Financial Accounting 12 - Financial Concepts

PRESCRIBED LEARNING OUTCOMES

It is expected that students will:

• justify the application of generally accepted accounting principles (GAAP)
• explain the relationships among assets, liabilities, and owner's equity
• explain the relationship between debit and credit entries
• describe and explain the uses of journals, ledgers, trial balances, and financial statements
• explain the standard classification and numbering of accounts
• describe the similarities and differences between cost of goods sold accounts and expense accounts
• identify sources and uses of cash related to the cash flow statement
• differentiate between the accounting needs of service and merchandising businesses
• describe relationships among different forms of capital and current assets
• describe career opportunities associated with various fields of accounting

SUGGESTED INSTRUCTIONAL STRATEGIES

• Have students review several case studies to see how GAAP affects the preparation of financial statements. Ask students to justify the application of the accounting principles in each case.
• Invite students to explore various ways of using graphics to communicate basic concepts. For example:
  • Students review typical accounts and create charts showing the standard classification and numbering of accounts, then they work in pairs to classify and number given sets of accounts.
  • Following a discussion of sample expense account entries and cost of goods sold entries, students draw charts listing similarities and differences.
  • Students draw flow charts showing how cost and expense transactions affect income statement and balance sheet accounts for merchandising and service companies.
• Have students in small groups list the advantages and disadvantages of different cash sources for various business objectives (e.g., expansion, modernization, new product development). Then ask groups to report orally to the class. Invite a representative from each group to explain how the cash sources can affect the value of current assets.
• Suggest that students interview accountants about accounting as a career. Have them ask about work opportunities and conditions, professional designations, educational requirements, major duties, support for those underrepresented in the field (e.g., gender equity), and ethical issues. Ask students to summarize their information in brochures for the school's career counselling services.

SUGGESTED ASSESSMENT STRATEGIES

• Invite students to compile a class list of rules related to financial accounting. Note evidence that they understand the rules for crediting and debiting assets, liabilities, owner equity, revenue, and expense accounts.
• Discuss with students the sources of working capital most appropriate for various business objectives. Note the extent to which they:
  • can describe how the different sources of capital will affect the balance sheet
  • relate the purpose for raising capital to the costs and benefits associated with different sources of capital
• Have students interview local business people about their sources of capital and about why they need working capital. Then ask them to report their findings to the class. Note the extent to which students understand working capital in terms of:
  • reasons that businesses need it
  • how businesses obtain it
  • sources of it
  • how it is used
• Review brochures that students develop to describe career opportunities in finance and accounting. Note whether students include details regarding career planning such as:
  • accurate information about the levels of education required to enter the various career areas
  • details about institutions and organizations that offer programs (including prerequisites, financial-assistance information, and special considerations for entrance)
  • tasks and expectations associated with the various careers

• Accounting: The Basis for Business Decisions, Seventh Edition
• Financial Accounting, Canadian Third Edition

• Designing an Accounting System using ACCPAC Simply Accounting
• Whitemoose Creek Farms: A Business Simulation

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