Teach and learn basic accounting principles, bookkeeping skills, and methods.
Accounting provides information about the financial position of a business or company. Accountants create
financial records of business transactions, and prepare statements containing the assets, liabilities, and
operating results of a business. They maintain and audit these quantitative records, while preparing financial
reports such as the income statement, balance sheet, and statement of cash flows.
Here students will learn about the importance of accounting, and also the basic steps, terms, principles and
techniques used. In addition, we also have included informative articles, helpful tips, and other topics related
to accounting.
INTRODUCTION TO ACCOUNTING
LESSON PLAN:
WHAT IS
ACCOUNTING?
Topic: Introduction
to Accounting
Concept: Understand
the purpose of
accounting records
both within
organizations and for
use by outside
parties.
Objectives:
 Students will
understand the
importance of
the accounting
language.
 Students will
understand the
three main
types of
accounting
information.
 Students will
be introduced
to the
“principles” of
accounting and
GAAP.
 Students will
be introduced
to the three
types of
accounting
reports
required by
GAAP.
Suggested Grades:
Seventh Grade Eighth Grade - Ninth
Grade - Tenth Grade Eleventh Grade Twelfth Grade - Adult
Education
ACCOUNTING INTRODUCTION LESSON PLAN
Teaching Materials

Lesson - What is Accounting? (see below for printable lesson)

Accounting Introduction Worksheet
Additional Materials:
 Sample Balance Sheet
 Sample income Statement
 Sample Cash Flow Statement
Lesson Activity:
1. Begin by talking about the idea of accounting as a language.
 Solidify this concept using an example of computer
programming as another “language” used in a professional
setting that facilitates communication and understanding.
 Ask students for their own examples of other professional
“languages.”
2. Discuss the different types of accounting information and use
detailed examples.
 Operating information: discuss the need to track how much
cash you have in your bank. When you pay bills or when you
receive cash for sales you need to account for the changes in
your financial records.
 Financial information: discuss the need to communicate your
financial position to the bank. If you apply for a loan the
bank needs to know if you have the ability to repay it.
Managerial information: discuss the need for managers to
use financial information when making business decisions.
Talk about the need to prepare a budget.
3. Briefly introduce GAAP

4. Discuss the different accounting reports using examples of each.
Talk about the difference between status and flow reports and point
out the terminology used in the report heading “as at Dec 31” on a
Balance Sheet versus “for the period ending Dec 31” on the Income
and Cash Flow Statements.
Assessment/Evaluation:
Have students complete worksheet. A passing grade is 70% or
greater.
Lesson Printable Materials - Worksheets
Print out the teaching lesson pages and exercise worksheets for use with
this lesson:
ACCOUNTING INTRODUCTION LESSON
Accounting Introduction Lesson
This is an introduction to accounting lesson.
ACCOUNTING WORKSHEET - STUDENT EXERCISE
Accounting Introduction Worksheet *
Student worksheet based on the above lesson.
Do you have a recommendation for an enhancement to this accounting
lesson, or do you have an idea for a new lesson? Then leave us
asuggestion.
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What is Accounting? Learn Basic Accounting Lesson
Accounting Introduction
Quite simply, accounting is a language: a language that provides information about the financial
position of an organization. When you study accounting you are essentially learning this specialized
language. By learning this language you can communicate and understand the financial operations
of any and all types of organizations.
This is because the information required by most organizations is very similar
and can be broken down into three main categories:
Operating Information
This is the information that is needed on a day-to-day basis in order for the organization to conduct
its business. Employees need to get paid, sales need to be tracked, the amounts owed to other
organizations or individuals need to be tracked, the amount of money the organization has needs to
be monitored, the amounts that customers owe the organization need to be checked, any inventory
needs to be accounted for: the list goes on and on. Operating information is what constitutes the
greatest amount of accounting information and it provides the basis for the other two types of
accounting information.
Financial Accounting Information
This is the information that is used by managers, shareholders, banks, creditors, the government,
the public, etc… to make decisions involving the organization and its operations. Shareholders want
information about what their investment is worth and whether they should buy or sell shares,
bankers and other creditors want to know whether the organization has an ability to pay back
money lent, managers want to know how the company is doing compared to other companies. This
type of information would be very difficult to extract if every company used a different system for
recording their financial position. Financial accounting information is subject to a set of ground rules
that dictate how the information is reported and this ensures uniformity.
Managerial Accounting Information
In order for the managers of a company to make the best decisions for a company they need to
have specific information prepared. They use this information for three main management functions:
planning, implementation and control. Financial information is used to set budgets, analyze different
options on a cost basis, modify plans as the need arises, and control and monitor the work that is
being done.
As you can see, accounting is a multifaceted system involving different people with different needs
and after analyzing the various uses and applications of accounting information the American
Accounting Association has come up with this definition: “the process of identifying, measuring, and
communicating economic information to permit informed judgments and decisions by users of the
information.”
In order to facilitate the informed use of this financial information, accounting has come to be based
on specified rules or conventions called “principles.” These principles provide general laws or rules
that are used to guide accounting activity and are called Generally Accepted Accounting
Principles, or GAAP for short. These principles are established by the Financial Accounting
Standards Board (FASB) which is a nongovernmental agency funded by the accounting profession
and contributions from business organizations. While there is no legal obligation for companies to
adhere to GAAP, there are strong practical reasons to do so. From auditing to reporting earning to
the US Securities Exchange Commission to applying for a loan, there are very compelling reasons for
organizations to conform to the generally accepted standard.
What Is The End Result Of All This Accounting Information? We’ve talked about the reason
for maintaining accounting information and the end result of all of this recording is the preparation
of financial statements. These statements let people see, at a glance, the financial position of an
organization. These statements provide summaries of the operating information and are used
extensively by people within and external to the company. The statements fall into one of two
categories:

Status/Stock – these statements show the financial status of an organization at one
specified instant in time. Stock reports = a snapshot.

Flow Report – these statements show the flow of financial information over a period of
time. Flow reports = motion picture
GAAP requires the preparation of three different statements:
Balance Sheet
A Balance Sheet is a status report that shows information about the organization’s resources at one
given time. Examples of information found on a balance sheet are how much cash is in the bank,
what is owed to creditors, and the value of the company’s assets.
Income Statement
An Income Statement (also called a Statement of Earnings, Statement of Operations, or a Profit and
Loss Statement) is a report that shows the flow of revenues (amounts earned from business activity)
and expenses (amounts paid in the course of operations) over a given period of time, typically a
month, quarter, or year.
Statement of Cash Flow
As the name suggests, this is also a flow statement that details the movement of cash through the
organization over a specified period.
The whole purpose of accounting is to provide information that is useful and relevant for interested
parities when making decisions regarding the company and its operations. In order to do that
effectively, a specific language and subsequent rules have been developed for users of the
information. By learning accounting you learn these rules and can then communicate financial
information with others in a comprehensible and comparable manner.