Section 1 Mini Case: The Preparation of Accounting Activities

This section will give you an example to illustrate the role of the accountant in the operation of a corporation. Note that all mini cases are based on business dealings of Tianyu Consultancy Services Company in this book. Therefore, the cycle of accounting is introduced step by step by these business transactions.

Miss Li has worked as an accountant for ten years. Recently, she accepted another job as an accountant in Tianyu Consultancy Services Company. Today is her first day at work. She was given the following information about the company:

（1）Invested $50,000 in cash in the company on Jan. 1, 2012.

（2）Spent $1,000 on buying office equipments in cash from BJ Company, on Jan. 3.

（3）Spent $2,000 on buying office supplies from SH Company on credit on Jan. 5.

（4）Received a cash cheque of $500 from TJ company for selling office equipments on Jan. 6.

（5）Sold office equipment that cost $500 to Lee Company on account on Jan. 8.

（6）Paid $1,000, part of the amount owing to SH Company, on Jan. 10.

（7）Collected $500 of cash from its debtor Lee Company on Jan. 12.

（8）Received $10,000 professional fees from Wuxi Company on Jan. 13.

（9）Paid $1,000 of cash for office rent on Jan. 15.

（10）Paid $3,000 of cash for staff salary on Jan. 17.

（11）Incurred and paid miscellaneous expense $1,000 on Jan. 18.

（12）Received $5,000 professional fees on account from NJ Company on Jan. 19.

（13）Collected $5,000 of cash from its debtor NJ company on Jan. 25.

（14）Owner of the company withdrew $4,000 of cash for personal use on Jan. 31.

After Miss Li reads these information, she begins to consider how to translate them into accounting language such as making accounting entry, journal, ledger and financial statements, which will be discussed in the later units. In accounting language, these transactions can tell of assets, liabilities, revenue, expense, profit and capital of a company. Here, Invested cash, office equipments, goods, cash received, accounts receivable belong to assets. In addition, capital, revenue, expense and withdrawals are recorded in the company's owner's equity. Accounts payable belongs to liabilities.