ACCT*1220 Introductory Financial Accounting – Course Syllabus and Study Guide

Course Overview

This course introduces students to the fundamental concepts and practices of financial accounting. It is designed to help students understand how accounting information is recorded, processed, and used in business decision-making. The course covers the entire accounting cycle, the preparation and analysis of financial statements, and the ethical responsibilities of accountants.

Course Structure and Main Topics

• Unit 01: Financial Statements: The Purpose and Use

• Unit 02: Recording Business Transactions

• Unit 03: Accrual Accounting and the Financial Statements

• Unit 04: Cash and Receivables

• Unit 05: Inventory and Cost of Goods Sold

• Unit 06: Property, Plant and Equipment, Intangible Assets and Goodwill

• Unit 07: Liabilities

• Unit 08: Shareholders' Equity

• Unit 09: The Statement of Cash Flows

• Unit 10: Financial Statement Analysis

Learning Outcomes

• Understand the purpose and users of accounting information.

• Identify and measure transactions and other events in the accounting cycle.

• Prepare transactional, adjusting, and closing journal entries.

• Present the financial position, income, changes in equity, and cash flows of an organization.

• Analyze financial statements using common ratios and communicate the results effectively.

• Recognize ethical issues and professional responsibilities in accounting contexts.

Key Topics and Subtopics

Financial Statements: The Purpose and Use

Financial statements are formal records that summarize the financial activities and position of a business. They are essential for decision-making by various stakeholders, including investors, creditors, and management.

• Key Financial Statements: Balance Sheet, Income Statement, Statement of Changes in Equity, Statement of Cash Flows

• Purpose: To provide information about the financial position, performance, and changes in financial position of an entity.

• Users: Internal (management) and external (investors, creditors, regulators)

• Example: The Balance Sheet shows assets, liabilities, and shareholders' equity at a specific date.

Recording Business Transactions

Business transactions are recorded using the double-entry accounting system, which ensures that the accounting equation remains balanced.

• Double-Entry System: Every transaction affects at least two accounts (debit and credit).

• Accounting Equation: $\text{Assets} = \text{Liabilities} + \text{Shareholders' Equity}$

• Journal Entries: The process of recording transactions in the accounting records.

• Example: Purchasing inventory for cash increases inventory (debit) and decreases cash (credit).

Accrual Accounting and the Financial Statements

Accrual accounting recognizes revenues and expenses when they are earned or incurred, not necessarily when cash is received or paid.

• Revenue Recognition Principle: Revenue is recognized when earned.

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

• Adjusting Entries: Made at the end of the period to update account balances.

• Example: Recording accrued salaries at year-end.

Cash and Receivables

Cash includes currency and deposits available for immediate use. Receivables are amounts owed to the business by customers or others.

• Types of Receivables: Accounts Receivable, Notes Receivable

• Allowance for Doubtful Accounts: An estimate of uncollectible receivables.

• Example: Recording a bad debt expense using the allowance method.

Inventory and Cost of Goods Sold

Inventory represents goods held for sale. Cost of Goods Sold (COGS) is the direct cost of inventory sold during a period.

• Inventory Systems: Perpetual and Periodic

• COGS Formula: $\text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory}$

• Inventory Valuation Methods: FIFO, LIFO, Weighted Average

• Example: Calculating COGS using the FIFO method.

Property, Plant, and Equipment, Intangible Assets and Goodwill

These are long-term assets used in the operations of a business. Intangible assets lack physical substance but provide future economic benefits.

• Depreciation: Allocation of the cost of tangible assets over their useful lives.

• Amortization: Allocation of the cost of intangible assets.

• Goodwill: The excess of purchase price over the fair value of identifiable net assets acquired in a business combination.

• Example: Calculating annual depreciation using the straight-line method: $\text{Depreciation Expense} = \frac{\text{Cost} - \text{Residual Value}}{\text{Useful Life}}$

Liabilities

Liabilities are obligations that the business must settle in the future, typically through the transfer of assets or provision of services.

• Current Liabilities: Due within one year (e.g., accounts payable, short-term loans)

• Long-term Liabilities: Due after one year (e.g., bonds payable, long-term loans)

• Example: Recording interest expense on a loan.

Shareholders' Equity

Shareholders' equity represents the owners' claims on the assets of the business after liabilities are deducted.

• Components: Share capital, retained earnings, other comprehensive income

• Equation: $\text{Shareholders' Equity} = \text{Share Capital} + \text{Retained Earnings} + \text{Other Equity Items}$

• Example: Issuing new shares increases share capital.

The Statement of Cash Flows

The statement of cash flows reports the cash inflows and outflows from operating, investing, and financing activities during a period.

• Sections: Operating Activities, Investing Activities, Financing Activities

• Purpose: To provide information about a company’s cash receipts and cash payments.

• Example: Cash received from customers is reported under operating activities.

Financial Statement Analysis

Financial statement analysis involves evaluating financial statements to assess an organization’s performance and financial health.

• Common Ratios: Liquidity ratios, profitability ratios, solvency ratios

• Example Ratios:

  • Current Ratio: $\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$

  • Return on Equity: $\text{ROE} = \frac{\text{Net Income}}{\text{Average Shareholders' Equity}}$

• Purpose: To inform decision-making by internal and external users.

Assessment Structure

Assessment Item	Weight	Learning Outcomes
Dynamic Study Module (best 9/10)	5%	1, 2, 3, 4
Quizzes (best 8 out of 10)	10%	1, 2, 3, 4
Midterm Exam 1	25%	1, 2, 3, 4
Midterm Exam 2	25%	1, 2, 3, 4
Submitted Workings	5%	1, 2, 3, 4
Final Exam	30%	1, 2, 3, 4

Additional Information

• Required Textbook: Financial Accounting (Trotman et al., 2024, 8th Canadian Edition, Pearson)

• Course delivery is asynchronous online, with assessments via Pearson MyLab and CourseLink.

• Students are expected to adhere to academic integrity policies and ethical standards.