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Students learn an introduction to accounting.

 

 

LESSON PLAN:
FUNDAMENTAL CONCEPTS OF ACCOUNTING

 

Topic:  Fundamental accounting concepts

Concept:    Understand the main accounting concepts and how they form the basis for GAAP.

Objectives

  1. Students will learn 12 key accounting concepts
  2. Students will be able to identify which concept is being applied to a given accounting situation

Suggested Grades:

Seventh Grade - Eighth Grade - Ninth Grade - Tenth Grade - Eleventh Grade - Twelfth Grade - Adult Education

 
 

 

ACCOUNTING INTRODUCTION LESSON PLAN

 

Teaching Materials

 

Lesson Activity

Introduce each accounting concept and discuss its relevance and application. Use or modify the following situations and ask the students how the concept applies:

Entity – the owner of a painting company takes some paint to use in his home renovations.  Is this paint recorded as a business expense?

Money-Measurement – a printing business is about to be sold to new owners who have no experience in the industry. Is this information recorded in the financial statements?

Going Concern – a company’s stock price has plummeted 70% in the past six months due to increased industry competition.  Do we assume the company is still in business?

Cost – A construction company owns two excavators and is preparing to sell both of them in order to buy one brand new one.  The book value of the two used excavators is $10,000, is that the price that the owner should expect to get as a trade-in value?

Dual Aspect – A company has $40,000 in assets, owes the bank $12,000, and owes creditors an additional $8,000.  How much equity does the owner have in the company?

Objectivity – Have students name five different types of source documents used for accounting purposes.  Invoice, checks, bank statement, purchase orders, cash receipts, bill of lading, loan certificate

Time Period – department stores often have fiscal years that end Jan 31.  Ask students to explain why that is the case. 

Conservatism – discuss the pros and cons of choosing to be prudent when reporting income and expenses. 

Realization – if a toy manufacturer receives an order for 96,000 yoyo’s at $2 each to be delivered in equal installments over the next year, when would the revenue from the order be recorded?  What would the amount(s) be? 

Matching – a dry-cleaning company sells $5000 worth of services in October.  They pay $3000 for their dry-cleaning fluid and supplies every quarter in March, June, September, and December.  What expense, if any, would be recorded in October for dry-cleaning supplies?

Consistency – discuss the importance of consistent accounting between reporting periods. 

Materiality – discuss the impracticality of accounting for every change that occurs within a business on a day-to-day basis.  Use office supplies as the most obvious example.

 

Assessment/Evaluation

Have students complete worksheet. A suggested passing grade is 70% or greater.

 

 

 

Lesson Printable Materials - Worksheets

Print out the teaching lesson pages and exercise worksheets for use with this lesson:

 

ACCOUNTING CONCEPTS LESSON

Accounting Concepts Lesson *

This is a lesson on fundamental accounting concepts..

 

 

 

ACCOUNTING WORKSHEET - STUDENT EXERCISE

Accounting Concepts Worksheet *

Student worksheet based on the above lesson.

 

 

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