Upon completion of the course students will be able to:
1. Explain how accounting meets the information needs of investors, creditors, managers, regulatory agencies, and taxing authorities.
2. Explain the principles, procedures, and concepts underlying the primary financial statements.
3. Evaluate the uses and limitations of financial statements and related information disclosed in the annual report of Securities and Exchange Commission's reports in making decisions.
4. Explain how an accounting system is designed to meet the needs of specific businesses; and how to input transactions, process this input and prepare and interpret the financial statements.
5. Determine the economic transactions for both a service and merchandising concern from the source document through the closing process.
6. Analyze the difference in accounting methods allowed under generally accepted accounting principles in the accounting for various assets, liabilities and equity transactions.
7. Categorize the types of business transactions as being operating, investing or financing activities.
8. Compare the difference between accrual based measurements and cash flows from activities.
9. Demonstrate analytical, interpersonal, and communication skills in solving problems.
I. Introduction to Accounting
A. Users of accounting information and their needs
B. Financial statements as a means of communications
C. The objectives of financial reporting
D. Types of organizations and forms of business ownership
E. The nature of business activity: operating, investing, and financing activities
F. The accounting profession and ethical issues
G. Learn critical thinking skills, analytical ability, interpersonal and collaborative skills, and the ability to write business reports.
II. Financial statements and the annual report
A. The accounting equation
B. Presentation of the Income Statement, Statements of Retained Earnings or Stockholders' Equity, classified Balance Sheet and Statement of Cash Flows
C. Financial Statement interpretation and analysis
D. Understanding elements of the annual report
E. The Securities and Exchange Commission's reports
F. Objective of Financial Reporting
G. Qualitative characteristics of accounting information
III. Processing accounting information for service entities
A. External and internal transactions
B. The accounting equation and transactional analysis
C. The double-entry system and use of "T" accounts
D. Use of general journal and general ledger to process information
E. Cash versus accrual accounting and the adjustment process
F. The adjusting process -- why and how
G. The closing process -- why and how
H. The accounting cycle
IV. Processing accounting information for merchandising entities
A. Additional accounts and recording merchandising concerns
B. Periodic vs perpetual inventory systems
C. Internal control for a merchandising concern
D. Inventory valuation and its impact on the financial statements
E. Lower of Cost or Market and its effect on inventory valuation
F. Estimating inventory value: the gross profit method and retail inventory method
G. Effect of inventories on cash flows
V. Accounting for Assets
A. Monetary assets: cash, marketable securities and receivables
1. Valuation issues and their impact on income measurement cash flows
2. Liquidity issues
B. Operating Assets: property, plant and equipment, natural resources, and intangibles
1. Acquisition, depreciation and disposal of plant and equip.
2. Subsequent costs: revenue or capital expenditure
3. The matching principle and cost allocation
4. Allocation versus valuation of assets
5. Tax implications of asset dispositions
6. Acquisition and depletion of natural resources
7. Acquisition and amortization of intangible assets
VI. Accounting for Liabilities
A. Current liabilities, contingent liabilities, and the time value of money
1. Recording and disclosing accounts payable, notes payable, currently maturing portions of long-term debt and accrued deferred liabilities
2. Balance sheet and footnote disclosures
3. Liquidity and cash flow issues
B. Long-term liabilities
1. Accounting for bonds
2. Other long-term liabilities; leases, deferred taxes, pensions and other postretirement benefits
3. Balance sheet and footnote disclosures
4. Impact on the Statement of Cash flows
VII. Stockholders' Equity and Financing Operations
A. Components of stockholders' equity; contributed capital and retained earnings
B. Types of stock and their characteristics
C. Issuance of stock for cash, noncash consideration and by subscription
D. Treasury stock transactions and retirement of shares
E. Retained earnings and dividends: Types of dividends and apportionment
F. Stock splits
G. Valuation issues; book value versus market value
H. Effect of stockholders' equity changes on cash flows
VIII. The Statement of Cash Flows
A. Cash versus accrual accounting reviewed
B. Purpose and reporting requirements for the Statement of Cash Flows
C. Direct and indirect methods of computing cash flows from operations
D. Noncash investing and financing activities
E. Preparing the Statement of Cash Flows
F. Use of cash flow information
IX. Financial Statement Analysis
A. Horizontal and trend analysis
B. Vertical analysis
C. Common-size statements
D. Ratio analysis:
1. Liquidity analysis
2. Solvency analysis
3. Projectability Analysis
E. Limitations of Financial Statements and Analysis