The Basic Accounting Cycle
WebQuest Internet Project
A Whole New Ball Game
In this project, students will investigate what it takes to operate a professional soccer team in the U.S. They will research the components of marketing, accounting, management, and merchandising as each relates to a minor-league soccer team. Through this WebQuest, students will gain a better understanding of the kinds of business transactions that occur in the sports franchise industry and how financial statements are impacted. You may also want students to research the earnings of European professional soccer clubs, in order to discuss the future potential of the industry in the U.S.
The Guidance section of this WebQuest project contains questions that would be applicable for a whole-class discussion and for generating interdisciplinary connections. If you prefer, have each student research only one of the questions and add the information he or she finds to the final presentation of their WebQuest.
Several Web sites are included in the project to help students complete the WebQuest project. Encourage students to find additional sites and to share those sites with other students.
- Revenues from ticket sales for a professional soccer team will increase Assets (either in the form of cash or accounts receivable) and will increase Owner’s Equity.
- When a team purchases billboard advertising space on credit, Advertising Expense is debited and Accounts Payable is credited.
- Review of an income statement helps a potential buyer understand the expenses that are incurred during the period and the kinds and amounts of revenue that can be expected during that same period.
- The first closing entry closes revenue into Income Summary, the second closing entry closes expenses into Income Summary, and the third closing entry closes the balance of the Income Summary account into the Capital account.
- A bank account reconciliation would show which checks have not cleared the account (which checks have not been cashed by the payee).
A business transaction in which the team issues a check for an amount owed to a creditor for the purchase of training equipment would decrease Accounts Payable and decrease Cash in Bank.
If the owner of the Minnesota Thunder invests $5,000 in the team, Cash in Bank is debited for $5,000 and the Owner’s Capital account is credited for $5,000.
If the Liverpool soccer club earned revenues of $170 million and reported net income of $57 million, return on sales is 34%.
The closing entry for revenues is to debit Revenue for $1,240,000 and credit Income Summary for $1,240,000. The closing entry for expenses is to debit Income Summary for $1,114,000 and credit the balance of each expense account for a total of $1,114,000. Therefore, the balance in the Income Summary would be a debit of $126,000.
- $1,570 should be added to the bank statement balance for deposits in transit.
- $1,145 should be subtracted from the bank statement balance for outstanding checks.