Accounting cycle in service company/ Cambodian Mekong University/Chhan Rathana

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MEKONG SCHOOL OF ACCOUNTING

Accounting Cycle in Service Company

Mr. PIN SOPNHATH ID: 4231130004 Mss. SAING SOREYAN ID: 4231130018 Mr. MEAN CHET ID: 4231130331Mss. UK MARILEY ID: 4231130025Mr. CHHAN RATHANA ID: 4231130040 Mss. THAN SREYPOV ID: 4231130021

Prepared by group: 9

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Chapter outline

I. IntroductionII. Literature ReviewIII. Accounting Cycles in Service Company IV. Conclusion

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I. introduction

The definition of accounting

The important of accounting

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I. introduction

The definition of accounting

Accounting is the to identify, record, and communicate the economic events of an organization to interested users.

Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employees at larger companies

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I. introduction

The important of accounting

Can assist in preparing list of the company to have the order.

Shows the financial situation of company to manage its easy preparation and strategically decision.

Shows the revenue and expense that have in organization for help manager can reduction other bad expense.

Shows the results of business, Net income or Net loss? Help employer to check activities of organization Reduce exploitations.

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II. Literature view

The Five Type of Account

The Chart of Accounts

Nine Steps of accounting in Service Company

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II. Literature view

The Five Type of Account

1) Asset2) Liabilities3) Owner’s Equity4) Revenue5) Expense

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II. Literature review

The Five Type of Account

• 1. Asset is resources or something valuable belonging to firms or organization which can be used for the payment of debts, the asset account represents the value of the assets owned by the business and there are current asset and fixed asset. currents asset there are such as, cash, account receivable, inventories, office supply, note receivable, etc. Fixed assets there are, land, equipment, accumulated depreciation equipment, truck, patents, building, accumulated depreciation building, etc.

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II. Literature review

The Five Type of Account

2. Liabilities is type of debt or upcoming cost for the business that company necessary to pay in cash in the one periodic, there are two current liabilities and long-term liabilities. Current liabilities that need to pay during one year it included account payable, note payable, interest payable, salary payable, unearned Revenue. And long-term liabilities, there are mortgage payable, and bond payable.

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II. Literature review

The Five Type of Account

3. Owner’s equity is the net worth and ownership of the business, it included capital or owner investments, drawing, retained earnings, and common .

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II. Literature review

The Five Type of Account

4. Revenue is the income in cash or on account that company or organization received from customer’s paying, when the company have serviced to consumers. Revenues include service revenue, interest revenue, rent revenue, admission revenue, concession revenue, etc.

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II. Literature review

The Five Type of Account

5. Expense is an arrangement in which employer will pay for the operations in company, it included salary expense, rent expense, utilities expense, insurance expense, depreciation expense, interest expense, advertising expense, supply expense, etc.

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II. Literature review

Asset101 Cash112 Account Receivable126Supplies128Cleaning Supply130Prepaid Insurance136Prepaid Rentals157Office Equipment158Accumulated Depreciation-Office

Equipment

The Chart of Accounts

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II. Literature review

The Chart of Accounts

Asset140 Land143 Cottages144 Accumulated Depreciation- Cottage145 Building149 Furniture150 Accumulated Depreciation- Furniture153 Store Equipment154 Accumulated Depreciation- Equipment157 Equipment

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II. Literature review

The Chart of Accounts

Liabilities Account200 Note Payable201 Account Payable209 Unearned Revenue212 Salaries Payable230 Interest Payable244 Utilities Payable275 Mortgage Payable

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Owner’s Equity

II. Literature review

The Chart of Accounts

301 Beginning Capital306 Owner’s drawing

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II. Literature review

The Chart of Accounts

Revenue

400 Service Revenue405 Admission Revenue406 Concession Revenue429 Rent Revenue

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II. Literature reviewThe Chart of Accounts

Expense Account

610 Advertising Expense620 Depreciation Expense-Cottage621 Depreciation Expense-

Furniture622 Repair Expense632 Film Rental Expense631 Supplies Expense711 Depreciation Expense

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II. Literature review

The Chart of Accounts

718 Interest Expense722 Insurance Expense726 Salaries Expense729 Rent Expense732 Utilities Expense

Expense Account

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Nine Steps of accounting in Service Company

II. Literature review

1. Analyze business

transactions

2. Journalize the transactions

3. Post to ledger accounts

4. Prepare a trial balance

5. Journalize and post adjusting

entries

6. Prepare an adjusted trial

balance

7. Prepare financial

statements

8. Journalize and post-closing

entries

9. Prepare a post-closing trial

balance

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1. Analyze business transactions

Assets = Liabilities + Owner’s Equity

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A journal is a book-paper or electronic-in which transaction are recorded.On January 01, 2014 the Tourism Cambodia Company (TCC) starts open operation businesses that. Prepare the journalize in January :01 invested $100,000 on cash in the business.02 Paid $3,000 cash for April office rent.

Jan. 01 Cash………………………………$100,000TCC, Capital…………………………..$100,000

Jan. 02 Rent Expense………………..$3,000Cash………………………………………..$3,000

2. Journalize the transactions

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Cash No101Date Explanation Ref. Debit Credit Balance2014Jan. 01 Balance $100,000 $100,000 02 Balance $3,000 $97,000

TCC, Capital No301Date Explanation Ref. Debit Credit Balance2014Jan. 01 Balance $10,000 $10,000

Rent Expense No729Date Explanation Ref. Debit Credit Balance2014Jan.02 Balance $3,000 $3,000

3. Post to ledger accounts

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4. Prepared Trail Balance Tourism Cambodia COMPANY

Trial BalanceMay 30, 2012

Cash $163,900Account Receivable $35,500Rent Expense $3,000Supplies and VAT $8,000Prepaid Insurance $5,000Equipment and VAT $2,200Note Payable $40,000Account Payable $8,000TCC, Capital $100,000TCC, Drawing $5,000Service Revenue $92,500Unearned Revenue $15,000Advertising Expense $7,000Utilities Expense $900Salaries Expense and TOS $25,000

$255,500 $255,500

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5. Post the Adjusting entries

The end the January 2014 insurance expire $1,500;

Cash No101Date Explanation Ref. Debit Credit Balance2014Jan. 31 Adjusted $1,500 $1,500

Insurance Expense No722Date Explanation Ref. Debit Credit Balance2014Jan. 31 Adjusted $1,500 $1,500

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Preparing an adjusted trial balance, an adjusted trial balance may be prepared after adjusting entries are made and before the financial statements are prepared. This is to test if the debits are equal to credits after adjusting entries are made.

6. Prepared an adjusted trail balance

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Income statement

7. Prepared financial statement Tourism Cambodia COMPANY

Income StatementMay 31, 2012

RevenueService Revenue $92,500Total Revenue $92,500

Expense

Rent Expense $3,000Advertising Expense $7,000VAT of equipment $200VAT of supplies $727TOS $1,953Utilities Expense $900Salaries Expense $23,047Insurance Expense $1,500Depreciation Expense $600Supplies Expense $2,773Interest Expense $600Total Expense $42,300

Net Income $50,200

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Owner’s Equity Statement

7. Prepared financial statement Tourism Cambodia COMPANY

Owner’s equity StatementMay 31, 2012

Beginning Capital $10,000Plus: Net Income $50,200Less: TCC, Drawing $5,000

Ending Capital $145,200

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Balance sheet

7. Prepared financial statement Tourism Cambodia COMPANY

Balance SheetMay 31, 2012

Asset:Current Asset;

Cash $163,300Account receivable $35,500Supplies $4,500Prepaid Insurance $3,500Less: Accumulated depreciation $600

Total Current Asset $206,200

Property Plan and Equipment

Equipment $2,000

Total Property Plan and Equipment $2,000

Total Asset: $208,200

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Balance sheet

7. Prepared financial statement Tourism Cambodia COMPANY

Balance SheetMay 31, 2012

Liabilities and Owner’s EquityLiabilities:

Current Liabilities;Account Payable $8,000Unearned Revenue $15,000

Total Current Liabilities $23,000Long-term Liabilities:

Not Payable $40,000Total Long-term Liabilities $40,000Total Liabilities $63,000

Owner’s Equity Ending Equity $145,200

Total Liabilities and Owner’s Equity $208,200

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8. Post-closing entries Tourism Cambodia COMPANY

Closing entryMay 31, 2012

Revenue ……………………………………….. $92,500Income Summary……………. $92,500

(To close revenue account)

Income Summary……………………………….. $54,100Rent Expense………………………. $3,000Salaries Expense...................... $23,047TOS…………………………………...... $1,953Utilities Expense………………….. $900Advertising Expense………….... $7,000Insurance Expense……………..... $1,500Depreciation Expense………….. $600Supplies Expense……………….. $2,773VAT of Supplies…………………… $727VAT of equipment……………….. $200Interest Expense…………………. $600

(To close expense account)

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8. Post-closing entries Tourism Cambodia COMPANY

Closing entryMay 31, 2012

Income Summary……………………….. $50,200Owner’s Capital…………… $50,200

(To close net income to owner’s capital)

Owner’s Capital……………………………… $5,000Owner’s Drawing…………….. $5,000

(To close drawing to owner’s capital)

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9. Post-closing Trail Balance

Account Title Debit Credit

Cash………………………………………………… $163,300

Account Receivable………………………………… $35,500

Supplies……………………………………………. $4,500

Prepaid Insurance………………………………….. $3,500

Equipment………………………………………… $2,000

Note Payable……………………………………….. $40,000

Account Payable……………………………………. $8,000

Unearned Revenue…………………………………..   $15,000

Accumulate depreciation………………………….. $600

TCC, Capital……………………………………….. $145,200

$208,800 $208,800

Tourism Cambodia CompanyPost-Closing Trail Balance

30 January 2014

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The brief explanation, accounting is the to identify, record, and communicate the economic events of an organization to interested users and it is very important for all organizations to use for classify, management financial, check export and import of company, know about of net loss or net income, etc.

Accounting cycle have nine steps that need for service company, there are Analyze business transactions, Journalize the transactions, Post to ledger accounts, Prepare a trial balance, Journalize and post adjusting entries, Prepare an adjusted trial balance, Prepare financial statements, Journalize and post-closing entries, Prepare a post-closing trial balance.

II. conclusion

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ReferenceInternets:What is accounting. Retrieved, march 24 2014, from google.com website: http://www.accountingcoach.com/blog/what-is-accountingand http:// www.asiabs.com/english/english_theme_accounting.htm Definition of accounting. Retrieved, March, 24, 2014 from google.com website: http://www.investopedia.com/terms/a/accounting.asp What is important of accounting? Retrieved, March, 27, 2014 from google.com website: http://www.ask.com/question/why-is-accounting-important-to-bus...

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Type of account and different. Retrieved, March, 28, 2014 from google.com website:http://www.kashoo.com/accounting.../what-are-the-different-account- what are nine steps of accounting ? Retrieved. March, 27, 2014 from google.com website: http://Mwiki.answers.com/Q/What_are_the_9_steps_of_accounting_cycle Nine steps of accounting cycle. Retrieved, May, 09, 2014 from google.com website:http://www.accountingverse.com/accounting-basics/accounting-cycle.html VAT and TOS. Retrieved, May, 09, 2014 from google.com website http://www.tax.gov.kh/en/taxtypes.php

Reference

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Books:Bun Sundro : fundamental of accounting, Angkor Wat (1st Edition) 2008Jerry J. Weygandt, Donald E.Keiso, Paul D. Kimmel. (2009). Accounting Principle (9st ed.). USA: John Wiley and Sons, Inc

Reference

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The end!

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