Accounting-15
State/Provincial Event #1
CAREER CLUSTER
Finance
CAREER PATHWAY
Accounting
INSTRUCTIONAL AREA
Financial Analysis
ACCOUNTING EVENT
PARTICIPANT INSTRUCTIONS
PROCEDURES
1. The event will be presented to you through your reading of these instructions, including the
Performance Indicators and Event Situation. You will have up to 30 minutes to review this
information to determine how you will handle the role-play situation and demonstrate the
performance indicators of this event. During the preparation period, you may make notes to
use during the role-play situation.
2. You will have up to 15 minutes to role-play your situation with a judge (you may have more
than one judge).
3. You will be evaluated on how well you meet the performance indicators of this event.
4. Turn in all your notes and event materials when you have completed the role-play.
PERFORMANCE INDICATORS
1. Demonstrate the effects of transactions on the accounting equation.
2. Prepare an income statement.
3. Prepare a balance sheet.
4. Prepare a cash flow statement.
5. Discuss the use of Generally Accepted Accounting Principles.
Published 2015 by DECA Inc. Copyright © 2015 by DECA Inc. No part of this publication may be reproduced for
resale or posted online without written permission from the publisher. Printed in the United States of America.
Accounting-15
State/Provincial Event #1
EVENT SITUATION
You are to assume the role of a CPA who specializes in accounting for small businesses in your
area. A client (judge) has come to you with information from the first month of his new sole
proprietorship, JOE’S LANDSCAPING SERVICE. Your client (judge) has provided the following
information:
January 1
January 1
January 1
January 1
January 15
January 20
January 27
January 28
January 31
January 31
Invested $50,000 cash to start the business
Purchased $20,000 of equipment for cash
Purchased a 1-year insurance policy for $1,200 cash
Hired two part-time workers, who will work 20-hours per week @ $9.25 per
hour
Billed customers $7,500, for landscaping services
Purchased $1,000 of supplies on account
Received $3,000 from customers billed on January 15
Received utility bill for $400, due February 14
Paid part-time workers for 80-hours each
Withdrew $1,000 for personal use
You will explain the first month’s results to your client (judge) in a role-play to take place in
your office. You will begin the role-play by welcoming the client (judge) to your office and
explaining the accounting equation and how transactions impact it. Then you will explain the
financial statements. Once you have finished your explanation and have answered the client’s
(judge’s) questions, you will conclude the role-play by thanking the client (judge) for the
business.
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Accounting-15
State/Provincial Event #1
JUDGE’S INSTRUCTIONS
DIRECTIONS, PROCEDURES AND JUDGE’S ROLE
In preparation for this event, you should review the following information with your event
manager and other judges:
1. Procedures
2. Performance Indicators
3. Event Situation
4. Judge Role-play Characterization
Participants may conduct a slightly different type of meeting and/or discussion with you
each time; however, it is important that the information you provide and the questions
you ask be uniform for every participant.
5. Judge’s Evaluation Instructions
6. Judge’s Evaluation Form
Please use a critical and consistent eye in rating each participant.
JUDGE ROLE-PLAY CHARACTERIZATION
You are to assume the role of the client who has just completed his first month of JOE’S
LANDSCAPING SERVICE. You provided your accountant (participant) with information from the
first month of your new sole proprietorship, JOE’S LANDSCAPING SERVICE. You provided the
following information:
January 1
January 1
January 1
January 1
January 15
January 20
January 27
January 28
January 31
January 31
Invested $50,000 cash to start the business
Purchased $20,000 of equipment for cash
Purchased a 1-year insurance policy for $1,200 cash
Hired two part-time workers, who will work 20-hours per week @ $9.25 per
hour
Billed customers $7,500, for landscaping services
Purchased $1,000 of supplies on account
Received $3,000 from customers billed on January 15
Received utility bill for $400, due February 14
Paid part-time workers for 80-hours each
Withdrew $1,000 for personal use
3
Accounting-15
State/Provincial Event #1
Your accountant (participant) will explain the first month’s results to you in a role-play to take
place in accountant’s (participant’s) office. The accountant (participant) will begin the role-play
by welcoming you to his/her office and explaining the accounting equation and how transactions
impact it. Then the accountant (participant) will explain your first month’s financial statements.
During the course of the role-play you are to ask the following questions of each participant:
1. Why did you include all of the revenues in January’s income statement when I
haven’t been paid for all of them yet?
2. What accounts affect owner’s equity?
3. What are the main principles that guide accrual accounting?
You are not to make any comments after the event is over except to thank the participant. Once
the accountant (participant) has finished the explanation and has answered your questions, the
accountant (participant) will conclude the role-play by thanking you for the business.
SOLUTION
ASSETS
Cash
A/R
Supplies
=
Prepaid
Insurance
Equipment
LIABILITIES+ O/E
A/P
+50,000
+50,000
-20,000
+20,000
-1,200
+1,200
+7,500
+7,500
+1,000
+3,000
Joe, capital
+1,000
-3,000
+400
-400
-1,480
-1,480
-1,000
-1,000
4
Accounting-15
State/Provincial Event #1
JOE’S LANDSCAPING SERVICE
Income Statement
For the Month of January
Revenues
Expenses
Salary Expense
Utility Expense
Total Expenses
Net Income
$7,500
1,480
400
1,880
$5,620
JOE’S LANDSCAPING SERVICE
Owner’s Equity Statement
For the Month of January
Beginning Equity
Add: Investments
Net Income
$0
50,000
5,620
55,620
55,620
1,000
54,620
Less: Drawings
Ending Equity
JOE’S LANDSCAPING SERVICE
Balance Sheet
January 31st
Assets
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
TOTAL ASSETS
$29,320
4,500
1,000
1,200
20,000
56,020
Liabilities
Accounts Payable
1,400
Owner’s Equity
Joe’s, Capital
54,620
LIABILITIES AND OWNER’S EQUITY
56,020
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Accounting-15
State/Provincial Event #1
JOE’S LANDSCAPING SERVICE
Cash Flow Statement
For the Month of January
Operating Activities
Cash Received from Customers
Cash Paid for Insurance
Cash Paid for Salaries
Net cash from operating activities
Investing Activities
Purchase of Equipment
Net cash from investing activities
Financing Activities
Investment by owner
Drawing by owner
Net cash from financing activities
NET INCREASE IN CASH
Cash at Beginning of Period
Cash at End of Period
Key Points
$3,000
(1,200)
(1,480)
320
(20,000)
(20,000)
50,000
(1,000)
49,000
29 ,320
0
29,320
(Answers to Judge’s Questions)
1. Revenues must be recognized when earned, under accrual accounting, not when paid.
May mention the Revenue Recognition Principle.
2. Revenues and investments increase owner’s equity and expenses and drawings decrease
owner’s equity.
OR
Net income and investments increase owner’s equity and net loss and drawings decrease
owner’s equity.
3. The revenue recognition principle and the matching principle (aka expense recognition
principle) guide accrual accounting. The revenue recognition principle says that you
must recognize revenue in the period in which you do the work. The matching principle
(aka expense recognition principle) says you must match expenses to the revenues they
help generate.
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Accounting-15
State/Provincial Event #1
JUDGE’S EVALUATION INSTRUCTIONS
Evaluation Form Information
The participants are to be evaluated on their ability to perform the specific performance
indicators stated on the cover sheet of this event and restated on the Judge’s Evaluation Form.
Although you may see other performance indicators being demonstrated by the participants,
those listed in the Performance Indicators section are the critical ones you are measuring for this
particular event. Please note that an overall score of 70% indicates a minimum level of acceptable
performance.
Evaluation Form Interpretation
The evaluation levels listed below and the evaluation rating procedures should be discussed
thoroughly with your event chairperson and the other judges to ensure complete and common
understanding for judging consistency.
Level of Evaluation
Interpretation Level
Exceeds Expectations
Participant demonstrated the performance indicator in
an extremely professional manner; greatly exceeds
business standards; would rank in the top 10% of
business personnel performing this performance
indicator.
Meets Expectations
Participant demonstrated the performance indicator in
an acceptable and effective manner; meets at least
minimal business standards; there would be no need for
additional formalized training at this time; would rank
in the 70-89th percentile of business personnel
performing this performance indicator.
Below Expectations
Participant demonstrated the performance indicator
with limited effectiveness; performance generally fell
below minimal business standards; additional training
would be required to improve knowledge, attitude
and/or skills; would rank in the 50-69th percentile of
business personnel performing this performance
indicator.
Little/No Demonstration
Participant demonstrated the performance indicator
with little or no effectiveness; a great deal of formal
training would be needed immediately; perhaps this
person should seek other employment; would rank in
the 0-49th percentile of business personnel performing
this performance indicator.
7
ACCOUNTING, 2015
Participant: _____________________________
JUDGE’S EVALUATION FORM
STATE/PROVINCIAL EVENT #1
I.D. Number: ____________________________
INSTRUCTIONAL AREA
Financial Analysis
Did the participant:
Little/No
Value
Below
Expectations
Meets
Expectations
Exceeds
Expectations
PERFORMANCE INDICATORS
1.
Demonstrate the effects of
transactions on the accounting
equation?
0-1-2-3-4-5
6-7-8-9-10-11
12-13-14-15
16-17-18
2.
Prepare an income statement?
0-1-2-3-4-5
6-7-8-9-10-11
12-13-14-15
16-17-18
3.
Prepare a balance sheet?
0-1-2-3-4-5
6-7-8-9-10-11
12-13-14-15
16-17-18
4.
Prepare a cash flow statement?
0-1-2-3-4-5
6-7-8-9-10-11
12-13-14-15
16-17-18
0-1-2-3-4-5
6-7-8-9-10-11
12-13-14-15
16-17-18
0-1-2
3-4-5
6-7-8
9-10
5.
6.
Discuss the use of Generally Accepted
Accounting Principles?
Overall impression and response to
judge’s questions
TOTAL SCORE
8
Judged
Score