Af Ag01 Fundamentals of Accounting

AF_AG01_FUNDAMENTALS OF ACCOUNTING

Teacher’s Guide

1. Objectives

The objectives of this Formative unit are the following:

· Learning some specific content from Accounting curriculum through English.

· Engaging students positively in a CLIL environment to benefit both from the learning of the content and the learning of the language.

· Identifying Purchases and Sales, and the corresponding codification in the Chart of accounts.

· Identifying Assets, Liabilities, Equities, Expenses and Revenues.

· Journalizing transactions related to Sales, Purchases, Discounts and Merchandise Returns.

· Journalizing Cash and credit Sales and Purchases.

· Journalizing VAT in Sales, purchases, discounts and merchandise returns.

3. Description

By the end of this formative unit, the student will know about journalizing sales, purchases, discounts and merchandise returns. The project aims at interpreting accounting information, journalizing the firm transactions, and becoming familiar with the Chart of Accounts.

2. Materials and teacher’s advice.

This Formative Unit has four lessons. The same methodology has been used to develop each lesson.

· First of all, there is an introduction to the main theoretical concepts, with practical examples.

· Second, the student will have to do several activities, in order to memorize the new vocabulary and go into detail into the new theoretical concepts just acquired.

· Third, there is a set of activities in order to put all the theory into practice: the Student must journalize the firm transactions.

· Fourth: Games of Accounting

· Fifth: “To know more” section.

It would be advisable for the students, to check the pronunciation of the new words, using online dictionaries such as www.answers.com, www.wordreference.com, or any similar webpage.

3. Answer key.

UNIT 1

A.1

Cash purchase; credit purchase; input VAT; creditor; supplier; Trade bill payable; Vat included; credit sale; cash sale.

A.2

· A credit purchase happens when goods are bought and the customer does not have to pay immediately but can pay after a specified number of days.

· A credit sale happens when goods are sold and the customer does not have to pay immediately but can pay after a specified number of days.

A.3

1c; 2a; 3d ; 4d ;5b ;

A.4

Supplier; goods; bank; in cash; by check; by bank transfer; input vat; trade bill payable; creditor; supplier; account; Goods; Merchandise; sale; purchase.

A.5

· Debited; debited; credited.

A.6

We have to divide the Total amount of the purchase invoice by 1.16. The result will be the amount we have to journalize in the account (600) Merchandise Purchased.

A.7

· D

· F

· B

· F

A.8

1,000
210 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 1,210

1,210 / (400) / Supplier / (570) / Cash / 1,210

1,540
323.4 / (600)
(472) / Merchandise purchased
Input VAT / (570) / cash / 1,863.4

431.03
68.97 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 500

100
21 / (600)
(472) / Merchandise purchased
Input VAT / (572) / Bank / 121

115.7
24.30 / (600)
(472) / Merchandise purchased
Input VAT / (570) / cash / 140

20,330.58
4,269.42 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 24,600

1,000
210 / (600)
(472) / Merchandise purchased
Input VAT / (401) / Suppliers, trade bills payable / 1,210

24,600 / (400) / Suppliers / (570) / Cash / 24,600

10.

1,210 / (401) / Suppliers, trade bill payable / (572) / Bank / 1,210

11.

8,264.46
1,735.54 / (600)
(472) / Merchandise purchased
Input VAT / (572) / Bank / 10,000

12.

500 / (400) / Suppliers / (572) / Bank / 500

13.

200
42 / (600)
(472) / Merchandise purchased
Input VAT / (572) / Bank / 242

14.

200
42 / (600)
(472) / Merchandise purchased
Input VAT / (570) / Cash / 242

15.

165.29
34.71 / (600)
(472) / Merchandise purchased
Input VAT / (570) / Cash / 200

16.

400
84 / (600)
(472) / Merchandise purchased
Input VAT / (570) / Cash / 84

17.

1,200
252 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 1,452

18.

1,452 / (400) / Suppliers / (570) / Cash / 1,452

19.

10,000
2,100 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 12,100

20.

20,000
4,200 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 24,200

21.

1,239.67
260.33 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 1,500

22.

1,500
315 / (600)
(472) / Merchandise purchased
Input VAT / (572) / Bank / 1,815

23.

1,157.02
242.98 / (600)
(472) / Merchandise purchased
Input VAT / (572) / Bank / 1,400

24.

1,983.47
416.53 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 2,400

25.

1,515
318.15 / (600)
(472) / Merchandise purchased
Input VAT / (401) / Suppliers, trade bills payable / 1,833.15

26.

8,347.10
1,752.89 / (600)
(472) / Merchandise purchased
Input VAT / (572) / Bank / 10,100

27.

1,500 / (400) / Suppliers / (572) / Bank / 1,500

28.

2,100
441 / (600)
(472) / Merchandise purchased
Input VAT / (572) / Bank / 2,541

UNIT 2

A.1

A credit sale happens when we sell goods or merchandise and our customer doesn’t have to pay immediately, although the invoice has to be paid after a specified number of days

A.2

Merchandise sold; Output VAT; journal; account; credit purchase; trade receivable; trade bills receivable; VAT included; credit sale.

A.3

Sales of goods; journal Book; journalizing; to credit an account; to debit an account; income or revenue; expense; asset; liability; equity.

A.4

1f; 2b; 3a; 4e; 5c; 6d.

A.5

1,210 / (430) / Trade receivables / (700)
(477) / Merchandise sold
Output VAT / 1,000
210

1,210 / (570) / Cash / (430) / Trade receivables / 1,210

1,210 / (570) / Cash / (700)
(477) / Merchandise sold
Output VAT / 1,540
323.4

500 / (430) / Trade receivables / (700)
(477) / Merchandise sold
Output VAT / 413.22
86.78

121 / (572) / Bank / (700)
(477) / Merchandise sold
Output VAT / 100
21

140 / (570) / Cash / (700)
(477) / Merchandise sold
Output VAT / 115.70
24.30

24,600 / (430) / Trade receivables / (700)
(477) / Merchandise sold
Output VAT / 20,330.58
4,269.42

260.15 / (431) / Trade receivables, Trade bill receivable / (700)
(477) / Merchandise sold
Output VAT / 215
45.15

24,600 / (570) / Cash / (430) / Trade receivables / 24,600

10.

260.15 / (572) / Bank / (431) / Trade receivables, trade bill receivable / 260.15

11.

10,000 / (572) / Bank / (700)
(477) / Merchandise sold
Output VAT / 8,264.46
1,735.54

12.

500 / (572) / Bank / (430) / Trade receivables / 500

13.

242 / (572) / Bank / (700)
(477) / Merchandise sold
Output VAT / 200
42

14.

2,904 / (570) / Cash / (700)
(477) / Merchandise sold
Output VAT / 2,400
504

15.

200 / (570) / Cash / (700)
(477) / Merchandise sold
Output VAT / 165.29
34.71

16.

484 / (570) / Cash / (700)
(477) / Merchandise sold
Output VAT / 400
84

17.

1,452 / (430) / Trade receivables / (700)
(477) / Merchandise sold
Output VAT / 1,200
252

18.

1,452 / (570) / Cash / (430) / Trade receivables / 1,452

19.

1,210 / (430) / Trade receivables / (700)
(477) / Merchandise sold
Output VAT / 1,000
210

20.

24,200 / (570) / Cash / (700)
(477) / Merchandise sold
Output VAT / 20,000
4,200

21.

1,500 / (430) / Trade receivables / (700)
(477) / Merchandise sold
Output VAT / 1,239.67
260.33

22.

1,815 / (572) / Bank / (700)
(477) / Merchandise sold
Output VAT / 1,500
315

23.

24,200 / (570) / Cash / (700)
(477) / Merchandise sold
Output VAT / 20,000
4,200

24.

2,400 / (430) / Trade receivables / (700)
(477) / Merchandise sold
Output VAT / 1,983,47
416.53

25.

1,850 / (431) / Trade receivables, Trade bill receivable / (700)
(477) / Merchandise sold
Output VAT / 1,528.93
321.07

26.

10,100 / (572) / Bank / (700)
(477) / Merchandise sold
Output VAT / 8,347.11
1,752.89

27.

1,500 / (572) / Bank / (430) / Trade receivables / 1,500

28.

2,541 / (572) / Bank / (700)
(477) / Merchandise sold
Output VAT / 2,100
441

29.

2,662 / (570) / Cash / (700)
(477) / Merchandise sold
Output VAT / 2,200
462

30.

1,600 / (570) / Cash / (700)
(477) / Merchandise sold
Output VAT / 1,322.31
277.69

UNIT 3

A.1

· Any kind of discount included in the invoice has to be subtracted from the amount of the purchase.

· The account Merchandise Returns includes Shipments of merchandise and goods returned to suppliers, normally because they do not meet the conditions of the order.

A.2

Purchase returns; input VAT; prompt payment discount; volume discount; settlement discount; supply order; volume of orders; deduction; trade discount.

A.3

Shipment of merchandise; returned goods; receipt of invoice; Trade discount; prompt payment discount; included in the invoice.

A.4

1 a ; 2b ; 3a ; 4c ; 5 b .

A.5

930
195.3 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 1,125.3

1,125.3 / (400) / Supplier / (570) / Cash / 1,125.3

1,493.8
313.7 / (600)
(472) / Merchandise purchased
Input VAT / (570) / Cash / 1,807.50

404.96
85.04 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 490

100
21 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 121

121 / (400) / Suppliers / (570)
(606)
(472) / Cash
Prompt payment discount
Input Vat / 110.95
5
1.05

24,354
5,114.34 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 29,468.34

242 / (400) / Suppliers / (609)
(472) / Volume discount
Input Vat / 200
42

970
203.7 / (600)
(472) / Merchandise purchased
Input VAT / (401) / Suppliers, trade bills payable / 1,173.7

10.

29,468.34 / (400) / Suppliers / (570) / Cash / 29,468.34

11.

1,173.7 / (401) / Suppliers, trade bill payable / (572) / Bank / 1,173.7

12.

9,800
2,058 / (600)
(472) / Merchandise purchased
Input VAT / (572) / Bank / 11,858

13.

500 / (400) / Suppliers / (570)
(606)
(472) / Cash
Prompt payment discount
Input Vat / 463.7
30
6.3

14.

198
41.58 / (600)
(472) / Merchandise purchased
Input VAT / (572) / Banks / 239.58

15.

302.5 / (400) / Suppliers / (609)
(472) / Volume discount
Input Vat / 250
52.5

16.

60.5 / (400) / Suppliers / (608)
(472) / Purchase returns
Input Vat / 50
10.5

17.

192.06
40.33 / (600)
(472) / Merchandise purchased
Input VAT / (570) / Cash / 232.39

18.

165.29
34.71 / (600)
(472) / Merchandise purchased
Input VAT / (570) / Cash / 200

19.

60.5 / (400) / Suppliers / (608)
(472) / Purchase returns
Input Vat / 50
10.5

20.

390.06
81.91 / (600)
(472) / Merchandise purchased
Input VAT / (570) / Cash / 471.97

21.

971.9
204.1 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 1,176

22.

1,176 / (400) / Suppliers / (570)
(606)
(472) / Cash
Prompt payment discount
Input Vat / 1,109.7
30
6.3

23.

9,600
2,016 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 11616

24.

19,740
4,145.4 / (600)
(472) / Merchandise purchased
Input VAT / (570) / Cash / 23,885.4

25.

1,239.67
260.33 / (600)
(472) / Merchandise purchased
Input VAT / (400) / Suppliers / 1,500

26.

726 / (570) / Cash / (608)
(472) / Purchase returns
Input Vat / 600
126

27.

1,500 / (400) / Suppliers / (608)
(472) / Purchase returns
Input Vat / 1,239.67
260.33

28.

60.5 / (400) / Suppliers / (609)
(472) / Volume discount
Input Vat / 50
10.5

29.

100 / (400) / Suppliers / (608)
(472) / Purchase returns
Input Vat / 82.64
17.36

30.

250 / (400) / Suppliers / (608)
(472) / Purchase returns
Input Vat / 206.61
43.39

UNIT 4

A.1

• This account includes Shipments of merchandise and goods returned for our customers, normally because they do not meet the conditions of the supply order.

• Any kind of discount included in the invoice has to be subtracted from the amount of the sale transaction

A.2

Sales returns; Output VAT; trade receivables; shipments of merchandise; Volume of discount.

A.3

Prompt payment discount; Cash discount; Settlement discount; credit note; trade discount; trade receivables.

A.4.

1C or F ; 2D or A ; 3 C or F ; 4 D or A ; 5B ; 6E ;

A.5

1173.7 / (430) / Trade receivables / (700)
(477) / Merchandise sold
Output VAT / 970
203.7