Student Handout and Activities
Additional Activities will be Uploaded into Schoology
Timeframe: 9+2
Performance Indicators:
Unit Project:
Objectives:
a. Define the terms: subsidiary ledger, general journal, and special journal. b. Distinguish between a subsidiary ledger and a special journal. c. Discuss the purpose of special journals.d. Explain the relationship between special journals and the general ledger. e. Explain the benefit to business of using special journals.Activity:
Research special journals. After completing this research, one-paragraph description or one minute audio recording. of special journals, the purpose of special journals, the relationship of special journals to the general ledger, and benefits of using special journals.
Journals and Ledgers—Discussion Guide
Slide #1 THINK ABOUT IT
At its core, accounting is simply the accurate maintenance of financial accounts. While technology has rendered some aspects of that maintenance obsolete, a solid understanding of the building blocks of accounting will always lead to performing well in this field. If credits and debits are those building blocks, they are constructed on a basic foundation of journals and ledgers.
KEY CONCEPTS
Slide #2 In accounting, a journal is a book that contains the original entry for each business transaction.
Slide #3 A general ledger is a collection of the accounts used to organize and store the information from a company’s business transactions.
Slide #4 Special journals allow accountants to group together financial transactions into types with similar characteristics. This makes the recording process faster and more efficient.
Discussion #1: Ask students to discuss what types of transactions would be so common for an ice cream shop that they required the use of a special journal. What about for a landscaping company?
Slide #5 Subsidiary ledgers share a similar purpose to special journals in that they help keep lengthy lists of transactions out of the general ledger.
A subsidiary ledger often contains the detailed entries of a particular general ledger control account, which is typically used to summarize areas that contain a large number of transactions, such as accounts receivable or accounts payable.
Instead of listing every single transaction from these accounts in the general ledger, they are instead listed in a subsidiary ledger and then summarized in the general ledger.
Often, at the end of each day, the aggregate amount for that day’s subsidiary ledger is entered as a single-item summary entry in the general ledger.
The difference between special journals and subsidiary ledgers is that subsidiary ledgers provide details relating to a specific account in the general ledger.
Special journals, on the other hand, group a number of transactions of a similar type, such as sales or payroll.
In either case, a number of individual transactions are recorded in detail and summarized for efficiency in the general ledger.
Objectives:
a, Explain the purpose of a journal entry.b. Describe types of entries typically made in the general journal.c. Explain types of transactions recorded in different special journals (e.g., cash payments journal, cash receipts journal, sales journal, etc.).d. Discuss factors to consider when determining which journal to use.e. Identify information typically included in a journal record.f. Demonstrate how to journalize business transactions.Activity:
Complete the Journalizing Business Transactions worksheet found in your student handout.
Alternative Activity
Read the Accounting in the Headlines blog post How Will Cedar Point’s Assets, Liabilities, and Equity Be Impacted by Various Transactions?
Questions
What would be the journal entry for each of the listed transactions?
For each transaction, how Cedar Fair’s assets, liabilities, and equity would be impacted by each individual transaction?
3.2 Journalizing Business Transactions Answer Key
Journalizing Business Transactions—Discussion Guide
KEY CONCEPTS
Slide #6 A journal is a book or digital log in which the original entry for each business transaction is recorded in the order that it occurred.
Slide #7 After analyzing the transaction and determining the necessary information for the journal entry, the appropriate journal for the entry is selected.
Slide #8 Before making any journal entry, an accountant must first identify the accounts involved in the transaction.
Discussion #1: Ask students to discuss the importance of following the same routine every time they complete a journal entry. If it doesn’t matter if debits or credits are listed first, why is it standard to follow the same routine with each entry?
Slide #9 Each type of journal may require different information to be entered.
Objectives:
a, Define the term posting.b. Explain the purpose of the general ledger.c. Describe the relationship of the general ledger to the chart of accounts.d. Identify information typically included in a general ledger.e. Demonstrate how to post journal entries to general ledger accounts.Activity:
Use your Journalizing Business Transactions from 3.2 and complete the Posting to General Ledger Accounts worksheet
General Ledger—Discussion Guide
Performance Indicator: Post journal entries to general ledger accounts
KEY CONCEPTS
Slide #11 A general ledger is a collection of the accounts used to organize and store the information from a company’s business transactions.
Discussion #1: Ask students why they think it is important to mark a journal entry after it has been posted to a ledger. Why is it the last step in the posting process?
Slide #12 Posting is the act of moving debit and credit account balances from individual journals into their corresponding ledger accounts.
Slide #13 In the following example, an entry from the general journal is posted to the corresponding cash account and utilities expense account.
Activity:
Complete the Preparing a Trial Balance worksheet
Trial Balances—Discussion Guide
KEY CONCEPTS
Slide #14 A trial balance is a worksheet that lists the different accounts found in a business’s general ledger along with their current balances at the end of an accounting period.
Slide #15 Even if the total debits and the total credits are equal in the trial balance, there still may be errors that need to be adjusted.
Discussion #1: Ask students to think about other examples of errors that would not appear in a trial balance. What types of errors would appear in a trial balance?
Slide #16 Here is an example of an unadjusted trial balance:
Objectives:
a. Define the following term: adjusting entry.b. Explain the purpose of adjusting entries.c. Discuss when adjusting entries are generally made.d. Describe types of adjusting entries (e.g., accruals, deferrals, estimates, inventory, unrecorded expenses, bank charges/credits, fixed assets, unusual events, etc.).e. Demonstrate techniques for journalizing and posting adjusting entries.Activity:
Instruct students to complete the Adjusting Entries worksheet in the student handout
Adjusting Entries—Discussion Guide
Performance Indicator: Journalize and post adjusting entries
THINK ABOUT IT
Accountants use adjusting entries to accurately report the revenues and expenses of an accounting period in a company’s financial statements.
KEY CONCEPTS
Slide #17 Before exploring adjusting entries, there are a few important terms to define.
Slide #18 Adjusting entries are journal entries recorded at the end of an accounting period to amend the ending balances in general ledger accounts for that period.
Slide #19 A number of situations require the use of adjusting entries. Most will relate to either accruals or deferrals.
Slide #20 In the following example of an adjusting entry for a deferral, the company has charged a client $2,500 for the sale of a product, but has not yet delivered that product.
Discussion #1: Ask students to discuss why the “product revenues” account is a revenue account, but the “deferred revenues” account is a liability account. What is the difference between these types of accounts? Why would there need to be a liability account for revenues?
Objectives:
a. Define the term closing entry.b. Explain the purpose of closing entries.c. Explain when closing entries are made.d. Discuss methods for making closing entries.e. Demonstrate techniques for journalizing and posting closing entries.Activity:
Instruct students to complete the Closing Entries worksheet starting on page 4-184. When complete, review the students’ responses and return their work to them to use when preparing a post-closing trial balance. Answer key is provided on page 4-186.
Closing Entries—Discussion Guide
KEY CONCEPTS
Slide #21 Temporary accounts (such as revenue and expense accounts) contain balances that only pertain to a specific accounting period.
Discussion #1: Ask students to discuss why it is important to have some accounts that only show transactions for a single accounting period and other accounts that carry balances for multiple accounting periods. What is different about the information in a temporary account and the information in a permanent account?
Slide #22 In the following example, the total revenues are greater than the total expenses by $2,750.
This amount is then debited to the income summary account and credited to the retained earnings account.If the total expenses are greater than the total revenue by that amount, then $2,750 would be debited to the retained earnings account and $2,750 would be credited to the income summary account.For more information on how to journalize and post closing entries, click here: https://www.youtube.com/watch?v=nNTFxSMgZrk.Objectives:
a. Discuss reasons for preparing a post-closing trial balnce.b. Identify accounts included in a post-closing trial balance (i.e., balance sheet accounts).c. Demonstrate techniques for preparing a post-closing trial balance.Activity:
Instruct students to use their Closing Entries worksheet from the last activity to complete the Preparing a Post-Closing Trial Balance worksheet in the student handout.
Post-Closing Trial Balances and Reversing Entries—Discussion Guide
THINK ABOUT IT
Preparing a post-closing trial balance is the final step of the accounting cycle. Once it is complete, the cycle begins again for each new accounting period.
KEY CONCEPTS
Slide #23 A post-closing trial balance is a trial balance that demonstrates that all accounts are in balance at the end of an accounting period, and after these accounts have been closed.
Slide #24 After the post-closing trial balance has been completed, accountants can begin preparing any reversing entries for the beginning of the next accounting period.
Discussion #1: Ask students to discuss why accountants make adjusting entries only to reverse them a day or two later.
Activity:
Complete the Correcting Accounting Entries worksheet in the Student Handout
THINK ABOUT IT
Slide #26 Accounting errors are accidents; they are unintentional and can occur for a variety of reasons. However, they are not due to fraud. Fraud refers to a willful or intentional act to deceive through the misrepresentation or falsification of records.
KEY CONCEPTS
Slide #27 Accounting errors happen; they are unavoidable—the trick is learning how to recognize and correct them as quickly as possible.
Slide #28 There are many types of accounting errors. Some of the most common ones will fall into these categories:
Errors of omissionDiscussion #1: Ask students to come up with more examples of errors that would or would not appear in a trial balance.
Errors of principle
Slide #29 The method for correcting an accounting error is determined by the type of error that was committed and when the error was noticed.
Correcting errors in a previous accounting period can be complicated, for example.Most accounting errors made in journals that are recognized in the same period in which they occurred can be fixed with correcting entries.Activity:
Select a spreadsheet template when completing this activity. Instruct students to complete the Accounting Applications and Systems
There are a number of templates online that are available for use. Some are free to download and use (although they often contain ads for the companies that create them). Here are a few options for free accounting spreadsheet templates:
https://exceldatapro.com/templates/accounting-templates/
https://www.smartsheet.com/ic/top-excel-accounting-templates
https://excelaccountingtemplate.com/free-accounting-templates/#prettyPhoto
Here is a video tutorial for using Microsoft Excel for small-business accounting: https://www.youtube.com/watch?v=doPjZsGMhQc.
Computerized Accounting Systems—Discussion Guide
Slide # 30 THINK ABOUT IT
Modern computerized accounting systems can perform many tasks throughout the accounting cycle with the simple click of a button. Although it is still important to know how to perform these tasks manually, the increased efficiency that the computerized systems bring to accounting is often well worth the cost of investing in one.
KEY CONCEPTS
Slide #31 The ways companies use computers in accounting is constantly evolving.
Slide #32 While spreadsheet programs are capable of performing calculations based on entered formulas, they are not necessarily constructed to perform as accounting systems.
Because of this, many accountants who use these programs rely on templates for creating their journals, ledgers, trial balances, balance sheets, etc.Slide #33 If a company chooses a more complete accounting software system, it can use these programs to provide much more than accounting equations.
Systems like Intuit’s QuickBooks program are built for accounting and can perform tasks like automatically creating reversing entries and closing entries or one-click trial balances.Discussion #1: Ask students to discuss why it is important to learn how to perform these tasks even if a computer-based system can do them for you.
QuickBooks is not the only accounting software available.