High School Business—Accounting I Curriculum … Essentials Documents...This is a one semester...

33
High School Business—Accounting I Curriculum Essentials Document Boulder Valley School District Department of CTEC October 2011

Transcript of High School Business—Accounting I Curriculum … Essentials Documents...This is a one semester...

High School Business—Accounting I Curriculum Essentials

Document

Boulder Valley School District Department of CTEC

October 2011

6/25/2012 BVSD Curriculum Essentials 2

Introduction

The number one college major for both men and women is Business. As a result, the Boulder Valley School District offers a number of comprehensive college-oriented business classes which allow students the opportunity to begin evaluating a potential career in business and the selection of business as a major or minor in college. For those students who complete a specified three course sequence of business classes, during their high school career, the Boulder Valley School District also offers a Business Pathways Completion Certificate. Based on the knowledge that over 70% of college students state that they wish they had more financial literacy education in high school, the Accounting course sequence is designed to provide students with the most comprehensive accounting literacy education in the Boulder Valley School District. This course meets the personal money management graduation requirement for BVSD. This hands-on, eighteen week course offers the following units of study: Accounting Careers, Ethics in Accounting, Basic Accounting Cycle, Accounting for a Payroll System, Accounting Legalities, and Generally Accepted Accounting Procedures. The material covered is reinforced and enhanced through the use of technology, guest speakers, videos and hands-on, project-based activities, possibly Denver Post Stock Market Game, whenever possible. In addition, because experiential learning is an important aspect of this course, a field trip to an accounting firm, the Federal Reserve Bank of Denver or other finance related business or destination may also be offered. Students may also have the opportunity to take the National Financial Capability Challenge which is a standardized online test offered each year by the U.S. Department of the Treasury in cooperation with the U.S. Department of Education and the President’s Advisory Council on Financial Literacy. Historically, the BVSD Finance students who have taken this standardized test have consistently had some of the highest scores in the state and have averaged approximately 15% higher scores than the National average for the test.

6/25/2012 BVSD Curriculum Essentials 3

Business Accounting 1 Overview

Course Description

This is a one semester introductory course in double entry accounting procedures. Students will learn to keep financial records for a service or retail business. Principles covered include the bookkeeping cycle, debit/credit theory, financial statements, use of various journal and ledgers, worksheets, accounts receivable and payable, and payroll systems. Computers will be used for simulation and projects. This course is also available to be taken in an online format.

Topics at a Glance • Read, interpret, and analyze financial

information/terms • Apply generally accepted accounting

principles • Understand how the accounting system

provides business information • Understand the dynamic nature of the

business environment in which accounting information is used

• Recognize the various users of accounting information

• Identify career opportunities in accounting • Demonstrate ethical practices • The Future Business Leaders of America (FBLA)

organization is the Career and Technical Student Organization (CTSO) which Accounting students may join.

Assessments

• Pre-test/Post-test • Student Restatement of Material Covered • Problems • Tests • Quizzes • Selected Readings • Teacher and Student Designed Modified Personal

Assessments

Evidence Outcomes:

a. Prepare, analyze and interpret financial statements

b. Describe career opportunities in the accounting profession

c. Identify and describe generally accepted accounting principles

d. Complete the steps in the accounting cycle in order to prepare the financial statements

e. Use a spreadsheet or accounting software to prepare charts and graphs useful in analyzing the financial condition of a business.

f. Describe career opportunities in the accounting profession

Inquiry Questions: 1. What are financial statements and how do

they impact business decisions? 2. What career opportunities are available? 3. Why do businesses follow generally accepted

accounting principles (GAAP)? 4. Why do I need to learn this for life-long

learning?

Relevance and Application: 1. Accounting statements provides information

to the business concerning operation 2. Prepare students for entering into the

workforce

Nature of Business: 1. Understanding and preparing financial

information assists a business/person in making viable decisions.

6/25/2012 BVSD Curriculum Essentials 4

Prepared Graduates The preschool through twelfth-grade concepts and skills that all students who complete the Colorado education system must master to ensure their success in a postsecondary and workforce setting.

1. CTE Essential Skills: Academic Foundations ESSK.01: Achieve additional academic knowledge and skills required to pursue the full range of career and postsecondary education opportunities within a career cluster.

Prepared Graduate Competencies in the CTE Essential Skills standard:

Complete required training, education, and certification to prepare for employment in a particular career field

Demonstrate language arts, mathematics, and scientific knowledge and skills required to pursue the full range of post-secondary and career opportunities

2. CTE Essential Skills: Communications Standards ESSK.02: Use oral and written communication skills in creating, expressing, and interrupting information and ideas, including technical terminology and information

Prepared Graduate Competencies in the CTE Essential Skills standard:

Select and employ appropriate reading and communication strategies to learn and use technical concepts and vocabulary in practice

Demonstrate use of concepts, strategies, and systems for obtaining and conveying ideas and information to enhance communication in the workplace

3. CTE Essential Skills: Problem Solving and Critical Thinking ESSK.03: Solve problems using critical thinking skills (analyze, synthesize, and evaluate) independently and in teams using creativity and innovation.

6/25/2012 BVSD Curriculum Essentials 5

Prepared Graduate Competencies in the CTE Essential Skills standard:

Employ critical thinking skills independently and in teams to solve problems and make decisions

Employ critical thinking and interpersonal skills to resolve conflicts with staff and/or customers

Conduct technical research to gather information necessary for decision-making

4. CTE Essential Skills: Safety, Health, and Environmental

ESSK.06: Understand the importance of health, safety, and environmental management systems in organizations and their importance to organizational performance and regulatory compliance

Prepared Graduate Competencies in the CTE Essential Skills standard:

Implement personal and jobsite safety rules and regulations to maintain safe and helpful working conditions and environment

Complete work tasks in accordance with employee rights and responsibilities and employers obligations to maintain workplace safety and health

5. CTE Essential Skills: Leadership and Teamwork ESSK.07: Use leadership and teamwork skills in collaborating with others to accomplish organizational goals and objectives

Prepared Graduate Competencies in the CTE Essential Skills standard:

Employ leadership skills to accomplish organizational skills and objectives

6/25/2012 BVSD Curriculum Essentials 6

6. CTE Essential Skills: Employability and Career Development ESSK.09: Know and understand the importance of employability skills; explore, plan, and effectively manage careers; know and understand the importance of entrepreneurship skills

Prepared Graduate Competencies in the CTE Essential Skills standard:

Indentify and demonstrate positive work behaviors and personal qualities needed to be employable

Develop skills related to seeking and applying for employment to find and obtain a desired job

6/25/2012 BVSD Curriculum Essentials 7

COLORADO COMMUNITY COLLEGE SYSTEM CAREER & TECHNICAL EDUCATION TECHNICAL STANDARDS REVISION & ACADEMIC ALIGNMENT PROCESS Colorado’s 21st Century Career & Technical Education Programs have evolved beyond the historic perception of vocational education. They are Colorado’s best kept secret for: • Relevant & rigorous learning • Raising achievement among all students • Strengthening Colorado’s workforce & economy Colorado Career & Technical Education serves more than 116,000 Colorado secondary students annually through 1,200 programs in 160 school districts, 270 High Schools, 8 Technical Centers, 16 Community Colleges & 3 Technical Colleges. One of every three Colorado high school students gains valuable experiences by their enrollment in these programs. ALIGNMENT REQUIRED BY SB 08-212 22-7-1005. Preschool through elementary and secondary education - aligned standards - adoption - revisions. 2(b): In developing the preschool through elementary and secondary education standards, the State Board shall also take into account any Career & Technical Education standards adopted by the State Board for Community Colleges and Occupational Education, created in Section 23-60-104, C.R.S., and, to the extent practicable, shall align the appropriate portions of the preschool through elementary and secondary education standards with the Career and Technical standards. STANDARDS REVIEW AND ALIGNMENT PROCESS Beginning in the fall of 2008, the Colorado Community College System conducted an intensive standards review and alignment process that involved: NATIONAL BENCHMARK REVIEW Colorado Career & Technical Education recently adopted the Career Cluster and Pathway Model endorsed by the United State Department of Education, Division of Adult and Technical Education. This model provided access to a national set of business and industry validated knowledge and skill statements for 16 of the 17 cluster areas. California and Ohio provided the comparative standards for the Energy cluster • Based on this review Colorado CTE has moved from program-specific to Cluster & Pathway based standards and outcomes • In addition, we arrived at fewer, higher, clearer and more transferrable standards, expectations and outcomes.

6/25/2012 BVSD Curriculum Essentials 8

COLORADO CONTENT TEAMS REVIEW The review, benchmarking and adjusting of the Colorado Cluster and Pathway standards, expectations and outcomes was through the dedicated work of Content Teams comprised of secondary and postsecondary faculty from across the state. Participation by instructors from each level ensured competency alignment between secondary and postsecondary programs. These individuals also proposed the draft academic alignments for math, science reading, writing and communication, social studies (including Personal Financial Literacy) and post secondary and workforce readiness (PWR.)

6/25/2012 BVSD Curriculum Essentials 9

ACADEMIC ALIGNMENT REVIEW In order to validate the alignment of the academic standards to the Career & Technical Education standards, subject matter experts in math, science, reading, writing and communication, and social studies were partnered with career & technical educators to determine if and when a true alignment existed. CURRENT STATUS • One set of aligned Essential skills to drive Postsecondary and Workforce Readiness inclusion in all Career & Technical Education programs. • 52 pathways with validated academic alignments • 12 pathways with revised standards ready for alignment (currently there are no approved programs in these pathways) • 21 pathways where no secondary programming currently exists. Standards and alignments will be developed as programs emerge. • Available for review at: www.coloradostateplan.com/content_standards.htm

6/25/2012 BVSD Curriculum Essentials 10

Colorado Career & Technical Education Standards Academic Alignment Reference System The Career & Technical Education standards have been organized by Career Cluster (17) and Pathway (81). In addition, a set of “Essential Skills” was developed to ensure the Postsecondary and Workforce Readiness within any cluster or pathway. These workforce readiness skills are applicable to all career clusters and should form the basis of each CTE program. Organization Essential Skills There exists a common set of knowledge and skills that are applicable to all students regardless of which cluster or pathway they choose. This set of standards, is meant for inclusion in each program to enhance the development of postsecondary and workforce readiness skills. Career Cluster A Career Cluster is a grouping of occupations and broad industries based on commonalities. The 17 Career Clusters organize academic and occupational knowledge and skills into a coherent course sequence and identify pathways from secondary schools to two- and four-year colleges, graduate schools, and the workplace. Students learn in school about what they can do in the future. This connection to future goals motivates students to work harder and enroll in more rigorous courses. Career Pathway Pathways are sub-groupings of occupations/career specialties used as an organizing tool for curriculum design and instruction. Occupations/career specialties are grouped into Pathways based on the fact that they require a set of common knowledge and skills for career success. Prepared Completer Competency This level targets the “big ideas” in each pathway. These are the competencies that all students who complete a CTE pathway must master to ensure their success in a postsecondary and workforce setting. Prepared Completer Competencies will not usually be “course” specific but grow with the student’s progression through the sequence of courses. Concept/Skill The articulation of the concepts and skills that indicates a student is making progress toward being a prepared completer. They answer the question: What do students need to know and be able to do? Evidence Outcome The indication that a student is meeting an expectation at the mastery level. How do we know that a student can do it? Pathway Abbreviation (4 Letter)

6/25/2012 BVSD Curriculum Essentials 11

Academic Alignments Academic alignments, where appropriate in Math, Reading, Writing and Communication, Science and Social Studies (including Personal Financial Literacy) were defined by CTE and academic subject matter experts using the following criteria: • It was a point where technical and academic content naturally collided; • The student must demonstrate adequate proficiency with the academic standard to perform the technical skill; and • It could be assessed for both academic and technical understanding. Colorado’s CTE programs have had academic alignments dating back to the early 1990’s. While these alignments resulted in an increase in academic focus in CTE programs, the reality is that a true transformation in intentional teaching toward the academic standard was limited. With these alignments comes a new expectation: If a CTE instructor is teaching a CTE concept that has an identified alignment, they must also be intentional about their instruction of the academic standard. CCCS will be providing professional development and instructional resources to assist with the successful implementation of this new expectation. In addition, this expanded expectation will require increased collaboration between CTE and academic instructors to transform teaching and learning throughout each school. For each set of Cluster and Pathway standards, the academic alignments have been included and are separated by academic area. CCCS chose to align at the “Evidence Outcome” level. The aligned academic evidence outcome follows the CTE evidence outcome to which it has been aligned. For a sample, see Illustration A.

6/25/2012 BVSD Curriculum Essentials 12

The academic standard number used in the alignments matches the Colorado Department of Education standards numbering convention.

6/25/2012 BVSD Curriculum Essentials 13

6/25/2012 BVSD Curriculum Essentials 14

6/25/2012 BVSD Curriculum Essentials 15

6/25/2012 BVSD Curriculum Essentials 16

6/25/2012 BVSD Curriculum Essentials 17

FIAC.01 Develop the knowledge, financial acumen, and competencies needed to make informed decisions in business and personal life.

FIAC.01.01 The Accounting Profession: Understand the role that accountants play in business and society.

FIAC.01.01.a Describe the current and historical regulatory environment of the accounting profession.

FIAC.01.01.b Describe how current events impact the accounting profession.

FIAC.01.01.c Explain the need for a code of ethics in accounting and the ethical responsibilities required of accountants.

FIAC.01.01.d Explain how accounting information is used to allocate resources in the business and personal decision-making process.

FIAC.01.02 The Accounting Profession: Describe career opportunities in the accounting profession.

FIAC.01.02.a Identify student and professional accounting organizations and associations.

FIAC.01.02.b Identify professional designations and certifications in the accounting profession.

FIAC.01.02.c Describe the educational requirements for various careers, professional designations, and certifications in the accounting profession.

FIAC.01.02.d Describe the skills and competencies needed to be successful in the accounting profession.

FIAC.01.02.e Describe the areas of specialization within the accounting profession and careers that require knowledge of accounting.

FIAC.01.03 The Accounting Profession: Demonstrate the skills and competencies required to be successful in the accounting profession.

FIAC.01.03.a Perform research and communicate in writing the results of the research.

FIAC.01.03.b Apply analytical and critical decision-making skills.

FIAC.01.03.c Identify and use information technology productively.

6/25/2012 BVSD Curriculum Essentials 18

FIAC.01.03.d Demonstrate the ability to work within a team concept.

FIAC.01.04 Financial Reports: Develop an understanding and working knowledge of an annual report and financial statements.

FIAC.01.04.a Identify the sections in an annual report and the purpose for each section.

FIAC.01.04.b Describe the information provided in each financial statement and how the statements articulate with each other.

FIAC.01.04.c Identify the classifications in an income statement and explain their relationship to each other (revenue, expense, gains, losses).

FIAC.01.04.d Explain how and why the conceptual frameworks of accounting and generally accepted accounting principles provide guidance and structure for preparing financial statements.

FIAC.01.04.e Identify and explain the business activities reported in a statement of cash flows (operating, inventing, financing).

FIAC.01.04.f Define comprehensive income and describe its relationship to operating results.

FIAC.01.05 Financial Analysis: Assess the financial condition and operating results of a company and analyze and interpret financial statements and information to make informed business decisions.

FIAC.01.05.a Recognize the primary areas of analysis (trend analysis, profitability, liquidity, capital structure) and explain the information that can be obtained from each type of analysis.

FIAC.01.05.b Perform a horizontal and vertical analysis of the income statement and balance sheet.

FIAC.01.05.c Compare and contrast debt and equity financing and explain the impact on the financial statements.

FIAC.01.05.d Use the statement of cash flow to analyze business activities (operating, investing, financing).

FIAC.01.05.e Analyze cash flow from operating activities to assess profitability and liquidity.

FIAC.01.06 Accounting Principles: Identify and describe generally accepted accounting principles (GAAP), explain how the application of GAAP impacts the recording of financial transactions, and the preparation of financial statements.

FIAC.01.06.a Describe and explain the conceptual framework of accounting and generally accepted accounting principles and assumptions.

FIAC.01.06.b Assets: Explain the accounting methods used to determine the value of accounts receivable to be reported on the balance sheet and describe the effect on the income statement.

FIAC.01.06.c Liabilities: Determine the initial valuation of long-term debt instruments and their impact on the financial statements.

6/25/2012 BVSD Curriculum Essentials 19

FIAC.01.06.d Equity: Explain how operating results, capital contributions, and distribution of earnings affect equity for the various types of ownership structures.

FIAC.01.06.e Revenue: Describe the criteria used to determine revenue recognition and record revenue related transactions.

FIAC.01.06.f Expense: Describe the criteria used to determine expense recognition and record expense-related transactions.

FIAC.01.06.g Gains and Losses: Distinguish between revenue and gains between expenses and losses and record transactions resulting in gains and losses.

FIAC.01.07 Accounting Process: Complete the steps in the accounting cycle in order to prepare the financial statements.

FIAC.01.07.a Identify and explain the advantages and disadvantages of different types of accounting systems.

FIAC.01.07.b Apply the double-entry system of accounting to record business transactions and prepare a trial balance.

FIAC.01.07.c Prepare the financial statements for the different types of business operations and ownership structures.

FIAC.01.07.d Describe the relationship between the closing process, the financial statements, and the post-closing trial balance.

FIAC.01.09 Compliance, Personal Finance: Develop a working knowledge of individual income tax procedures and requirements to comply with tax laws and regulations.

FIAC.01.09.a Describe the history and purpose of tax law in the United States and the process by which tax laws are created.

FIAC.01.09.b Complete the applicable individual income tax forms.

FIAC.01.09.c Identify, discuss, and apply strategies for minimizing taxable income.

FIAC.01.11 Compliance, Payroll: Apply appropriate accounting practices to payroll.

FIAC.01.11.a Calculate net pay.

FIAC.01.11.b Calculate employer’s payroll taxes.

FIAC.01.11.c Prepare payroll reports.

ESSK.03 Problem Solving and Critical Thinking: Solve problems using critical thinking skills (analyze, synthesize, and evaluate) independently and in teams. Solve problems using creativity and innovation.

ESSK.03.01 Employ critical thinking skills independently and in teams to solve problems and make decisions (e.g., analyze, synthesize and evaluate).

ESSK.03.01.a Identify common tasks that require employees to use problem-solving skills.

ESSK.03.01.b Analyze elements of a problem to develop creative solutions.

6/25/2012 BVSD Curriculum Essentials 20

ESSK.03.01.c Describe the value of using problem-solving and critical thinking skills to improve a situation or process.

ESSK.03.01.d Create ideas, proposals, and solutions to problems.

ESSK.03.01.e Evaluate ideas, proposals, and solutions to problems.

ESSK.03.01.f Use structured problem-solving methods when developing proposals and solutions.

ESSK.03.01.g Generate new and creative ideas to solve problems by brainstorming possible solutions.

ESSK.03.01.h Critically analyze information to determine value to the problem-solving task.

ESSK.03.01.i Guide individuals through the process of recognizing concerns and making informed decisions.

ESSK.03.01.j Identify alternatives using a variety of problem solving and critical thinking skills.

ESSK.03.01.k Evaluate alternatives using a variety of problem solving and critical thinking skills.

ESSK.04 Information Technology Applications: Use information technology tools specific to the career cluster to access, manage, integrate, and create information.

ESSK.04.07 Employ spreadsheet applications to organize and manipulate data.

ESSK.04.07.a Create a spreadsheet.

ESSK.04.07.b Perform calculations and analyses on data using a spreadsheet.

ESSK.04.10 Employ computer operations applications to manage work tasks.

ESSK.04.10.a Manage computer operations.

ESSK.04.10.b Manage file storage.

ESSK.04.10.c Compress or alter files.

ESSK.09 Employability and Career Development: Know and understand the importance of employability skills. Explore, plan, and effectively manage careers. Know and understand the importance of entrepreneurship skills.

ESSK.09.01 Identify and demonstrate positive work behaviors and personal qualities needed to be employable.

ESSK.09.01.a Demonstrate self-discipline, self-worth, positive attitude, and integrity in a work situation.

ESSK.09.01.b Demonstrate flexibility and willingness to learn new knowledge and skills.

ESSK.09.01.c Exhibit commitment to the organization.

6/25/2012 BVSD Curriculum Essentials 21

ESSK.09.01.d Identify how work varies with regard to site, from indoor confined spaces to outdoor areas, including aerial space and a variety of climatic and physical conditions.

ESSK.09.01.e Apply communication strategies when adapting to a culturally diverse environment.

ESSK.09.01.f Manage resources in relation to the position (i.e. budget, supplies, computer, etc).

ESSK.09.01.g Identify positive work-qualities typically desired in each of the career cluster's pathways.

ESSK.09.01.h Manage work roles and responsibilities to balance them with other life roles and responsibilities.

ESSK.11 Independent Living: Know and understand the skills, rights, resources, and responsibilities required to live independently in society.

ESSK.11.01 Demonstrate the financial knowledge and skills necessary for independent living.

ESSK.11.01.a Develop a personal budget based on a given income level.

ESSK.11.01.b Demonstrate the ability to open and maintain checking and savings accounts.

ESSK.11.01.c Demonstrate an understanding of investments (types, purposes, rates of return, and compound interest).

ESSK.11.01.d Demonstrate an understanding of credit (types, usage, and costs).

ESSK.11.01.e Demonstrate the ability to calculate wages, overtime, and commission.

ESSK.11.01.f Understand different types of insurance (auto, health, life, disability, renters) and how to compare costs.

ESSK.11.01.g Demonstrate an understanding of taxes by calculating tax rates and completing personal income tax returns.

ESSK.11.01.h Demonstrate an understanding of Social Security benefits and how to access them.

ESSK.11.01.i Compare and calculate the costs of purchasing a car.

ESSK.11.01.j Demonstrate an understanding of how to rent an apartment (compare features and costs, understand lease agreements).

6/25/2012 BVSD Curriculum Essentials 22

ACCOUNTING DICTIONARY 1 A Account a record summarizing all the information pertaining to a single item in the accounting equation Account balance the amount in an account Account number the number assigned to an account Account title the name given to an account Accounting planning, recording, analyzing, and interpreting financial information Accounting cycle the series of accounting activities included in recording financial information for a fiscal period Accounting equation an equation showing the relationship among assets, liabilities, and owner’s equity Accounting period see Fiscal period Accounting records organized summaries of a business’s financial activities Accounting system a planned process for providing financial information that will be useful to management Accounts expenses expenses incurred in one fiscal period but not paid until a later fiscal period Accounts payable ledger a subsidiary ledger containing only accounts for vendors from whom items are purchased or bought on account Accounts receivable ledger a subsidiary ledger containing only accounts for charge customers Accounts receivable turnover ratio the number of times the average amount of accounts receivable is collected during a specified period Accrual basis of accounting the accounting method that records revenues when they are earned and expenses when they are incurred Accrued expenses expenses incurred in one fiscal period but not paid until a later fiscal period Accrued interest expense interest incurred but not yet paid Accrued interest income interest earned but not yet received Accrued revenue revenue earned in one fiscal period but not received until a later fiscal period Accumulated depreciation the total amount of depreciation expense that has been recorded since the purchase of a plant asset Acid-test ratio a ratio that shows the numeric relationship of quick assets to current liabilities Adjusting entries journal entries recorded to update general ledger accounts at the end of a fiscal period Adjustments changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period Administrative expenses budget schedule a statement that shows the projected expenses for all operating expenses not directly related to selling operations Aging accounts receivable analyzing accounts receivable according to when they are due Allowance method of recording losses from uncollectible accounts crediting the estimated value of uncollectible accounts to a contra account Amortization recognizing a portion of an expense in each of several years ACCOUNTING DICTIONARY 2 Appropriations authorizations to make expenditures for specified purposes Articles of incorporation a written application requesting permission to form a corporation Assessed value the value of an asset determined by tax authorities for the purpose of calculating taxes Asset anything of value that is owned

6/25/2012 BVSD Curriculum Essentials 23

Auditing the independent reviewing and issuing of an opinion on the reliability of accounting records Auditor a person who examines the records that support the financial records of a business to assure that generally accepted accounting principles (GAAP) are being followed Automatic check deposit depositing payroll checks directly to an employee’s checking or savings account in a specific bank Average number of days’ sales in merchandise inventory the period of time needed to sell an average amount of merchandise inventory B Bad debts see Uncollectible accounts Balance sheet a financial statement that reports assets, liabilities, and owner’s equity on a specific date Bank statement a report of deposits, withdrawals, and bank balances sent to a depositor by a bank Bill of exchange see Draft Bill of lading a receipt signed by the authorized agent of a transportation company for merchandise received that also serves as a contract for the delivery of the merchandise Blank endorsement an endorsement consisting only of the endorser’s signature Board of directors a group of persons elected by the stockholders to manage a corporation Bond a printed, long-term promise to pay a specified amount on a specific date and to pay interest at stated intervals Bond issue all the bonds representing the total amount of a loan Bond sinking fund an amount set aside to pay a bond issue when due Book inventory see Perpetual inventory Book value the difference between an asset’s account balance and its related contra account balance Book value of a plant asset the original cost of a plant asset minus accumulated depreciation Book value of accounts receivable the difference between the balance of Accounts Receivable and its contra account, Allowance for Uncollectible Accounts Book value per share see Equity per share Breakeven point the amount of sales at which net sales is exactly the same as total costs Budget a written financial plan of a business for a specific period of time, expressed in dollars Budget period the length of time covered by a budget Budgeted income statement a statement that shows a company’s projected sales, costs, expenses, and net income Budgeting planning the financial operations of a business C Capital the account used to summarize the owner’s equity in a business Capital stock total shares of ownership in a corporation Cash basis of accounting the accounting method that records revenues when they are received and expenses when they are paid Cash budget a statement that shows for each month or quarter a projection of a company’s beginning cash balance, cash receipts, cash payments, and ending cash balance Cash discount a deduction from the invoice amount, allowed by a vendor to encourage early payment Cash flows the cash receipts and cash payments of a company Cash over a petty cash on hand amount that is more than a recorded amount Cash payments budget schedule projected cash payments Cash payments journal a special journal used to record only cash payment transactions Cash receipts budget schedule projected cash receipts

6/25/2012 BVSD Curriculum Essentials 24

Cash receipts journal a special journal used to record only cash receipt transactions Cash sale a sale in which cash is received for the total amount of the sale at the time of the transaction Cash short a petty cash on hand amount that is less than a recorded amount Certificate of deposit a document issued by a bank as evidence of money invested with the bank Charge sale see Sale on account Chart of accounts a list of accounts used by a business Charter the approved articles of incorporation Check a business form ordering a bank to pay cash from a bank account Check register a journal used in a voucher system to record cash payments Checking account a bank account from which payments can be ordered by a depositor Closing entries journal entries used to prepare temporary accounts for a new fiscal period Commercial invoice a statement prepared by the seller of merchandise addressed to the buyer, showing a detailed listing and description of merchandise sold, including prices and terms Common stock stock that does not give stockholders any special preferences Comparative income statement an income statement containing sales, cost, and expense information for two or more years Component percentage the percentage relationship between one financial statement item and the total that includes that item Consignee the person or business who receives goods on consignment Consignment goods that are given to a business to sell, but for which title to the goods remains with the vendor Consignor the person or business who gives goods on consignment Contra account an account that reduces a related account on a financial statement Contra balance an account balance that is opposite the normal balance Contract of sale a document that details all the terms agreed to by seller and buyer for a sales transaction Contribution margin income determined by subtracting all variable costs from net sales Controlling account an account in a general ledger that summarizes all accounts in a subsidiary ledger Corporation an organization with the legal rights of a person and which may be owned by many persons Correcting entry a journal entry made to correct an error in the ledger Cost accounting the determination and control of costs of a business enterprise Cost ledger a ledger containing all cost sheets for products in the process of being manufactured Cost of goods sold see Cost of merchandise sold Cost of merchandise the price a business pays for goods it purchases to sell Cost of merchandise sold the total original price of all merchandise sold during a fiscal period Credit an amount recorded on the right side of a T account Credit card sale a sale in which a credit card is used for the total amount of the sale at the time of the transaction Credit memorandum a form prepared by the vendor showing the amount deducted for returns and allowances Creditor a person or organization to whom a liability is owed Current assets cash and other assets expected to be exchanged for cash or consumed within a year Current liabilities liabilities due within a short time, usually within a year Current ratio a ratio that shows the numeric relationship of current assets to current liabilities Customer a person or business to whom merchandise or services are sold

6/25/2012 BVSD Curriculum Essentials 25

D Date of a note the day a note is signed Date of declaration the date on which a board of directors votes to distribute a dividend Date of payment the date on which dividends are actually to be paid to stockholders Debit an amount recorded on the left side of a T account Debit card a bank card that, when making purchases, automatically deducts the amount of the purchase from the checking account of the cardholder Debit memorandum a form prepared by the customer showing the price deduction taken by the customer for returns and allowances Debt ratio the ratio found by dividing total liabilities by total assets Declaring a dividend action by a board of directors to distribute corporate earnings to stockholders Declining-balance method of depreciation multiplying the book value by a constant depreciation rate at the end of each fiscal period Deferred revenue see Unearned revenue Deficit the amount by which allowances to partners exceed net income Departmental accounting system an accounting system showing accounting information for two or more departments Departmental margin the revenue earned by a department less its cost of merchandise sold and less its direct expenses Departmental margin statement a statement that reports departmental margin for a specific department Departmental statement of gross profit a statement prepared at the end of a fiscal period showing the gross profit for each department ACCOUNTING DICTIONARY 5 Depletion the decrease in the value of a plant asset because of the removal of a natural resource Depreciation expense the portion of a plant asset’s cost that is transferred to an expense account in each fiscal period during a plant asset’s useful life Direct expense an operating expense identifiable with and chargeable to the operation of a specific department Direct labor salaries of factory workers who make a product Direct materials materials that are of significant value in the cost of and that become an identifiable part of a finished product Direct write-off method of recording losses from uncollectible accounts recording uncollectible accounts expense only when an amount is actually known to be uncollectible Discount on capital stock an amount less than par or stated value at which capital stock is sold Dishonored check a check that a bank refuses to pay Dishonored note a note that is not paid when due Distribution of net income statement a partnership financial statement showing net income or loss distribution to partners Dividends earnings distributed to stockholders Double-entry accounting the recording of debit and credit parts of a transaction Doubtful accounts see Uncollectible accounts Draft a written, signed, and dated order from one party ordering another party, usually a bank, to pay money to a third party E Earnings per share the amount of net income belonging to a single share of stock Electronic funds transfer a computerized cash payments system that uses electronic impulses to transfer funds Employee benefits payments to employees for non-working hours and to insurance and

6/25/2012 BVSD Curriculum Essentials 26

retirement programs Employee earnings record a business form used to record details affecting payments made to an employee Encumbrance a commitment to pay for goods or services that have been ordered but not yet provided Endorsement a signature or stamp on the back of a check transferring ownership Endorsement in full see Special endorsement Entry information for each transaction recorded in a journal Equities financial rights to the assets of a business Equity per share the amount of total stockholders’ equity belonging to a single share of stock Equity ratio the ratio found by dividing stockholders’ equity by total assets Estimated salvage value the amount an owner expects to receive when a plant asset is removed from use Ethics the principles of right and wrong that guide an individual in making decisions Exhibit see Supporting schedule Expenditures cash disbursements and liabilities incurred for the cost of goods delivered or services rendered Expense a decrease in owner’s equity resulting from the operation of a business ACCOUNTING DICTIONARY 6 Exports goods or services shipped out of a seller’s home country to a foreign country F Face amount see Principal of a note Factory overhead all expenses other than direct materials and direct labor that apply to the making of products Federal unemployment tax a federal tax used for state and federal administrative expenses of the unemployment program Fifo see First-in, first-out inventory costing method File maintenance the procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current Financial accounting the recording of a business’s financial activities and the periodic preparation of financial reports Financing activities cash receipts and payments involving debt or equity transactions Finished goods manufactured products that are fully completed Finished goods ledger a ledger containing records of all finished goods on hand First-in, first-out inventory costing method using the price of merchandise purchased first to calculate the cost of merchandise sold first Fiscal period the length of time for which a business summarizes and reports financial information Fixed assets see Plant assets Fixed costs total costs that remain constant regardless of change in business activity Fund a governmental accounting entity with a set of accounts in which assets always equal liabilities plus equities G Gain on plant assets revenue that results when a plant asset is sold for more than book value General amount column a journal amount column that is not headed with an account title General fixed assets governmental properties that benefit future periods General journal a journal with two amount columns in which all kinds of entries can be recorded General ledger a ledger that contains all accounts needed to prepare financial statements Goodwill the value of a business in excess of the total investment of owners

6/25/2012 BVSD Curriculum Essentials 27

Gross earnings see Total earnings Gross pay see Total earnings Gross profit method of estimating inventory estimating inventory by using the previous year’s percentage of gross profit on operations Gross profit on sales the revenue remaining after cost of merchandise sold has been deducted H Horizontal analysis see Trend analysis I Imports goods or services bought from a foreign country and brought into a buyer’s home country Income statement a financial statement showing the revenue and expenses for a fiscal period Indirect expense an operating expense chargeable to overall business operations and not identifiable with a specific department Indirect labor salaries paid to factory workers who are not actually making products Indirect materials materials used in the completion of a product that are of insignificant value to justify accounting for separately Intangible assets assets of a non-physical nature that have value for a business Interest an amount paid for the use of money for a period of time Interest expense the interest accrued on money borrowed Interest income the interest earned on money loaned Interest rate of a note the percentage of the principal that is paid for use of the money Interim departmental statement of gross profit a statement showing gross profit for each department for a portion of a fiscal period Internal auditor see Auditor Inventory the amount of goods on hand Inventory record a form used during a periodic inventory to record information about each item of merchandise on hand Investing activities cash receipts and cash payments involving the sale or purchase of assets used to earn revenue over a period of time Invoice a form describing the goods or services sold, the quantity, and the price J Journal a form for recording transactions in chronological order Journalizing recording transactions in a journal L Last-in, first-out inventory costing method using the price of merchandise purchased last to calculate the cost of merchandise sold first Ledger a group of accounts Letter of credit a letter issued by a bank guaranteeing that a named individual or business will be paid a specified amount, provided stated conditions are met Liability an amount owed by a business Lifo see Last-in, first-out inventory costing method Liquidation of a partnership the process of paying a partnership’s liabilities and distributing remaining assets to the partners List price a business’s printed or catalog price Long-term assets see Plant assets Long-term liabilities liabilities owed for more than a year Loss on plant assets the loss that results when a plant asset is sold for less than book value

6/25/2012 BVSD Curriculum Essentials 28

Lower of cost or market inventory costing method using the lower of cost or market price to calculate the cost of ending merchandise inventory M MACRS see Modified Accelerated Cost Recovery System Maker of a note the person or business who signs a note and thus promises to make payment Management advisory services management advice provided to an organization by a private accountant Managerial accounting the analysis, measurement, and interpretation of financial accounting information Marginal income see Contribution margin Market value the price at which a share of stock may be sold on the stock market Markup the amount added to the cost of merchandise to establish the selling price Materials ledger a ledger containing all records of materials Maturity date of a note the date a note is due Maturity value the amount that is due on the maturity date of a note Medicare tax a federal tax paid for hospital insurance Memorandum a form on which a brief message is written describing a transaction Merchandise goods that a merchandising business purchases to sell Merchandise inventory the amount of goods on hand for sale to customers Merchandise inventory turnover ratio the number of times the average amount of merchandise inventory is sold during a specific period of time Merchandising business a business that purchases and sells goods Modified Accelerated Cost Recovery System a depreciation method required by the Internal Revenue Service to be used for income tax calculation purposes for most plant assets placed in service after 1986 Mutual agency the right of all partners to contract for a partnership N Net income the difference between total revenue and total expenses when total revenue is greater Net loss the difference between total revenue and total expenses when total expenses is greater Net pay the total earnings paid to an employee after payroll taxes and other deductions Net purchases total purchases less purchases discount and purchases returns and allowances Net sales total sales less sales discount and sales returns and allowances No-par-value stock a share of stock that has no authorized value printed on the stock certificate Nominal accounts see Temporary accounts Nonprofit organization see Not-for-profit organization Normal balance the side of the account that is increased Not-for-profit organization an organization providing goods or services with neither a conscious motive nor expectation of earning a profit ACCOUNTING DICTIONARY 9 Note see Notes payable Notes payable promissory notes signed by a business and given to a creditor Notes receivable promissory notes that a business accepts from customers Number of a note the number assigned to identify a specific note O Opening an account writing an account title and number on the heading of an account

6/25/2012 BVSD Curriculum Essentials 29

Operating activities the cash receipts and payments necessary to operate a business on a day-to-day basis Operating budget a plan of current expenditures and the proposed means of financing those expenditures Organization costs fees and other expenses of organizing a corporation Other revenue and expenses budget schedule budgeted revenue and expenses from activities other than normal operations Overapplied overhead the amount by which applied factory overhead is more than actual factory overhead Overhead see Factory overhead Owner’s equity the amount remaining after the value of all liabilities is subtracted from the value of all assets Owners’ equity statement a financial statement that summarizes the changes in owners’ equity during a fiscal period P Par value a value assigned to a share of stock and printed on the stock certificate Par-value stock a share of stock that has an authorized value printed on the stock certificate Partner each member of a partnership Partnership a business in which two or more persons combine their assets and skills Partnership agreement a written agreement setting forth the conditions under which a partnership is to operate Pay period the period covered by a salary payment Payee of a note the person or business to whom the amount of a note is payable Payroll the total amount earned by all employees for a pay period Payroll register a business form used to record payroll information Payroll taxes taxes based on the payroll of a business Performance report a report showing a comparison of projected and actual amounts for a specific period of time Periodic inventory a merchandise inventory determined by counting, weighing, or measuring items of merchandise on hand Permanent accounts accounts used to accumulate information from one fiscal period to the next Perpetual inventory a merchandise inventory determined by keeping a continuous record of increases, decreases, and balance on hand Personal financial planning assisting individuals in managing their personal investments Personal property all property not classified as real property Petty cash an amount of cash kept on hand and used for making small payments Petty cash slip a form showing proof of a petty cash payment ACCOUNTING DICTIONARY 10 Physical inventory see Periodic inventory Plant asset record an accounting form on which a business records information about each plant asset Plant assets assets that will be used for a number of years in the operation of a business Post-closing trial balance a trial balance prepared after the closing entries are posted Postdated check a check with a future date on it Posting transferring information from a journal entry to a ledger account Preferred stock stock that gives stockholders preference in earnings and other rights Prepaid expenses expenses paid in one fiscal period but not reported as expenses until a later fiscal period Price-earnings ratio the relationship between the market value per share and earnings per share of a stock Principal of a note the original amount of a note; sometimes referred to as face amount of a

6/25/2012 BVSD Curriculum Essentials 30

note Production-unit method of depreciation calculating estimated annual depreciation expense based on the amount of production expected from a plant asset Promissory note a written and signed promise to pay a sum of money at a specified time Proprietorship a business owned by one person Proving cash determining that the amount of cash agrees with the accounting records Purchase invoice an invoice used as a source document for recording a purchase on account transaction Purchase order a completed form authorizing a seller to deliver goods with payment to be made later Purchases allowance credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer’s accounts payable Purchases budget schedule a statement prepared to show the projected amount of purchases that will be required during a budget period Purchases discount a cash discount on purchases taken by a customer Purchases journal a special journal used to record only purchases of merchandise on account Purchases return credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer’s accounts payable Q Quick assets those current assets that are cash or that can be quickly turned into cash R Rate earned on average stockholders’ equity the relationship between net income and average stockholders’ equity Rate earned on average total assets the relationship between net income and average total assets Rate earned on net sales the rate found by dividing net income after federal income tax by net sales Ratio a comparison between two numbers showing how many times one number exceeds the other Real accounts see Permanent accounts ACCOUNTING DICTIONARY 11 Real estate see Real property Real property land and anything attached to the land Realization cash received from the sale of assets during liquidation of a partnership Receipt a business form giving written acknowledgement for cash received Residual value see Estimated salvage value Responsibility accounting assigning control of business revenues, costs, and expenses as a responsibility of a specific manager Responsibility statements financial statements reporting revenue, costs, and direct expenses under a specific department’s control Restrictive endorsement an endorsement restricting further transfer of a check’s ownership Retail merchandising business a merchandising business that sells to those who use or consume the goods Retail method of estimating inventory estimating inventory by using a percentage based on both cost and retail prices Retained earnings an amount earned by a corporation and not yet distributed to stockholders Retiring a bond issue paying the amounts owed to bondholders for a bond issue Revenue an increase in owner’s equity resulting from the operation of a business Reversing entry an entry made at the beginning of one fiscal period to reverse an adjusting entry made in the previous fiscal period

6/25/2012 BVSD Curriculum Essentials 31

S Salary the money paid for employee services Sale on account a sale for which cash will be received at a later date Sales allowance credit allowed a customer for part of the sales price of merchandise that is not returned, resulting in a decrease in the vendor’s accounts receivable Sales budget schedule a statement that shows the projected net sales for a budget period Sales discount a cash discount on sales Sales invoice an invoice used as a source document for recording a sale on account Sales journal a special journal used to record only sales of merchandise on account Sales mix relative distribution of sales among various products Sales return credit allowed a customer for the sales price of returned merchandise, resulting in a decrease in the vendor’s accounts receivable Sales slip see Sales invoice Sales tax a tax on a sale of merchandise or services Salvage value see Estimated salvage value Schedule of accounts payable a listing of vendor accounts, account balances, and total amount due all vendors Schedule of accounts receivable a listing of customer accounts, account balances, and total amount due from all customers Scrap value see Estimated salvage value Selling expenses budget schedule a statement prepared to show projected expenditures related directly to the selling operations Serial bonds portions of a bond issue that mature on different dates Service business a business that performs an activity for a fee Share of stock each unit of ownership in a corporation Sight draft a draft payable on sight when the holder presents it for payment ACCOUNTING DICTIONARY 12 Social security tax a federal tax paid for old-age, survivors, and disability insurance Sole proprietorship see Proprietorship Source document a business paper from which information is obtained for a journal entry Special amount column a journal amount column headed with an account title Special endorsement an endorsement indicating a new owner of a check Special journal a journal used to record only one kind of transaction State unemployment tax a state tax used to pay benefits to unemployed workers Stated-value stock no-par-value stock that is assigned a value by a corporation Statement of cash flows a statement that summarizes cash receipts and cash payments resulting from business activities during a fiscal period Statement of cost of goods manufactured a statement showing details about the cost of finished goods Statement of stockholders’ equity a financial statement that shows changes in a corporation’s ownership for a fiscal period Stock certificate written evidence of the number of shares each stockholder owns in a corporation Stock ledger a file of stock records for all merchandise on hand Stock record a form used to show the kind of merchandise, quantity received, quantity sold, and balance on hand Stockholder an owner of one or more shares of a corporation Stockholders’ equity value of the owners’ equity in a corporation Straight-line method of depreciation charging an equal amount of depreciation expense for a plant asset in each year of useful life Subscribing for capital stock entering into an agreement with a corporation to buy capital stock and pay at a later date Subsidiary ledger a ledger that is summarized in a single general ledger account

6/25/2012 BVSD Curriculum Essentials 32

Sum-of-the-years-digits method of depreciation using fractions based on years of a plant asset’s useful life Supplementary report see Supporting schedule Supporting schedule a report prepared to give details about an item on a principal financial statement T T account an accounting device used to analyze transactions Taking an inventory see Periodic inventory Tax accounting the preparation of tax returns as well as tax planning Tax base the maximum amount of earnings on which a tax is calculated Tax levy authorized action taken by a governmental organization to collect taxes by legal authority Temporary accounts accounts used to accumulate information until it is transferred to the owner’s capital account Term bonds bonds that all mature on the same date Terms of sale an agreement between a buyer and a seller about payment for merchandise Time draft a draft that is payable at a fixed or determinable future time after it is accepted Time of a note the days, months, or years from the date of signing until a note is to be paid Total costs all costs for a specific period of time ACCOUNTING DICTIONARY 13 Total earnings the total pay due for a pay period before deductions Trade acceptance a form signed by a buyer at the time of a sale of merchandise in which the buyer promises to pay the seller a specified sum of money, usually at a stated time in the future Trade discount a reduction in the list price granted to customers Transaction a business activity that changes assets, liabilities, or owner’s equity Treasury stock a corporation’s own stock that has been issued and reacquired Trend analysis a comparison of the relationship between one item on a financial statement and the same item on a previous fiscal period’s financial statement Trial balance a proof of the equality of debits and credits in a general ledger Trustee a person or institution, usually a bank, who is given legal authorization to administer property for the benefit of property owners U Uncollectible accounts accounts receivable that cannot be collected Underapplied overhead the amount by which applied factory overhead is less than actual factory overhead Unearned revenue revenue received in one fiscal period but not earned until the next fiscal period Unit cost an amount spent for one of a specific product or service V Variable costs total costs that change in direct proportion to a change in the number of units Vendor a business from which merchandise is purchased or supplies or other assets are bought Vertical analysis see Component percentage Voucher a business form used to show an authorized person’s approval for a cash payment Voucher check a check with space for writing details about a cash payment Voucher jacket see Voucher Voucher register a journal used to record vouchers Voucher system a set of procedures for controlling cash payments by preparing and approving vouchers before payments are made

6/25/2012 BVSD Curriculum Essentials 33

W Weighted-average inventory costing method using the average cost of beginning inventory plus merchandise purchased during a fiscal period to calculate the cost of merchandise sold Wholesale merchandising business a business that buys and resells merchandise to retail merchandising businesses Withdrawals assets taken out of a business for the owner’s personal use Withholding allowance a deduction from total earnings for each person legally supported by a taxpayer, including the employee Work in process products that are being manufactured but are not yet complete Work sheet a columnar accounting form used to summarize the general ledger information needed to prepare financial statements Working capital the amount of total current assets less total current liabilities ACCOUNTING DICTIONARY 14 Writing off an account canceling the balance of a customer account because the customer does not pay