沃顿商学院全套笔记-十九-
沃顿商学院全套笔记（十九）
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P56：8_1 5 3M公司年度报告之旅.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
Hi， I'm Professor Brian Bouscher。 Welcome back。 Wow。
what a long week of watching videos on the accounting basics。 So。
what I want to do in the last video each week is look at a real financial statement。
so that we can take the things that we've learned in the lectures and see how they play。
out in a real world financial statement。 And to do this。
I want to use the same financial statement throughout the course。
The statement I chose is the 3M Company。 In case you had noticed， I'm from Minnesota。
There's a Vikings helmet over here and some hockey helmets and a gopher helmet over here。
My dad worked for 3M。 My grandmother worked for 3M for 40 years。
It's a company I have some affinity for。 Hopefully， I won't find anything bad in the report。
What we'll do in this video though is take a quick tour of everything that's in the。
annual report so that you have an overview of where we're going to find things。
And at the end of every week， we'll dive in in more detail and try to find that week's。
topics in the 3M annual report。 I hope you enjoy the video。
So we pull up the 3M annual report and there's a nice glossy cover， some smiling kids， some。
benign looking chemicals。 There are people writing on forms and then kids drawing pictures。 Oh wait。
I think I get the theme。 There's first the science of 3M and then there's the impact they have on smiling happy children。
Anyway， we go to the next page and you get a letter from the chairman and CEO。
So this is his explanation of how the company did during the past year。
We get some graphs showing that everything's going up。 Looks like everything is going well with 3M。
Then we get a financial summary。 By the end of the course。
you will not only know what all of these terms mean， but you。
will realize that this is not enough information to know what's going on at 3M。
We have to read through the entire annual report。 If we go to the next page。
we get this very ominous looking black and white page。
Starts with United States Securities and Exchange Commission at the top form 10K。
On this point forward， we're looking at the filing to the SEC and so everything that 3M。
says or reports here is subject to all the laws in the Securities and Exchange Acts of。
1934 and full SEC enforcement。 This is the point where things start to get serious。
If we go to the next page， it gives us the table of content。
So it's a quick overview。 In part 1 of the report， we're going to learn a lot about the business。
What I'm going to do in a second is just flip through a lot of these quickly。
You'll look at these more carefully as we go on later in the course。
Part 2 is going to give us the financial information。
Key things we're going to find here are the management discussion analysis and of course。
the financial statements which are the star of the show。
Then part 3 gives us proxy related information， the directors， officers， how much they're， paid。
and then there's any supplemental exhibits in part 4。
Part 1 has the information about the business。 Again。
I'm just going to flip through this very quickly。
If you want to go and read it in more detail， see what kind of things are there， it'll be。
available on the course platform。 As you can see， it's not that long。
We just got through part 1。 Then part 2 starts some information on stock price。
selected financial data。
Now here's the big thing， management discussion analysis。
This is where management tries to explain to the users of the financial statements what。
happened during the year。 So all the numbers that changed went up， went down， or didn't change。
tries to provide。
some kind of explanation so that users can understand the financial statements。
Although management is being very helpful by giving us all this detailed explanation on。
what they think happened during the prior year， we still want to be a little skeptical。 After all。
there have been some companies which have had some big frauds where they've。
written about things that have happened in the section that didn't really happen。
So I like to look at the financial statements and the footnotes first， come up with my own。
theories for what happened， and then come and see what management's saying about it just。
as a reality check of whether I can believe what they're saying。
So flipping through here， you can see it's going to be pretty extensive in detail。
There's talking about the income statements， business segments， geographic segments， financial。
condition and liquidity。 So we're starting to get some cash flow information。
And we're going to come back and look at these once we learn about all of these topics later。
in the course。 There's disclosures about market risk。
And then we finally get to the financial statements which， as I said， I think are the。
stars of the show。 Notice here that there's two pages of reports。
six pages for the actual financial statements， and then 66 pages of footnotes。
which right away tells you that the financial statements。
are probably not going to have all the information we need。
We're going to have to dive into these footnotes to really learn what we need to learn about。
the company。 And so we're going to be doing a lot as we go through the course is looking at the details。
in the footnotes because that's where all the action is。
On the next page， we see two of the reports， management's responsibility for financial reporting。
and internal controls。 So as we talked about in earlier lectures。
management is responsible for putting together， the financial statements。 Now， of course。
we hire an auditing firm， public accounting firm， to provide， as they。
say， an opinion。 So the auditing firm says， in our opinion。
the consolidated financial statements listed， in the accompanying index present fairly in all material respects。
the financial position， of 3M Company， an subsidiary， it's at December 31， 2012 and 2011。
and results of operations， and cash flows for the three years ended， December 31， 2012。
in conformity with accounting principles， generally accepted in the United States of America。
I want to jump in here to point out what the auditor is actually saying here。
They're not saying we are giving you an ironclad guarantee that 100% of the things in this。
statement are completely accurate and true and you can bet your life on them。 Instead。
they're saying in our opinion， these financial statements present fairly in all， material respects。
the financial position， results of operations， in conformity with， US GAAP。 In other words。
we've gone and looked at some of the big things that they're doing。
They seem to be following the rules， at least in our opinion。
So as we've talked about in earlier videos， the auditors give us a little bit of insurance。
but we still need our own healthy dose of skepticism when reading these statements because。
we cannot fully rely on what the auditors have done in terms of guaranteeing the accuracy。
of everything in these statements。 The rest of the report talks about internal controls。
Thanks to Enron and the Sarbanes-Oxley Act， there's a lot of focus now on internal controls。
that have companies have。 have to audit the internal controls。 It's a big part of the job。 It's not。
something we're really going to talk about in this course。 Then we see the。
income statement， balance sheet， statement of stockholders' equity， statement of。
cash flows。 We'll come back and look at these as we learn more material and then。
the footnotes start and go on and on and on and on。 Wow， still not through the。
footnotes yet。 Still not up。 Okay， went too fast。 There we go。 So the footnotes。
66 pages， seems very intimidating and very daunting now， but don't worry by the， end of the course。
you'll be able to work your way through a lot of these and。
understand what's going on。 The last parts of the report are part three， which。
gives us the proxy information， directors， officers， comp。 We're not going to talk， about these。
You can look through them if you're interested。 Last part is any。
exhibits or financial statement schedules。 Most of those were incorporated。
within the financial statements and we finally wrap up on page 124， which makes。
this a fairly short annual report these days。 I recently used Sony's annual report。
in my elective class and that one came in at 279 pages and I made my students。
responsible for knowing everything in those 279 pages。 So you're getting off a。
little bit easy here。 So that was a quick overview of the 3M and a report。 As I， mentioned。
every week we will come back to it to try to find what we've talked。
about during that week's video lectures in the 3M financial statements and then。
during the last week of the course we're going to pick a different financial。
statement and do a deep dive through that statement and try to find all the。
things that we've learned about during the course。 So thanks for sticking with me。 I。
realized it was probably a tough week of videos trying to get these basics down。
of debits and credits and all the vocabulary and the counting language but。
hopefully you stick with it。 We've got a couple more tough weeks ahead of us but I。
think you'll find by the end of the course it'll be worth it if you stick with us。
Hope to see you next week。
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P57：9_2 1 收入和支出.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
Hello and Professor Brian Bache。 Welcome back。 In this video， we're going to talk about revenues。
expenses， and the income statement。 This is a fairly important video because we're going to talk in detail about the difference。
between accounting income and cash flows。 Accounting income is determined by something called accrual accounting。
which tries to， measure business activities and gives a very different picture of the company's performance。
than merely cash in or cash out。 Let's get started and see how this works。
As we talked about in the opening video， the income statement reports increases in shareholders。
equity due to operations over a period of time。
Net income is made up of revenues minus expenses。
There's a couple synonyms that are often used for net income。
It's also called earnings and net profits。
All the income statement items are based on accrual accounting principles。
Now notice I said accrual accounting， not accrual accounting， but this in fact is where the。
accounting starts to get cruel because now recognition of revenues and expenses are。
going to be tied to business activities not to cash flows， which makes the accounting。
a little bit more tricky。 Revenues are recognized when goods and services are provided。
not necessarily when the cash。
is received。
Expenses are recognized in the same period as the revenues they help to generate， not。
necessarily when cash is paid。
And so the bottom line is that net income is not the same thing as net cash flow。
So let's look at revenues and expenses in more detail starting with revenue。
Revenues an increase in shareholders' equity from providing goods or services。
There are two criteria that need to be satisfied to recognize revenue。
First， it has to be earned， which means goods and services are provided， and it has to。
be realized， which means that payment for the goods and services is either received in cash。
or something that can be converted to a known amount of cash。
These are called the revenue recognition criteria。 For example。
let's say that we make a sale to a customer， we deliver the goods to the。
customer， and we give the customer an invoice， which has the dollar amount that they owe us。
and a time period in which they have to pay us。
We've satisfied the first criteria because we deliver the goods to the customer， and we。
satisfied the second criteria， realized because even though we haven't gotten cash， we have。
something that can be converted to a known amount of cash， and that's the invoice which。
has the dollar amount on it。 So in this case， we could book the revenue even before we get the cash。
and what we would。
do in this case is create an accounts receivable for what the customer owes us。
Good， but can you give us some examples of when these criteria would not be satisfied？ Why yes。
thank you for asking。 Here's an example where the first criteria， earned。
may not be straightforward。 Let's say you pay $100 to a software company to buy some software for your computer。
For the software company， the $100 is realized because they've collected the cash， but they。
might not book the full $100 as revenue today because it's not all earned。
The reason is that you're paying for not only the code that you receive today， but you're。
also paying for updates or patches that you receive over time， as well as technical support。
that you might receive over time。 So what the software company might do is book $80 of revenue today because that's what they've。
earned by delivering the code。 The other $20 of revenue would only be booked later on as they deliver updates or as they。
provide technical support over time。 And how about the second criterion？
And now here's an example of where the second criteria realized is not exactly straightforward。
So there used to be this CEO who was a turnaround expert。
I'm not going to mention his name because I don't want to get sued， but what he used to。
do is get hired by distressed companies and he would come in and reduce the workforce。
streamline the operations， make aggressive accounting decisions and turn around the company。
very quickly。 And one of his stops， he ended up shipping out a bunch of product to customers that had。
an order of the product right at the end of the quarter。
These shipments allowed the company to book the revenue and meet their earnings targets。
that analysts had set for the company for that quarter。
The justification for booking the revenue was that it was earned because they had delivered。
the goods and it was realized because they gave the customers an invoice。
The problem is that if the customers haven't ordered the product， they're probably going。
to send it right back without paying it。 And so the revenue really hasn't been realized because you don't have something that can be。
converted to a known amount of cash because you don't know the customers have any intention。
of actually paying for the goods that you ship to them。 That sounds illegal to me。 Yes， in fact。
the company I'm talking about got in trouble with the Securities and Exchange。
Commission for this practice。 In fact， well over 50% of the enforcement actions by the Securities and Exchange Commission。
are for violation of one of these two criteria。 So these criteria have a lot of gray area and trying to interpret them。
And if companies are going to get aggressive in their accounting， this is often the first。
place where they get aggressive。
Expenses are decreases in shareholders' equity that arise in the process of generating revenues。
They're recognized when either the related revenues are recognized or when they're incurred。
if they're difficult to match with revenues。
Now here we're talking about two criteria but it's an either/or instead of a both。
And we're really talking about a distinction between something called product costs and。
period costs。 Now you also see unusual events there。
I'll come back and talk about those in a second。
But as an example， think of a company that makes so I don't know video cameras。
For some reason I'm very interested in video cameras these days。
The product costs would be all the direct costs of producing the video camera。
It would include raw materials such as plastic， the metal， the glass for the lens。
It would include all the labor that went into producing the camera。
All the cost of the factory which we call overhead。 All of these are product costs。
These product costs would stay in inventory until the camera sold。
When the camera sold， those costs would leave inventory and become an expense。
So product costs follow the product。
When the product is sold， the cost become an expense。
Now think of all of the other costs of renting a business that makes video cameras。
You have to have research and development people， operations personnel， sales force， marketing。
staff， human resources， top management。
Those people are not directly involved in producing the video camera， but they are costs。
of running the business。 We call all of these costs period costs。
Later， we're going to call them SGA or selling general and administrative costs。
These costs are recognized as expense when they're incurred。
What that means is when the people work for you， you incur the costs and so you recognize。
those costs as an expense at that point。
What if the company used the CEO's car to transport parts from the warehouse to the factory？
Would that be a product cost or a period cost？ Yeah。
in the highly unusual example where a CEO's car would be used to both transport。
parts to the warehouse and to transport the CEO to his golf game， you would have to take。
the cost of the CEO's car and split it between product costs and period costs。
I'll actually come back to this topic when we talk about the income statement in a future， video。
The product cost versus period cost distinction is what we call the matching principle， where。
we try to match expenses to the revenues that they generate。
There's also something called the conservatism principle， which is for unusual events。
This principle says recognize anticipated losses immediately， but recognize anticipated。
gains only when they're realized。
Another way to look at this is it's the anti-human nature principle。
Human nature would be， "Hey， something good's going to happen in the future。 Let's record it now。"。
Whereas something bad's going to happen in the future， let's just wait until it happens。
The conservatism principle forces you to the opposite。
If you anticipate some loss in the future， like an environmental cleanup or settlement。
on a product liability suit or employee severance costs in a restructuring， you don't wait。
until those costs actually happen to expense them。
You expense them right away as soon as they're anticipated。
But if you expect some big gain to happen in the future， like you've signed a new customer。
to a contract and you expect big profits in the future， you actually have to wait until。
those profits come。 You can't recognize them when they're anticipated。
For this reason you'll see a lot of big one-time expenses， but not so many big one-time gains。
It's because the conservatism principle forces you to anticipate future losses， but not anticipate。
future gains。 Hey， I didn't know this was going to get political。
I am going to leave if this turns into a biased political polemic。
I thought the only right versus left debate in the course was debit versus credit。 No no no。
This is not political conservatism。 This is not conservatism as the opposite of liberalism。
This is conservatism as the opposite of aggressivism。 Rest assured。
there'll be no political content to any of these videos， and the only left。
right debate will be debit versus credit。
Now we're going to practice applying these revenue recognition criteria to figure out。
how much revenue should be recognized in the month of December for each of the following， examples。
As always， you'll see a pause button， so if you want to pause the video and guess the， answer。
the pause sign will cue you when you should do that。
Let's get started。
BOC delivers $500，000 worth of washing machines in December to customers who don't have to。
pay until February。
The answer is $500，000。 BOC has delivered the washing machine。
so they've earned the revenue in December。
BOC is given the customer an invoice which has them scheduled to pay in February， so they've。
realized the revenue with both earned and realized BOC gets to book $500，000 of revenue。
in December。 What happens if we never collect the cash？ Do we have to cancel out the revenue？
It still seems dodgy to me that you can record revenue before you get the cash。 Yes。
you are correct that we do have to worry about whether we will collect the cash on this， revenue。
Later in the course， we'll see how companies try to estimate how much of their revenue。
they won't collect in cash， and then at the time of sale， make an adjustment to reduce。
their revenue based on the amount they don't expect to collect。
But that's a complication we're going to get to in a few weeks。 For now。
let's just assume that all of the revenue is eventually collected in cash。
BOC collects $300，000 cash in December for washing machines delivered in October。
The answer here is zero。 Presumably when BOC delivered the washing machines in October。
they also sent an invoice so that。
they could book the revenue of $300，000 in October when those revenue recognition criteria。
were satisfied。 In December， BOC is just collecting the cash on accounts receivable。
They can't book the revenue again or they'd be double booking it， so there wouldn't be。
any revenue in December。
It was all booked in October。 Next， BOC Realty leases space to a tenant for the month of December in January for $20。
000。
all of which is paid for in cash in December。
The answer here is $10，000。 We've received the cash so we know whatever revenue we're going to record meets the realized。
criteria。 But the question is how much have we earned in the month of December？
If BOC is getting paid for December and January， the way they earn revenue is by providing space。
to the tenant for December and January。 BOC is only provided space for December。
so they can only record revenue for December。
which would be one half of the $20，000 or $10，000。
That's the amount that's been earned in December。
BOC Aerospace receives an order for a $400，000 jet in December to be delivered in July。
The answer here is zero。 BOC Aerospace has not delivered any goods or services in December。
so they have earned。
no revenue， which means they can't book any revenue until they actually deliver a jet。
If this is a long-standing customer that promises to pay us， why can't we book the revenue now？
Even if it's a long-standing customer， the revenue recognition criteria still apply。
We have to deliver goods or services before we can record revenue。
It's just one of those conservative， I mean， non-aggressive practices that accountants。
use to increase the reliability or objectivity of the financial statements。 BOC Bank is owed $100。
000 of interest on a loan for December and receives the payment。
in January。
The answer is $100，000。 BOC Bank has earned the interest revenue by providing the money outstanding to its customers。
It's provided a service。
Presumably there's some kind of payment schedule with the customer borrow the money on when。
they should pay so we can consider it realized。
And so BOC Bank can book $100，000 of interest revenue in December even though they won't。
get the cash payment until January。
BOC issues 20，000 shares of stock in December and receives $10 per share， which is $2，000。
per share more than they expected。
The answer is zero。
Companies can only record revenue when they provide goods or services。
They can never， ever record revenue from selling shares of their own stock。
It doesn't matter what the proceeds of the stock issuance were， whether they were more。
or less than expected。
You simply cannot book revenue on issuing your own stock。
Revenue is only booked when you provide goods and services。
Now let's practice with expenses， so for each of these items we're going to try to figure。
out how much expense would be recognized in December。
First， BOC Automotive buys engines worth $2 million in December for cash。
The answer is zero。
BOC has bought engines with cash， but engines are going to be a product cost， so they're。
not going to be expensed until BOC actually sells the cars that they make with those engines。
So at this point， no expense。
BOC Automotive uses the engines to make cars at a total cost of $10 million in December。
The answer is still zero。 Now BOC has used the engine to make cars。
We know how much the cars cost in total， but the cars are still product costs and the cost。
won't become expenses until BOC Automotive actually sells some cars。
Come on now。 The question says the words total cost。 Cost is just another word for expense， right？
In these videos， I'm going to use the term expense very specifically。
Businesses will only refer to things that show up on the income statement。 In contrast。
I'll use the term cost very loosely。 A cost is any cash outlay， whether in the past， present。
or future， that's required， to run the business。 So a cost only becomes an expense when we put it on the income statement。
BOC Automotive sells cars costing $8 million in December for $15 million。
The answer is $8 million of expense in December。 So we can finally recognize expenses because we've sold cars。
The expense will be equal to what it costs to make the cars， which is $8 million。
The $15 million will be the revenue that we earn from selling the cars。
And it's good news in this case because our revenue is greater than our cost， so we've。
made some profit。
BOC Automotive incurs $180，000 in salaries for its marketing staff in December。
The answer is $180，000。 Marketing staff would be a period cost。
We recognize and expanse as we incur the cost of the marketing staff， in other words， as。
they work for us and earn salaries。 We don't try to match the cost of the marketing staff to selling future cars。
like a product。
cost， because we assume that whatever the marketing staff is doing， and sometimes it's。
not clear， it's helping us sell cars this period。
So the matching prince would say， let's match the cost of the marketing staff this period。
to the revenues we generated this period and expanse the entire cost of the marketing staff。
this period。
BOC Automotive pays its auditor $50，000 in December for services to be rendered in December。
and January。
The answer is $25，000 in expenses in December。 Even though we paid $50。
000 cash to the auditor in December， we're paying for work the auditor。
is going to give us in both December and January。 We can only recognize the amount of work they've done in December as a cost。
enhance， and expanse。
If we assume it's roughly divided between the two months， then half of $50，000 will be。
25，000 of expenses。
The other $25，000 will be expensed in January when the auditor provides the work for us then。
Paying for an auditor is a period cost， right？ We pay the auditor $50，000， right？
So there should be $50，000 of expense， right？ Right about auditors being a period cost。
but not so right about the other stuff。 We're only going to expanse the cost of the auditors as they work for us。
BOC paid their auditor $50，000 cash for work the auditor would provide in December and， January。
But BOC only wants to expanse in December the amount of work the auditor did in December。
which is half of that or $25，000。 Remember on the income statement。
we want expenses to match business activities， not cash flows。 BOC automotive pays $1，200。
000 in cash dividends in December。
The answer is zero。
Dividends are never considered an expense because they're not considered a cost of doing business。
We'll never show up on the income statement， they're not an expense。
So I think that gave us some good practice in applying these revenue and expense recognition。
concepts。 We'll get a lot more practice in the next video when we start to look at some revenue。
and expense transactions for a relic spotter。 I'll see you then。 See you next video。 [ Silence ]。
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P58：10_2 2 文物寻宝案例部分 3.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
Hello， I'm Professor Brian Boucher。 Welcome back。 In this video。
we're going to finally generate some income for Rebecca Park and her relic， spotter company。
We'll go through a number of revenue and expense transactions for relic spotter and。
see how they performed in their first six months of business。 Without further ado。
let's get started。 In a prior video， we did the first 14 transactions for this startup company。
Now we'll resume the case with transactions related to revenues and expenses。
Some of the transactions will be summary entries to record six months' worth of activity。
in one journal entry。 As we did last time， we'll record journal entries and post-a-tea counts for each transaction。
After the transaction， you should pause the video and try to do the journal entry。
Make sure you think about what accounts are involved。 Did the increase or decrease？
Do we debit or credit？ And then resume the video to see the answer and the explanation。
Transaction 15。 In a search for new revenue opportunities。
Park initiated an unlimited rental arrangement。
with the Penn Antiquities Club on December 1， 2012。
Under this arrangement， the club paid relic spotter $1，200 cash upfront for unlimited rentals。
over the next year。
For this transaction， relic spotter is receiving $1，200 of cash。
Cash is an asset。 We increase an asset with a debit， so we're going to debit cash for $1，200。
Now we have to look for the credit。 So we're getting the cash and now we're obligated to provide rentals over the next year。
That obligation is a liability and should be called something like unearned rental revenue。
Liabilities are increased through credits， so we're going to credit unearned rental revenue， for $1。
200。
When do we get to recognize the revenue？ We have the cash。
We have committed to allowing the club to rent units whenever they need them。
Isn't that enough to call this revenue？ No， committing to provide the rentals is not enough to be able to recognize the revenue。
We have to earn the revenue by delivering the service。
And the service here is providing unlimited rentals over time， which means we're going。
to have to wait until time passes before we can recognize the revenue and record this。
on our income statement。 Then we post this to T-accounts。
so we add something on the debit side of cash， so we。
increase cash from this transaction。
And we create a T-account for unearned rental revenue， which has a credit balance。
Transaction 16。
For the six months and December 31， 2012， rental revenues on the metal detectors total。
$124，300。 Most of the rentals were paid in cash immediately。
However， as an initiative to reward repeat customers， Park allowed a select number of。
frequent renters to charge their rentals we build later。 As of December 31， 2012， $4。
200 was outstanding under this plan。
To do the journal entry for this one， we have to recognize that there are three accounts。
involved。 We've got rental revenues of $124，300。
We have an accounts receivable of $4，200。 That's what the customers owe us under the frequent renner plan。
And the rest of it we received in cash。
So the difference between $124，300 and $4，200 is $120，100 of cash that we receive。
Anytime we receive cash， we debit it， so we debit cash for $120，100。
We also have these accounts receivable， which are an asset。
We make assets go up through a debit， so we debit accounts receivable $4，200。
Remember， we always use the term accounts receivable for money owed to us by customers。
based on providing them goods or services in the past。
Now we're looking for the credit part of the journal entry。
And what we have left to do is record the rental revenue。
Revenue accounts are credit balance accounts。
So to increase revenue， we credit rental revenue， which increases revenue and increases stock。
dollars equity by $124，300。
Another way to look at this is that Relics Potter recorded $124，300 of revenue， of which。
$120，100 was received in cash and $4，200 has not yet been received in cash， but hopefully。
will turn into cash soon in the coming months。 Same question as before。
What happens if we don't collect the cash？ It doesn't seem kosher for them to book all that revenue with no guarantee they'll get。
the cash。 Same answer as before。 For now we're assuming that the company will collect all the cash。
but later on we'll see， how companies have to estimate how much cash they won't collect and then make adjustments。
for this on their income statement and in the balance of their accounts receivable。
So just hang on until later in the course。 To post this one。
we add another debit to the cash account， so another increase in cash。
We create an accounts receivable to account with a debit balance and we create a T account。
for rental revenue， which has a credit balance。
Transaction 17。 During the period between July 1st and December 31st， Park purchased $40。
000 of sundry's inventory。
of which $38，000 have been paid in cash and $2，000 was still owed at December 31st。
So for this journal entry we're paying $38，000 of cash。
We credit cash for $38，000 to make the asset go down。
We're receiving inventory。 Inventory is an asset。 Assets go up with debits。
So we debit inventory for $40，000 to recognize the inventory that we've received。
So we're still missing one part of this and that's the $2，000 that we still owe at December。
31。 If you remember from a prior video， when we owe money to a supplier based on getting。
shipments of inventory， we call it accounts payable， which is a liability。
We make a liability go up with a credit， so credit accounts payable $2，000。
Very cool with this one， but thank you for checking。 We need to post this transaction。
so we add a credit entry to the cash account。
We add a debit to the inventory account， so now there'd be $42，000 in inventory and a。
credit to accounts payable。 Now the balance would come back up from $0，000 to $2，000。
Transaction 18。
Relic spot recorded sales of sundry's， totaling $35，000 for the six months end of December， 31。
all received in cash。
The journal entry here is very straightforward。 We're receiving $35，000 of cash。
so we debit cash $35，000 to make that asset go up。
We've made a sale， we delivered sundries， we got cash， it meets both criteria， we get。
to record revenue。 Revenue is a credit account， so we make revenue go up with a credit to sales for $35。
000。
We are not cool with this one。 Where is the inventory？ If we sold sundries。
or whatever you call them， then our inventory should go down。 Excellent question。
This journal entry is only dealing with the revenue part of the transaction， where we record。
the cash and the sales revenue at the selling price。
We'll deal with the inventory part of this transaction in about 15 seconds。
Let's post this to T-accounts， so we post a debit to the cash account and create a sales。
T-account to keep track of revenue from sundry sales。
Transaction 19。 The original cost of these sundries was $30，000。
In this journal entry， we're going to take care of the inventory part of the sundry sales。
transaction。 If we sold sundries， our inventory went down。
Inventory is an asset， we make an asset go down with the credit， so we're going to credit。
inventory for $30，000。
Our debit here is going to be something called cost of goods sold， which is an expense。
This is what we call the product cost when we make a sale。
That original cost of the inventory becomes an expense called cost of goods sold that。
we match with the revenue that we get from selling the sundries。
So we debit this expense cost of goods sold for $30，000， which then will reduce stockholders'。
equity。 Do these last two journal entries always have to go together？ I mean。
any time you record revenue in an entry， do you have to record cogs in another， entry？
Just also tell me why the revenue and the cogs were different dollar amounts。 Yes。
these two journal entries are like the salt and pepper of accounting。 They always go together。
Anytime you sell inventory， you need one entry to record the revenue and the cash we're going。
to collect at the selling price。 And you need a second entry to record the reduction of the inventory and cost of goods。
sold expense at the original cost。 We hope that the revenue is greater than the cost you could sell because it means we've。
been able to sell our product at a markup of our cost。 In other words。
we've been able to earn a profit on our product。 If it's not the case。
well then you don't have to worry about doing these journal entries。
much longer because you won't be in business。 We post this to T-accounts by reducing the inventory account through a credit entry in。
the T-account and we post a debit to a cost of goods sold expense T-account。
Transaction 20。 Finally， I think the word， finally。
may be my favorite word in the accounting language。 Ha ha， let's try that again。
Relics spotters two employees were paid wages of 32，000 total during the six month period。
and parked through a salary of $50，000。
For the journal entry， we paid 82，000 in cash total so we credit cash for $82，000 to reduce。
the cash account。 The debit is going to be an expense for the employees working for us。
Now these employees would be period costs so we're recognizing an expense as they work。
for us。 We're going to debit salaries and wages expense for 82。
000 to recognize this period cost which。
then in turn will reduce stockholder's equity as expenses always do。
Then we post this to T-accounts so yet another credit to the cash account and we create a。
salary as in wages expense T-account with a debit balance。
Now it's the end of Relics spotters fiscal period so we're going to close the books to。
any more transactions with the outsiders。
The next step on the accounting cycle will be to do an unadjusted trial balance which。
makes sure that everything that we've done so far during the fiscal period has been okay。
There have been no math mistakes or transposition errors。
So I'm going to bring up Excel and show you how to do this。
I've been showing you the T-accounts one by one but here's what they would look like all。
on the same page。
You'll notice that there are some T-accounts which have nothing in them yet。
These are things that we're going to work on in a later video when we talk about adjusting。
entries but for all the other T-accounts what you'd want to do is draw a line and come up。
with a balance for each account。
So we have 78，800 in cash， 4，200 in accounts receivable， 103，000 in land and so forth。
Then you carry over all the account titles to another page and create a column for debits。
and a column for credits。 You put in the balance of each account and then just add up the columns。
And you can see that we have 536，500 debits。 We have the same amount for credits so we know that we've done everything correct so far。
because our debits equal our credits。
And now we're ready to go on to the next step in the accounting cycle which will be adjusting。
entries。 Wow， there's nothing more thrilling than watching somebody work through Excel and video。
Sorry about that but that seemed to be the most expeditious way to show this part of the。
accounting cycle。 Plus， if you're going to learn some accounting you've got to do some Excel now and then。
right？ So in the next video we're going to talk about adjusting entries which will get us one step。
closer to putting together financial statements。 I'll see you then。 See you next video。 Bye。
沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P59：11_2 3 1 调整分录 I.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c
Hello and Professor Brian Boucher， welcome back。 In the next two videos we're going to talk about adjusting entries。
These entries help to get the books in shape so that we can prepare financial statements。
In this video we'll talk about adjusting entries conceptually and go through some examples。
and in the next video get some practice to do these journal entries。 Let's get started。
So far we've looked at the part of the accounting cycle where a company is analyzing transactions。
doing journal entries and posting the tea accounts during the fiscal period。
At the end of the period the company does an unadjusted trial balance to make sure that。
there are no mistakes made so far。 Now we're going to move on and take a look at the next step in the cycle which is adjusting。
entries。 Adjusting entries are internal transactions that update account balances in accordance with。
the cruel accounting prior to the preparation of financial statements。
By internal transactions we mean that we're not doing any more transactions without ciders。
This is just the accountant sitting at his or her desk doing journal entries to get accounts。
up to date to do financial statements。
I guess the way to think about this is if a company's fiscal period ends December 31st。
everyone else in the company is going to leave at 5 o'clock to go out for New Year's Eve， parties。
But the poor accountant has to stay behind and do these adjusting entries before the company。
can get ready to do its financial statements for the end of the year。
There's two big categories to these entries。 The first are called deferred revenues and expenses。
In this case we're updating some existing account balance to reflect its current accounting。
value。 This happens when there's been some kind of cash flow in the past but we need to record。
revenues or expenses now。 The other big category are accrued revenues and expenses。
Here we have to create some new account balances to record some previously unrecorded assets。
or liabilities。 This will be situations where we're going to record a revenue or expense now and there'll。
be some kind of cash flow in the future。
So don't worry， I'm going to go through examples of each of these types of adjusting entries。
so you can see exactly what we mean by them。 Do any of these adjusting entries involve recording cash now？
No， adjusting entries never involve cash because these are purely internal transactions。
We're not doing any transactions with anyone outside the business at this point so there's。
no more cash coming in and there's no more cash going out。
The first category we're going to look at are deferred expenses。
So as our poor accountant sits at his desk on New Year's Eve night and watches his colleagues。
from sales and marketing and operations and human resources happily leave the company to。
go celebrate New Year's Eve， the accountant asks himself are there any assets that have。
been used up this period and should be expensed？
The accounts that we'll see here are generally called prepaid accounts like prepaid rent or。
prepaid insurance。
Occupation and amortization are also examples of a deferred expense but we'll talk more。
about those later in the video。
But let's think of something like prepaid rent。 We've paid cash in advance of occupying the space so we create an asset called prepaid。
rent but then as time goes by and we've occupied the space we have to recognize the cost of。
the rent for the time that we've occupied the space。
So we're going to do an adjusting journal entry where we debit an expense to recognize the。
cost of the rent that's been used up over time and we're going to credit the prepaid。
asset to reduce the balance to how much that's still prepaid if any at the end of the year。
Next we have deferred revenues。 So as our accountant starts receiving all sorts of text messages from his friend saying。
"Hey， when are you going to come out to the new Z party， it's getting late。"。
The accountant has to put away his phone and think to himself， "Are there any liabilities。
that have been fulfilled by delivery of goods or services that should be recognized as revenue？"。
So the accounts involved here will be things like unearned revenues or deferred revenues。
So what's happened in this case is we've received cash prior to providing goods or。
service。 Now that time has gone by and we've earned the revenue， the adjusting journal entry will。
say credit revenue to recognize the revenue that we've earned over time and debit the。
unearned revenue liability to reduce the obligation because we've fulfilled part of。
the obligation by delivering the goods or services over the time period。
Why would this be an adjusting entry？ Wouldn't you know when you had delivered goods and then just record this entry then？
Yeah， if we had delivered some goods， we probably would have recognized revenue when we delivered。
the goods。 But these examples are about providing some kind of service over time。 And in this case。
we just do an adjusting entry to recognize all the service provided over。
the period as opposed to doing an entry every month or week or day or hour or minute or second。
Next we have accrued expenses。 So as our port accountant decides to turn on the TV to watch something like New Year's。
Rock and Eve so he can hear some of the music in the background that he's missing at all。
the parties， he has to ask himself， have any expenses accumulated during the period that。
have not yet been recorded。
These accounts are all going to be payable type accounts。
What's going on here is that we've incurred some expense over time but we haven't yet paid。
for it in cash。 So the adjusting journal entry we need to make is to debit an expense to recognize that expense。
and credit a payable liability to show that we have an obligation to pay for that expense。
For example， if employees have worked for us but we haven't paid them yet， we have to。
debit a salary as in wages expense to recognize the cost the employees working for us and。
then credit salary and wages payable to show the liability that we have to pay our employees。
some point in the future。 Finally， we have accrued revenue。
So as our port accountant looks at the TV to watch the ball drop at Times Square， he hurriedly。
asks himself， have any revenues accumulated during the period that have not yet been recorded。
so he can do his one more set of adjusting journal entries。
The accounts we're talking about here are going to be receivable accounts like interest。
receivable or rent receivable。 An example would be if we loaned someone else money。
time has gone by so now they owe us。
interest， we would do a journal entry to credit revenue for the interest that they owe us。
and then we would debit a receivable asset like interest receivable to show that we have。
an asset for the amount of cash that we're going to collect in the future。
So this adjusting journal entry allows us to recognize revenue that we haven't recognized。
so far and then show that we have an asset for the cash that we expect to collect in。
the future。 How can revenues be accumulated with you not knowing about it？
When revenues are earned and realized， you should record the entry。 Why is this an adjusting entry？
Again these examples are about providing a service over time as opposed to delivering。
specific goods。 And so that only matters that the revenues show up in the books when we put together。
financial statements， it's just easier to do the adjusting entry once at the end of the。
period instead of doing it every month or week or hour or minute or you get the idea。
Finally we're going to talk about depreciation and amortization which are just examples of。
deferred expenses but there's a lot more to them so I wanted to give them their own couple。
of slides。 The goal of depreciation and amortization is to allocate the original cost of long-lived。
asset over its useful life。 What we want to do is match the total cost of the asset to the revenues it generates over。
its period of use。
Remember back in the introductory video we looked at Dave's car transport service。
Dave had bought a truck that he intended to use for 48 months。
Instead of recognizing the cost of that truck as an expense in the first month， we spread。
the cost out over 48 months through depreciation to try to match the cost of the truck to the。
revenue we think it will generate in the future。
There's some terminology here。 Tangible assets which are physical assets like buildings or equipment or truck。
we're。
going to call this process depreciation。
For intangible assets which are abstract assets like trademarks or customer lists which we've。
acquired in an acquisition， we're going to call this process amortization but the process。
is going to be very similar even though the terminology is different。
Now let's talk about the accounting procedure for depreciation and amortization。
Starting with depreciation。 Depreciation is not deducted from the tangible asset account。
In other words if you were taking depreciation on a truck you wouldn't deduct it from the。
truck account。 Instead the depreciation is going to be recorded in a contra asset account called accumulated。
depreciation。 A contra asset is denoted by XA in parentheses and it has a credit balance which means that。
contra assets go up with credits and down with debits。
I think contra is a Latin word which means something like it has the balance on the opposite。
side of where you'd expect the balance to be based on where it is in the balance sheet。
In other words assets normally have debit balances so they're increased with debits。
A contra asset would have a credit balance and be increased with a credit because essentially。
a contra asset is keeping track of reductions in a companion asset account。
Then what we'll see is when we put together the financial statements the accumulated depreciation。
will be subtracted from property plant equipment on the balance sheet to get something called。
net book value。 Amortization is often deducted directly from the intangible account。
So if you were amortizing a trademark you would deduct it directly from the trademark。
account。 However， nowadays there are companies that have fairly large intangible assets and they've。
started to use accumulated amortization accounts as well。
So that's just another type of contra asset where the accounting works just like accumulated。
depreciation。
But I think the most common treatment you see is that the amortization just comes directly。
out of the intangible asset account。
Why do contra assets fit into the balance sheet equation？
Why do they have a credit balance if they are assets？
I admit that it's hard to get your head around this notion of a contra account。
Let me pull up the super T account to show you where a contra asset sits on the balance， sheet。
So the contra asset is on the asset side of the balance sheet but it has a credit balance。
That means an increase in a contra asset would reduce total assets。
The way to think about it is that contra account is keeping track of the decreases or reductions。
in a specific asset account。 It's almost like an expense。
Expenses sit on the shareholders equity side of the balance sheet in retained earnings but。
they have a debit balance。 That means an increase in expense reduces retained earnings。
In fact an expense is just a contra shareholders equity account。
So you've actually seen this before and you're going to see a lot of it again and as you see。
it over and over I think it will become more intuitive to you。
And why not just deduct depreciation from the regular asset account？ Excellent question。
When we get to the video where we put together a balance sheet we'll see that the common format。
for reporting property plan equipment is to show the original cost of the property plan。
equipment separate from how much it's been depreciated over time。
And in order to provide that format we have to keep track of this accumulated depreciation。
in a separate account。
To calculate the amount of depreciation expense every year almost every company uses a method。
called straight line depreciation。 Under this method the depreciation expense is equal to the original cost of the asset。
minus its salvage value all divided by its useful life。
The salvage value is what you think the assets are going to be worth when you're done using。
it。 When the numerator we're taking how much of the assets cost you're going to use up and。
then the useful life is the number of periods you expect to use the asset。
So under straight line depreciation the amount of the depreciation expense is going to be。
the same for each year of the assets life。
Are there other methods of depreciation？ Why do almost all companies use straight line for their financial statements？
Yes there are accelerated methods of depreciation where you recognize higher depreciation in the。
early years of an assets life and then much less depreciation in later years of an assets， life。
These methods are used for tax purposes which we're going to talk about much later in the， course。
My conjecture is that most managers like to use straight line depreciation because it。
produces nice smooth earnings。 If you use accelerated depreciation then your earnings will be more volatile depending on。
whether you have a lot of new equipment which has high depreciation or a lot of equipment。
which is later in its life which has much lower depreciation。
Who determines the useful life and the salvage value？ Is it a central government agency？
No for financial reporting purposes there is no central government agency that dictates。
useful life and salvage value。 Managers are supposed to choose the useful life based on how long they intend to use。
the asset and then the salvage value will be a function of how long they intend to use， it。
So to see how this works let's talk about a couple airlines。
There's a major international airline which has a strategy of only flying pretty new state。
of the art planes。 They'll buy a brand new plane， fly it for five years and then sell it to someone else。
So when they choose their depreciation assumptions their useful life is five years and they have。
a very high salvage value。 Now there's a major domestic airline that tends to fly their planes for 20。
30， 40 years。 I'm not going to mention the name but you probably know who it is。
Their strategy if they bought a brand new plane would be to choose a useful life of 20。
years and then they would have a low salvage value as a result。
So you can have two airlines buy the same plane and have different depreciation assumptions。
but that's okay because the depreciation assumptions are supposed to match how the manager intends。
to use the plane not anything that has to do with the physical life of the plane。
So I think I've probably fully depreciated your energy at this point so why don't we， wrap up here。
I'll see you next video where we'll do some more practice with adjusting journal entries。
See you then。 See you next video。 Bye。
