H.T.S. Crest Holy Trinity School
Grade 9 Business
Lesson Plan


Lesson 11: Exploring the creation and use of accounts.

During this class we shall examine how accounts are used to keep track of a business' economic situation.

Account: any tool used to record inflows to, and outflows from, a similar group of items.

Students will learn to differentiate between three general categories of accounts:

  1. assets: items of value owned by a business

  2. liabilities: the debts owned by a business

  3. owner's equity: the value of the business assets which the owner has claim to.

      Four types of accounts which affect owner's equity are:

    • capital, (a permanent account which records the owner's personal investment or contribution of assets. This INCREASES owner's equity.)
    • drawings, (a temporary account which records the owner's personal withdrawal of assets. This DECREASES owner's equity)
    • revenue, (a temporary account which records the value of assets which the business has generated. This INCREASES owner's equity)
    • expenses, (a temporary account which records the value of assets which the business has consumed. This DECREASES owner's equity)

***NOTE***
Revenue - Expenses = Net Income


Finally, students will learn to differentiate between temporary and permanent accounts.

Permanent Account: an account which carries its balance into the next accounting period.

Temporary Account: an account which transfers its balance into the capital account at the end of an accounting period. Thus, it will begin each new accounting period with a zero balance.


Evaluation:

Students will complete an account identification worksheet in which they identify a variety of accounts as being either assets, liabilities, or owner's equity accounts. In addition, students will determine the total value for each of the account categories.

Following this, students will complete a Summary of Accounts. This is an informal statement which they will use to identify, and note the value of, the assets, liabilities, and owner's equity accounts they feel will be required before their individual business simulation could begin operation.


Resources:

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