Basic Accounting Skills
a learning guide
(1 credit hour)
course designed by
Richard L. Rogers
Associate Professor of Accounting
School of Continuing Studies
Independent Study Program
Copyright © 2001 by the Trustees of Indiana University
All rights reserved.
No parts of this guide may be reproduced in any form.
Basic Accounting Skills
Objectives and Content
This course provides an introduction to the subject of accounting.
Accounting is a process that organizes and communicates financial
information about a company or individual to potential users of that
information. Financial information is necessary to understand and evaluate
how well a company or an individual is doing: Is the company growing or
contracting? Is it making a profit or losing money? Can the company pay
its bills or is it going bankrupt? These are the types of questions that users
of financial information need to know about companies or individuals.
Accounting performs a similar task: it formalizes certain types of financial
information, which allows a user to evaluate the financial health or
strength of a company. Accounting permits comparisons between different
types of financial entities. It is often described as the language of business.
This course introduces the subject of accounting by explaining the various
types of financial reports that are used to evaluate and compare financial
entities. The course introduces terminology used by accountants to
communicate economic events or transactions. By the end of the course,
you should be able to
! read and interpret a simple income statement and balance sheet
! understand what accountants mean when they use terms like assets and
liabilities, revenue and expenses, profits and losses
! set up the basic accounting entries for a small business
! prepare basic financial reports to be used by others in evaluating a
How the Course OperatesBasic Accounting Skills
is a self-paced introduction to financial
accounting. The course contains five lessons. Each lesson coordinates with
one or two chapters in the textbook.
Lesson 1 coordinates with the first two chapters of the Libby textbook.
This lesson introduces you to the concept of a business. Since accounting
is the language of business, it is helpful to first understand how a business
works and the types of information that are useful and necessary to make a
business successful. At the end of lesson 1 is an online quiz that comprises
10% of your final grade.
Lesson 2 parallels chapter 3 of the textbook. This chapter develops the
concepts of transactions and business activities. This chapter covers
businesses transactions that are needed to produce financial statements like
the Income Statement and the Balance Sheet. Lesson 2 explains how these
statements are prepared and how they convey useful information to users
of the statements. Lesson 2 also contains a quiz that will count for 10% of
your final grade.
Lesson 3 corresponds to chapter 4 of the textbook. Lesson 3 completes our
introduction to the accounting process and introduces the process of
adjusting the accounts to make them ready for presentation to readers. This
lesson is the capstone of this course. At the end of this lesson you will be
able to prepare a simple but accurate financial statement that can be used
to evaluate how well a company or business did for a period of time.
Lesson 3 contains the final quiz that will count for an additional 10% of
your final grade. All together the three quizzes comprise 30% of your final
Lesson 4 is an interactive self-study problem we call "Cell Shop." Cell
Shop is a small retail business that is just starting out and needs to develop
accurate financial statements so that we can evaluate how well the
company is doing. Cell Shop is designed to take advantage of Web
technology by incorporating an interactive component. You will be asked
to make decisions and the problem will give you feedback on the
correctness of your choices. We hope it will be instructive and interesting.
You can review Cell Shop as many times as you like to make sure you
understand some of the processes of making accounting entries. Cell Shop
can be useful preparation before taking the final exam outlined in lesson 5.
Lesson 5 is the final exam for the course. The final exam is to be proctored
by an examination supervisor at a local testing site. It is a traditional,
in-class, paper exam. Instructions for arranging for and applying to take
the exam appear in lesson 5. The exam will be made up of 25
multiple-choice questions and counts for 70% of the final grade assigned
in the course. You should review lesson 5 for guidance as to how to take
the final exam.
How to Navigate This Course
Log on to the Web site and read the learning objectives for the lesson. For
each of the lessons, there is a reading assignment in the required textbook,
which should be read before commencing with the lesson's discussion. The
lesson's discussion provides an in-depth review of the material and
prepares you to complete the review questions and the quiz at the end of
the lesson. The review questions are for your own benefit; they are
self-study and self-check questions. The quizzes count toward your final
grade. Your quiz answers are scored immediately, and you will see your
grade and the correct answers. Your grade is also sent to your instructor.
The correct answers should help you prepare for the final exam and help
you measure your progress in the course. When you've completed all of the
lesson's components, move on to the next lesson.
Your course grade will be determined by combining the total points from
both the quizzes and the final exam. The quizzes total 30% of your grade
and the final exam comprises the remaining 70% of the grade. Total points
will be apportioned to a 100% grade scale, where:
1. 90 to 100% = A
2. 80 to 89% = B
3. 70 to 79% = C
4. 60 to 69% = D
You must earn at least a 60% grade to pass the course.
Materials and Requirements
You are presumed to have no background or training in accounting.
You are required to use a customized textbook entitled Introduction to
published by McGraw-Hill/Irwin. The custom book
contains the first four chapters of Libby, Libby, and Short's Financial
textbook. The Libby, Libby, and Short book is an
internationally recognized financial accounting textbook.