QuickBooks, Review It with QuickBooks, and Try It with QuickBooks.

TEACHING TIPS

New to this edition:

This edition will provide students an opportunity to learn QuickBooks while they learn accounting.Chapters 1–5 will introduce QuickBooks using the journal entry method, and Chapters 9–12 will introduce the forms-based approach. New QuickBooks features include: Accounting with QuickBooks, Review It with QuickBooks, and Try It with QuickBooks.New QuickBooks topics covered in this chapter are: (1) Identify the advantages and disadvantages of a computerized accounting system, (2) Install and register QuickBooks, (3) Open or restore a com- pany, (4) Modify a company name, (5) View chart of accounts, (6) Back up QuickBooks, and (7) Close a company and exit QuickBooks.

Suggested in-class problems:

●Exercise 1-1 (accounting equation) ●Exercise 1-3 (accounting equation) ●Exercise 1-7 (transaction analysis) ●Demonstration Problem

Suggested homework:

●Problem 1-1 (transaction analysis) ●Problem 1-4 (transaction analysis)

Suggested in-class activity:

Create a set of three note cards for each student; label the cards “Assets,” “Liabilities,” and “Owner’s Equity.” Call out different account names and ask students to raise the correct note card. For example, if you call out “Prepaid Insurance,” the students should raise the note card labeled “Assets.”

QuickBooks activities:

●QuickBooks Exercise 1-1

LEARNING OBJECTIVES

1.Define and identify asset, liability, and owner’s equity accounts.

2.Record, in column form, a group of business transactions involving changes in assets, liabilities, and owner’s equity.

3.Define and identify revenue and expense accounts.

4.Record, in column form, a group of business transactions involving all five elements of the fundamental accounting equation.

ACCOUNTING LANGUAGE

Account numbersBackups AccountsBusiness entity Accounts PayableCapital Accounts ReceivableChart of accounts AssetsCloud computing 1 Asset, Liability, Owner’s Equity, Revenue, and Expense Accounts College Accounting A Career Approach, 12e Cathy Scott (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters Solutions Manual Supplement files download link at the end of this file.1-1

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CHAPTER 1 Asset, Liability, Owner’s Equity, Revenue, and Expense Accounts Computerized accounting system Liabilities CreditorManual accounting system Double-entry accountingOwner’s equity EquityRevenues ExpensesSeparate entity concept Fair market valueSole proprietorship Fundamental accounting equation Withdrawal

KEY POINTS

1.There are five classifications of accounts: assets, liabilities, owner’s equity, revenue, and expenses.

2.After each transaction has been recorded, the total of one side of the fundamental accounting equation must equal the total of the other side.

LECTURE OUTLINE

I.Illustrations, discussion questions, exercises, and problems can be referred to in class. Students should consider their texts primary tools and record marginal notations to make the best possible use of the text.II.Assets = Liabilities + Owner’s Equity: the fundamental accounting equation.A.Assets: property or things of value owned by an economic unit (examples: cash, equipment, building, land).

B.Liabilities: amounts owed to creditors.

1.Creditor: one to whom money is owed.

2.Examples: Accounts Payable, Notes Payable, Mortgage Payable.

C.Owner’s equity: owner’s claim, investment, net worth, or proprietorship.

1.Example: owner’s name followed by the word Capital.

2.Relationship of the fundamental accounting equation. Show how the amounts under each classification are determined and how a change in one classification affects the other classifications.

3.Accounts: specific subheadings or breakdowns of assets, liabilities, and owner’s equity.

4.Withdrawals: taking of cash or other assets for personal use.

D.Recording business transactions.

1.Every transaction is recorded as increases and/or decreases in two or more accounts— the introduction of double-entry accounting.

2.One side of the equation is always equal to the other side of the equation.

3.Discuss with students the steps demonstrated in the chapter. When working example exercises or problems, have students go through each of the steps.E.Revenues: amounts of assets that a business gains (earns) from its operations; also called income.

1.Earnings in the form of cash.

2.Earnings in the form of other assets—usually as charge accounts (accounts receivable) that a firm maintains for its customers, to be received at a later time.

3.Examples: fees earned, rent income, income from selling merchandise, interest

income.F.Expenses: amounts of assets that a business uses up as a result of its operations.

1.Expenses in the form of cash.

2.Expenses in the form of liabilities: payment to be made at a later time.

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CHAPTER 1 Asset, Liability, Owner’s Equity, Revenue, and Expense Accounts

3.Examples: wages to employees, rent to landlord, interest on a loan, supplies,

insurance expired.

G.Student input:

1.Have students list possible asset, liability, owner’s equity, revenue, and expense accounts for a car wash, an insurance office, and a travel agency.III.Relationship of revenues and expenses to owner’s equity.

A.Revenues: Revenues earned increases owner’s equity.

B.Expenses: Expenses incurred decrease owner’s equity.

IV.Chart of accounts: the official list of accounts tailor-made for the business.A.All transactions must be recorded using the official account titles. The numbers preceding the accounting titles are the account numbers.B.In the numbering of accounts for a service business, the 100s are used for assets, the 200s for liabilities, the 300s for owner’s equity accounts, the 400s for revenue accounts, and the 500s for expense accounts.

DEMONSTRATION PROBLEM

During November of this year, James Kirkland opened an accounting practice called James Kirkland, CPA. The following transactions were completed during the first month.a.Deposited $13,500 in a bank account in the name of James Kirkland, CPA.b.Paid rent for the month, $1,600 (Rent Expense).c.Bought office equipment, including a computer and a printer, for $9,500 from Bingham Company. Paid $6,700 in cash, with the balance due in 30 days.d.Purchased office supplies and announcements for $970 from City Stationers. Payment is due in 30 days.e.Billed clients $5,500 for services rendered (Client Fees).f.Paid $1,450 salary to secretary/assistant for the month.g.Paid telephone bill of $210 (Telephone Expense).h.Received cash from clients previously billed on account, $2,450.i.Paid Bingham Company $970 to apply on account.j.Paid $275 for continuing education course (Miscellaneous Expense).k.Kirkland withdrew $2,200 for personal use.Instructions 1.Record the transactions and the balance after each transaction, using the following headings.=Liabilities+ Accounts J. Kirkland,J. Kirkland, Cash+ +Supplies+Equip.= Payable+Capital–Drawing+Revenue–Expenses 2.Demonstrate that the total of one side of the equation equals the total of the other side of the equation.Receivable

Owner’s EquityAssets Accounts 1-3

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CHAPTER 1 Asset, Liability, Owner’s Equity, Revenue, and Expense Accounts

SOLUTION

=+ Cash ++Supplies+Equipment=+

• Kirkland,

Capital–

• Kirkland,

Drawing +Revenue– (a)+13,500+ 13,500 (b)– 1,600+1,600 Bal. 11,900=13,500– 1,600 (c)– 6,700+ 9,500 + 2,800 Bal. 5,200+ 9,500= 2,800+ 13,500– 1,600 (d)+ 970+ 970 Bal. 5,200+ 970+ 9,500= 3,770+ 13,500– 1,600 (e)+ 5,500+5,500 Bal. 5,200+ 5,500+ 970+ 9,500= 3,770+ 13,500+5,500– 1,600 (f)– 1,450+1,450 Bal. 3,750+ 5,500+ 970+ 9,500= 3,770+ 13,500+5,500– 3,050 (g)– 210+ 210 Bal. 3,540+ 5,500+ 970+ 9,500= 3,770+ 13,500+5,500– 3,260 (h)+ 2,450 –2,450 Bal. 5,990+ 3,050+ 970+ 9,500= 3,770+ 13,500+5,500– 3,260 (i)– 970– 970 Bal. 5,020+ 3,050+ 970+ 9,500= 2,800+ 13,500+5,500– 3,260 (j)– 275+ 275 Bal. 4,745+ 3,050+ 970+ 9,500= 2,800+ 13,500+5,500– 3,535 (k)– 2,2002,200 Bal. 2,545+ 3,050+ 970+ 9,500= 2,800+ 13,500– 2,200 +5,500– 3,535 Left Side of Equals Sign:Right Side of Equals Sign:

$2,545$2,800

Accounts Receivable3,05013,500 Supplies970J. Kirkland, Drawing– 2,200 9,500Revenue5,500 Expenses– 3,535

$16,065$16,065

(Salary Expense) AssetsOwner’s Equity Expenses (Rent Expense) Liabilities Accounts Payable Accounts Receivable Accounts Payable

• Kirkland, Capital

Cash

Equipment (Misc. Expense) (Client Fees) (Telephone Expense) + 1-4 © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

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