The BaSIS Framework™ - Using the poster in your classroom
This page provides an overview of how you can use the BaSIS Framework™ poster in your Accounting-101 classroom. If you want to use the whole Color Accounting boot-camp experience, this website, and its companion teacher-only site, the Educators' Resource Center will provide that.
The BaSIS Framework is a concept map which is a visual representation of information that shows all of the key concepts in a single view. It is effective because even though it looks simple, it is not simplistic. It is an accurate reflection of how accounting works in reality and will stand rigorous examples.
So let's start with the name - BaSIS. It's an acronym of Balance Sheet and Income Statement.
In a nutshell it provides a top-down single-page graphical view of accounting. Its unique layout has the debit and credit accounts arranged by 'sides' and then color-coded. Once the students learn how the framework works, it becomes a powerful tool for 'pointability' - the ability for the teacher, or the student, to simply point at the model to emphasize a question or make a point, for example: "Is it here (pointing to assets) or here (pointing to expenses)?" You can also use it to teach debits and credits, for T-accounts, underpin financial analysis (see the ratios), teach how the general ledger and general journal entries work, provide accounting literacy and much more.
It's also been called:
The BaSIS Framework is a concept map which is a visual representation of information that shows all of the key concepts in a single view. It is effective because even though it looks simple, it is not simplistic. It is an accurate reflection of how accounting works in reality and will stand rigorous examples.
So let's start with the name - BaSIS. It's an acronym of Balance Sheet and Income Statement.
In a nutshell it provides a top-down single-page graphical view of accounting. Its unique layout has the debit and credit accounts arranged by 'sides' and then color-coded. Once the students learn how the framework works, it becomes a powerful tool for 'pointability' - the ability for the teacher, or the student, to simply point at the model to emphasize a question or make a point, for example: "Is it here (pointing to assets) or here (pointing to expenses)?" You can also use it to teach debits and credits, for T-accounts, underpin financial analysis (see the ratios), teach how the general ledger and general journal entries work, provide accounting literacy and much more.
It's also been called:
- A teaching and communication tool.
- A visualizer for accounting.
- Accounting on a page.
- Top-down view of a General Ledger.
You can download a pdf of this poster here. Feel free to add your school logo (perhaps at top right?) if you wish.
Structure
The BaSIS Framework is essentially a 'bird's eye' or 'top-down' view of the General Ledger, with the debit accounts (Assets and Expenses - coded green) on the left and the credit accounts (Liabilities, Equity and Revenue/Income - coded orange) on the right.
[Sidebar: the use of color is not gratuitous… backed by neurological research, the brain responds quicker to color than location / sides / directions. So coding debit and credit with color instead of as left or right literally makes the cognition faster as you will see.]
The Income Statement is shown as being a 'storytelling window' explaining the current period's net profit number that lives in Equity. The Income Statement is therefore part of the balance sheet, and not independent. The purple perimeter shows this relationship. Purple is the third coded color used in Color Accounting and refers to profit and the profit story.
The five elements of the General Ledger are shown: Revenue, Equity, Liabilities, Assets & eXpenses (RELAX) together with an educational definition for each (legal definitions can be developed later). Within each element, live the accounts, exactly as they are organized in an accounting system general ledger. 'Postings' will be made to these accounts so the students can learn how the 'increases' and 'decreases' work. In the Color Accounting technology, these postings are made physically with a 3D pop-up BaSIS Board and general journal tickets for the debiting and crediting effects. You can use T-accounts on the poster by applying the downloadable 'T-account' document where needed and writing in the amounts as required (there is a worked example of this below to show you the process).
[Sidebar: the use of color is not gratuitous… backed by neurological research, the brain responds quicker to color than location / sides / directions. So coding debit and credit with color instead of as left or right literally makes the cognition faster as you will see.]
The Income Statement is shown as being a 'storytelling window' explaining the current period's net profit number that lives in Equity. The Income Statement is therefore part of the balance sheet, and not independent. The purple perimeter shows this relationship. Purple is the third coded color used in Color Accounting and refers to profit and the profit story.
The five elements of the General Ledger are shown: Revenue, Equity, Liabilities, Assets & eXpenses (RELAX) together with an educational definition for each (legal definitions can be developed later). Within each element, live the accounts, exactly as they are organized in an accounting system general ledger. 'Postings' will be made to these accounts so the students can learn how the 'increases' and 'decreases' work. In the Color Accounting technology, these postings are made physically with a 3D pop-up BaSIS Board and general journal tickets for the debiting and crediting effects. You can use T-accounts on the poster by applying the downloadable 'T-account' document where needed and writing in the amounts as required (there is a worked example of this below to show you the process).
Language
Accounting is a language used to communicate a financial story for the purposes of decision-making. Unfortunately, this is an area that causes great confusion, much of which is caused due to thinking-errors in commonly available definitions, including those used in IFRS and US GAAP! In the BaSIS Framework™, we use 'educational' / 'transitional' definitions to help us first understand what these words mean using simple (but never simplistic) concepts that we can build upon.
ASSETS: Valuable things. Rights.
This is the only place that value exists from the entity's perspective. Revenue is not valuable, profit is not valuable and equity is not valuable. It is also the only place that tangibility can exist (noting that assets can also be intangible). All of the other elements are intangible.
LIABILITIES: Obligation to creditors.
Creditors (with a small 'c') simply means 'those to whom we owe'. In the UK and some other countries, there is a sub-group of creditors called Trade Creditors or similar (Accounts Payable) and refers to the suppliers of the organization. Creditors as used here means all parties with whom we have a contractual obligation.
EQUITY: Obligation to owners.
Sometimes called, 'Owner's Equity' (the word 'Owner' is actually a redundancy because equity can only be attributed to the owners), equity is probably one of the least understood elements in accounting. It is frequently defined using an incorrect (external) point of view. From the entity's perspective, it is an obligation to the owners more akin to a moral obligation than a contractual one.
REVENUE: Value Generating Activities (VGA).
The dictionary defines revenue as something like "cash received..." and as a noun. Revenue is actually much more like a verb and that 'cash received' is woefully inadequate if not downright inaccurate in that this describes one of the assets that could be generated as an outcome from the activity of earning revenue. But it doesn't define the actual activity. Revenue generates value (net value to be precise) in that an asset is earned or a reduction in a liability occurs - both of which increase the net value of the entity.
[Sidebar 1: What is the sound of revenue? Universally, people will respond to that question with "Ka-ching". But it's wrong! That's the sound of the cash going into the cash register and is therefore the receipt of the asset - not the revenue. So what does revenue sound like? Well, think of a lawn-mowing business. When is revenue being generated? Think of the sound of the lawn-mower (vroom vroom), the hedge trimmer, the truck being loaded. What about a hairdressing salon? Snip snip etc. A law firm? Type type or voices dictating, and so on.]
[Sidebar 2: Outside of the US, income is synonymous with revenue - they mean the same thing. In the US, income and net profit are sometimes used as though they mean the same thing which can be very confusing.]
EXPENSES: Value Sacrificing Activities (VSA).
The dictionary defines expenses as something like "cash spent..." and as a noun. As per the revenue definition, in practice expenses are actually more like a verb in that they are an activity that sacrifices value from the entity's perspective. Expenses sacrifice value (net value to be precise) in that an asset's value decreases or an increase in a liability occurs - either of which decreases the net value of the entity.
ASSETS: Valuable things. Rights.
This is the only place that value exists from the entity's perspective. Revenue is not valuable, profit is not valuable and equity is not valuable. It is also the only place that tangibility can exist (noting that assets can also be intangible). All of the other elements are intangible.
LIABILITIES: Obligation to creditors.
Creditors (with a small 'c') simply means 'those to whom we owe'. In the UK and some other countries, there is a sub-group of creditors called Trade Creditors or similar (Accounts Payable) and refers to the suppliers of the organization. Creditors as used here means all parties with whom we have a contractual obligation.
EQUITY: Obligation to owners.
Sometimes called, 'Owner's Equity' (the word 'Owner' is actually a redundancy because equity can only be attributed to the owners), equity is probably one of the least understood elements in accounting. It is frequently defined using an incorrect (external) point of view. From the entity's perspective, it is an obligation to the owners more akin to a moral obligation than a contractual one.
REVENUE: Value Generating Activities (VGA).
The dictionary defines revenue as something like "cash received..." and as a noun. Revenue is actually much more like a verb and that 'cash received' is woefully inadequate if not downright inaccurate in that this describes one of the assets that could be generated as an outcome from the activity of earning revenue. But it doesn't define the actual activity. Revenue generates value (net value to be precise) in that an asset is earned or a reduction in a liability occurs - both of which increase the net value of the entity.
[Sidebar 1: What is the sound of revenue? Universally, people will respond to that question with "Ka-ching". But it's wrong! That's the sound of the cash going into the cash register and is therefore the receipt of the asset - not the revenue. So what does revenue sound like? Well, think of a lawn-mowing business. When is revenue being generated? Think of the sound of the lawn-mower (vroom vroom), the hedge trimmer, the truck being loaded. What about a hairdressing salon? Snip snip etc. A law firm? Type type or voices dictating, and so on.]
[Sidebar 2: Outside of the US, income is synonymous with revenue - they mean the same thing. In the US, income and net profit are sometimes used as though they mean the same thing which can be very confusing.]
EXPENSES: Value Sacrificing Activities (VSA).
The dictionary defines expenses as something like "cash spent..." and as a noun. As per the revenue definition, in practice expenses are actually more like a verb in that they are an activity that sacrifices value from the entity's perspective. Expenses sacrifice value (net value to be precise) in that an asset's value decreases or an increase in a liability occurs - either of which decreases the net value of the entity.
Mechanics (movement)
Increases and decreases are made to the general ledger accounts so as to record business events that have a financial impact on the entity. With traditional accounting, the student has to memorize the debit and credit type accounts and the impacts of debiting and or crediting entries against those accounts. In Color Accounting, we simply substitute color for those two words as it is much easier to visualize. Debits and credits can be easily introduced later once the students become confident and competent with posting using color.
The green (debit nature) accounts live on the green (uses of funds) side of the BaSIS Framework and the orange (credit nature) accounts live on the yellow (sources of funds) side. If we need to record an increase against a green account, we need to make it more green, so the effect (journal) would be a green number. Similarly for an orange account - increases are orange numbers. For decreases, it is the opposite color. An orange number (journal) would decrease a green account and a green number (journal) would decrease an orange account.
The accounts can be shown on the BaSIS Framework as cylinders, with the numbers in green or orange commencing at the bottom of the cylinder. Or, you can use traditional T-accounts, with the green (debit) numbers on the left of the T-account and the orange (credit) numbers on the right.
The green (debit nature) accounts live on the green (uses of funds) side of the BaSIS Framework and the orange (credit nature) accounts live on the yellow (sources of funds) side. If we need to record an increase against a green account, we need to make it more green, so the effect (journal) would be a green number. Similarly for an orange account - increases are orange numbers. For decreases, it is the opposite color. An orange number (journal) would decrease a green account and a green number (journal) would decrease an orange account.
The accounts can be shown on the BaSIS Framework as cylinders, with the numbers in green or orange commencing at the bottom of the cylinder. Or, you can use traditional T-accounts, with the green (debit) numbers on the left of the T-account and the orange (credit) numbers on the right.
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On the left above we can see the BaSIS Framework used with 'cylinder' style accounts and on the right the same financials but with T-accounts.
Note on profit account (in Equity): this net balance has been shown in gray so as to avoid double-counting the income statement accounts. If we were just focussing on the balance sheet, then this would be an orange (credit) number.
Note on profit account (in Equity): this net balance has been shown in gray so as to avoid double-counting the income statement accounts. If we were just focussing on the balance sheet, then this would be an orange (credit) number.
Activities
You can use the BaSIS Framework to visually demonstrate other activities from your traditional curriculum, and you will find it very helpful for this. It is even more powerful if you use it to build the foundations of your students accounting literacy with the Color Accounting Bootcamp approach - see menu above.
Resources for download
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If you have received a physical copy of the above poster, and want to use it for T-account entries, you can download a profile of a T-account, have it laminated and use it on the poster to write on with a dry erase marker.
Download this file and produce as many debit-nature (assets and expenses) and credit-nature (liabilities, equity and revenue) T-accounts as you will need. These can be affixed to the poster using a variety of means such as removable putty, tape or similar. The debits and credit amounts can then be written in using a green dry-erase marker for debiting amounts or an orange one for crediting amounts. For more information on using Color Accounting learning technology in an academic environment, this website has it all. |
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If you plan on writing directly onto the poster during the class, you may prefer to download one (shown at right) which provides more white space within each element: download.
As you wish you can then:
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Copyright and Proprietary Information
The BaSIS Framework™ is the property of Color Accounting International and may only be used commercially under separate written license. For non-commercial use, the BaSIS Framework™ is available under a Creative Commons license as follows:
Attribution:
When using the BaSIS Framework, the attribution to be provided is "Created and licensed by Color Accounting International".
- BY: Attribution. You must attribute the work in the manner specified by the author or licensor. See below.
- NC: Noncommercial. The licensor permits others to copy, distribute and transmit the work. In return, licensees may not use the work for commercial purposes — unless they get the licensor's permission.
- ND: No derivative works. The licensor permits others to copy, distribute and transmit only unaltered copies of the work — not derivative works based on it.
Attribution:
When using the BaSIS Framework, the attribution to be provided is "Created and licensed by Color Accounting International".
