Subject: Accounting Chapter 2

Grade Level: 10th – 12th

South Dakota State Content Standards (Accounting Standards):

- 1.3 Classify items as assets, liabilities, or owner’s equity
- 1.7 Explain the double-entry system of accounting and apply debit and credit
rules when analyzing business transactions
- 1.16 Demonstrate an understanding of the fundamental accounting equation
- 2.1 Define and identify current and long-term assets and explain their impact on
financial statements
- 2.11 Define and identify current and long-term liabilities and explain their impact
on financial statements
- 2.16 Explain the purpose o f the capital and drawing accounts for a sole
proprietorship and partnership

Guiding Question:
- How do everyday business transactions affect owner’s equity and the accounting
equation for a business?

Learning Outcomes:
- As a result of this lesson, students will be able to apply rules of debits and credits
to asset, liability, and owner’s equity accounts.
- As a result of this lesson, students will be able to analyze transactions that affect
owner’s equity in the accounting equation.
- As a result of this lesson, students will be able to define the concept of realization
of revenue and be able to analyze and record transactions that implement this
concept.

Materials:
- Accounting textbook
- Accounting workbook
- Chapter 2 study guide
- Working together problems (overheads or on tablet pc)
- Examples of application problems (overheads or on tablet pc)
- Chapter 2 pre-test
- Chapter 2 Test

Introduction:
- We learned in the last chapter about the accounting equation and how to record
several kinds of transactions. Today we are going to learn how to record several
more transactions and how they affect the accounting equation. (draw the
accounting equation on the board and have students turn to page 26)

Setting the Purpose:

 - Every business has transactions that occur daily and monthly. For instance,
businesses have telephones to speak with customers and vendors. Businesses also
have a building or location that they must rent or lease in most cases. All of these
types of transactions must be accounted for in the accounting equation.

Procedures:
1) Provide the students with the Chapter 2 study guide and have them read the
chapter and complete the study guide
2) Begin discussion of Chapter 2 introduction
3) Discuss chapter terms
o Revenue – is an increase in capital resulting from the operation of the
business (this is how the business makes money)
 The revenue account is typically called Sales
4) Work through section 2-1 beginning with
o Transaction 6
 Received cash from sales
 This is an increase in the cash asset account and an increase in the
owner’s equity account sales
 Sales increase the value of the business
o A sale on account is when we will receive our money at a later date.
 The name of this account is accounts receivable/name of the
business who owes us money.
 It is an asset account because we will get the money later.
o Transaction 7
 Sold services on account.
 This is an increase to assets in the accounts receivable – Kids Time
account. This also increases what we are worth in the owner’s
equity account sales (revenue).
o When a business has a decrease in owner’s equity as a result of operating
the business, it is called an expense.
o Transaction 8 & 9
 Paid cash for rent or telephone
 This is a decrease in cash and a decrease in the owner’s equity
account classified as an expense. Expenses decrease the value of a
business.
o Transaction 10
 Received cash on account from Kids Time
 This is an increase in cash and a decrease in the accounts
receivable account Kids Time. This means that they now owe less
money or none at all
o Assets taken out of the business for the owner’s personal use are called
withdrawals
o Transaction 11
 Paid cash to owner for personal use
 This is a decrease in cash and a decrease in owner’s equity
 The name of the withdrawal account is the owner’s name, drawing
 o Do working together with the students on pg 29
o Have students complete on your own on pg 29
5) Begin section 2-2 covering the balance sheet
o The only change in the balance sheet is adding accounts receivable.
Everything else stays the same for now
o Skip working together and on your own for section 2-2
6) Have students begin working on application problems 2-1 through 2-4
o Complete a portion of application 2-1 with the students on the overhead or
laptop
7) Provide students with Chapter 2 Pre-test
o Collect pre-test when students are finished
8) Provide students with Chapter 2 Test
o Collect all test when the students are finished

Transition:
- What we have covered in Chapter 2 is a continuation of basic accounting. You
will continue to analyze transactions and classify them in the correct manner
throughout this class.
Closure:
- Accounting for sales (revenue) and expenses is a major part of bookkeeping for
businesses. Every business makes money and has expenses that they incur to
operate. Thus, it is important to grasp the concepts we have been covering today.

Assessment:
- Students are assigned application problems 2-1 through 2-4 which will be
collected and graded.
- Students will complete Chapter 2 exam.

Evaluation:
- The teacher will know if the students have mastered the objectives if they have
completed the assigned application problems with minimal errors.
- The teacher will know if the students have mastered the objectives if they have
passed the Chapter 2 exam with a proficiency of “C” or better.
- The teacher will gain understanding of the students’ knowledge of the given
concepts through class observation.

Assignment:
- Chapter 2 study guide
- Chapter 2 application problems 2-1 through 2-4

Differentiated Instruction for Student(s) with Diverse Needs:

- This lesson could be modified for students with diverse needs by providing more
time for the students to complete the evaluation tool. Additionally, the forms
could be provided on a computer for students that need electronic access to the
information. For students with visual diverse needs, the electronic access to the
lesson could be enlarged to meet the needs of the students. Also, since a majority
 of this class will be auditory, hearing aids or a recording of the class discussion
could be provided.

Reflection: