Teaching kids and teenagers about accounting is important, whether students anticipate entering this field or not. Everyone needs a strong understanding of finances to be successful. Small-business owners in particular can help their businesses succeed and save money when they understand accounting processes. But you’re never too young to start learning about these concepts. Financial education for students can be both informative and fun.
Accounting involves keeping track of business financial transactions. Accounting includes the recording phase, classifying phase, summarizing phase, and interpreting phase. Businesses of every size need to perform accounting processes to plan costs, measure economic performance, and make decisions about the future. Although accounting is typically considered a business process, individuals also use accounting to compute household expenses, make budgets, check bank account balances, and more.
Record-keeping is an important part of running a successful business. It’s crucial to record income and expenses to track this information. This enables you to analyze past performance and make decisions about the future. Anyone who employs workers needs to keep a careful record of wages and hours. Basic record-keeping includes expenses, sales, accounts receivable and payable, a list of vendors and customers, employee information, tax documents, purchase orders and invoices, receipts, bank statements, and any business contracts.
A business budget outlines the money coming in and the money going out. Without a budget, it’s impossible to understand business performance, manage spending, and plan for the future. A budget is also helpful for cutting expenses because it helps to identify unnecessary expenditures. If a business struggles with staying in the black, a budget can help track income and expenses to help the owner set priorities for spending. Creating a business budget involves examining revenue, subtracting fixed expenses, determining variable expenses, earmarking funds for unexpected expenses, making a profit and loss statement, and outlining plans for the future.
Managing money typically involves placing it in bank accounts. The two main types of bank accounts are checking and savings accounts. Savings accounts pay account-holders interest on the money kept in an account; most banks have specific rules about how long money must stay in the account and minimum account balances. Checking accounts hold money that account-holders need to spend on bills and other expenses. Account-holders write paper checks that are drawn on funds in the accounts, or they can use debit cards connected with these accounts. Checking accounts usually don’t pay interest.
Debits and credits are common accounting concepts. A debit is a sum of money that is being added into an account, and a credit is funds that are being subtracted from an account. This can seem backward at first. However, a business needs to apply the terms in the opposite direction that consumers apply them. Funds credited are being subtracted from a business account, and funds debited are being added to it. Debit entries are recorded on the left side of an accounting ledger, and credit entries are recorded on the right side.
A career in accounting can follow a number of different paths, each with its own specialization. Everyone entering the accounting field will need generalized accounting skills. Working as a certified public accountant involves assisting both individuals and businesses with preparation and review of financial statements for budget analysis and consultation. A tax accountant specializes in tax-related accounting processes. A financial accountant usually works for one business to prepare reports and analyze fiscal performance. A financial planner assists individuals with financial budgeting, investing, and taxes.
It’s almost always easier to learn about a subject when students have fun as they learn. Enjoyable learning experiences tend to teach lessons that students remember. Many accounting games and puzzles are available online, and it’s not necessary to pay for these activities. Try online accounting games to teach students about different types of accounting, money, budgeting, and more.
Online lesson plans provide a wealth of information that educators can use to plan an accounting unit for students. Explore lesson plans that present the basics of accounting, or dive into more in-depth lesson plans.