ACC 120 PRINCIPLES OF FINANCIAL ACCOUNTING COURSE

ACC 120PRINCIPLES OF FINANCIAL ACCOUNTINGCOURSE DESCRIPTION:Prerequisites ENG 090, and RED 090 or DRE 098; MAT 070 or DMA 010, 020, 030, 040, orsatisfactory score on placement testCorequisites: NoneThis course introduces business decision-making accounting information systems. Emphasis is onanalyzing, summarizing, reporting, and interpreting financial information. Upon completion, studentsshould be able to prepare financial statements, understand the role of financial information in decisionmaking and address ethical considerations. This course has been approved to satisfy the ComprehensiveArticulation Agreement for transferability as a pre-major and/or elective course requirement. CourseHours Per Week: Class, 3. Lab, 2. Semester Hours Credit, 4.LEARNING OUTCOMES:Upon completion of this course, the student will be able to:1. Function effectively on the joba. Attend to accuracy and detailb. Use current accounting terminology2. Use quantitative and qualitative tools and methodsa. Obtain information for financial statement and/or ratio analysis and interpret and communicatethe results3. Classify accounts and record transactionsa. Analyze simple and complex business transactionsb. Convert items from cash basis to accrual basisc. Know account titles, classifications, and normal balancesd. Record transactions in journalse. Post transactions to ledgersf. Analyze accounts receivable aging scheduleg. Account for bad debtsh. Account for inventories using either perpetual or periodic systemsi. Identify, compute and record current liabilitiesj. Recognize long-term liabilities and account for bonds payable, mortgages, and long-term notes.k. Account for fixed assets and calculate depreciation4. Account for casha. Reconcile bank statementsb. Account for petty cash.5. Complete the accounting cycle and use its outputsa. Prepare a working trial balanceb. Journalize and post adjusting entriesc. Prepare an adjusted trial balanced. Journalize and post closing entriese. Prepare a post-closing trial balancef. Prepare financial statements and necessary disclosuresACC 120: June 2013

g. Review internal control procedures and suggest ways to strengthen weak controls6. Account for specific industries and organizational structuresa. Account for corporate equity transactionsb. Understand corporation specific financial statements, statement of stockholder’s equity, andcorporate income statementOUTLINE OF INSTRUCTION:I. Introduction to financial statementsA. Forms of business organizationsB. Users and uses of financial information1) Internal users2) External users3) Ethics in financial reportingC. Business activities1) Financing2) Investing3) OperatingD. Communicating with users1) Income statement2) Retained earnings statement3) Balance sheet4) Statement of cash flows5) Interrelationships of statements6) Management discussion and analysis7) Notes to the financial statements8) Auditor’s reportII. A further look at financial statementsA. Objectives of financial reporting1) Characteristics of useful information2) Assumptions3) Principles4) Constraints in accountingB. The financial statements revisited1) Classified balance sheet2) Using the financial statementsa.) Profitability ratiosb.) Liquidity ratiosc.) Solvency ratiosIII. The accounting information systemA. Accounting transactionsB. Double-entry system1) Use of two or more accounts2) Debit and credit rulesC. The Chart of AccountsD. Steps in the recording processACC 120: June 2013

1)2)3)4)Entering transactions into the journalPosting journal entries to the general ledger accountsPreparing the trial balanceLimitations of trial balanceIV. Completing the accounting cycleA. Steps in the accounting cycleB. Timing issues1) Revenue recognition principle2) Matching principleC. Accrual vs. cash basis accountingD. Adjusting entries1) Why needed2) Typesa.) Prepaymentsb.) AccrualsE. Adjusted trial balanceF. Closing entries1) Permanent accounts2) Temporary accountsG. Post closing trial balanceV. Accounting for a merchandising businessA. Differences between a service enterprise and a merchandising businessB. Recording merchandising transactions1) Perpetual inventory system2) Periodic inventory systemC. Single-step vs. multiple-step income statementD. Determining cost of goods sold under periodic inventory systemE. Evaluating profitability1) Gross profit rate2) Profit marginVI.Reporting and analyzing inventoryA. Classifying inventoryB. Determining inventory quantities1) Taking a physical inventory2) Determining ownership of goodsC. Inventory costing1) Specific identification2) Cost flow assumptionsa.) First-in, first out (FIFO)b.) Last-in, last-out (LIFO)c.) Average costD. Financial statement and tax effects of cost flow methodsE. Consistent useF. Lower of cost or marketG. Analysis of inventory1) Inventory turnover ratioACC 120: April 2013

2) LIFO reserveVII.A.B.C.D.E.Internal control and cashPrinciples of internal controlLimitations of internal controlApplying internal control to cash receipts and cash disbursementsPreparing a bank reconciliationReporting cash1) Cash equivalents2) Restricted cashF. Managing and monitoring cash1) Basic principles2) Cash budgetingG. Petty cash1) Establishing fund2) Making payments3) ReplenishingVIII. Reporting and analyzing receivablesA. Types of receivablesB. Accounts receivable1) Recognizing2) Valuinga.) Direct write-off of bad debtsb.) Allowance methodC. Notes receivable1) Computing interest2) Recognition3) Valuation4) DisposalD. Financial statement presentation of receivablesE. Managing receivables1) Receivables Turnover2) Accelerating Cash ReceiptsIX.Reporting and analyzing long-lived assetsA. Plant assets1) Determining cost2) Depreciationa.) Straight-lineb.) Declining-balancec.) Units-of-activityd.) Revisions3) Expenditures during useful life4) Impairments5) Disposalsa.) Saleb.) Retirement6. Analyzing plant assetsACC 120: June 2013

a.) Return on assets ratiob.) Asset turnover ratioc.) Profit margin ratioB. Intangible assets1) Basic issues related to reporting intangible assets2) TypesC. Financial statement presentation of long-lived assetsX.Reporting and analyzing liabilitiesA. Current liability1) Definition2) Accounting for various typesa.) Notes payableb.) Sales taxes payablec.) Payroll and payroll taxes payabled.) Unearned revenuese.) Current maturities of long-term debtB. Long-term liabilities1) Definition2) Bonds payablea.) Typesb.) Issuing proceduresc.) Determining market valued.) Journal entries for issuance and interest expensee.) Journal entries for redemptionC. Financial statement presentation and analysis1) Debt to Total Assets2) Times Interest EarnedXI.Reporting and analyzing stockholders’ equityA. The corporate form of organization1) Characteristics2) Formation3) Stockholder rightsB. Stock issue consideration1) Authorized stock2) Issuance3) Par, no-par value, stated value4) Accounting for common stock issuesC. Accounting for purchase of treasury stockD. Preferred stockE. Accounting for Dividends1) Cash dividends2) Stock dividendsF. Stock splitsG. Retained earningsH. Financial statement presentation of stockholders’ equityI. Measuring corporate performance1) Payout ratioACC 120: June 2013

2) Return on common stockholders’ equity ratio3) Debt financing versus equity financingREQUIRED TEXTBOOK AND MATERIALS:To be selected by Instructor/Discipline Chair.ACC 120: April 2013

1) Characteristics of useful information 2) Assumptions. 3) Principles. 4) Constraints in accounting. B. The financial statements revisited 1) Classified balance sheet. 2) Using the financial statements. a.) Profitability ratios. b.) Liquidity ratios. c.) Solvency ratios. III. The accounting information