Lesson: 1

Topic: Introduction to Accounting

Objectives:

During this lesson the class will explore the fundamental objectives of accounting. These include:

• gathering financial information,
• preparing and collecting permanent records,
• rearranging, summarizing, and classifying financial information,
• preparing information reports and summaries, and
• establishing controls to promote accuracy and honesty among employees.

The class will also learn to differentiate between the following types of businesses:

• service
• merchandising
• manufacturing,
• non-profit organization,

Method of Instruction and Evaluation:

Group Work

Part A: Within the course Blackboard site, under "Assignments, Unit 1: Introduction to Accounting" a Wiki has been set up entitled "Types of Businesses." Within that Wiki, four pages have been set up under the following headings:  

1. service,
2. merchandising,
3. manufacturing, and
4. non-profit organization.

Part B: After a Socratic lesson guided by the PowerPoint entitled What is Accounting?, the class will form into groups of four to five students. The groups will then attempt to answer Chapter Review questions #1, 8, 9, 10, and 11.

No text book? No problem! Here's the questions:

1. List the five main activities involved in accounting. 8. Identify three kinds of businesses besides a service business. 9. List the three forms of business ownership. 10. Give examples of a routine accounting activity and a periodic accounting activity. 11. Define the accounting cycle. Bonus Question: Explain the paradox involved in the answer to question #8.

Expectations Addressed:

The "Fundamental Accounting Practices" strand of the BAF3M Ministry of Education Curriculum Guidelines outlines all of the following specific expectations. The expectations addressed by this lesson have been highlighted below.

• Introduction to Accounting as a Discipline:

  • explain the purpose of accounting;

  • explain the difference between accounting and bookkeeping;

  • identify the users and uses of accounting;

  • identify the Generally Accepted Accounting Principles (GAAP) and explain their importance.

• Business Structures:

  • describe the characteristics of different forms of business organization, including sole proprietorship, partnership, and corporation;

  • describe the advantages and disadvantages of different forms of business organization, including sole proprietorship, partnership, and corporation;

  • explain the differences among the equity sections of different forms of business organization, including sole proprietorship, partnership, and corporation (e.g., capital account in a sole proprietorship versus common stock in shareholders’ equity in a corporation).

• The Accounting Cycle for a Service Business:

  • assess the effects that transactions have on the accounts and financial statements of a service business;

  • record transactions using the journals and ledgers of a service business;

  • prepare a trial balance and the financial statements for a service business;

  • record adjusting and closing entries for a service business (e.g., prepaid expenses, amortization, accruals);

  • describe the impact of year-end procedures, including adjusting and closing entries, on the financial statements of a service business;

  • apply the Generally Accepted Accounting Principles (GAAP) at each stage of the accounting cycle for a service business.

References:

• text, chapter #1, topic #1: pages 1-9 (required reading);
• Power Point Presentation: What is Accounting?
• class notes