Course Description

This course provides a comprehensive introduction to the fundamental principles and practices of financial accounting. It focuses on the accounting cycle for sole proprietorships engaged in service and merchandising operations, emphasizing the preparation, analysis, and interpretation of the three major financial statements: the Income Statement, Balance Sheet, and Statement of Owner’s Equity. Students will also explore internal controls, accounting systems, and asset management to develop a strong foundation in financial reporting and decision-making.

 

Course Objectives

Upon successful completion of this course, students will be able to:

• Understand and apply generally accepted accounting principles (GAAP).

• Analyze and record financial transactions using the double-entry system.

• Complete the accounting cycle, including journalizing, posting, and preparing financial statements.

• Perform bank reconciliations and understand the role of internal controls.

• Account for current assets, current liabilities, and long-term tangible and intangible assets.

• Distinguish between service and merchandising operations in accounting.

• Use special journals and subsidiary ledgers for high-volume transactions.

 

Course Learning Outcomes

By the end of the course, students will be able to:

1. Explain the purpose and scope of financial accounting.

2. Apply the accounting equation to business transactions.

3. Complete the steps in the accounting cycle through closing entries and post-closing trial balance.

4. Prepare and interpret financial statements from adjusted data and worksheets.

5. Account for inventories using periodic and perpetual systems and various valuation methods.

6. Maintain accurate records for receivables, payables, and merchandising operations.

7. Apply internal control principles in managing cash and other current assets.

8. Account for acquisition, depreciation, and disposal of long-term assets.

9. Distinguish among accounting assumptions, principles, and constraints as they apply to financial reporting.

 

Recommended Course Materials

• Textbook: Financial Accounting, 12th Edition by Carl Warren, James Reeve, and Jonathan Duchac

• Workbook and Practice Sets (instructor assigned)

• Calculator

• Access to accounting software (if applicable)

• Recommended: Online accounting simulation tools and case studies

 

Course Content

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1. Introduction to Accounting Concepts

• Purpose and importance of accounting

• Characteristics of useful accounting information

• The accounting profession and ethical standards

• Forms of business organizations

• The accounting equation and effects of transactions

 

2. The Accounting Cycle

• Source documents and journal entries

• Debits and credits

• General ledger and trial balance

• Adjusting entries

• Preparation of adjusted trial balance

• Financial statements: income statement, balance sheet, owner’s equity

 

3. Completion of the Accounting Cycle

• Worksheets

• Closing entries

• Post-closing trial balance

• Use of accounting software or templates (optional)

 

4. Accounting for Merchandising Operations

• Sales and purchase transactions

• Inventory systems: periodic and perpetual

• Multi-step income statements

• Classified balance sheet

• Inventory estimation: retail and gross profit methods

 

5. Accounting Systems and Special Journals

• Sales journal, purchases journal

• Cash receipts and payments journal

• Subsidiary ledgers and internal control procedures

 

6. Internal Control and Cash Management

• Principles of internal control

• Petty cash, cash receipts, cash disbursements

• Bank reconciliations

 

7. Current Assets and Current Liabilities

• Accounts receivable and notes receivable

• Accounts payable and notes payable

• Short-term investments

 

8. Inventories and Valuation

• Inventory costing: FIFO, LIFO, weighted average, specific identification

• Valuation methods and effects on financial statements

 

9. Long-Term Assets

• Acquisition and depreciation of fixed assets

• Amortization of intangible assets

• Depletion of natural resources

• Asset disposal and gains/losses

 

10. Underlying Accounting Principles

• Reporting objectives and framework

• Assumptions: monetary unit, economic entity, time period, going concern

• Principles: revenue recognition, matching, full disclosure, cost

 

Course Assessment & Evaluation

• Class Participation and Homework – 10%

• Midterm Examination – 40%

• Final Examination – 50%