Focus: Assets, liabilities, equity, debits and credits, chart of accounts.
Key Responsibility: Record financial transactions correctly using double-entry accounting.
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The accounting equation is the foundation of all financial reporting:
Assets = Liabilities + Equity
The equation must always remain in balance. Every financial transaction affects at least two accounts, ensuring accuracy and internal consistency throughout the accounting system.
Students learn how each major account category operates within the accounting equation.
Resources owned by the business such as cash, inventory, accounts receivable, equipment, and prepaid expenses.
Obligations owed to others such as accounts payable, loans, credit cards, and payroll liabilities.
Owner’s claim on the business, including contributed capital, retained earnings, and owner withdrawals/dividends.
The Chart of Accounts is a structured list of all accounts used by the business. It organizes financial data into standardized categories and numbering.
Students learn how QuickBooks, Xero, and other software implement the COA behind the scenes.
The double-entry system ensures that every transaction has two equal sides:
Total debits must always equal total credits.
This maintains the accounting equation and prevents imbalance or misstatement of financial records.
The “Golden Rules” of debit and credit behavior:
| Account Type | Debit ↑ | Credit ↑ |
|---|---|---|
| Assets | Increase | Decrease |
| Liabilities | Decrease | Increase |
| Equity | Decrease | Increase |
| Revenue | Decrease | Increase |
| Expenses | Increase | Decrease |
This week teaches students to apply these rules to every journal entry.
Students classify a list of accounts into assets, liabilities, equity, revenue, or expenses.
Students draw T-accounts and post sample transactions to understand how debits and credits flow.
Instructor provides real-world transactions. Students must write full journal entries with dates, accounts, debits, credits, and descriptions.
Students show how each transaction affects the accounting equation and identify debit/credit impacts.
Students write journal entries for 15–20 transactions involving capital contributions, expenses, revenue, and adjustments.
Create a sample COA with at least 34 accounts across all major categories.
Why is the double-entry system more reliable than single-entry bookkeeping? Provide an example to support your reasoning.
Week 2 teaches the essential mechanics of accounting. Students learn how the accounting equation, double-entry system, debits and credits, and the chart of accounts work together to ensure accurate financial reporting. Mastery of these concepts is required for all future bookkeeping skills.
In Week 3, we begin working with actual source documents and learn how transaction details flow into the journal and ledger.