RevolutionizeAccounting in the Classroom

Ontario

Curriculum ObjectivesThe following information is referenced from and can be found in the The Ontario Curriculum Grades 11 and 12 Business Studies (Revised) document (available on the Ministry of Education website at http://www.edu.gov.on.ca)

“The integration of information technology and accounting software throughout the accounting curriculum will help prepare students for today’s business environment. Students who learn not only the fundamentals of accounting, but how to think and apply that knowledge, will have the confidence to integrate accounting principles and practices into their work in a wide spectrum of careers.”

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BAF3M

Fundamental Accounting PracticesAdvanced Accounting Practices Overall Expectations

Apply accounting practices in a computerized environment

Applications In Accounting Specific Expectations

Use accounting or application software to record (Computer transactions for a service and merchandise business)

Use accounting or application software to prepare financial statements

Ethics, Impact of Technology, and Careers Overall Expectations

Assess the impact of technology on accounting functions in business

Impact of Technology Specific Expectations

Compare manual accounting system with a computerized accounting system

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BAI3E

Accounting EssentialsInternal Control, Banking and Computerized Accounting Overall Expectations

Use accounting or applications software to complete the accounting cycle for a service business.

Computerized Accounting Specific Expectations

Describe the advantages of using accounting software

Use accounting software to record and post transactions

Use a computerized trial balance to demonstrate the accuracy of accounting records

Use accounting or applications software to prepare income statements, balance sheets, adjustments, closing accounting entries, and a post-closing trial balance.

BAT4M

Financial Accounting PrinciplesThe Accounting Cycle Overall Expectations

Demonstrate an understanding of the accounting cycle in a computerized environment for a service and a merchandise business

Accounting Cycle in a Computerized Environment Specific Expectations

Record transactions, using a computerized accounting system, for a service business and a merchandising business

Prepare a trial balance and detailed financial statements, using applications software

Record adjusting, closing, and reversing entries, using a computerized accounting system

Ethics and Issues in AccountingEvaluate the impact of the evolution of technology on the field of accounting.

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Accounting Practice for Assets

Inventory Procedures Specific Expectations

Inventory Procedures

Financial Analysis and Decision Making Specific Expectations

Use information technology to conduct financial analysis

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BAN4E

Accounting for a Small BusinessService and Merchandising Business

The Accounting Cycle for a Service Business Specific Expectations

Complete the accounting cycle for a service business, using accounting software

Accounting Practices

Accounting for Receivables Specific Expectations

Record transactions in a receivables sub-ledger, using accounting software

Accounting for Payables Specific Expectations

Record transactions in a payables sub-ledger, using accounting software

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Getting StartedIn order to get started using the program, the instructor and students will have to register for a free account with Wave.

Step 1Visit waveapps.com/accounting/

Step 2Enter your details and click on the Sign Up button (see fig 1.1)

Step 3As the course instructor, the business details sections can be random. This does not have an impact on how the students will adopt the program.

fig 1.1

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To be consistent with the example used throughout this resource, the following information (i.e. SiLube Auto Repair Inc.) can be used:

fig 1.2

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Step 4Download the following document: 1.2 Case Questions: SiLube & Auto Repair Inc.

Step 5Once registered, the company dashboard is displayed. This area shows a financial snapshot of important information for the company:

i. Income & Expenses ii. Payable & Owing iii. Net Income iv. Business Expenses

These will be generated as you work through the example and are a good assessment tool for students.

Step 6To continue with the company setup, the user must click on the Account settings icon, above the company dashboard. (see fig 1.3)

Step 7Business ProfileInputting the profile of the business is an important step if the user chooses to utilize and customize the invoice feature provided by Wave.

fig 1.3

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From the Account menu, select Your profile:

Select Businesses from the sidebar and under Your businesses you should find your business (i.e. SiLube & Auto Repair Inc.). Click the edit icon to the right of your business’ name.

The profile can be setup at a later time and can be accessed at anytime.

For the purpose of this activity (SiLube & Auto Repair Inc.) it is not a necessary to setup and create Invoices, Products, Customers and Vendors. These features of the program are explored in detail in the following sections:

2.0 Invoice Creation, Customization & Payment Final 2.1 Expenses Creation & Payment Final

fig 1.4

fig 1.5

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Guest CollaboratorBy selecting the “Guest Collaborator” option, teachers can gain access to the students’ work. This is an excellent way to assess and evaluate journalized transactions, invoices, financial statements, etc.

In order to be invited as a guest collaborator, the student needs to to complete the form under the Accounting settings icon, select Guest collaborators.

fig 2.1

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Select the Add a collaborator button and complete the form that appears.

fig 2.2

Don’t forget to save!WAVE TIP

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The collaborator will be sent an email to verify the request and will then be given full access:

In order to view all of the businesses available to you, click on the arrow beside the business name (i.e. SiLube & Auto Repair Inc) for a drop-down. It is important that the students save their businesses with their initials/ names or the company profiles will be difficult to distinguish between accounts.

fig 2.3

fig 2.4

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Other Options: Sales tax, Accounts and Account balancesSales TaxAs the students become more familiar with accounting concepts, specifically with taxes, the Sales Taxes option can used by clicking on the Add a sales tax button.

AccountsThis feature is useful if the user already has prior information with previous accounts and balances. Accounts can be added or deleted according to the example being used.

Account BalancesThis feature is useful if the user already has prior information with previous accounts and balances.

fig 3.1

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Illustration of Wave & the Accounting CycleSimon Liu has decided to open an auto service station, SiLube & Auto Repair Inc. Simon hopes to expand his business into a major complex, but for now he’s renting a small station, equipped with eight parking spots, and three servicing platforms. To help with costs, Simon has recruited his family to run the administrative aspects of the business. You are his younger brother/sister, fresh out of college and hoping to get some experience in the world of accounting.

You remember using Wave in your high school accounting course, as your teacher promised, you actually found a useful application of your knowledge. After sitting down to discuss business formatting, Simon wants you to produce the first month’s financial reports and general journal transactions. These transactions will be documented on the day they occur. Amounts owed to the company are to be paid within one month of the issuing. Using Wave’s Accounting software, you were presented with the following transactions:

January 1

Owner, Simon Liu, invested $25,000 (cash) into the business by opening an account at his local bank.

January 2

Purchased $1150.00 in supplies for office and general use

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January 4

Pre-paid for three months rent, totaling $1950.00 using cheque #001

January 6

Purchased $3600.00 of equipment from Geovvy Industrial Supply Co., with a five-year use-ful life and a salvage value of $600. Using cheque #002, $1800.00 was paid upfront and the rest on account under credit terms 2/10, n/30.

January 7

To help spread the word of his new company, Simon purchased ad space in the local pa-per (The Daily News). The ad will be displayed in every paper for the next three weeks, costing $150.00 up front and paid by cheque #003.

January 9

Simon decides to hire two mechanics who each sign their contract and agree to earn a monthly salary (paid at the end of each month) of $2,800. The will not start working until January 17th (second half of the month).

January 10

Service (tune-up) was performed amounting to $550.00 (terms were 2/10, n/30). Invoice #001 issued to Manu Singh.

Service (tire rotation) was performed amounting to $680. Invoice #002 issued and paid in full by Dr. Ritesh Patel.

January 12

Two services performed for Michael Hertz: general maintenance and repair for $730.00 and a tire rotation for $680.00. Michael pays cash for the first job and requests to pay the balance in 30 days.

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January 13

A customer accidentally flushed a rag down the toilet and Earl (from Toilet and Bath Re-pairs) was called for maintenance. While working, he found that a pipe was on the verge of bursting and needed to be replaced. Earl charged $200.00 for labour and $130.00 parts due in 30 days.

January 16

Received $1,500 cash from Walter Bradley as an advanced payment for services to be provided at a later date.

Simon withdrew $300 for personal use.

January 20

Simon realized that he needed an administrative assistant right away. Luckily his sister was willing to work part time for two weeks and was paid $400 (cash) upfront for the rest of the month.

Received full payment for Invoice #001 (Manu Singh).

January 25

Paid Geovvy Industrial Supplies Inc. (in full) for Jan 06 purchase of equipment using cheque #004.

The following data was also available for you on January 31, 2012, for analysis and possible adjustments for the company:

a. Rent expired during the month of January amounted to $650. b. Supplies on hand on January 31 are $850. c. All wages and salaries are paid in full for the month. d. Unearned fees on January 31 are $750. e. Amortization of Equipment for month of January.

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Journalizing TransactionsStep 1Under the Accounting tab, select the last option (in top window) entitled Journal transactions:

Step 2Click on the Add transactions button. This allows the user to manually journalize transactions.

fig 5.1

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Journal EntriesThe following snapshot shows how manual entries can be journalized by the user.

Description: Explanation of transaction Date: Date of transaction Account: Titles of affected accounts Account +: Creation of titles of affected accounts (if not listed) Description: Additional information, specific to account Debit: Dollar Amount to be debited Credit: Dollar amount to be credited + Add a line: Allows user to add another line for compound journal entry Save: Saves transaction

fig 6.1

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The transactions on the following pages are journalized from section: 1.2 Case Questions: SiLube & Auto Repair Inc.

The remaining answers for Silube & Auto Repair Inc. can be found in the file: 1.4 Transaction Answers

Example

January 1

Owner, Simon Liu, invested $25,000 (cash) into the business by opening an account at his local bank.

fig 6.2

If your debits are not equal to your credits, you will be shown the difference in red (at the bottom of the page).

WAVE TIP

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Example

January 2

Purchased $1150.00 in supplies for office and general use

From the pulldown menu, an Office Supplies account does not exist in the chart of accounts. The following steps must be taken to add it as an official account:

From the Add journal transactions screen click on the + to create a new account

fig 6.3

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The student should first search for the account name before creating a new one. If the search results state that No accounts available, clear the Search by account name field by clicking on the x

The user should then choose the appropriate account type from the list given.

Click once on Current Asset. Select a current asset account to create a new account

Click once on Other Current Asset

Then, click on Other Current Asset

fig 6.4

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When prompted, name the specific account and click Savefig 6.5

fig 6.6

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The student can then complete the rest of the fields

Example

January 4

Pre-paid for three months rent, totaling $1950.00 using cheque #001

fig 6.7

fig 6.8

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Example

January 6

$3600.00 of equipment was purchased from Geovvy Industrial Supply Co., with a five-year useful life and a salvage value of $600. Using cheque #002, $1800.00 was paid upfront and the rest on account under credit terms 2/10, n/30.

This transaction requires the addition of the new account Equipment (see Jan 02 transaction):

Click on Fixed Asset

Click on Long-Term Assets

Click on Machinery, equipment, furniture & fixtures

fig 6.9

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Since this is a compound journal entry, be sure to utilize + Add a line (see fig 6.10) and select the appropriate account (i.e. Accounts Payable):

fig 6.10

fig 6.11

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SolutionsJanuary 7

To help spread the word of his new company, Simon purchased ad space in the local paper (The Daily News). The ad will be displayed in every paper for the next three weeks, costing $150.00 (total) up front and paid by cheque #003.

January 9

Simon decides to hire two mechanics who each sign their contract and agree to earn a monthly salary of $2,800. They will not start working until January 17th.

No entry required.

fig 7.1

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January 10

Service (tune-up) is performed amounting to $550.00 (terms were 2/10, n/30). Invoice #001 issued to Manu Singh.

The user will manually enter the invoice number for now. The creation, customization and usage of invoices is an advanced learning tool and explained in 2.0 Business Profile & Invoice.

January 10

Service (tire rotation) performed amounting to $680. Invoice #002 issued and paid in full by Dr. Ritesh Patel.

fig 7.2

fig 7.3

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January 12

Two services performed for Michael Hertz: general maintenance and repair for $730.00 and the other for a tire rotation for $680.00. Michael pays cash for the first job and requests to pay the balance in 30 days.

January 13

A customer accidentally flushed a rag down the toilet and Earl (from Toilet and Bath Repairs) was called for maintenance. While working, he found that a pipe was on the verge of bursting and needed to be replaced. Earl charged $200.00 for labour and $130.00 parts due in 30 days.

fig 7.4

fig 7.530

January 16

You received $1,500 cash from Walter Bradley as an advanced payment for services to be provided at a later date.

January 16

Simon withdrew $300 for personal use.

fig 7.6

fig 7.7

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January 20

Simon realized that he needed an administrative assistant right away. Luckily his sister was willing to work part time for two weeks and was paid $400(cash) upfront for the rest of the month.

January 20

Received full payment for invoice 001 (Manu Singh).

fig 7.8

fig 7.9

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January 25

Paid Geovvy Industrial Supplies Inc. for Jan 06 purchase of equipment using cheque #004.

fig 7.10

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Adjusting EntriesRent expired during the month of January amounted to $650.

Supplies on hand on January 31 are $850.

fig 8.1

fig 8.2

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All wages and salaries are paid in full for the month.

Unearned fees on January 31 are $750.

fig 8.3

fig 8.4

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Amortization of Equipment for month of January.

(Purchase Price of Asset – Approximate Salvage Value) ÷ Estimated Useful Life of Asset

($3600 – $600) ÷ 5example: = $50

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fig 8.5: expense for the month of January using the straight-line method

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Financial Reports and AnalysisFinancial SnapshotFor a quick Financial snapshot of the company, view the Dashboard. Each chart or graph is live and can be clicked to view the numbers behind the results.

For SiLube Auto & Repair Inc., the following should be the results of the journalized transactions.

fig 9.1

fig 9.2

fig 9.3

Payroll — Salary & Wages: $3200.00Rent Expense: $650.00Advertising & Promotion: $450.00Office Supplies: $300.00Repairs & Maintenance: $200.00Other: $180.00

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ReportsUnder the Reports tab, the user can find all relevant financial statements and documents.

fig 10.1

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Balance SheetEach account and balance highlighted in blue is live and will direct you to the Account Transactions page associated with that specific account or balance.

General Ledger Summary

fig 10.2

fig 10.339

Income Statement

fig 10.4

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Invoice CustomizationIn order to effectively use invoices, the student should set up products and services for their company.

The creation and payment of an invoice created through the Invoice customization option is a separate tool and will not be reflected in the Journal transaction list. In the following example(s), the manual journal entry is removed and replaced by using the Invoice customization option.

Once the business profile is complete, the student is now able to customize invoices. From the Settings menu select Invoice customization.

fig 11.1

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ProductsIn Wave, you can add common products and services provided by a company. Adding products make invoicing faster and easier.

In SiLube & Auto Repair Inc, Simon’s first month of transactions include tune-ups, tire rotations and regular check-up and maintenance.

Here is an example of how to set-up the product/service using the following transaction:

January 10

Services (tune-up) performed amounting to $550.00. Invoice no. 001 sent to Manu Singh due in one month.

The student is able to Edit or Delete each product by clicking on the respec-tive icons.

It is important that the Sell this option is selected. This example does not use a tax rate.

fig 12.1

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CustomersManu Singh can be setup as a permanent customer now.

Adding a customer prior to journalizing the transactionUnder Accounting settings, select the Customers link followed by the Add a customer button:

Additional information is not required for this example, but can be entered by clicking on the Toggle additional information link underneath the Currency drop-down menu:

fig 13.1

fig 13.243

Invoices — Creation and PaymentsHave the students create an invoice for the following transactions:

January 12

Two services are performed for Michael Hertz: general maintenance and repair for $730.00, the other for a tire rotation at the rate of $680.00. He pays cash for the first job and requests to pay the remaining balance in 30 days.

On the sidebar, select the Income tab. Then, select the Create an invoice link:

fig 14.1

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Under the Customer Name drop-down menu, notice that Manu Singh has been saved.

Now the students can add Michael Hertz as a new customer. To do so the student can simply click the + Add new customer within the Customer drop-down menu. The student will be prompted with the Add customer screen:

fig 14.2

fig 14.345

Once saved, the student can enter the invoice information as required:

Since this is a compound entry, use the + Add a line feature. Notice how the Price field of the tire rotation is generated as the service was already established as a product. This field can by adjusted by typing over the auto populated price.

fig 14.4

fig 14.5

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Once saved, the newly created invoice appears. The user has the option to:

View/Edit: View or edit the invoice Send: E-mail the invoice to any specified email address PDF: Download the invoice in PDF format Delete: Deletes the invoice Show amount paid: Changes the status from Amount due to Amount paid

fig 14.5

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Full Payments of InvoicesJanuary 20

SiLube & Auto Repair received the balance owing from M. Hertz.

Retrieve the invoice from the Income tab, and record a payment The student should then choose the Add Payment option. (see fig 15.1)

fig 15.1

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The payment information can now be added. In this case, the full amount is paid:

The student’s invoice page now will be updated to reflect the payments:

fig 15.2

fig 15.3

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Partial Payments of InvoicesUnfortunately, not all customers pay invoices in full. Wave does an excellent job of keeping track of partial payments.

Let’s assume that Michael Hertz only made a partial payment of the outstanding balance. The original invoice can be edited:

fig 16.1

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Change the Amount and click Add Payment:

Notice on the invoice page that the partial payment is highlighted:

fig 16.2

fig 16.3

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ExpensesAnother feature for the students to learn is how to create, maintain and report ex-penses and detailed bills.

January 6

$3600.00 of equipment was purchased from Geovvy Industrial Supply Co., with a five year useful life and a salvage value of $600. Using cheque #002, $1800.00 was paid upfront and the rest on account under credit terms 2/10, n/30.

Step 1On the sidebar, select the Bills tab. The user should then select the Create a bill link: If a new vendor is required, click + to add an additional vendor.

fig 17.1

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Under the Vendor drop-down select menu Geovvy Industrial Supplies Co., already exists.

Step 2The information of the transaction is entered next, using all appropriate fields with the following additional instructions:

Under the Item menu, the student should create and asset using the + Add new product function.

fig 17.2

fig 17.3

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The student will be prompted to add a product. Choose a logical account type from the Expense account drop down.

The final input screen should look similar to the following:

fig 17.4

fig 17.554

Payment of an ExpenseTo enter a payment the student can add a payment under the dropdown in the

Bills menu:

The student will then be prompted to enter in payment information:

fig 18.1

fig 18.255

Final PaymentThe company Dashboard will reflect the outstanding amount:

On the Reports page, the Aged Payables report will also reflect the outstanding amount. The results below need to be adjusted, as the invoice was paid in full on January 25th.

fig 19.1

fig 19.2

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January 25

Paid Geovvy Industrial Supplies Inc. in full for Jan 06 purchase of equipment using cheque #004.

Under the Bills tab, select the bill and click Add payment. Selecting the Add payment button will update the expense and the bill will reflect full payment.

The history of the bill and expenses can be viewed in its entirety from the Expense by Vendor report.

fig 19.3

fig 19.4

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About the AuthorRickesh Kotecha, is an educator at Royal St. George’s College (Toronto, Ontario), has been teaching the Accounting (BAF3M/BAT4M), Business (BBI2O) and Mathematics (MPM1D/MP-M2D) courses over the past fours years. He received his Hons. B.A (Economics & Math) from the University of Waterloo, B.Ed from OISE/University of Toronto, and is currently pursing his M.Ed (Education and Digital Technologies) at the Ontario Institute of Technology. Rickesh has a passion for the integration of technology with education and has teamed up with Wave to revolutionize how accounting is being taught in high schools across Canada.

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