AC221 Financial Accounting Syllabus and Course Structure: Study Guide

AC221 Financial Accounting: Syllabus and Course Structure

Course Overview

This course introduces the fundamental concepts and procedures of financial accounting, focusing on the preparation, interpretation, and analysis of financial statements. Students will learn how financial reporting measures business performance and supports decision-making in the economy.

• Key Learning Goals:

  • Understand the role of financial reporting in business and capital allocation.

  • Apply accrual accounting principles to revenues, expenses, assets, liabilities, and equity.

  • Prepare and interpret the four primary financial statements: income statement, balance sheet, statement of cash flows, and statement of equity.

  • Analyze financial statements to evaluate company performance.

  • Appreciate the broader context of corporate and financial reporting, including ethics and global standards.

Course Structure and Topics

The course is organized around the following major topics, each corresponding to textbook chapters and key concepts in financial accounting:

1. The Financial Statements (Ch. 1, Ch. 12, Appendix C)

• Introduction to Financial Statements: Overview of the income statement, balance sheet, statement of cash flows, and statement of equity.

• Purpose: To communicate a company's financial performance and position to external users.

• Key Terms: Assets, liabilities, equity, revenues, expenses, net income.

• Example: Preparing a basic balance sheet for a service business.

• Additional info: Appendix C covers a summary of Generally Accepted Accounting Principles (GAAP).

2. Transaction Analysis (Ch. 2)

• Definition: The process of identifying, classifying, and recording business transactions.

• Double-Entry System: Every transaction affects at least two accounts, maintaining the accounting equation: $Assets = Liabilities + Equity$

• Steps:

  1. Identify the accounts affected.

  2. Determine the type of account (asset, liability, equity, revenue, expense).

  3. Decide whether each account increases or decreases.

  4. Record the transaction using debits and credits.

• Example: Purchasing inventory on credit increases inventory (asset) and accounts payable (liability).

3. Accrual Accounting and Income (Ch. 3)

• Accrual Accounting: Revenues and expenses are recognized when earned or incurred, not necessarily when cash is received or paid.

• Matching Principle: Expenses are matched to the revenues they help generate.

• Key Adjustments: Prepaid expenses, accrued revenues, accrued expenses, unearned revenues.

• Formula: $Net\ Income = Revenues - Expenses$

• Example: Recording salary expense incurred but not yet paid at period end.

4. Internal Control and Cash; Receivables and Revenue (Ch. 4 & 5)

• Internal Control: Procedures to safeguard assets and ensure reliable financial reporting.

• Cash Management: Bank reconciliations, petty cash, and controls over cash receipts and disbursements.

• Receivables: Recognition, valuation (allowance for doubtful accounts), and collection.

• Revenue Recognition: Revenue is recognized when earned and realizable.

• Example: Estimating bad debts using the allowance method.

5. Inventory and Cost of Goods Sold (Ch. 6)

• Inventory Systems: Perpetual vs. periodic inventory systems.

• Cost Flow Assumptions: FIFO, LIFO, and weighted average methods.

• Formula: $Cost\ of\ Goods\ Sold = Beginning\ Inventory + Purchases - Ending\ Inventory$

• Example: Calculating cost of goods sold using FIFO method.

6. Plant Assets, Natural Resources, and Intangibles (Ch. 7)

• Plant Assets: Tangible long-term assets such as land, buildings, and equipment.

• Depreciation: Systematic allocation of the cost of a tangible asset over its useful life.

• Formula (Straight-Line Depreciation): $Annual\ Depreciation = \frac{Cost - Salvage\ Value}{Useful\ Life}$

• Intangibles: Non-physical assets like patents and copyrights (limited coverage in this course).

• Example: Recording annual depreciation expense for equipment.

7. Current and Long-Term Liabilities (Ch. 8 & 9)

• Current Liabilities: Obligations due within one year (e.g., accounts payable, short-term notes).

• Long-Term Liabilities: Obligations due beyond one year (e.g., bonds payable, leases).

• Leases: Accounting for operating and finance leases.

• Example: Recording issuance of a note payable and subsequent interest expense.

8. Stockholders' Equity (Ch. 10)

• Components: Common stock, preferred stock, additional paid-in capital, retained earnings.

• Dividends: Distribution of earnings to shareholders.

• Example: Issuing common stock for cash and declaring a cash dividend.

9. The Statement of Cash Flows (Ch. 11)

• Purpose: Reports cash inflows and outflows from operating, investing, and financing activities.

• Methods: Direct and indirect methods for operating activities.

• Formula (Indirect Method): $Net\ Cash\ from\ Operating\ Activities = Net\ Income + Noncash\ Expenses - Noncash\ Revenues \pm Changes\ in\ Working\ Capital$

• Example: Reconciling net income to net cash provided by operating activities.

10. Financial Statement Analysis (Ch. 12)

• Purpose: To evaluate a company's financial health and performance using ratios and other analytical tools.

• Key Ratios: Liquidity ratios (e.g., current ratio), profitability ratios (e.g., return on equity), solvency ratios (e.g., debt-to-equity).

• Formula (Current Ratio): $Current\ Ratio = \frac{Current\ Assets}{Current\ Liabilities}$

• Example: Calculating and interpreting the return on assets (ROA).

11. Global Financial Reporting and Ethics

• Global View: Introduction to International Financial Reporting Standards (IFRS) and comparison with US GAAP.

• Ethics: Discussion of ethical issues in financial reporting, including fraud and its impact.

• Case Study: "A Letter from Prison" explores ethical dilemmas in accounting.

12. Environmental, Social, and Governance (ESG) Reporting

• Overview: Introduction to ESG reporting and its growing importance in financial accounting.

• Application: In-class discussion and exercises on ESG topics.

Course Assessment and Grading

Evaluation Activity	Portion of Course Grade
Exam 1	15%
Exam 2	15%
Exam 3	15%
Final Exam	35%
Homework in MyLab	10%
Participation, Case Study(ies), Professionalism & Other	10%
Total	100%

Assignments and Study Recommendations

• MyLab Homework: Complete assigned problems in Pearson MyLab by the due dates. Late submissions incur a penalty.

• Self-Study "Quick Check" Problems: Practice problems in the textbook to reinforce learning. Answers are provided in the textbook.

• Case Study: Complete and submit assignments related to the Harvard Business School case study as instructed.

• Participation: Engage in class discussions and activities to earn participation credit.

Support and Resources

• Instructor and Course Assistants: Office hours and help room sessions are available for additional support.

• Review Sessions: Weekly recitations and review sessions reinforce class material.

• Educational Resource Center: Offers tutoring and academic support services.

• Disability Services: Accommodations are available for students with documented needs.

Professionalism and Academic Integrity

• Attendance: Regular attendance and participation are expected for success.

• Academic Integrity: Adherence to the Boston University Academic Conduct Code is required.

• Professional Conduct: Respectful behavior and compliance with course policies are mandatory.

Course Schedule Overview

The course follows a structured schedule, covering each major topic in sequence, with exams spaced throughout the semester. Refer to the course schedule for specific dates and reading assignments.

Summary Table: Major Topics and Corresponding Chapters

Topic	Textbook Chapter(s)
The Financial Statements	Ch. 1, Ch. 12, Appendix C
Transaction Analysis	Ch. 2
Accrual Accounting and Income	Ch. 3
Internal Control and Cash; Receivables and Revenue	Ch. 4, Ch. 5
Inventory and Cost of Goods Sold	Ch. 6
Plant Assets, Natural Resources, and Intangibles	Ch. 7
Current and Long-Term Liabilities	Ch. 8, Ch. 9
Stockholders' Equity	Ch. 10
The Statement of Cash Flows	Ch. 11
Financial Statement Analysis	Ch. 12
Global Financial Reporting	Ch. 1 (Global View), Ch. 7 (Global View), Appendix D
Ethics, ESG, and Careers	Case Study, In-class discussions

Additional info: This study guide is based on the official course syllabus and is intended to provide a structured overview of the course content, requirements, and academic expectations for AC221 Financial Accounting.