introduction to accounting 120 revised · 2020. 2. 21. · notebook diagram displaying the eight...

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Introduction to Accounting 120

Department of EducationEducational Programs & Services Branch

REVISED OCTOBER 2006

Acknowledgements

The Department of Education expresses its sincere appreciation to members of the CDACfor their expertise and insights in developing Introduction to Accounting 120. In addition,pilot teachers and those who contributed comments and suggestions are to becommended for their commitment.

Special thanks to:Brenda MacDonald, Leo Hayes High SchoolSonya Travis, Hampton High SchoolDarren White, Rothesay High SchoolShelley Caissie, Minto Memorial High SchoolKaren Fillmore, Saint John High SchoolCindy Dow-Gallant, Leo Hayes High SchoolTina Estabrooks, Department of Education E-Learning

The Department of Education recognizes the following organizations and theirdedicated staff members, who provided valuable input and resources:Canadian Institute of Chartered AccountantsMaclean’sThe Globe and MailTime (Canadian edition)

Table of Contents

GCO 1 Demonstrate an understanding of basic accounting activities

GCO 2 Demonstrate an understanding of account form balance sheet

GCO 3 Demonstrate an understanding of changes in financial position

GCO 4 Demonstrate an understanding of debit and credit theory and journalizing

GCO 5 Demonstrate an understanding of owner’s equity & financial documents

GCO 6 Demonstrate an understanding of source documents & sales tax

GCO 7 Demonstrate an understanding of posting

GCO 8 Demonstrate an understanding of six-column worksheet

GCO 9 Demonstrate an understanding of completing the accounting cycle

GCO S1 Supplementary unit for NBCC challenge

GCO S2 Supplementary unit for NBCC challenge

Appendix A Suggested Time Line

Appendix B GCO 1 – The Accounting Cycle

Appendix C GCO 2 – Fundamental Accounting Equation

Appendix D GCO 3 – Transaction Analysis Sheet

Appendix E GCO 4 – Accounting Equation T-AccountAppendix F GCO 4 – Balance Sheet T-AccountAppendix G GCO 4 – Debit Credit Theory ChartAppendix H GCO 4 – Journal pageAppendix I GCO 4 – Trial BalanceAppendix J GCO 4 – T-Account Ledger

Appendix K GCO 5 – Expanded Analysis ChartAppendix L GCO 5 – Income StatementAppendix M GCO 5 – Balance Sheet Report FormAppendix N GCO 5 – Equity Equation WorksheetAppendix O GCO 5 – Equity Equation Worksheet-Consecutive YearsAppendix P GCO 5 – T-Account Ledger Expanded Equity

Appendix Q GCO 7 – Accounting Cycle 3 StepsAppendix R GCO 7 – Ledger

Appendix S GCO 8 – WorksheetAppendix T GCO 9 – Insurance Time LineAppendix U GCO 9 – Worksheet 9 columnAppendix V GCO 9 – Closing EntriesAppendix W Condensed Curriculum Document

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IntroductionThe focus of Introduction to Accounting is to provide the essential understandings,economic framework, consumer skills and attitudes to successfully participate in a societyinfluenced by financial and business decisions. Students will better manage personalfinances, understand obligations of business owners and make informed decisionsconcerning life careers and choices. The intention of this course is to encourage studentsto further their education in post-secondary business studies.

Learning ActivitiesThroughout this document, suggestions are provided for teaching and learning activitiesand practical applications. Sample forms and supplementary resources are provided inAppendices A-V. Students may complete assignments individually or in groups.Teachers are encouraged to use these suggestions as well as develop their own.

Primary ResourceGeorge Syme & Tim Ireland. Accounting 1. Sixth Edition. Toronto: Pearson Prentice Hall, 2002.ISBN: 0-13-092332-X

Teacher Supplementary ResourceIt is suggested that beginning teachers visit the online version of Introduction toAccounting at http://nbvhs.nbed.nb.ca. Teachers will find practical application materialsthat enhance instruction and learning.

NBCC Challenge For CreditIn collaboration with the New Brunswick Department of Education, the New BrunswickCommunity College has agreed to provide credit to any student who, upon completion ofthis course, achieves a minimum of 70% on a challenge examination. NBCC will provideall examination material. The teacher from the participating school will administer theexam and return all documents in a sealed envelope to NBCC for evaluation. NBCC willcontact the participating student directly with exam results. To ensure student exposure toall NBCC curriculum outcomes, the New Brunswick Department of Education has includedtwo supplementary units. These units are not required for regular completion of curriculumoutcomes.

Time Line RecommendationTo ensure students complete all learning outcomes, the teacher should adhere to the timelines provided in Appendix A.

Pre-requisiteNone

Overview of Curriculum OutcomesUpon the completion of this course, students will meet the following outcomes: Identify and understand the essential need for and the various careers associated

with financial management. Demonstrate comprehension of daily activities which comprise the accounting cycle

for each fiscal period. Develop the ability to prepare financial documents using a spreadsheet application. Develop basic analytical skills used to make financial decisions.

Duration90 hours

http://nbvhs.nbed.nb.ca/

2

INTRODUCTION TO ACCOUNTING 120GCO 1: At the end of this unit students will be able to demonstrate the necessity and

basic activities of accounting in various forms of businesses.

Specific Outcomes Links/StrategiesStudents will be expected to:

1. Identify and understand the need foraccounting.

2. Identify the five main activities involved inaccounting:Gathering financial informationPreparing and collecting permanent

recordsRearranging, summarizing and classifying

financial informationPreparing information reports and

summariesEstablishing controls to promote accuracy

and honesty among employees

3. Identify the four types of business:ServiceMerchandisingManufacturingNon-profit

4. Identify the three forms of businessownership:Sole proprietorshipPartnershipCorporation

5. Identify the 8 steps of the accounting cycle

6. Examine various categories ofcareers/levels of accounting

1-2 As a class, compile a list of questionswhich can only be truly answered withaccounting information.

3 Using a chart with the four types ofbusinesses as column headings, havestudents categorize various localbusinesses/industries into types.

4 Have students identify the pros and cons ofthe various types of business ownership.

5 Have students prepare a bulletin board ornotebook diagram displaying the eightsteps of the accounting cycle.

6 Students prepare a bulletin boarddisplaying and describing accountingcareers. Students may use localnewspapers, magazines and/or theInternet.

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INTRODUCTION TO ACCOUNTING 120GCO 1: At the end of this unit students will be able to demonstrate the necessity and

basic activities of accounting in various forms of businesses.

Assessment Resources

1-2 Evaluate student ability to compile a listof questions regarding their own personalfinancial position.

1-2 Evaluate student ability to compile a listof questions generated by the owner of asmall business and a large business.

3 Brainstorm various local businesses,classifying each accordingly.

4 For each type of ownership, discuss the:Responsibility for the debts of the

businessAdvantages/disadvantages of

shareholders/ investors

5 Provide students with individual steps ofthe cycle and have them put them in thecorrect order.

6 Using the classified ad of the localnewspaper or the Internet, have studentsresearch and chart various accountingjobs. Students create a chart with thefollowing headings: position, requirements,salary and education.

Teacher created summative test (optional)

Local newspaperMaclean’sThe Globe and MailTime (Canadian edition)

http://www.cga-canada.orghttp://www.cga-nb.orghttp://www.cma-canada.orghttp://www.cica.cahttp://www.acoa.ca

Possible guest speakers:Small business ownerAccountantLawyerNon-profit organization representative

http://www.nbica.org

http://nbvhs.nbed.nb.caIntroduction to Accounting 120 online,

material in Unit 1

http://accounting1.cahttp://www.quia.com

Appendix B: The Accounting Cycle

http://www.cga-canada.org/http://www.cga-nb.org/http://www.cma-canada.org/http://www.cica.ca/http://www.acoa.ca/http://www.nbica.org/http://nbvhs.nbed.nb.ca/http://accounting1.ca/http://www.quia.com/

4

INTRODUCTION TO ACCOUNTING 120GCO 2: At the end of this unit students will be able to demonstrate an understanding

of financial position and the preparation of a simple balance sheet.


1. Define the terms asset, liability (claimsagainst assets), capital, owner’s equityand net worth.

2. Explain the concept of financial position.

3. Explain the fundamental accountingequation and show basic changes to one’sfinancial position.

4. Identify and define the structure andelements of an account form balancesheet:Balance sheet headingDate formatOrder of liquidity/retiring debtAccounts rec. and accounts pay.AbbreviationsDefine terms debtor and creditorIndentingColumnar paper.Ruled linesDollar signs

1 Have students classify various items(business and/or personal) as assets orliabilities.

2 Have students calculate their own financialworth by determining the differencebetween the monetary value of personallyowned assets and claims against thoseassets.

2 Provide exercises illustrating assets andliabilities (names and financial value) forfictitious persons. Students determine thefictitious individual’s net worth.

3 Provide exercises giving two of thefinancial amounts for the fundamentalaccounting equation. Students determinethe value of the third element.

3 Provide exercises illustrating baselinetotals for asset, liability and owner’s equity.Specify basic increases and/or decreasesto the amounts of two elements of theequation. Students determine the new totalfor the remaining element.

4 Provide exercises listing the financialvalues of various assets and liabilities.Students determine capital and prepare abalance sheet.

5




1 Based on the student assignment, compilea class list of the assets and liabilities.

1 Provide students with various assets andliabilities. Have students classify the items.

2 List and discuss various student and/orbusiness examples of personal net worth.

3 Using previous examples of net worthcalculation, establish the fundamentalaccounting equation.

3 Evaluate examples of the fundamentalaccounting equations with an unknownvalue.

3 Evaluate examples of the baselineexercises with unknown values.

4 Considering the elements listed in specificcurriculum outcome 4, evaluate students’ability to properly format a balance sheet.

CICA Handbook (possibly provided by localaccounting firm)

Possible guest speaker:Personal credit manager


material in Unit 2IT 110 online, material in Module 4: MS

OfficeIT 120 online, material in Excel Module


Appendix C: FAE Items

http://nbvhs.nbed.nb.ca/http://accounting1.ca/http://www.quia.com/

6



Specific Outcomes Links/Strategies

5. Explain the purpose and need forgenerally accepted accounting principles(GAAP).

6. Describe and explain the followingGAAP’s:The business entity conceptThe continuing concern conceptThe principle of conservatism

7. Demonstrate an understanding of basicdata entry into a spreadsheet application.

5 Discuss the consequences of not followingeach of the three given principles.

6 Have students create a section in theirnotebooks to record GAAP’s as they areintroduced.

6 Invite a guest speaker to discuss personaluse of credit and personal budgeting.

7 Examine the basic features of aspreadsheet application:Title barToolbarsIconFormula barCellCell address

7 Enter numbers into cells and create basicmanipulative formulas.

7 Provide balance sheet information.Students enter specific data into specifiedcells to create an electronically formattedbalance sheet.

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5 Evaluate student discussion of “lawless”accounting in business.

6 Students explain why it is important tokeep business records separate frompersonal records.

6 Students discuss how/why businessdecisions are based on the idea that it willcontinue to grow.

6 Students discuss the importance ofrealistic/conservative business decisions.Provide students with an example of anunrealistic personal budget. Discuss theconsequences/implications of poordecisions.

6 Complete speaker reviews under thefollowing headings.Name of SpeakerOrganization RepresentedPurpose of OrganizationKey Topics of the Presentation (4-5)New Facts or Ideas LearnedRate the Speaker (1-10) with Reasons

7 Students complete an electronic balancesheet using previously completedexercises.

Teacher created summative test


Possible guest speaker:Personal credit manager





Appendix C: FAE Items


8


of changes in financial position and their effect on the balance sheet.


1. Define transaction.

2. Identify the impact of a transaction on thefinancial position of a person and/orbusiness.

3. Identify what is and what is not atransaction.

4. Identify and define basic components ofsource documents.

5. Explain the purpose and need for theobjectivity principle (GAAP).

1 Provide examples of typical businesstransactions.

2 Provide baseline financial figures for afundamental accounting equation. Providea transaction. Have students calculate thenew financial position.

3 Provide examples of situations which mayor may not be financial transactions. Havestudents determine which will alter thefinancial position of the business.

4 Provide realistic examples of sourcedocuments. Have students identify:The vendorTerms of transaction (payment)Date of transactionInvoice number

4 Have students create a transaction for boththe vendor and the purchaser realizing thatthe source document is the same for bothcompanies.

4 Discuss the need for source documents,emphasizing that every accounting eventrequires objective evidence.

5 Students define the objectivity principle inthe established GAAP section of theirnotebook.

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1 List and discuss various businesstransactions.

2 Evaluate students’ ability to determine anew financial position during a series oftransactions.

3 Have students compile a list oftransactions that do not affect the financialposition of a business and give reasonswhy.

4 Have students complete an assignmentmatching terms to a source document.

4 Have students design a company sourcedocument incorporating the variousidentifiable components.

4 Using the source document previouslycreated, have students identify thetransaction of the vendor and purchaser.

5 Provide students with a list of possiblescenarios where the objectivity principlehasn’t been followed, e.g.:Cheque stub not completedOvertime paid with cashLost gas receiptStudents discuss the possibleconsequences of such oversights.

Source document samples:Sales invoiceCash sales slipChequePurchase invoice






Appendix D: Transaction Analysis Sheet


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6. Identify and explain the purpose of atransaction analysis sheet.

7. Demonstrate an understanding of theflexibility of an electronic spreadsheet as atime saving tool.

6 Provide examples illustrating beginningbalance sheets and lists of monthlytransactions. For each example, students:Enter the assets, liabilities and capital

onto the transaction analysis sheet.Enter the beginning balances for each

asset, liability and owner’s equity.Enter the increase/decrease caused by

each transaction.Calculate the new balances each time.Prepare a new balance sheet

7 Using previously created exercises, havestudents create an electronic transactionanalysis sheet. Enter transactions andnote that the formulas automatically adjustbalances.

7 Students create a transaction analysissheet using formulas.

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6 Evaluate students’ ability to complete atransaction analysis sheet.

6 Have students complete a chart listing thesteps of transaction analysis.

7 Assess students’ ability to complete anelectronic transaction analysis sheet.

7 Have students make adjustments toindividual transactions noting the efficiencyof formulated (automatic) balancing.


Source document samples:Sales invoiceCash sales slipChequePurchase invoice






Appendix D: Transaction Analysis Sheet


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of debit and credit theory and journalizing.


1. Define the term account and ledger:Loose leaf ledger bookCard ledgerComputer ledger

2. Understand and use T-accounts toestablish a ledger.

3. Demonstrate an understanding ofdebit/credit theory.

4. DefineJournal/journalizingBook of original entryOpening entry

1 Discuss the various forms of an accountledger and how each account has its own“page” in a ledger.

2 Provide a simple balance sheet. Illustratethe fundamental accounting equation in theform of a T-account. Identify how accountswhich fall on the left side (assets) will havea normal balance on the left side of the T-account. Accounts which fall on the rightside (liabilities & owner’s equity) will have anormal balance on the right side of the T-account.

3 Stress the fact that debit means left sideand credit means right-side. Ensurestudents understand that there are nonegative or positive connotations attachedto these terms.

3 Provide activities which expand upon theprevious strategy by demonstrating howaccounts would be increased/decreasedusing T-accounts. Have studentsdetermine the new account totals.

3 Have students analyze transactions usinga chart with the following headings:Account NamesAccount ClassificationIncrease/DecreaseDebit/CreditAmount

3 Discuss the term “double entry accounting”and its necessity.

4 Define the rationale for journalizingbusiness transactions

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1 Have students create an image of a loose-leaf ledger for a fictitious company.

2 Provide students with balance sheets.Evaluate the ability of students to organizesmall T-accounts within a large balancesheet T-account (see Appendix F).

3 Provide a T-account ledger with onlyaccount names. Using varioustransactions, have students indicate theeffect on accounts by recording a + or –sign on the left or right side. Keep in mindthat the fundamental accounting equationmust remain balanced.

3 Using previously completed transactionanalysis sheets, have students:Establish a T-account ledger with opening

balances on the correct side.Analyze each transaction, determining

accounts and if account willincrease/decrease.Record the increase or decrease on the

correct side of the T-accounts.Once all transactions are entered,

determine new account total.Verify account totals with the transaction

analysis sheet.

4 Classroom discussion on the necessity forlarge businesses to compile a listing ofindividual transactions

4 Discuss how a business would firstestablish its accounts using the initialbalance sheet as a source document toprepare the opening journal entry.

Loose leaf ledger book—can be purchasedat stationery store





Appendix E: Accounting Equation T-AccountAppendix F: Balance Sheet T-AccountAppendix G: Debit Credit Theory ChartAppendix H: Journal pageAppendix I: Trial BalanceAppendix J: T-Account Ledger


14




5. Demonstrate an understanding of thejournalizing process.

6. Demonstrate an understanding andnecessity of the trial balance.

5 Discuss the proper format of the generaljournal:Page numberDateIndentationsBlank lineDebit/creditCompound entriesAbbreviationsExplanationsBalanced entries

5 Using a beginning balance sheet of a newbusiness, students record the openingjournal entry.

5 Provide various exercises (may useprevious exercises) where studentspractice entering transactions onto ageneral journal.

6 Using previously completed exercises,have students prepare a trial balance.

6 Discuss various methods for errordetection. Provide examples of erroneousledgers and/or trial balances. Studentsdetermine errors.

15




5 Provide a list of transactions. Evaluatestudents’ ability to journalize.

6 Evaluate students’ ability to prepare aproper trial balance.

6 Students complete a comprehensiveexercise:Provide students with an opening balance

sheet and a list of transactions.Students journalize the opening position

and each transaction.Transactions are transferred to the T-

account ledger.Once all transactions are transferred,

students prepare a trial balance.

6 Provide a list of transactions that wererecorded incorrectly. Students complete achart with the following headings:Trial balance will not balance—debits are

greater than credits by ($$)Trial balance will not balance—credits are

greater than debits by ($$)Trial balance will balance but will not be

correct.








16




7. Demonstrate an understanding of basictrial balance preparation using aspreadsheet application.

7 Using previously completed exercises,have students create a properly formattedtrial balance. Students should utilize theformula function when calculatingbalances. Students should include asection for error detection.

17




7 Assess students’ ability to complete anelectronic trial balance.

7 Have students format a teacher createdtrial balance that contains errors. Havestudents create a section for errordetection which displays the differencebetween the debit and credit columns.Students should use error detection skillsto locate and correct any inaccuracies.









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of owner’s equity, income statements & report form balance sheets.


1. Define the terms revenue, expense,drawings and contra account.

2. Explain the purpose and need for thefollowing GAAP’s:The revenue recognition convention

principleThe matching principleThe time period concept

3. Identify and define the structure andelements of an income statement:Proper sequence of an income statement

headingRevenue and expense sections of an

income statementProper order of accounts listed on an

income statement

4. Identify and define the structure andelements of a report form balance sheetwith an expanded owner’s equity section.

1 Have students examine the components ofowner’s equity transactions. Classify asrevenue, expense, capital or drawing anddetermine if the effect is anincrease/decrease in Owner’s Equity.

1 Provide exercises which analyzetransactions using a chart with thefollowing headings:Total AssetsTotal LiabilitiesOwner’s EquityChange in Equity (+ -)Revenue?/Expense?/Drawings

2 Discuss the necessity for businesses toreport an accurate reflection of income orloss. Examine how businesses couldmanipulate their “books” by overstating/understating revenue/expenses formalicious purposes.

2 Students define principles/concepts in theestablished GAAP section of theirnotebook.

3 Provide exercises containing accountbalances (may use a trial balance). Havestudents prepare income statements.

4 Provide exercises using a T-account ledgerand/or trial balance; have students preparereport form balance sheets.

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1 Classroom discussion: Have studentscreate a fictional company and discuss theeffect of increasing revenue, expenses,capital and drawing.

1 Have students analyze transactions, notingthat the fundamental accounting equationstays in balance as transactions areevaluated.

1 Discuss the concept of all contra accounts.Students should realize that the normalbalance for drawings and expenses is“opposite” to the normal balance for anequity account.

2 Provide a list of situations where revenueor expense has been incorrectly reported.Evaluate students’ ability to correct theerrors.

3 Evaluate students’ ability to use the correctform and format in preparing incomestatements. Use the following rubric:Heading, date format, subheading,

indentation, account order, dollar signs(optional), rulings

4 Evaluate students’ ability to correctlyformat report form balance sheets. Use thefollowing rubric:Heading, date format, subheading,

indentation, account order, dollar signs(optional), rulings





Appendix K: Expanded Analysis Chart.Appendix L: Income StatementAppendix M: Balance Sheet Report FormAppendix N: Equity Equation WorksheetAppendix O: Equity Equation Worksheet-

Consecutive YearsAppendix P: T-Account Ledger Expanded

Equity


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5. Demonstrate an understanding of thechart of accounts.

6. Demonstrate an understanding of basicincome statement and report form balancesheet preparation using an electronicspreadsheet application.

4 Using the following column headings,students solve the equity equation withdifferent unknowns:Opening CapitalNet Income/LossDrawingsEnding Capital

4 Provide exercises where students solvethe equity equation with various unknownsand carry the ending capital to the nextyear as the beginning capital

5 Provide various exercises where studentsare given a list of ledger accounts inalphabetical order. Students must preparea chart of accounts.

6 Using previously completed exercises,students create a properly formattedelectronic income statement and reportform balance sheet. Students shouldutilize the formula function whencalculating balances.

6 Teacher provides electronically createdincome statement and balance sheetcontaining various errors. Students mustlocate and correct errors.

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Assessment Resources4 Have students complete various exercises

where they must solve for the missingvariable in the expanded owner’s equitysection.

4 Using data from previously created trialbalance sheets, students will predict thebeginning capital for the next reportingperiod.

5 Provide a listing of various ledger accountnames. Have students create a properlyformatted chart of accounts.

6 Have students complete both an electronicincome statement and report form balancesheet. Have students alter the values tosee how the formulas allow for easyupdating of information.

6 Using teacher created electronic incomestatements and balance sheets with bothnumerical errors and formulaic errors,students should make corrections andsave the corrected sheets.






Appendix K: Expanded Analysis Chart.Appendix L: Income StatementAppendix M: Balance Sheet Report FormAppendix N: Equity Equation WorksheetAppendix O: Equity Equation Worksheet-

Consecutive YearsAppendix P: T-Account Ledger Expanded

Equity


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of source documents and accounting for sales taxes.


1. Identify and explain specific sourcedocuments:Cash sales slipSales invoiceDual purpose sales slipPurchase invoiceCheque copiesCash receipts daily summaryBank advice

2. Explain the purpose and need for the costprinciple.

3. Define the following terms:Goods and Services TaxValue Added TaxProvincial Sales TaxHarmonized Sales Tax

4. Identify and explain theories of accountingfor PST.

5. Identify and explain theories of accountingfor the GST/HST remittance.

1 Provided with various source documents,students prepare the related journalentries.

2 Discuss and have students record the costprinciple in the established GAAP sectionof their notebook.

3 As a class, research various types of tax inCanada.

4 As a class, discuss why PST is onlyaccounted for in the books of the seller andwhen it is remitted to the government.

5 As a class, discuss and display theaccounting from the position of both theseller and purchaser. Note that thepurchaser is able to recover all GST paidon purchases and that the seller must remitall GST collected.

5 As a class, discuss how and whenGST/HST is remitted to the government.

5 Provide various exercises where studentsaccount for the collection of sales tax andthe remittance of GST payable.

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of source documents and accounting for sales taxes.


1 Using source documents, evaluatestudents’ ability to identify the following:Transaction dateVendor/sellerTermsUnit costSubtotalTaxesTotal cost

1 Evaluate students’ ability to journalizetransactions in the books of thesender/recipient.

2 Using relevant scenarios, discuss theconsequences for businesses not abidingby the cost principle.

3 Evaluate student produced reports/projectsinvestigating tax in Canada.

4 Provide various exercises where studentsaccount for the collection of sales tax andthe remittance of PST payable.

5 Using T-accounts for HST/GSTpayable/recoverable, evaluate students’ability to journalize remittance entries.

5 Discuss the forms used by businesseswhen remitting tax.

5 Discuss the format of the balance sheet inboth the remitting/refund position forGST/HST.


Local businesses will often provide samplesof various source documents which can beused for instructional purposes.

Newspaper/magazine reports on businessesnot following specific GAAP’s:Local newspaperMaclean’sThe Globe and MailTime (Canadian edition)

Possible guest speaker:Representative from HRDC, Human

Resource Development Canada; subject-tax


material in Unit 6



24


of posting to the general ledger.


1. Define the term posting.

2. Demonstrate an understanding of the foursteps to open an account and the properuse of the balance column.

3. Demonstrate an understanding of the sixsteps in posting.

4. Demonstrate an understanding of the firstthree steps in the accounting cycle:Originating transaction dataJournalizingPosting

1 As a class, discuss the significance ofposting and using ledger cards in theaccounting process.

2 Provide exercises where students transferT-account balances to properly formattedgeneral ledger accounts with emphasis onthe balance column.

2 Provide exercises where students properlyopen a new account.

3 Working through an example, using eithernew or previously taught material,demonstrate the six steps in posting atransaction from the journal to the ledger.

4 Emphasize previous learning of the linkbetween the initial financial position andthe establishment of the ledger.

25




1 As a class, discuss the ramifications ofusing only T-accounts in a large company.

2 Provide a reinforcement exercise wherestudents are given a list of account namesand are asked to classify and assignappropriate account numbers.

2 Evaluate students’ ability to open generalledger accounts when provided with acompleted chart of accounts and ledgercards.

2 Students are provided with completed T-accounts and blank general ledgeraccounts.Students will open general ledger

accounts.Students will transfer balances from the

completed T-accounts to their respectivegeneral ledger account.

3 Provide students with a completed GeneralJournal Page and a General Ledger.Evaluate student ability to post thetransactions from the General Journal tothe General Ledger.

4 Evaluate students’ ability to establish achart of accounts, journalize and post theinitial financial position of a business froman opening balance sheet.

4 Provide a reinforcement activity that beginsat the start of the accounting cycle.Students will complete the chart ofaccounts, open the general ledgeraccounts, journalize the transactions, andpost the transactions to the general ledger.

Local company may provide a chart ofaccounts for instructional display purposes.





Appendix Q: Acct Cycle 3 StepsAppendix R: Ledger


26



Specific Outcomes Links/Strategies5. Demonstrate an understanding of the

three reasons for cross referencing:Ledger account entries can be easily

traced to their source in the generaljournal.Entries in the journal can be traced to the

accounts where they have been posted.If posting is interrupted, it is easy to

remember where to begin again.

6. Demonstrate an understanding of theproper accounting method(s) for errorcorrection.

7. Demonstrate an understanding of theproper accounting procedures forforwarding balances in a general ledger.

5 Discuss the information made available toa business by properly posted entries.Have students explain what process wouldhave to be followed to answer accountingquestions without the posting process.

6 Demonstrate how to correct errors whichhave been found immediately (drawing aline through an incorrect number).

6 Provide exercises where studentsdetermine the effects of an error that is notcorrected immediately. Demonstrate howto prepare a correcting journal entry forsuch errors.

6 Reinforce prior learning of the errordetection process.

7 Provide various exercises where studentsmust carry a balance forward to a newgeneral ledger page.

27



Assessment Resources5 Students are provided with scenarios in

which they will use cross referencing toreinforce the importance of being able toanswer accounting questions.

6 Provide students with a journal, ledger andtrial balance. All of these items containvarious types of errors that will require thestudents to use all the techniques thatwere taught. After students havecompleted all corrections, they willcomplete a corrected trial balance to verifytheir work.

7 Evaluate students’ ability to use properformat when forwarding account balancesand other necessary information fromvarious completed ledger cards.

7 Using previously completed exercises,assess students’ ability to posttransactions, find errors and be able toanswer specific accounting questions.


Local company may provide a chart ofaccounts for instructional display purposes.





Appendix Q: Acct Cycle 3 StepsAppendix R: Ledger


28


of the six-column worksheet, the preparation of a classified balance sheetand income statement and how financial decisions are based on thesedocuments.


1. Demonstrate an understanding of theconcept of control accounts.

2. Differentiate between working papers andformal financial statements.

3. Identify and understand the purpose ofand the steps in the preparation of a six-column worksheet:HeadingEntering trial balance accountsExtension to balance sheet and income

statement columnsBalancing worksheet

4. Define terms:Current assetsFixed assetsCurrent liabilitiesLong-term liabilities

1 Using a large business as an example,discuss the difficulty encountered whenpreparing a balance sheet with numerousreceivable and payable accounts. Brieflyintroduce the use of subsidiary ledgers andcontrol accounts.

2 Have students prepare a chart listingvarious working papers and formalfinancial statements.

3 After working through a class example,provide various exercises where studentscomplete a six-column worksheet.

4 Given a list of assets and liabilities,students classify them as current, fixed orlong-term.

29




1 Provide simple exercises where studentspost entries to an accounts receivablesubsidiary ledger, accounts payablesubsidiary ledger and their controlaccounts. Students then prepare anaccounts receivable summary and anaccounts payable summary. Evaluatestudents’ understanding of:The separation of accounting tasksThe necessity of balance between

subsidiary ledgers and the control accountThe flow of information/communication

(source documents) with a three-ledgersystemThe process and purpose of preparing a

summary report

2 Provide students with a list of financialdocuments studied to date. Evaluatestudents’ ability to differentiate workingpapers and formal financial statements.

3 Evaluate students’ ability to properlycomplete a six-column worksheet.

4 Evaluate students’ ability to categorizevarious assets and liabilities.





Appendix S: Worksheet


30




preparation of a formal income statementand classified balance sheet.

6. Demonstrate an understanding of the firstsix steps of the accounting cycle.

7. Demonstrate an understanding ofworksheet, formal income statement andclassified balance sheet preparation usinga spreadsheet application.

5 Using previously completed worksheets,students prepare formal income statementsand classified balance sheets.

6 Students complete a comprehensiveexercise beginning with journalizing andconcluding with the preparation of financialstatements.

7 Using new or previously completedexercises, have students complete aworksheet, formal income statement andclassified balance sheet. Students shouldutilize the formula function to determinebalances.

31



Assessment Resources5 Evaluate student comprehension of net

income/loss as it appears on theworksheet. Ask students, “If the debitcolumn of the income statement columns isgreatest, has the company experienced aprofit or a loss?”

5 Evaluate students’ ability to properlyprepare a formal income statement andclassified balance sheet.Assess:Proper dateHeadingsClassificationsSubtotallingIndenting

6 Provide students with an opening financialposition—balance sheet and a list ofjournal entries. Evaluate students’ abilityto complete the first six steps of theaccounting cycle.

7 Using previously completed exercises,assess students’ ability to complete anelectronic worksheet. Ensure studentsunderstand how to use formula functionsfor data manipulation.

7 Using previously completed exercises,assess students’ ability to complete anelectronic income statement and balancesheet.






Appendix S: Worksheet


32


of adjusting entries, closing entries, depreciation, the expanded worksheetand the preparation of a post-closing trial balance.


1. Define the term audit.

2. Explain the purpose and need for thefollowing GAAP’s:The consistency principleThe materiality principleThe full disclosure principle

3. Identify and understand the need to adjustfor:SuppliesPrepaid expenses such as insurance,

licenses, rent, salaries, utilities, etc.Late purchase invoices

4. Define the terms:DepreciationStraight-line depreciationDeclining balance method of depreciation

1 As a class, discuss the necessity andimportance of auditing.

2 As a class, discuss the importance ofmaintaining quality financial statements.Have students record these principles inthe established GAAP section of theirnotebook.

3 Discuss business applications whereadjustments have to be made.

3 Using timelines (calendar and fiscalperiod), illustrate prepaid expenses.

3 Provide various exercises where studentsmust calculate the remaining balance ofprepaid expense accounts. Journalize andpost the adjusting entry.

3 Provide various exercises where studentsmust journalize and post the adjustingentries for late purchase invoices.

4-5 Provide various exercises wherestudents use the straight-line depreciationmethod to determine adjustment amounts.Journalize and post the adjusting entry.

33




1 Complete a review of guest speaker underthe following headings.Name of SpeakerOrganization RepresentedPurpose of Organization4-5 Key Topics of the PresentationNew Facts or Ideas LearnedRate the Speaker (1-10) with Reasons

2 Provide students with various examplesand have them identify which of the threeGAAP’s were violated.

3 Provide prepaid expense details. Evaluatestudents’ ability to expense used portionsof the assets.

3 Provide various exercises where studentsmust complete an inventory sheet forsupplies. Journalize and post the adjustingentriesEvaluation of various exercises and/orassignments.

3 Provide exercises where both the trialbalance and the closing inventory valuesfor prepaid assets are given. Havestudents determine the expense amount.Journalize and post the adjusting entry.

3 Provide scenarios where a businessreceives late invoices. Evaluate students’ability to prepare the proper adjustingentry.

4-5 Evaluate students’ ability to determineand journalize depreciation.

Guest speaker—auditor





Appendix T: Insurance Time LineAppendix U: Worksheet 9 ColumnAppendix V: Closing Entries


34




5. Identify and understand the need toadjusting for depreciation of:EquipmentBuildingsAutomobiles

6. Identify and define the structure andelements of an expanded worksheet.

7. Identify and understand the preparation ofa classified balance sheet and incomestatement with adjustment accounts.

8. Demonstrate an understanding of thenecessity and the preparation of closingentries.

9. Define the terms :Nominal/temporary accountReal/permanent accountIncome summary/revenue and expense

summary

10. Demonstrate an understanding of theprocess of journalizing and postingclosing entries.

4-5 Provide various exercises wherestudents use the declining balance methodto determine the adjustment amounts.Journalize and post the adjusting entry.

6 Provide various exercises where studentsare provided with a trial balance andadjustment information. Students mustcomplete adjustment calculations andcomplete an expanded worksheet.

7 Using previously completed expandedworksheets with adjustments, havestudents prepare classified balance sheetsand income statements.

7 As a class or group, discuss theimportance of yearly comparison offinancial position. Determine how thisinformation assists in sound businessdecision-making.

8 Discuss how closing entries update theowner’s equity section of a balance sheet.

9 Students record definitions in notebook.

10 Provide exercises where students use T-accounts and the expanded owner’s equitysection of a balance sheet to “close” theexpense and revenue accounts to IncomeSummary. Then “close” the IncomeSummary and Drawing accounts toCapital, resulting in the adjusted capitalamount.

10 Using previously completed expandedworksheets, have students journalize andpost closing entries.

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6 Evaluate students’ ability to properly formatan eight-column worksheet withadjustments for prepaid expenses anddepreciation.

7 Assess the format of student producedfinancial statements, concentrating on theclassification of adjustment accounts.

7 As a class, create a list of questionsanswered by year ending financialstatements.

8 Using various scenarios, evaluatestudents’ knowledge of the importance ofclosing.

9 Using a list of accounts, have studentsclassify each as nominal or real.

10 Using a T-account ledger, pre-closedbalance sheet and income statement,demonstrate and evaluate the closingprocess.

10 Use criteria referencing to evaluateclosing entries prepared from theworksheet.








36




preparation of a post-closing trialbalance.

12. Demonstrate an understanding of thecomplete accounting cycle.

13. Demonstrate an understanding of thepreparation of a post-closing trial balanceusing a spreadsheet application.

11 Using previously completed, up-datedworksheets, have students prepare post-closing trial balances.

12 Students complete a comprehensiveexercise beginning with journalizing andconcluding with the preparation of a post-closing trial balance.

13 Using new or previously completedexercises, have students complete a post-closing trial balance. Students shouldutilize the formula function to determinebalances.

37



Assessment Resources11 Evaluate students’ ability to properly

format a post-closing trial balance. Ensureno nominal/temporary accounts appear.

12 Evaluate students’ ability to complete acomprehensive exercise.

13 Evaluate students’ use of formulas andformatting of an electronic post-closing trialbalance.









38

INTRODUCTION TO ACCOUNTING 120—SUPPLEMENTARY UNIT

GCO S1: At the end of this unit students will be able to demonstrate the basicactivities of accounting in a merchandise business.


1. Describe merchandising activities.

2. Demonstrate an understanding of theinventory asset of a merchandisingcompany.

3. Describe both perpetual and periodicinventory systems.

4. Analyze transactions of a merchandisingcompany using a perpetual and periodicinventory system.

1 As a class, discuss the difference betweena service business, a merchandisingbusiness and a service/ merchandisingbusiness.

1 As a class, discuss the relationshipbetween producing/manufacturingbusinesses and merchandisingbusinesses.

2 Define terms/accounts associated with theinventory cycle:

Merchandise inventory Goods available for sale Cost of goods sold Gross profit

3 Discuss the accuracy of the merchandiseinventory account and the perpetual andperiodic procedure for determining acorrect value.

4 Discuss additional accounts required formerchandise accounting:

Sales Sales Returns & Allow. Sales Discounts Delivery Expense Purchases Freight In Purchase Returns & Allow. Purchase Discounts Cost of Goods Sold

4 Illustrate the similarities and differenceswhen recording transactions for a periodicand perpetual inventory system.

39




1 Evaluate student ability to explain theoperation cycle of both a service business(salescollection) and a merchandisingbusiness (inventory purchasesalescollection).

1 Allow students to generate a list of familiarbusinesses which can be classified asproducing, manufacturing andmerchandising

2 Evaluate students’ ability to createinventory cycle equations for GoodsAvailable For Sale, Cost of Goods Soldand Gross Profit.

2 Provide various exercises where missingamounts from the inventory cycle equationmust be determined.

3 Students explain the limitations of aperiodic and perpetual inventory system.

4 In groups students prepare bulletin boardscomparing perpetual and periodic inventoryjournalizing procedures.

4 Provide various exercises where studentsare required to journalize sale andpurchase transactions for both a periodicand perpetual inventory.

Ireland, Tim, and George Syme. Accounting1. 6th ed. Scarborough: Prentice Hall,2002. (Chapter 11)

ISBN 0-13-092332-X

Jensen, T., and K.D. Larson. FundamentalAccounting Principles. 11th ed. Toronto:McGraw-Hill Ryerson, 2005.(Supplementary text; Chapter 6)

ISBN 0-07-091649-7

40




5. Demonstrate an understanding ofaccounting adjustments for amerchandising company.

6. Properly format a worksheet, an incomestatement and a balance sheet for amerchandising company.

7. Demonstrate an understanding of theprocess of journalizing and posting closingentries.

5 Considering the necessity of a physicalinventory count for both a periodic andperpetual inventory system, discuss thenecessary entry to adjust the account.

5 Using T-accounts, illustrate the necessarychanges to update an inventory account.

6 As a class, brainstorm the placement of thenew accounts on the worksheet and reviewrecording processes especiallyadjustments.

6 Illustrate the placement of new accounts ona formal income statement and report formbalance sheet.

7 Using previously completed expandedworksheets, have students journalize andpost closing entries.

41




5 Evaluate students’ ability to journalizemerchandise inventory adjustments.

6 Provide various exercises requiringstudents to complete an eight-columnworksheet for a merchandising company.

6 Using previously completed worksheets,evaluate students’ ability to prepareincome statements and balance sheets.

7 Evaluate students’ ability to journalize andpost closing entries.

7 Evaluate students’ ability to complete acomprehensive exercise.


Ireland, Tim, and George Syme. Accounting1. 6 th ed. Scarborough: Prentice Hall,2002. (Chapter 11)

ISBN 0-13-092332-X


ISBN 0-07-091649-7

42

INTRODUCTION TO ACCOUNTING 120—SUPPLEMENTARY UNITGCO S2: At the end of this unit students will be able to demonstrate an

understanding of management information systems, special journals andledgers.


1. Demonstrate an understanding of how andwhy financial information is shared.

2. Describe the goals and uses of specialjournals.

3. Describe the use of control accounts andsubledgers.

4. Demonstrate the ability to journalize andpost transactions using special journalsand subledgers.

1 Define Management Information Systems(MIS) and Accounting Information Systems(AIS).

1 As a class or in groups, create:A flowchart depicting the movement of

information between subsystems of anorganization (sales/marketing, production,finance, HR, AIS)A diagram illustrating the path of various

source documents through the AISsubsystems (shipping/ receiving, a/r, a/p,purchasing, payroll)

2 As a class discuss the special journals thatincrease the efficiency of accounting for amerchandising organization (sales, cashreceipts, purchases, cash disbursements,general)

3 Review the use of :Control accountsAccounts receivable subledgerAccounts payable subledgerAssociated reports

3 Discuss the use of other subledgers suchas an equipment ledger or an inventoryledger.

4 Using various exercises, illustrate theproper procedures for journalizingtransactions in the various special journals.

4 Using previously completed exercises,illustrate the proper procedure for totallingspecial journals and posting amounts to theledgers. Pay particular attention to therelationship between subledgers, specialjournals and the general ledger.

43

INTRODUCTION TO ACCOUNTING 120—SUPPLEMENTARY UNITGCO S2: At the end of this unit students will be able to demonstrate an

understanding of management information systems, special journals andledgers.


1 Evaluate students’ ability to list commonMIS and AIS departments for various typesof businesses.

1 Evaluate students’ ability to describe thenecessity and benefits of sharinginformation within organizationalsubsystems.

2 Evaluate students’ ability to identify theappropriate journal for individualtransactions.

3 Evaluate students’ ability to select theappropriate subledger for individualtransactions.

3 Using T-accounts, have students posttransactions to various subledgers and,once complete, transfer the sum of eachsubledger to its appropriate controlaccount.

4 Evaluate students’ ability to complete acomprehensive exercise using all specialjournals and subledgers.


Ireland, Tim, and George Syme. Accounting1. 6th ed. Scarborough: Prentice Hall,2002. (Chapter 12)

ISBN 0-13-092332-X


ISBN 0-07-091649-7

introduction to accounting 120 revised · 2020. 2. 21. · notebook diagram displaying the eight...

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