In Accounting 1 students learn the complete accounting cycle and the preparation and analysis of financial reports. Central to this course is the study of debits and credits, their effects on balance sheet accounts, and income and expenses. Students learn the function of the ledger, journals and proper closing procedures and also how to analyze and interpret the financial statements of public companies. Web-based accounting programs and spreadsheet software are utilized to engage students in the most up to date methods of accounting. Ethical topics in Accounting are also explored.

ESSENTIAL QUESTIONS

• As the owner of a service business, how might I increase my owner’s equity?
• Not all businesses extend the “buy now, pay later” option. How will I determine when it would be best to allow my customers to buy on account?
• How will I determine when to buy on account and the maximum liabilities that I should carry?

CONTENT OBJECTIVES

Students will learn to . . .

• describe the different users of accounting information.
• prepare a net worth statement and explain its purpose.
• classify accounts as assets, liabilities, or owner’s equity and demonstrate their relationship in the accounting equation.
• analyze the effects of transactions on the accounting equation.
• distinguish between cash and on account transactions.
• compare and contrast the types of transactions that increase and decrease owner’s equity.
• explain the difference between expenses and liabilities.

Vocabulary - accounting, accounting system, financial statements, net worth statement, asset, liability, personal net worth, equity, ethics, business ethics, service business, proprietorship, business plan, GAAP, equities, owner’s equity, accounting equation, transaction, account, account title, account balance, capital account, creditor, revenue, withdrawals, sale on account, expense

ESSENTIAL QUESTIONS

• How will an accounting system help a business owner make good business decisions?

Prerequisite Skills

• Describe the different users of accounting information.
• Prepare a net worth statement and explain its purpose.
• Classify accounts as assets, liabilities, or owner’s equity and demonstrate their relationship in the accounting equation.

CONTENT OBJECTIVES

Students will learn to . . .

• analyze the relationship between the accounting equation and a T account.
• analyze the debit and credit side, the increase and decrease side, and the balance side of various accounts.
• restate and apply the two rules that are associated with the increase side of an account.
• restate and apply the four questions necessary to analyze transactions for starting a business into debit and credit parts.
• analyze transactions for operating a business into debit and credit parts.

Vocabulary - T account, debit, credit, normal balance, chart of accounts, accounts payable, accounts receivable

ESSENTIAL QUESTIONS

• Why would a business want to journalize each transaction rather than file the source documents in chronological order?

Prerequisite Skills

• Analyze the relationship between the accounting equation and a T account.
• Analyze the debit and credit side, the increase and decrease side, and the balance side of various accounts.
• Restate and apply the two rules that are associated with the increase side of an account.

CONTENT OBJECTIVES

Students will learn to . . .

• define what a journal is and explain why it is used to record transactions.
• compare and contrast different types of source documents.
• identify the four parts of a journal entry.
• analyze and record cash transactions using source documents.
• analyze and record transactions for buying and paying on account.
• analyze and record transactions that affect owner’s equity.
• analyze and record sales and receipts of cash on account.
• prove and rule a journal.
• demonstrate how to prove cash.
• identify and correct errors using standard accounting practices.

Vocabulary - journal, journalizing, entry, double-entry accounting, source document, check, invoice, sales invoice, receipt, memorandum, proving cash

ESSENTIAL QUESTIONS

• What essential organizational records have been presented? How do these compare to organizational records that an individual might keep?
• How can the general ledger help management analyze financial trends?
• Wouldn’t it be more efficient to post each special amount column entry as it is journalized? Explain.
• Do you think correcting entries are necessary with accounting software? Explain.

Prerequisite Skils

• Define what a journal is and explain why it is used to record transactions.
• Compare and contrast different types of source documents.
• Identify the four parts of a journal entry.

CONTENT OBJECTIVES

Students will learn to . . .

• construct a chart of accounts for a service business organized as a proprietorship.
• demonstrate correct principles for numbering accounts.
• apply file maintenance principles to update a chart of accounts.
• complete the steps necessary to open general ledger accounts.
• post amounts from the General Debit and General Credit columns of a journal.
• post column totals from a journal to ledger accounts.
• analyze incorrect journal entries and prepare correcting entries.
• demonstrate how to correct errors made during the posting process.

Vocabulary - ledger, general ledger, account number, file maintenance, opening an account, posting, correcting entry

ESSENTIAL QUESTIONS

• On which financial statement would the account cash short and over appear? Would this be an asset account like cash?
• What consequences would I impose on my employees if cash ended up short?
• Except for over-the-counter cash sales using a cash register, would it ever be appropriate for a business to use money rather than checks for cash transactions?
• How would a business obtain a business checking account? What kinds of decisions would need to be made before doing so?
• Why should I learn to balance my Cash account when the bank should be protecting my cash?
• What controls could I put in place to avoid dishonored checks in my business?
• Would it ever be advantageous for my business to accept electronic payments rather than checks?
• How would I safely control the Petty Cash account for my business so that I do not end up short on cash?

Prerequisite Skills

• Construct a chart of accounts for a service business organized as a proprietorship.
• Demonstrate correct principles for numbering accounts.
• Apply file maintenance principles to update a chart of accounts.
• Complete the steps necessary to open general ledger accounts.

CONTENT OBJECTIVES

Students will learn to . . .

• record a deposit on a check stub.
• endorse checks using blank, special, and restrictive endorsements.
• prepare a check stub and a check.
• complete a bank statement reconciliation.
• record and journalize a bank service charge.
• complete recordkeeping for a dishonored check.
• journalize an electronic funds transfer.
• journalize a debit card transaction.
• establish a petty cash fund.
• prepare a petty cash report.
• replenish a petty cash fund.

Vocabulary - checking account, deposit slip, endorsement, blank endorsement, special endorsement, restrictive, endorsement, postdated check, voided check, bank statement, canceled check, dishonored check, non-sufficient funds check, electronic funds transfer, debit card, petty cash, petty cash slip, cash short, cash over

ESSENTIAL QUESTIONS

• What is the relationship among adjusting entries, cash-basis accounting, and accrual-basis accounting?
• Is it really a big deal if after completing the work sheet total, debits do not equal total credits in the trial balance?
• Where should you begin troubleshooting if the total debits do not equal total credits in the trial balance?
• Wouldn’t it make sense to deduct from the Supplies and Prepaid Insurance expense accounts each time the asset is used rather than waiting until the end of the fiscal period to record an adjustment? Explain.
• Why doesn’t the accounting equation or the balance sheet provide the information needed for the net income or net loss?
• What would be the effect on the financial statement if adjusting entries were not journalized and posted?
• Wouldn’t it save time to just estimate the adjustments?

Prerequisite Skills

• Record a deposit on a check stub.
• Endorse checks using blank, special, and restrictive endorsements.
• Prepare a check stub and a check.
• Complete a bank statement reconciliation.

CONTENT OBJECTIVES

Students will learn to . . .

• prepare the heading of a work sheet.
• prepare the trial balance section of a work sheet.
• analyze and explain the adjustments for supplies and pre-paid insurance.
• complete the Adjustments columns of a work sheet.
• prepare the Balance Sheet and Income Statement columns of a work sheet.
• total and rule the work sheet.
• apply the steps for finding errors on a work sheet.
• journalize and post the adjusting entries for supplies and prepaid insurance.

Vocabulary - fiscal period, fiscal year, work sheet, trial balance, prepaid expense, accrual basis of accounting, cash basis of accounting, adjustments, balance sheet, income statement, net income, net loss, adjusting entries

ESSENTIAL QUESTIONS

• It is often said that financial statements provide a picture of the financial health of a company. Explain.
• Should a person be concerned if the balance sheet reveals much larger debt and fewer assets than other companies in the same industry?
• How might you use the financial information provided in the income statement and balance sheet?
• Why is it important to analyze other parts of the income statement other than just the bottom line?
• How does the matching principle apply to the income statement?
• Is it really necessary to calculate a new capital balance? Explain.
• Why is it important to compare your balance sheet of the current period with prior periods?

Prerequisite Skills

• Prepare the heading of a work sheet.
• Prepare the trial balance section of a work sheet.
• Analyze and explain the adjustments for supplies and pre-paid insurance.
• Complete the Adjustments columns of a work sheet.
• Prepare the Balance Sheet and Income Statement columns of a work sheet.

CONTENT OBJECTIVES

Students will learn to . . .

• prepare an income statement for a service business.
• calculate and analyze financial ratios using income statement amounts.
• prepare a balance sheet for a service business organized as a proprietorship.

Vocabulary - financial accounting, managerial accounting, financial ratio, ratio analysis, vertical analysis, return on sales (ROS)

ESSENTIAL QUESTIONS

• Why can’t the drawing account be closed using Income Summary?
• What happens if the debits do not equal credits on the post-closing trial balance?
• Why are the closing procedures so important?
• Why are the permanent accounts “permanent”?
• What would be the effect of closing liabilities?
• Can Step 8 be avoided as long as closing entries are posted in Step 7?

Prerequisite Skills

• Prepare an income statement for a service business.
• Calculate and analyze financial ratios using income statement amounts.
• Prepare a balance sheet for a service business organized as a proprietorship.

CONTENT OBJECTIVES

Students will learn to . . .

• journalize and post closing entries for a service business organized as a proprietorship.
• prepare a post-closing trial balance.

Vocabulary - permanent accounts, temporary accounts, closing entries, post-closing trial balance, accounting cycle

ESSENTIAL QUESTIONS

• As a business owner, how often would I want to review the schedule of accounts payable?
• Would it always be useful for my company to have an accounts payable ledger in addition to the general ledger?
• Why would it be beneficial for a business to have an accounts payable subsidiary ledger?
• Which form of ownership (proprietorship or corporation) would be beneficial in what situations?
• How does a wholesale merchandising business predict buying habits of retailers?
• What types of businesses would not benefit from UPC bar codes? What kinds of internal controls might be put in place for purchases to eliminate unnecessary or unapproved spending?
• How might the accounts payable ledger help me maintain good credit standing?
• As a small business owner, what are some ways you might be able to negotiate a better trade discount?

Prerequisite Skills

• Journalize and post closing entries for a service business organized as a proprietorship.
• Prepare a post-closing trial balance.

CONTENT OBJECTIVES

Students will learn to . . .

• distinguish among service, retail merchandising, and wholesale merchandising businesses.
• identify differences between a sole proprietorship and a corporation.
• explain the relationship between a subsidiary ledger and a controlling account.
• describe accounting procedures used in ordering merchandise.
• discuss the purpose of a special journal.
• journalize purchases of merchandise on account using a purchases journal.
• post merchandise purchases to an accounts payable ledger and a general ledger.
• record cash payments using a cash payments journal.
• record replenishment of a petty cash fund.

Vocabulary - merchandise, capital stock, merchandising business, articles of incorporation, retail merchandising business, charter, wholesale merchandising business, vendor, corporation, subsidiary ledger, capital, accounts payable ledger, share of stock, controlling account, stockholder, cash payments journal, list price, trade discount, net price, cash discount, general amount column, discount period, purchases discount, contra account