Question: The expanded accounting equation consists of assets, liabilities, capital, withdrawals, revenues, and expenses. It can be used to reveal insights into changes in a company's financial position.
Required: 1. Form learning teams of six (or more) members. Each team member must select one of the six components and each team must have at least one expert on each component:
(a) assets,
(b) liabilities,
(c) capital,
(d) withdrawals,
(e) revenues, and
(f) expenses.
2. Form expert teams of individuals who selected the same component in part 1. Expert teams are to draft a report that each expert will present to his or her learning team addressing the following:
a. Identify for its component the
(i) increase and decrease side of the account and
(ii) normal balance side of the account.
b. Describe a transaction, with amounts, that increases its component.
c. Using the transaction and amounts in (b), verify the equality of the accounting equation and then explain any effects on the income statement and statement of cash flows.
d. Describe a transaction, with amounts, that decreases its component.
e. Using the transaction and amounts in (d), verify the equality of the accounting equation and then explain any effects on the income statement and statement of cash flows.
3. Each expert should return to his/her learning team. In rotation, each member presents his/her expert team's report to the learning team. Team discussion is encouraged.