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EAC 3211 Intermediate Accounting 1


Course Description

Studies the development of generally accepted accounting principles and valuation models in their application to financial statement presentations. Includes in-depth coverage of the preparation and use of accounting information based on current accounting standards of financial accounting. (Requirement: must be enrolled in University Alliance.)

Course Objectives

Upon completion of this course, the student will be able to:

  • Explain the role of accounting standards and describe the role of the FASB, SEC, AICPA, AAA and the IRS in determining standards and policies in financial reporting
  • Explain the significance of the FASB’s conceptual framework in outlining the qualities of good accounting information, defining terms, and providing guidance about appropriate recognition, measurement, and reporting
  • Illustrate the following steps in the accounting cycle: analyze transactions, record and post journal entries, prepare adjusting entries, prepare financial statements, and prepare closing entries
  • Describe the specific elements of the balance sheet (assets, liabilities, and owner’s equity) and prepare a classified balance sheet, including the additional balance sheet disclosures made in the notes to the financial statements
  • Explain how income is measured, including the revenue recognition and expense matching concepts, and describe the specific components of an income statement
  • Compute comprehensive income and prepare a statement of stockholders’ equity
  • Prepare a complete statement of cash flows (using both the direct and indirect methods) and provide the required supplemental disclosures
  • Assess a firm’s financial strength by analyzing the relationships among cash flows from operating, investing, and financing activities, and by computing financial ratios based on cash flow data
  • Identify the factors that motivate earnings management and list the common techniques used to manage earnings
  • Prepare journal entries to record sales revenue, including the accounting for notes receivable, bad debts and warranties, and recognize the appropriate disclosures for presenting sales and receivables in the financial statements
  • Discuss the composition, management, and control of cash, including the use of a bank reconciliation
  • Explain the primary criteria for revenue recognition and apply revenue recognition concepts
  • Record journal entries for long-term construction contracts using percentage-of completion and completed-contract methods
  • Record journal entries for long-term service contracts using the proportional performance method
  • Compute total acquisition cost and apply the four basic inventory valuation methods (specific identification, average cost, FIFO, and LIFO) using both periodic and perpetual inventory systems
  • Illustrate the concepts of the gross profit method for estimating inventory and the lower-of-cost-or-market rule to reflect declines in the market value of inventory
  • Apply present value concepts to the accounting for long-term debts
  • Account for short-term debt obligations, including those expected to be refinanced, and describe the purpose of lines of credit
  • Identify the various types of bonds, compute the price of a bond issue, and account for the issuance, interest, and redemption of bonds, including the required disclosure in the notes to financial statements

Week 1


Lecture: About the Instructor
Lecture: Course Overview
Lecture: Objectives of Financial Reporting and the Associated Financial Statements
Lecture: Conceptual Framework for Financial Reporting

Outcomes

Upon completing this module, students will be able to:

  • Identify the major financial statements and other means of financial reporting
  • Explain how accounting assists in the efficient use of scarce resources
  • Identify the objective of financial reporting
  • Explain the need for accounting standards
  • Identify the major policy-setting bodies and their role in the standard-setting process
  • Explain the meaning of generally accepted accounting principles (GAAP) and the role of the Codification for GAAP
  • Describe the impact of user groups on the rule-making process
  • Describe some of the challenges facing financial reporting
  • Understand issues related to ethics and financial accounting
  • Compare and contrast international standards (IFRS) with currently applicable U.S. GAAP
  • Describe the usefulness of a conceptual framework
  • Describe the FASB’s efforts to construct a conceptual framework
  • Understand the objective of financial reporting
  • Identify the qualitative characteristics of accounting information
  • Define the basic elements of financial statements
  • Describe the basic assumptions of accounting
  • Explain the application of the basic principles of accounting
  • Describe the impact that constraints have on reporting accounting information

Week 2


Lecture: The Accounting Information System
Lecture: Closing the Books Problem
Lecture: The Income Statement
Lecture: Preparing an Income Statement, Retained Earnings Statement, and Comprehensive Income Statement

Outcomes

Upon completing this module, students will be able to:

  • Understand basic accounting terminology
  • Explain double-entry rules
  • Identify steps in the accounting cycle
  • Record transactions in journals, post to ledger accounts, and prepare a trial balance
  • Explain the reasons for preparing adjusting entries
  • Prepare financial statements from the adjusted trial balance
  • Prepare closing entries
  • Differentiate the cash basis of accounting from the accrual basis of accounting
  • Identify adjusting entries that may be reversed
  • Prepare a 10-column worksheet
  • Compare and contrast international standards (IFRS) with currently applicable U.S. GAAP
  • Understand the uses and limitations of an income statement
  • Prepare a single-step income statement
  • Prepare a multiple-step income statement
  • Explain how to report irregular items
  • Explain intraperiod tax allocation
  • Explain where to report earnings per share information
  • Prepare a retained earnings statement
  • Explain how to report other comprehensive income

Week 3


Lecture: The Balance Sheet
Lecture: Balance Sheet Disclosures and an Introduction to the Statement of Cash Flows
Lecture: Preparing a Balance Sheet and Statement of Cash Flows
Lecture: Statement of Cash Flows – Direct and Indirect
Lecture: Statement of Cash Flows – Special Issues and Worksheets
Lecture: Preparing a Complex Statement of Cash Flows

Outcomes

Upon completing this module, students will be able to:

  • Explain the uses and limitations of a balance sheet
  • Identify the major classifications of the balance sheet
  • Prepare a classified balance sheet using the report and account formats
  • Indicate the purpose of the statement of cash flows
  • Identify the content of the statement of cash flows
  • Prepare a basic statement of cash flows
  • Understand the usefulness of the statement of cash flows
  • Determine which balance sheet information requires supplemental disclosure
  • Describe the major disclosure techniques for the balance sheet
  • Identify the major types of financial ratios and what they measure
  • Describe the purpose of the statement of cash flows
  • Identify the major classifications of cash flows
  • Differentiate between net income and net cash flow from operating activities
  • Contrast the direct and indirect methods of calculating net cash flows from operating activities
  • Determine net cash flows from investing and financing activities
  • Prepare a statement of cash flows
  • Identify sources of information for a statement of cash flows
  • Discuss special problems in preparing a statement of cash flows
  • Explain the use of a worksheet in preparing a statement of cash flows
  • Compare and contrast international standards (IFRS) with currently applicable US GAAP

Week 4


Lecture: Accounting and the Time Value of Money – Single Sums
Lecture: Accounting and the Time Value of Money – Annuities, etc.
Lecture: Time Value of Money Problem
Lecture: Cash and Receivables – Basics
Lecture: Cash and Receivables – Advanced Topics
Lecture: Analyzing a Receivable for Impairment Problem

Outcomes

Upon completing this module, students will be able to:

  • Identify accounting topics where the time value of money is relevant
  • Distinguish between simple and compound interest
  • Use appropriate compound interest tables
  • Identify variables fundamental to solving interest problems
  • Solve future and present value of 1 problems
  • Solve future value of ordinary and annuity due problems
  • Solve present value of ordinary and annuity due problems
  • Solve present value problems related to deferred annuities and bonds
  • Apply expected cash flows to present value measurement
  • Identify items considered cash
  • Indicate how to report cash and related items
  • Define receivables and identify the different types of receivables
  • Explain accounting issues related to recognition of accounts receivable
  • Explain accounting issues related to valuation of accounts receivable
  • Explain accounting issues related to recognition and valuation of notes receivable
  • Explain the fair value option
  • Explain accounting issues related to disposition of accounts and notes receivable
  • Describe how to report and analyze receivables
  • Explain common techniques employed to control cash
  • Describe the accounting for a loan impairment
  • Compare and contrast international standards (IFRS) with currently applicable U.S. GAAP

Week 5


Lecture: Inventory Valuation – Basics
Lecture: Inventory Valuation – Advanced Topics
Lecture: Dollar Value LIFO Problem
Lecture: Inventory Valuation – Lower of Cost or Market, Gross Profit, and Retail Inventory Methods
Lecture: Retail Methods Problem

Outcomes

Upon completing this module, students will be able to:

  • Identify major classifications of inventory
  • Distinguish between perpetual and periodic inventory systems
  • Identify the effects of inventory errors on the financial statements
  • Understand the items to include as inventory cost
  • Describe and compare the cost flow assumptions used to account for inventories
  • Explain the significance and use of a LIFO reserve
  • Understand the effect of LIFO liquidations
  • Explain the dollar-value LIFO method
  • Identify the major advantages and disadvantages of LIFO
  • Understand why companies select given inventory methods
  • Describe and apply the lower-of-cost-or-market rule
  • Explain when companies value inventories at net realizable value
  • Explain when companies use the relative sales value method to value inventories
  • Discuss accounting issues related to purchase commitments
  • Determine ending inventory by applying the gross profit method
  • Determine ending inventory by applying the retail inventory method
  • Explain how to report and analyze inventory
  • Determine ending inventory by applying the LIFO retail methods
  • Compare and contrast international standards (IFRS) with currently applicable U.S. GAAP

Week 6


Lecture: Property, Plant, & Equipment – Costing and Valuation
Lecture: Property, Plant, & Equipment – Unusual Transactions and Costs After Purchase
Lecture: Classification of Costs and Interest Capitalization Problem
Lecture: Depreciation, Depletion, and Impairments
Lecture: Depreciation Using Alternative Methods Problem

Outcomes

Upon completing this module, students will be able to:

  • Describe property, plant, and equipment
  • Identify the costs to include in initial valuation of property, plant, and equipment
  • Describe the accounting problems associated with self-constructed assets
  • Describe the accounting problems associated with interest capitalization
  • Understand accounting issues related to acquiring and valuing plant assets
  • Describe the accounting treatment for costs subsequent to acquisition
  • Describe the accounting treatment for the disposal of property, plant, and equipment
  • Explain the concept of depreciation
  • Identify the factors involved in the depreciation process
  • Compare activity, straight-line, and decreasing-charge methods of depreciation
  • Explain special depreciation methods
  • Explain the accounting issues related to asset impairment
  • Explain the accounting procedures for depletion of natural resources
  • Explain how to report and analyze property, plant, equipment, and natural resources
  • Describe income tax methods of depreciation
  • Compare and contrast international standards (IFRS) with currently applicable U.S. GAAP

Week 7


Lecture: Types of Intangibles, Impairments, and Expenses
Lecture: Goodwill Impairment Problem
Lecture: Revenue Recognition – Basics and Long-Term Contracts
Lecture: Revenue Recognition – After Delivery and Franchise Accounting
Lecture: Percentage of Completion Problem

Outcomes

Upon completing this module, students will be able to:

  • Describe the characteristics of intangible assets
  • Identify the costs to include in the initial valuation of intangible assets
  • Explain the procedure for amortizing intangible assets
  • Describe the types of intangible assets
  • Explain the conceptual issues related to goodwill
  • Describe the accounting procedures for recording goodwill
  • Explain the accounting issues related to intangible-asset impairments
  • Identify the conceptual issues related to research and development costs
  • Describe the accounting for research and development and similar costs
  • Indicate the presentation of intangible assets and related items
  • Understand the accounting treatment for computer software costs
  • Compare and contrast international standards (IFRS) with currently applicable U.S. GAAP
  • Apply the revenue recognition principle
  • Describe accounting issues for revenue recognition at point of sale
  • Apply the percentage-of-completion method for long-term contracts
  • Apply the completed-contract method for long-term contracts
  • Identify the proper accounting for losses on long-term contracts
  • Describe the installment-sales method of accounting
  • Explain the cost-recovery method of accounting
  • Explain revenue recognition for franchises and consignment sales

Week 8


Lecture: Accounting Changes and Error Analysis
Lecture: Error Correction Entries Problem
Lecture: Full Disclosure in Financial Reporting – Basic Information
Lecture: Full Disclosure – Segment, Interim, and Other Reports
Lecture: Segmented Reporting Problem

Outcomes

Upon completing this module, students will be able to:

  • Identify the types of accounting changes
  • Describe the accounting for changes in accounting principles
  • Understand how to account for retrospective accounting changes
  • Understand how to account for impracticable changes
  • Describe the accounting for changes in estimates
  • Identify changes in a reporting entity
  • Describe the accounting for correction of errors
  • Identify economic motives for changing accounting methods
  • Analyze the effect of errors
  • Make the computations and prepare the entries necessary to record a change from or to the equity method of accounting
  • Compare and contrast international standards (IFRS) with currently applicable U.S. GAAP
  • Review the full disclosure principle and describe implementation problems
  • Explain the use of notes in financial statement preparation
  • Discuss the disclosure requirements for major business segments
  • Describe the accounting problems associated with interim reporting
  • Identify the major disclosures in the auditor’s report
  • Understand management’s responsibilities for financials
  • Identify issues related to financial forecasts and projections
  • Describe the profession’s response to fraudulent financial reporting
  • Understand the approach to financial statement analysis
  • Identify major analytic ratios and describe their calculation
  • Explain the limitations of ratio analysis
  • Describe techniques of comparative analysis
  • Describe techniques of percentage analysis

The course description, objectives and learning outcomes are subject to change without notice based on enhancements made to the course. November 2013