Presentation Transcript

1. Double Entry Accounting for the Real WorldBEAQ State Conference 2012

   Greg CuthbertHead of Business Studies St Peters Lutheran College
2. How has the teaching of Accounting progressed over time? The key facets of the Accounting definition are RECORDING, REPORTING, DECISION MAKING. DECISION MAKING has made major progress in successive syllabus rewrites. REPORTING has kept pace (roughly) with AASB reporting requirements. Besides implementing GST into the subject, we as teachers have failed in the teaching of the RECORDING aspects of the subject.
3. Aim of the presentation To challenge the way teachers of Accounting teach the recording units of Accounting. Present some alternative ideas and resources for teaching of these units. Focus on CS3 (Accounting Package) but some of these ideas can be implemented in other units, particularly CS1 (Double Entry). Examine what changes need to be made to established practice to be able to implement these ideas.
4. How has teaching the “recording” units failed our students? We have failed to keep track with what is happening in the real world! How do I know? I actually went to the real world! (for three years) “Partner syndrome” 1980’s text v 2012 text – what has changed?
5. Differences between “High School Accounting” and “Real World Accounting” PROBLEM ONE NARRATIVE APPROACH v SOURCE DOCUMENT APPROACH Narrative approach describes the transaction – no interpretation required. Leads to spoon feeding and rote learning. Source Document approach – requires students to read the document. Documents can be paper or computer generated. Every document is different. The student (Accountant) does the interpretation. Leads to understanding.
6. Differences between “High School Accounting” and “Real World Accounting PROBLEM 2 – PAYMENT METHODS Established secondary school accounting questions continue to emphasise payment by cheque or cash. Real world Accounting has moved towards payment by other methods e.g. internet banking, bpay, corporate credit cards.
7. Differences between “High School Accounting” and “Real World Accounting PROBLEM 3 – TREATMENT OF BANK DEPOSITS High School Accounting – money is mysteriously deposited into the bank account. Nobody ever goes to the bank in a high school question! Real world accounting – money received is deposited on a regular basis. Bank deposits are an important reconciliation tool.
8. Differences between “High School Accounting” and “Real World Accounting PROBLEM 4 – PURCHASE ORDERING High School Accounting – The purchase ordering process is ignored. Real World Accounting – The purchase ordering process is a key control component. What is ordered = what is delivered = what is invoiced = what is paid.
9. Differences between “High School Accounting” and “Real World Accounting” PROBLEM 5 – RECORDING EMPHASIS v RECONCILIATION EMPHASIS Successive Accounting syllabuses required the recording of a range of transactions and printing off of reports Real world – emphasis is on reconciliation of transactions to satisfy auditors of the validity of data. CAN WE BLAME THE SYLLABUS WRITERS?? NO!! Teachers have to take responsibility!
10. Why aren’t we teaching accounting the real world way? Not enough time in the course! Devising the questions would be a lot of work! Tree killing – we would waste too much paper! Text book would be too thick!
11. Accounting “Practice Sets” An accounting practice set allows students to learn the practical skills essential to accounting, through the completion of a one month accounting cycle for a fictional business. Practice sets show information using a source “document approach”. Practice sets can be presented to students in chronological order or in “shoebox form”. The sets being made available to you are self developed, available to be downloaded free of charge. Use of practice sets requires more time allocation for the computer accounting unit (6-7 weeks for CS3), but once mastered, individual questions should only take slightly longer to complete than a “narrative” question.
12. Changes to established practicesPaying by credit card Change Payment account to HSBC Visa Change Chq No. to a credit card identifier
13. Changes to established practicesPaying by credit card The double entry effects of paying by credit card are Furniture (or expense being paid) Dr GST Collected Dr Visa Credit Card Cr (Inc in Liability) When paying off the full card balance at the end of the month (via the banking option) Visa Credit Card Dr (Dec in liability) Cash at Bank Cr (Dec in asset)
14. Changes to established practicesPaying by internet banking Choose bank account Change chq no to an internet identifier
15. Changes to established practicesReceipt of cheques or cash Choose undeposited funds account Choose payment method (chq or cash) and enter details
16. Changes to established practicesReceipt of cheques or cash The double entry effect of receiving cheques and cash is to reroute the transaction through an “undeposited funds” account. Upon receipt the entry would be: Undeposited Funds Dr (Increase in Asset) Accounts Receivable Cr (Decrease in Asset) When the cash and cheques are taken to the bank Bank Account Dr (Increase in Asset) Undeposited Funds Cr (Decrease in Asset)
17. Changes to established practicePreparing a bank deposit Choose bank account Check off deposits recorded Note that only deposits receipted as undeposited funds will appear Record and print off a bank deposit slip from reports menu
18. Changes to established practiceBank Reconciliation Choose A/C to reconcile Enter closing balance from statement Enter statement date Check amounts on computer with amounts on bank statement. Add in any items on statement but not in computer
19. Changes to established practiceBank Reconciliation Once out of balance = $0.00, press reconcile and print the report Check off extra transactions that have been added in
20. Results of changing to a source document approach Allocate more time in your program– 6-7 weeks required Teach a “narrative approach” question first before moving on to the “source document approach”. Same practice sets (or part of) could be used for C1 No appreciable change in results in C3 The questions as they stand do not address all APP aspects as outlined in the QSA Accounting Syllabus 2010. Have a go! We have an obligation to replicate what is happening in the real world.
21. Data download and contact details Copy today or download the files http://members.optusnet.com.au/havealook Practice sets 2-5 require a password BEAQ2012 or beaq2012 Email if you want an exam (use a school email address) g.cuthbert@stpeters.qld.edu.au