard to when cash is received or paid.,A system of accounting in which revenues and expenses are recorded as the
8、y are received and paid.,Accrual accounting,Cash accounting,Definitions, Cash received from customers 100,000 Cash paid to suppliers of inventory 70,000 Beginning accounts receivable 8,000 Ending accounts receivable 10,000 Beginning accounts payable 6,000 Ending accounts payable 7,000 Unpaid bill at
9、 the year end 5,000 Depreciation charge for the year 3,000 Expenses paid in cash 20,000(including payments in advance of 2,000) ignore inventory,You are provided with the following information for the financial year of a business.,Revenue statements,Cash basis. Sales 100,000 Cost of sales (70,000) E
10、xpenses (20,000) Profit 10,000,Accrual basis. Sales 102,000 Cost of sales (71,000) Expenses (26,000) Profit 5,000,Question,Distinguish between accrual and cash accounting.,Why does accrual accounting usually lead to different figures for accounting profit and taxable profit?,1.,2.,Because tax law an
11、d accounting rules are different. A very good example is tangible fixed assets. When a business purchases a fixed asset the accounting treatment is to write off the cost over its estimated useful life as depreciation. However, for tax purposes, the full cost can be deducted in the year of purchase;
12、this is called a Capital Allowance.,10, 000 1, 000 each year Accounting profit: A profit of 25, 000 for that year Taxable profit: 16，000 (25,000+1,000-10,000) Tax rate: 40% Tax expense: 6,400,Value Added Tax,Consumption-type VAT Income-tax Production-based value-added tax,CASES,Trade loading,In the
13、1980s RJR Nabiscothe second largest provider of tobacco and snack food products in the USA , routinely sent more inventory to customers than they had actually ordered. Once sent it would be recognized as revenue which would inflate profit. The return of un-ordered goods would be recorded in the foll
14、owing period.,Whats wrong with RJR.?,Revenue Recognition,Criteria 2,Goods or services are provided to the buyer.,Payment or valid promise of payment must be received by the seller.,Criteria 1,Case Regina Co.,This company which made and sold vacuum cleaner went a lot furture than RJR.Because of a des
15、ign fault 400,000 of the units they had sold were returned. These returns were not recorded. They also started to record sales when goods were ordered rather than when they were sent.,Performance,To ensure that projected sales figures were achieved for the year ended June 30 1988 the company generat
16、ed $5.4 million of fictitious sales invoices for the last three business days of the year.,Question,Cash VS. accrual accounting,4.,The cash basis and accrual basis can give quite different pictures of a firms operating performance.,It will depend on the business in question .,How big will the differ
17、ence be after all?,Star,Cash cow,Problem child,Dog,The Boston Matrix,Market Growth,High,Low,Market share,High,Low,Let us guess,Conclusions,Star-In a growing company, cash needs would exceed net income because of the need to increase working capital and the fixed assets,Different pictures,Similar pic
18、tures,Cash cow -In a firm that has been in existence for quite some time and that has reached a steady state, the levels of receivables, inventory, and payables are often fairly constant.,Question,Could either of the above cases have happened under a system of cash accounting?,5.,Trade loading,In th
19、e 1980s RJR Nabiscothe second largest provider of tobacco and snack food products in the USA , routinely sent more inventory to customers than they had actually ordered. Once sent it would be recognized as revenue which would inflate profit. The return of un-ordered goods would be recorded in the fo
20、llowing period.,Case Regina Co.,This company which made and sold vacuum cleaner went a lot furture than RJR.Because of a design fault 400,000 of the units they had sold were returned. These returns were not recorded. They also started to record sales when goods were ordered rather than when they wer
21、e sent.,If all payments and receipts go through a bank account then, apart from not recording sales returns, the answer to this question is “no”.,Why does the FASB favour the accrual basis?,Discussion note,Because it gives a much fuller picture of business.,Thank youO(_)O,Team Leader Laurel Teammates： Judy, Michelle, Lydia, Wendy, Sylvia Thank you!,