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Performance Objective The student will be able to apply fundamental bookkeeping skills for a virtual business office. Specific Objectives The student will identify, understand, and apply the terms associated with this lesson. The student will identify and understand the basic accounting concepts. The student will identify and understand the accounting equation. The student will establish a simple chart of accounts. Copyright © Texas Education Agency, All rights reserved. 3

 Accounting  Accounting System  Accounting Records  Service Business  Proprietorship  Asset  Equities  Liability  Owner’s Equity  Accounting Equation  Transaction  Account  Account Title  Account Balance  Normal Balance  Capital  Chart of Accounts  Debit  Credit  Accounting Cycle  Accounting Concepts  Business Entity  Money Management  Going Concern  Historical Cost  Prudence/Conservatism  Materiality  Objectivity  Consistency  Accruals/Matching  Realization  Disclosure  Uniformity  Relevance Copyright © Texas Education Agency, All rights reserved. 4

Do you know how much your individual net worth is? How many of you have checking accounts ? When you credit your checking account, what happens to your balance? When you credit your checking account, what happens to your balance? When you debit your checking account, what happens to your balance? Copyright © Texas Education Agency, All rights reserved. 5

Identify and record at least five quotations that represent your understanding/mindset of what it means to be financially stable. QuoteAuthorWebsite In a balanced organization, working toward a common objective, there is success. T. L. ScruttonQuoteland.com Copyright © Texas Education Agency, All rights reserved. 6

Accounting Concepts  Business Entity  Money Management  Going Concern  Historical Cost  Prudence/Conservatism  Materiality  Objectivity  Consistency  Accruals/Matching  Realization  Disclosure  Uniformity  Relevance Copyright © Texas Education Agency, All rights reserved. 7

The Accounting Equation Assets = Liabilities + Owner’s Equity what you ownwhat you owe what you’re worth Copyright © Texas Education Agency, All rights reserved. 8

9 The Accounting Equation Find the missing number. AssetsLiabilitiesOwner’s Equity $90,000$49,000$41,000 $68,000$30,000 $3,000$2,000 $108,000$60,000 $19,000$11,000 $125,000$30,000

Assets (100s) Liabilities (200s)Owner’s Equity (300s)Revenue (400s) Expenses (500s) 110 Cash 210 Accounts Payable- XYZ Company 310 Owner’s Name, Capital 410 Sales 510 Advertising Expense 120 Accounts Receivable- John Smith 220 Accounts Payable- Learn and Play 320 Owner’s Name, Drawing 520 Insurance Expense 130 Accounts Receivable- Mary Johnson 330 Income Summary 530 Miscellaneous Expense 140 Supplies 540 Rent Expense 150 Prepaid Insurance Copyright © Texas Education Agency, All rights reserved. 10

11 Copyright © Texas Education Agency, All rights reserved. Assign the following account titles an appropriate account number and identify which type of account it is…asset, liability, owner’s equity, revenue, or expense. Account NumberType of Account Cash110Asset Prepaid Insurance Account Payable 1 Account Payable 2 Account Receivable 1 Supplies Account Receivable 2 Sales Owner, Capital Advertising Expense Owner, Drawing Rent Expense

How did you do? Performance Objective The student will be able to apply fundamental bookkeeping skills for a virtual business office. Specific Objectives Were you able to identify, understand, and apply the terms associated with this lesson? Were you able to identify and understand the basic accounting concepts? Were you able to identify and understand the accounting equation? Were you able to establish a simple chart of accounts? Copyright © Texas Education Agency, All rights reserved. 12

Search for news articles regarding companies or individuals who were able to maintain a positive net worth in the last three years. Select one company and research to find out the financial history of that company from year to year since its inception. Create a timeline with the findings. Copyright © Texas Education Agency, All rights reserved. 13