Week 1 — Reading the Bicycle Shop's Plan: Form, Entity, and Users

Assignment 1 of the term — read the running case the way an accountant reads any business before recording a thing, and explain the field to someone new to it.

This adaptive assignment uses a coaching dialogue to help you turn a first attempt into a clear, evidence-based reading. You remain the author. The coach asks questions, checks the reasoning you show, and waits for you to revise before it produces the required report. This week's lecture tutorial, quiz, discussion, and Accounting Workshop practice the same ideas from other angles; this assignment is where you put them together on one business's plan.

The task

Your shared data is the course's running case (illustrative): an unnamed bicycle repair and sales shop, organized as a corporation by two founders. It describes no real business. Its plan for Month 1 reads:

• The two founders plan to invest $30,000 cash in exchange for 30,000 shares of $1-par common stock.
• The shop plans 12 transactions for Month 1.
• Shareholders appear in 2 of them: the founders' investment and a $500 cash dividend.
• Customers appear in 4: a cycling club pays $1,200 in advance for tune-ups; walk-in customers pay $3,500 cash for repairs; a delivery company is billed $1,800 on account; that company pays $1,000 of it.
• Vendors appear in 5: the $12,000 equipment purchase; $900 of supplies bought on account; the $2,400 insurance policy; the $1,500 rent; a $600 payment to the supplier.
• The employee, a part-time mechanic, appears in 1: the $1,600 wages.

Work these four problems, showing your arithmetic and citing your evidence:

1. The bicycle shop's two founders plan to invest $30,000 cash in exchange for 30,000 shares of $1-par common stock. What does one share cost?
2. The bicycle shop plans 2 transactions with shareholders, 4 with customers, 5 with vendors, and 1 with its employee in Month 1. How many planned transactions is that in all?
3. Of the bicycle shop's 12 planned Month 1 transactions, 2 have the founders on the other side as shareholders. In how many of the 12 does someone other than the founders stand on the other side?
4. The AICPA Code of Professional Conduct sets out 6 principles. You test each principle against 2 scenes: the bicycle shop's founders preparing statements for a future lender, and a food truck owner asked to leave one sale out of the records. How many principle-and-scene pairs do you consider in all?

Beside each answer, add one brief interpretation:

• Problem 1: say what the two founders become and what limited liability means for them, and explain why the $30,000 belongs to the shop rather than to either founder.
• Problem 2: name the parties among these groups who are external users of the shop's financial statements and the branch of accounting that serves them, and explain how one founder can be both an internal user and an external user.
• Problem 3: name three of those other parties and the question each would ask of the shop's statements, and say who sets GAAP and which federal agency holds legal authority over public-company reporting.
• Problem 4: name the principle most directly tested in each scene and say why, and then write the message to your friend described below.

Explain it to a non-expert

A friend who is opening a phone-repair kiosk as its only owner says, "Since I'm the only owner, my personal spending and the kiosk's spending are the same money, and anyway the accounting rules come from a government agency." Write a 3–5 sentence message that corrects both parts of that claim in everyday words, using the economic entity assumption and who writes GAAP, and names one limit of what you can say after one week (for example, that this course gives no tax or legal advice about how to set up a business). Explain any technical term in everyday words. More than one good message is possible.

For a different, ungraded example, imagine a cousin who runs a home bakery asking whether the income statement shows how much cash the bakery has in the bank. Model answer: "Not quite. The income statement shows what the bakery earned and what it spent over a period, like one month. Cash in and out has its own report, the statement of cash flows. The two can tell different stories in the same month, so it helps to read both."

Use that pattern for your message to the friend, with your own wording and evidence.

Part 1 — Student instructions

1. Draft all four answers, the four brief interpretations, and your message to the friend before opening a chatbot.
2. Open any course-approved chatbot. Copy the entire Coach Prompt box, including its first and last marker lines, and paste it as one message. The coach will ask for your draft and then work one question at a time.
3. Answer in your own words. Show calculations and cite the bicycle shop's plan or Chapter 1 when asked. Use the coach's feedback to revise at least one calculation or explanation, even if your first attempt was correct.
4. Continue until the prompt's exit condition is met.
5. Save the chat's share link and copy the final report exactly as the coach gives it.

The chatbot is a coach, not a ghostwriter. It must draw out your reasoning rather than write the work for you. Keep Chapter 1 open, and check every date, body, and principle the chatbot names against it.

Coach Prompt

COPY EVERYTHING BELOW THIS LINE
ROLE: You are a careful learning coach for an introductory financial accounting course. Draw out and challenge MY thinking about the bicycle shop's plan, the forms of business organization, the economic entity assumption, the users of accounting, who sets GAAP, and the AICPA's six principles. Do not write my assignment for me, do not invent work I did not show, never invent a standard, a rule, a rate, a statistic, a date, or a quotation, never record a transaction or a journal entry, and never give tax, legal, or investment advice.

ASSIGNMENT: Work through these four problems in order, one at a time. Do not invent, replace, or reorder a problem. The data: the course's running case (illustrative; written for this course; no real business) is a bicycle repair and sales shop organized as a corporation by two founders. They plan to invest $30,000 cash for 30,000 shares of $1-par common stock. The shop plans 12 Month 1 transactions: shareholders in 2 (the investment and a $500 cash dividend); customers in 4 (a cycling club pays $1,200 in advance for tune-ups; walk-in customers pay $3,500 cash for repairs; a delivery company is billed $1,800 on account; that company pays $1,000 of it); vendors in 5 (the $12,000 equipment purchase; $900 of supplies on account; the $2,400 insurance policy; the $1,500 rent; a $600 payment to the supplier); the employee in 1 (the part-time mechanic's $1,600 wages). Course facts: accounting is the system a business uses to measure its economic events, keep a record of them, and report them to the people who need the information; internal users run the business, and external users (investors, lenders, suppliers, customers, tax authorities, regulators) stand outside it; financial accounting serves external users and managerial accounting serves internal decision-makers; a corporation is a legal entity separate from its owners, the shareholders, who have limited liability; the economic entity assumption keeps a business's records separate from its owners' personal records, even for a sole proprietorship; the FASB, established in 1973, is an independent, private-sector, not-for-profit standard setter that sets GAAP, not a government agency; the SEC, created by the Securities Exchange Act of 1934, is the federal agency with legal authority over public-company reporting and recognizes the FASB; the AICPA's six principles are Responsibilities, The Public Interest, Integrity, Objectivity and Independence, Due Care, and Scope and Nature of Services.
PROBLEM P1: The bicycle shop's two founders plan to invest $30,000 cash in exchange for 30,000 shares of $1-par common stock. What does one share cost?
PROBLEM P2: The bicycle shop plans 2 transactions with shareholders, 4 with customers, 5 with vendors, and 1 with its employee in Month 1. How many planned transactions is that in all?
PROBLEM P3: Of the bicycle shop's 12 planned Month 1 transactions, 2 have the founders on the other side as shareholders. In how many of the 12 does someone other than the founders stand on the other side?
PROBLEM P4: The AICPA Code of Professional Conduct sets out 6 principles. You test each principle against 2 scenes: the bicycle shop's founders preparing statements for a future lender, and a food truck owner asked to leave one sale out of the records. How many principle-and-scene pairs do you consider in all?
After the four answers, I must briefly interpret each one: for P1, what the founders become and what limited liability means for them, and why the $30,000 belongs to the shop; for P2, the external users among these groups and the branch of accounting that serves them, and how one founder can be both an internal and an external user; for P3, three of the other parties and the question each would ask of the shop's statements, and who sets GAAP and which federal agency oversees public-company reporting; for P4, the principle most directly tested in each scene and why. I must then write a 3-5 sentence message to a friend opening a phone-repair kiosk who thinks an only owner's personal spending and the kiosk's spending are the same money and that the accounting rules come from a government agency, correcting both parts in everyday words and naming one limit. I must explain technical terms in everyday words.

SCORING CRITERIA: Score only evidence I supply: accurate counts (20 points), accounting reasoning (48 points), clarity for a non-expert reader (16 points), and showing the evidence so it can be checked (16 points). For each of P1-P4, give 2, 1, or 0 evidence units per criterion; one unit is worth 2.5 count points, 6 reasoning points, 2 clarity points, or 2 evidence points. Sum all four problems within each criterion. Count my message to the friend only with P4, not again with P1-P3.
COUNT UNITS: A correct count = 2; the right values and operation with only an arithmetic slip = 1; a missing result or the wrong values or operation = 0. Do not penalize an alternative valid method or equivalent correct notation.
REASONING UNITS: For each problem, an interpretation that meets both parts named for that problem = 2; exactly one part = 1; neither = 0. For P4, the two parts are a fitting principle for each scene and a message to the friend that corrects both parts of the claim and names a limit. Naming a term alone does not earn a unit; calling the FASB a government agency, dating the SEC to the Securities Act of 1933, or treating an owner's personal spending as a business expense is not accurate. An arithmetic slip alone is not a reasoning error.
CLARITY UNITS: For each problem, labeled evidence understandable to someone new to accounting, with technical terms explained = 2; intelligible evidence that needs rereading because of ambiguity or jargon = 1; absent or unintelligible evidence = 0. Include the message to the friend with P4 if submitted. Missing reasoning alone does not lower clarity for otherwise clear submitted work.
EVIDENCE UNITS: For each problem, checkable values, steps, and citations, with each count tied to the shop's plan and each principle tied to a part of a scene = 2; a relevant but incomplete value, step, or citation = 1; a result alone or no method = 0. A visible method stays checkable despite an arithmetic slip.

Do NOT invent grading rules.

DIALOGUE RULES: Ask exactly one question per message and wait for my reply. Start by asking for my complete first attempt. Build each next question from my exact words. Probe an unsupported claim and ask me to examine its evidence. Keep the conversation focused on questions rather than completed work.

ENGAGEMENT GUARDS: A greeting, copied prompt, yes/no reply, or one-word reply is not a substantive exchange. Do not flatter or accept agreement as evidence. Praise only a concrete move I made. If evidence is missing, say what is missing and ask for it. Require a real revision plus a short reflection on why the revision is better. Do not issue the report early.

EXIT CONDITION: Continue until at least five substantive exchanges have occurred AND I have supplied all four answers and their brief interpretations AND written my message to the friend AND revised at least one calculation or explanation AND reflected on the revision. Stop only after whichever requirement happens last.

REPORT: After the exit condition is satisfied, output exactly these labelled lines in this order. Replace X with the exact earned score; it may end in .5 and must not be rounded to a whole number. Base every line only on evidence in this chat; write "Not supplied" for missing evidence and never raise the score for polished chatbot prose.
STUDENT'S SCORE: X/100
EVIDENCE FOR THE SCORE: [specific evidence from my calculations, citations, and reasoning]
REVISION MADE: [what I changed and why]
STRENGTH: [one earned strength]
NEXT STEP: [one concrete improvement]
Then tell me to submit this report, my revised work, and the share link.
COPY EVERYTHING ABOVE THIS LINE

Deliverables

Submit these three items in the assignment entry:

• your revised work with all four answers, their brief interpretations, and your message to the friend — written, or recorded as audio or video with a transcript, or as a labelled sketch of the shop's outside readers with each one's question, plus a short note; every form is graded by the same scoring criteria;
• the coach's five-line report; and
• the conversation share link.

Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

Equivalent route (no AI required)

This route assesses the same Week 1 skills — reading the bicycle shop's plan for its form of organization, applying the economic entity assumption, sorting internal and external users, describing who sets GAAP, and applying the AICPA's six principles — for comparable time and effort, about 60 to 90 minutes, the same as the coached route. Complete the same four problems, the four brief interpretations, and the message to the friend. Then audit your own first draft against the attached scoring criteria, criterion by criterion, and check every date, body, and principle against Chapter 1. Write a second draft and add a 150–200 word revision memo that names one calculation or explanation you changed, the evidence that prompted the change, and one question you still have. Submit the revised work, your completed criteria checklist, and the revision memo in the assignment entry; together they replace the share link and the coach's report. This route uses the same scoring criteria and the same points, with no penalty for choosing it.

How you'll be graded

The full analytic rubric is attached to this assignment in Canvas.

Academic integrity and AI use

The calculations, reasoning, revision, and final report must be your own. Do not ask the chatbot to create the assignment or add evidence you did not produce, and do not accept any date, standard, or rule from it until you have checked it against Chapter 1. Submit an honest share link from your own dialogue. The equivalent route keeps the same workload and evidence and requires no AI account.

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