Twin Valley School District. What is the purpose and importance of accounting? Who are the users of accounting information?

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Reynold Adams
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1 Twin Valley School District Subject/Course: Advanced Accounting Course Objective: Students need to become familiar with financial accounting information and reports in order to make financial decisions. Emphasis is placed on developing an understanding of generally accepted accounting principles and the financial statements used to evaluate the results of operations and the financial position of the various forms of business. Instructional Focus Big Ideas Essential Questions 1. Accounting is used in everyday business transactions in all business sectors What is the purpose and importance of accounting? Who are the users of accounting information? What are the opportunities in accounting? What role do ethics play in accounting? What are the generally accepted accounting principles? 2. Everyday business transactions use standard accounting methods. What are financial statements and how are they used in accounting? What are the steps in processing transaction and the role of source documents? What is an account and how is it used in recording transactions? What is a ledger and a chart of accounts? What is double-entry accounting and how is it used? 3. Certain accounts must be adjusted at the end of fiscal periods to accurately reflect transactions during that period on final financial statements How does an accountant analyze the impact of transactions on financial statements? How is the debt ratio computed and how is it used in analyzing a company s financial condition? How are financial statements prepared? What is the importance of periodic reporting and the role of accrual accounting?

2 What are the steps in the accounting cycle? How is a balance sheet prepared? How profit margin computed and what is its use in analyzing company performance? How is current ratio computed and what does the ratio reveal about a company s financial condition? How are adjusting entries prepared? What is an adjusted trial balance and how is it prepared? How are financial statements prepared using an adjusted trial balance? How are closing entries prepared? How is a post-closing trial balance prepared? 4. Accounting for a merchandising business is very different and unique than accounting for a service business. What is a merchandising business and how are the accounting transactions different than a service business? What is inventory asset and cash flows of a merchandising company? How is the acid-test ratio computed and how is it used to assess liquidity? How is gross margin ratio computed and how is it used to assess profitability? How are merchandising purchases and sales transactions analyzed and computed for a perpetual system? How are adjustments prepared for a merchandising business? How are accounts closed for a merchandising business? How are multi-step and single-step income

3 statements prepared? 5. Inventories and cost of sales plays a big role in accounting transactions What are the items that make up merchandise inventory? What are the costs of merchandise inventory? How are the effects of inventory methods for financial and tax reporting analyzed? What are the effects of inventory errors on current and future financial statements? How is inventory management assessed using both inventory turnover and days sales in inventory? How is inventory computed in a perpetual system using the methods of FIFO, LIFO, and weighted average? How is the lower of cost or market amount of inventory computed? 6. Cash and Internal controls is a crucial element of an organization s success What is internal control? What is the purpose and principles of internal control? How is the days sales uncollected ratio computed and how is it used to assess liquidity? How is internal control applied to cash receipts and disbursements? How is petty cash transactions recorded? How is a bank reconciliation prepared? 7. Accounting for receivables must be a priority for an organization to keep cash flow What are accounts receivable? How are accounts receivables recorded? What is a note receivable? How does a maturity date of a note receivable calculated?

4 How is a note receivable recorded? How can a note receivable be converted to cash before maturity? How is accounts receivable turnover computed and how can it be used to help assess the financial condition of an organization? How is the direct write-off method applied to accounts receivables? How is the allowance method applied to accounts receivables? How is the estimated uncollectibles based on sales method calculated? How does an accountant record the honoring and dishonoring of a note and adjustments for interest? 8. Because of depreciation, accounting transactions for long-term assets impacts the bottom line of an organization. How is the cost principle for computing plant assets performed? How is deprecation for partial years determined? How does one account for revenue and capital expenditures? How is total asset turnover computed? How is total asset turnover used to analyze a company s use of assets? How does one compute and record depreciation using: straight line, units of production, and declining balance methods? How is asset disposal through discarding or selling recorded? How are natural resource assets accounted for? How are intangible assets accounted for?

5 9. Accounting for current liabilities is an essential function for every organization. What are current and long-term liabilities? How does one account for contingent liabilities? How is the times interest earned ratio computed and used to analyze liabilities? How are entries prepared to account for short-term notes payable? How are employee payroll deductions and liabilities computed and recorded? How are employer payroll deductions and liabilities computed and recorded? How are estimated liabilities accounted for? Enabling Objectives: 1. Describe the environment of financial accounting 2. Prepare general-purpose financial statements 3. Record business transactions in the accounting records 4. Describe the differences between cash-basis and accrual-basis accounting 5. Explain the limitations of financial reporting, prepare appropriate journal entries and explain the implications related to accounts receivable 6. Recognize differences between the various inventory cost flows 7. Describe the accounting issues related to revenue recognition and the control of cash 8. Prepare journal entries related to asset capitalization and depreciation 9. Describe how the issuance of bonds and other long-term debt is recognized for financial reporting 10. Differentiate the various types of stock 11. Describe the different classifications for investment securities 12. Describe the usefulness of the statement of cash flows 13. Perform financial statement analysis 14. Communicate results of financial accounting issues and analysis in a clear, concise written format 15. Input business transactions and generate reports using computerized accounting software 16. Analyze and solve financial accounting problems using spreadsheet software. Assessments Exam 1: Accounting in Business, accounting for business transactions Exam 2: Adjusting accounts for financial statements Exam 3: Accounting for merchandising operations including: inventory, cash control, receivables, and longterm assets Exam 4: Accounting for current liabilities Project: Financial statement analysis

6 Standards A: Summarize professional designations, careers, and organizations within the field of accounting, including education and certification requirements B: Analyze the roles of policy-setting bodies in the accounting profession, e.g., American Institute of Certified Public Accountants (AICPA), Pennsylvania Institute of Certified Public Accountants (PICPA), Generally Accepted Accounting Principles (GAAP), and Securities and Exchange Commission (SEC) C: Analyze business transactions using T-accounts to determine their impact on a business D: Analyze, journalize, and post transactions to general & subsidiary ledgers E: Perform accounting functions using technology as a tool F: Analyze and journalize transactions for short- and long-term assets G: Analyze and journalize transactions involving short- and long-term liabilities H: Identify, calculate, and record depreciation, depletion and amortization; explain their effect on the financial statements I: Differentiate between and journalize entries for issuance or repurchase of stock and the declaration and payment of dividends J: Analyze the various methods for maintaining and valuing inventory (FIFO, LIFO, etc.) and describe their effect on financial statements K: Describe, calculate, and journalize the sales and cost of sales including purchases, transportation costs, sales taxes, and trade discounts L: Describe and explain the criteria used to determine expenses and journalize the expense transactions M: Analyze and calculate gross pay and net pay, including regular and overtime wages, commission, and piece rate N: Explain how the different forms of business ownership and business operations are reported on financial statements O: Compare and contrast the accrual basis and the cash basis of accounting; assess the impact of each on the financial statements P: Analyze and perform the reconciliation of accounts Q: Prepare financial statements (including a Balance Sheet, Profit & Loss and Owner s Equity) and understand their relevance R: Explain the primary areas of analysis (trend analysis, profitability, liquidity, capital structure) and the information that can be obtained from each S: Analyze and perform a horizontal and vertical analysis of the income statement and balance sheet T: Assess profitability, liquidity, and solvency by calculating and interpreting financial ratios U: Assess capital structure by calculating and interpreting financial ratios V: Analyze and explain the use of industry averages in assessing the financial condition, operating results, profitability, liquidity, and capital structure W: Analyze business activities using cash flow statements X: Analyze and perform breakeven and cost benefit analyses to support financial decisions Y: Determine and calculate taxable income and tax liability for both personal and business taxes Z: Demonstrate an auditing procedure that provides assurance that financial records are accurate. Key Terms Big Idea 1- accounting equation, assets, audit, auditors, balance sheet, common stock, dividends, equity, ethics, expenses, Financial Accounting Standards Board (FASB), full disclosure, Generally accepted accounting principles(gaap), income statement, internal transactions, International Accounting Standards Board (IASB), liabilities, managerial accounting, net income, net loss, partnership, proprietorship, retained earnings, return on assets (ROA), revenues, risk, Sarbanes-Oxley Act (SOX) Securities and Exchange

7 Commission (SEC) shareholders, statement of cash flows, Sustainability Accounting Standards Board (SASB) Big Idea 2- account balance, balance column account, chart of accounts, compound journal entry, credit, debit, debt, debt ratio, double-entry accounting, general journal, general ledger, journal, journalizing, ledger, posting, posting reference column, source documents, t- account, trial balance, unearned revenue Big Idea 3- Accounting cycle, accounting period, accrual basis accounting, accrued expenses, accrued revenues, adjusted trial balance, adjusting entry, annual financial statements, book value, cash basis accounting, classified balance sheet, closing entries, closing process, contra account, current assets, current liabilities, current ratio, depreciation, fiscal year, income summary, intangible asset, natural business year, operating cycle, permanent accounts, plant assets, post-closing trial balance, prepaid expenses, profit margin, reversing entries, straight-line depreciation, temporary accounts, time period assumption, unadjusted trial balance, unclassified balance sheet, unearned revenue, worksheet, working papers Big Idea 4- Acid-test ratio, cash discount, cost of goods sold, credit memorandum, credit period, credit terms, debit memorandum, discount period, EOM, FOB, gross margin, gross margin ratio, gross profit, inventory, list price, merchandise, merchandise inventory, multi-step income statement, periodic inventory system, perpetual inventory system, purchase discount, sales discount, shrinkage, single-step income statement, trade wholesaler Big Idea 5- average cost, conservatism constraint, consignee, consignor, consistency concept, days sales in inventory, First-in, first-out (FIFO), gross profit method, interim statements, inventory turnover, last-in, firstout (LIFO), lower of cost or market (LCM), net realizable value, retail inventory method, specific identification, weighted-average Big Idea 6-bank reconciliation, bank statement, canceled check, cash equivalents, cash short/over, check register, days sales uncollected, deposit ticket, deposit in transit, discounts lost, electronic funds transfer, gross method, internal control system, invoice, invoice approval, liquid assets liquidity, net method, outstanding checks, petty cash, principles of internal control, purchase order, purchase requisition, receiving report, Section 404, vendee, vendor, voucher, voucher register Big Idea 7-acccounts receivable, accounts receivable turnover, aging of accounts receivable, allowance for doubtful accounts, allowance method, bad debts, direct write-off method, interest, maker of the note, matching (expense recognition)principle, materiality constraint, maturity date of a note, payee of the note, principal of a note, promissory note, realizable value Big Idea 8-accelerated depreciation method, amortization, asset book value, betterments, capital expenditures, declining balance method, depletion, depreciation, goodwill, indefinite life, intangible asset, land improvement, lease, lease hold, lessee, lessor, licenses, limited life, modified accelerated recovery cost system, natural resources, obsolescence, patent, plant asset age, plant asset, revenue expenditures, salvage value, street line depreciation, total asset turnover, units of production depreciation, useful life Big Idea 9--contingent liability, current liability, current portion of long-term debt, deferred income tax liability, employee benefits, employee earnings report, estimated liability, federal depository bank, FICA taxes, FUTA taxes, form: 940, 941, W2, W4, long-term liabilities, merit rating, short-term note payable,

8 times interest earned

Key Learning: Students will review basic accounting concepts learned in the first level course.

Student Learning Map for Unit Topic: Review of Accounting I Concepts Rev. 1/14 Key Learning: Students will review basic accounting concepts learned in the first level course. How does a business organize