Principles of Financial Accounting I: Course Syllabus and Core Concepts

Principles of Financial Accounting I: Course Overview

Course Description and Purpose

This course provides an introduction to financial accounting, focusing on the theoretical foundation and practical application of accounting principles in business. Students will learn how corporations record and report economic transactions, and how to produce information for decision making and evaluating corporate performance.

• Course Title: Principles of Accounting I (ACCT 204/206)

• Credits: 3

• Textbook: Horngren’s Accounting, Miller-Nobles/Mattison, 13th Edition

• Core Competencies: Communication, Data Gathering, Problem Solving, Critical Thinking

Core Topics and Learning Objectives

1. Accounting and the Business Environment

This topic introduces the discipline of accounting, its users, and the business environment in which it operates.

• Definition of Accounting: The process of recording, summarizing, and reporting financial transactions to provide information for decision making.

• Users of Financial Information: Internal (management, employees) and external (investors, creditors, regulators) users.

• Accounting Profession: Governed by organizations such as the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB).

• Types of Business Organizations: Proprietorship, Partnership, Corporation.

• Accounting Equation: Assets = Liabilities + Equity

• Financial Statements: Income Statement, Statement of Owner’s Equity, Balance Sheet.

Example: A sole proprietorship records its assets, liabilities, and owner’s equity to prepare financial statements for external users.

2. Recording Business Transactions

This section covers the mechanics of recording transactions using accounts, journals, and ledgers.

• Accounts, Journals, Ledgers: Tools for recording and organizing financial data.

• Debits and Credits: Fundamental to double-entry accounting; each transaction affects at least two accounts.

• Normal Account Balances: Assets (debit), Liabilities (credit), Equity (credit).

• Transaction Recording Process: Identify, journalize, post, and prepare trial balance.

• Trial Balance: Ensures total debits equal total credits.

Example: Recording a cash sale increases both cash (asset) and sales revenue (equity).

3. The Adjusting Process

Adjusting entries are necessary to ensure that revenues and expenses are recorded in the correct accounting period.

• Accrual vs. Cash-Basis Accounting: Accrual records revenues and expenses when earned/incurred; cash-basis records when cash is received/paid.

• Revenue Recognition Principle: Revenue is recognized when earned.

• Matching Principle: Expenses are matched to revenues in the period incurred.

• Adjusting Entries: Required for prepaid expenses, accrued revenues, accrued expenses, and unearned revenues.

• Adjusted Trial Balance: Used to prepare financial statements.

Example: Adjusting for prepaid insurance to recognize expense over time.

4. Completing the Accounting Cycle

This topic covers the steps to finalize the accounting records for a period, including closing entries and classification of assets and liabilities.

• Accounting Worksheet: Tool for organizing and preparing financial statements.

• Closing Entries: Close revenue, expense, and dividend accounts to retained earnings.

• Post-Closing Trial Balance: Ensures only permanent accounts remain.

• Classification: Assets and liabilities as current or long-term.

Example: Closing the sales revenue account at period end.

5. Merchandising Operations

Merchandising businesses buy and sell goods; this section covers inventory systems and financial statement preparation for merchandisers.

• Inventory Systems: Perpetual and periodic systems.

• Purchases and Sales: Journalizing inventory transactions.

• Adjusting and Closing Entries: For inventory accounts.

• Merchandiser’s Financial Statements: Includes cost of goods sold.

Example: Using a perpetual system to track inventory purchases and sales.

6. Merchandise Inventory

Inventory accounting principles and costing methods are essential for accurate financial reporting.

• Inventory Costing Methods: FIFO, LIFO, Weighted Average.

• Periodic Inventory: Inventory counted at period end.

• Effects of Costing Methods: Impact on cost of goods sold and net income.

• Inventory Errors: Affect financial statements.

Example: Comparing FIFO and LIFO methods for inventory valuation.

7. Internal Control and Cash

Internal controls are procedures to safeguard assets and ensure accurate financial reporting, especially for cash.

• Internal Control Components: Control environment, risk assessment, control activities, information and communication, monitoring.

• Cash Controls: Procedures for receipts and disbursements.

• Bank Reconciliation: Matching company records to bank statements.

• Petty Cash: Small cash fund for minor expenses.

• Credit Card Sales: Recording and controlling sales made by credit card.

Example: Preparing a bank reconciliation to identify discrepancies.

8. Receivables

Receivables represent amounts owed to the business; proper accounting ensures accurate reporting and control.

• Types of Receivables: Accounts receivable, notes receivable, other receivables.

• Allowance Method: Estimating uncollectible accounts.

• Direct Write-Off Method: Writing off bad debts as they occur.

• Reporting Receivables: On the balance sheet.

Example: Using the allowance method to estimate bad debts.

9. Plant Assets, Natural Resources, and Intangibles

Long-lived assets require special accounting for acquisition, depreciation, and disposal.

• Measuring Cost: Includes purchase price and all costs to prepare asset for use.

• Depreciation Methods: Straight-line, units of production, double-declining balance.

• Asset Disposal: Recording sale or retirement of assets.

• Natural Resources: Depletion accounting.

• Intangible Assets: Amortization and impairment.

Example: Calculating depreciation using the straight-line method:

$\text{Depreciation Expense} = \frac{\text{Cost} - \text{Residual Value}}{\text{Useful Life}}$

10. Current Liabilities and Payroll

Current liabilities are obligations due within one year; payroll accounting involves calculating and recording employee compensation and taxes.

• Known Amount Liabilities: Accounts payable, notes payable.

• Estimated Liabilities: Warranties, taxes.

• Payroll Accounting: Calculating gross pay, deductions, and net pay.

Example: Calculating payroll tax liability for employees.

11. Long-Term Liabilities

Long-term liabilities include notes payable, mortgages, and bonds; proper accounting ensures accurate measurement and reporting.

• Notes Payable and Mortgages: Recording and amortizing payments.

• Bonds Payable: Issuance, interest expense, and amortization.

• Straight-Line Amortization: Spreading bond discount or premium evenly over the life of the bond.

• Reporting Liabilities: On the balance sheet.

Example: Calculating interest expense using straight-line amortization:

$\text{Interest Expense} = \text{Total Interest} \div \text{Number of Periods}$

12. Corporations and Stockholders’ Equity

This section covers the unique aspects of corporations, including stockholders’ equity, issuance of stock, dividends, and preparation of equity statements.

• Characteristics of Corporations: Separate legal entity, limited liability, transferable shares.

• Stockholders’ Equity: Common stock, preferred stock, retained earnings.

• Issuance of Stock: Journalizing stock transactions.

• Dividends: Cash and stock dividends, treasury stock.

• Statement of Retained Earnings: Shows changes in retained earnings.

• Stockholders’ Equity Section: On the balance sheet.

Example: Journalizing the issuance of common stock.

Assessment and Grading

Evaluation Methods

• Exams: Three midterms and one comprehensive final (50% + 30%)

• Homework and Quizzes: 10%

• Participation & Attendance: 10%

Grading Scale

Grade	Percentage
A	90% – 100%
B	80% – 89%
C	70% – 79%
D	60% – 69%
F	0 – 60%

Course Policies and Student Preparation

• Preparation: Sequential learning; each chapter builds on prior material.

• Homework: Required, completed individually via MyAccountingLab.

• Exams: No make-up exams except for approved university activities.

• Attendance: Required; participation affects grade.

• Academic Integrity: Cheating and plagiarism are strictly prohibited.

Additional Info

• Students are encouraged to use supplemental instruction and tutoring resources.

• Special accommodations are available for students with documented disabilities.

• Course content and policies may be updated with prior communication.