ACCT 5521
FINANCIAL
ACCOUNTING
Summer, 2010
Email:
tombeam@dr.com
Dr. T Beam
Fax:
215-836-7158
Home Page:alpha.fdu.edu/~tbeam
Objective: To provide a
conceptual overview of external financial statements from an
end user approach, including internal controls,
financial statement preparation and
analysis, generally accepted accounting principles (GAAP), and
financial statement ratios.
Selected managerial accounting topics will be included as well.
Prerequisites: Students are
assumed to have taken or waived all tier one courses in the
MBA core curriculum.
Text: Bruns Jr, Wm J, Accounting For
Managers: Text and cases, Thomsom/South-
Western, Mason, Ohio, 3rd Ed, 2005.
Grades will be based on: Take Home
Exam 10% Homework &
Participation 30%
In Class
Exam 50% Discussion
Board
10%
Class
Reading
Exercises &
Cases
1 5/25 Handout
An Attorney’s Advice
2 5/27 1.2-15 Statements,
Concepts
HO 3, Maria Hernandez 1-16 (June) (Read)
Beta Company (Read), EMAIL Me
3 6/1 1.19-26 Records, 50-66
Ratios
HO 1, Pico 1, Maria Hernandez 1-16 (June/Read)
Monterrey
Mfg 1-42 (Just Look At)
4 6/3 2.2-12 Current
Assets
HO 4, Pico 2,
Identify the Industries 1996
2.17-20 Revenues
Inventory Problem, C/F Exercise (Read)
5 6/8 2.33-43 Property Plant
& Equipment HO 5,6, Pico 3,
Chemalite, Inc. 1-27
Circuit City Stores 2-21
6 6/10 2.73-87 Liabilities
& Time
Pico 4, Company Drivers 1-67
Depreciation
Examples
7 6/15 2.99-106 Owner’s
Equity
HO 2, Pico 4A,Buying Time 2-67
8 6/17 2.107-120 Cash Flow
Statement
Pico 4B, Delta
& Singapore A 2-44
Zephyrs
Baseball 2-55
9 6/22 3.2-11 Auditing &
Rules
Pico 5, Precision Worldwide 4-7
Blumberg reading
10 6/24
-
-
11 6/29
Exam
-
12 7/1 4.2-6 Decision
Making
Pico 6, Handout Assignment
5.2-4 Indirect Costs
A/C Bus Trip, Red Bearded Baron
The Official First Page:
FAIRLEIGH DICKINSON UNIVERSITY
SILBERMAN COLLEGE OF BUSINESS
FINANCIAL STATEMENTS: AN END USERS
APPROACH
SUMMER 2010
Dr Tom Beam
Course Description:
To provide an understanding of financial reporting issues through
discussion and analysis. The underlying
justifications, implications, and uses of various financial statement
presentations will be explored. The course
will provide students with basic skills necessary to understand, use,
and analyze financial statements. The
primary emphasis will be from an end user perspective. End users
are defined as those constituencies who
rely on the information contained in financial statements to make
informed business decisions. Those users
include financial institutions, trade creditors and investors.
Pre- or corequisite: None
Outcomes: Upon completion of
this course, students should:
. Recognize the differences between amounts determined under
accrual vs. cash basis
accounting
. Understand the nature of information contained in the income
statements, balance sheet,
and statement of cash flows
. Understand the nature of accounting for an organization's
operating, investing and financing
activities
. Recognize how ratios and other techniques can be used to
analyze an organization's
financial statements
Course Topics:
. Underlying principles and concepts of financial statement
preparation to include the
accounting model
. Financial statement overview to include the basic concepts and
content of:
the balance sheet, income statement and cash
flow statement
. Utilization of financial information for financing and
investing decisions
. Preparation and analysis of cash flow statement and its
components
. Impact of alternative accounting decisions and estimates on
financial statements.
In particular, the impact on:
Inventory costing
Capitalization and depreciation
policies
Accounts Receivable
. Long term liabilities
. Leases
. Analysis of financial statements using ratios
. How the residual equity of owners are accounted for
FINANCIAL STATEMENTS: AN END USERS
APPROACH
SUMMER 2010
Dr. Tom Beam
Learning Objectives:
Students in this course are managers and executives. The course
is based on the premise that managers need
an understanding of how accounting information is produced, reported,
and used as a basis for decision-
making is emphasized.
A. Knowledge
Committed to a user approach, the course focuses on concepts and ideas
rather than procedures. Throughout
the course issues related to providing information useful for
decision-making is emphasized. Specific areas in
which the student is expected to demonstrate proficiency are:
. Demonstrate a basic understanding of the underlying concepts
involved in the preparation of financial
statements
. Read, interpret and analyze financial statements
. A recognition concerning the impact that current accounting
standards have on an organization's financial
position and its operating results
. Recognize potential ethical conflicts which may arise in the
preparation of financial statements
. Be familiar with basic similarities and differences between
U.S. and international financial statements.
B. Skills
Students will be expected to demonstrate their proficiency in the
following skill areas:
. Analytical skills in problem solving
. Use of computer skills i.e. use of spreadsheets
. Quantitative skills i.e. present value analysis
. Oral and written communication skills
C. Perspectives that form the context
for business
. Ethical Issues: The impact of ethical issues will be
examined. Management's influence over the results shown
in their reports will be discussed.
. Global Issues: American vs. international accounting and
reporting standards will be contrasted.
. Influence of Political, Social, Legal and Regulatory Issues:
The establishment of the FASB and its function in
creating accounting rules will be examined.
D. Integration of core areas and
application of cross-functional approach to organizational issues
The creations and interpretation of financial information is essential
in all areas of business and non-business
decision making. To aid in that process it is important that all
users recognize that financial information
predicated on judgements may not be precise but should contain the
qualities of relevance and reliability.
QUIZZES may be given
unannounced throughout the course and will cover material assigned for
the given
class. There is no makeup of quiz grades. If used, quizzes grades will
count 5% of the homework and
participation.
PARTICIPATION & TIMELINESS
Your level of participation will be assessed at the end of the
semester and it will be part of your grade. If material is turned in
late, it will lower the grade you would
otherwise have received. The cases and the take home portion of the
exam should be turned in on the
date due; if your cannot be in class, they should be
mailed, faxed or e-mailed. One half a letter grade
will be deducted for each half week delay. Homework that will not be
graded can be turned in during
the next class that you attend.
BLUMBERG READING For each of
the
10 items discussed, identify the accounting principle at
issue. If there is no specific
accounting issue state why you think that this item was included in the
list.
Should there be a LIBRARY
ASSIGNMENT, it requires that 2 articles relevant to the
course be
copied, read and key points
identified. Turn in a copy of the article as well as the 5 key points.
WEB COURSE JOURNAL ENTRIES are
to be made 3 times in week 2 (the first three questions),
and twice each in weeks 3, 4 and 5. You enter the web course through
the fdu page (webcampus.fdu.edu).
You need to respond to each of the questions that I post. Questions
should be responded to in the week
they are listed in. Responses need to be of substance. Do not just
agree or disagree. Every student is
expected to respond to each of them or to one of the responses of one
of the other students. I may
respond as well. If I respond to one of your postings, your are
expected to answer my response if it
poses a question or challenge. I very often ask people to explain
themselves. Try to remember that
just stating how you feel about something is not an acceptable
response. This is not a survey of your
feelings or opinions. You need to give reasoned positions. Expect me to
challenge you. Responses
need to be timely. If they are late they will count less. I will not
count any posting after classes have
officially ended, i.e., before finals week. In the summer that is the
day before the last class.
BOOK REVIEW (Optional)
Read the book Risk by Dick Francis. Prepare a two page (double
spaced, normal margin, normal point size pages) evaluation of (1)
the significant issue of accounting
ethics faced by the protagonist at the very end of the novel, (2)
the use of cost data in the solution
of the crime, (3) how the money was removed from the country, and
(4) how you would change
the accounting system if you were the controller so that this could not
happen again. There is no
right answer. This can add up to 4 points on to your average.
INTEGRITY Please note the
university's policy on cheating, plagiarism, and other violations of
integrity which allows each professor some freedom within constraints.
My policy is: First offence,
F in the course. I know my policy is somewhat severe and I have no
sense of humor on this subject.
I encourage you to get help with all of your
education, especially with written assignments. But
help means assistance and not replacement of effort. You should
understand anything that you turn
in with your name on it. If you can not explain any word or phrase that
you use, it will be treated
as plagiarism.
Please see Suggestions for Succeeding in My Class.
Please see Guidelines for Papers.
CASES may (and should) be
done in groups. I will not actually grade each case. What I am looking
for is a complete effort. So you should come up with something of
substance that responds to the case.
Maria Hernandez: Answer
questions 1 and 2 in the text on page 1-18. Note: the payment of $33,000
to designers does NOT include any payments to Maria Hernandez.
Monterrey Manufacturing: Just
look at the case. Figure out how you would attempt it.
Identify the Industries 1996 &
Company Drivers - 1999/2000: Using financial ratios and your
knowledge of the industries used, identify which set of financial
statistics is which industry. Keep track
of the sequence of your choices and the rational for each pick so that
we can discuss them.
Circuit City Stores:
Do questions 1 and 2 in the text on page 2-24.
Buying Time: Respond to the
questions in the text. Note that there is a typo in the text. The
formula
on the top of page 2-69 that reads PV = (PV / (1+i)^n) should read PV =
(FV / (1+i)^n).
Delta & Singapore:
[1] Do question 1 in the text on page 2-47.
[2] On January 1, 1989, each airline company
purchased a new aircraft for $50 million. For
depreciation Delta uses SL, 10 yrs, and 10% Salvage, and Singapore uses
SL, 8 yrs, and 10% Salvage.
On January 1, 1993 each company increased its useful life (Delta by 5
years, Singapore by 2). Salvage
values were also adjusted (Delta, no change, and Singapore, 20%) and
recalculated based on the
original purchase price. Calculate depreciation for each company for
this acquisition for the years 1989
through 2003.
[3] Repeat part 2 using DDB depreciation.
Kansas City Zephyrs:
Determine what you consider to be the proper income before taxes for
1984. (Use 8% to discount any future cash flows back to the present if
you think that that is appropriate.)
Chemalite, Inc: Use the
following copy of the Financial Statements for the first six months
(ended
June 30, 2003) and create your own financial statements for the six
months ended December 31, 2003.
Chemalite, Inc.
Balance Sheet
June 30, 2003
Cash
$230,000
Raw Materials Inventory
75,000
Current
Assets 305,000
Machinery & Equipment
62,500
Patent
125,000
Common Stock $500,000
Organization Costs
7,500
Total
Assets $500,000
Cash Flow Statement
For the Six Months Ended June 30, 2003
Operating
Cash Flow <
$75,000>
Financing Cash Flow
Sale of Stock
375,000
Investing
Cash Flow:
Machinery & Equipment
<62,500>
Organization Costs
< 7,500>
<70,000>
Net Cash Flow
$230,000
Non Cash Patent/Common Stock
$125,000
Precision Worldwide:
1] List all possible alternatives available to
Precision, from making only steel rings at one end of the
spectrum to making only plastic rings and scrapping raw steel
inventories and using FG for
replacements only at the other end.
2] List all the important criteria that should apply
to this decision.
3] Answer the question on page 4-9.