Ramon Llull University - Barcelona
IQS School of Business (AACSB Accredited)
Forum-Nexus Program
Graduate Division
Introduction
In this course, you will learn the theory and practice of accounting. This course will emphasize accounting terminology and methods and provide the necessary background to better understand, interpret, analyze and evaluate financial statements published in a firm's annual reports. This course will provide you with the necessary background to better understand the language of accounting and to effectively use it to interpret and analyze financial statements and other financial reports issued by public companies. You will learn to effectively apply the accounting concepts, to various business scenarios. The course adopts a decision-maker perspective of accounting by emphasizing the relationship between accounting data and the underlying economic events that generated it. This course will prepare you to successfully communicate using the accounting language with various users of financial information.
Course Description
Accounting is the language of business and companies prepare their financial statements using this language. In the financial statements, businesses communicate information regarding their financial performance to external users (primarily investors and creditors). In this course, you will learn to use these financial statements to derive needed information about a company's financial position and performance and to identify key elements and indicators regarding the company's future financial prospects.
In this course, you will learn basic bookkeeping and accounting. Specifically, you will learn: to keep the company's books and construct the financial statements from them (Income Statement, Balance Sheet and Statement of Cash Flows); to differentiate between the cost and accrual methods of accounting; and to categorize assets, liabilities, and capital. You will also learn to read a company's Annual Report. Specifically you will learn to: recognize and interpret the Annual Report; recognize the form(s), and meaning(s) of the Auditor's Opinion; read the Income Statement, Balance Sheet and Statement of Cash Flows; and read and understand the importance of the footnotes and other disclosures in evaluating the financial statements. You will learn to differentiate between high and low quality of reported earnings.
Course Objectives
Upon completion of this course students will be able to:
Understand the conceptual basis and content and form of business financial statements.
Learn the connection of business transactions to financial statements and prepare a set of financial statements from standard business transactions.
Appreciate the analysis of accounting transactions and the use of accounting as an information system to capture and organize financial data about a business.
Understand the Balance Sheet and the Income Statement and interpret the information they conveys about business activities.
Possess the basic skills involved in analyzing, interpreting and using information in financial reports.
Understand the conceptual basis and content and form of business financial statements.
Learn the connection of business transactions to financial statements and prepare a set of financial statements from standard business transactions.
Appreciate the analysis of accounting transactions and the use of accounting as an information system to capture and organize financial data about a business.
Understand the Cash Flow Statement and interpret the information it conveys about business activities.
Understand the meaning and relevance of the numbers reported on the financial statements.
Course Requirements
The course requires active student participation. Students are expected to read the assigned textbook chapters, cases and articles before every class. Punctual attendance is required. There will be a midterm exam, a final exam, case studies, midterm team project and a final team project. Each student is required to participate in a minimum of six professional visits.
Teaching Procedures and Methodology
Teaching methods used in this course include lectures, case discussions, team assignments, and professional visits. Learning in this course requires the student's constructive participation and active involvement in both class discussions and small group discussions. It is essential to attend all group activities inside and outside classes. The corporate visits will expose the participants to different aspects of the class and will highlight the practical relevance of the concepts learned. The visits will be accompanied by individual or group assignments.
Required Textbook
Financial Accounting: An Introduction to Concepts, Methods and Uses By Horngren, Sundem, Elliott and Philbreck
Published by Thomson Southwestern, 12th Edition, 2006
Plus supplementary articles to be distributed by the professor
Components of Final Grade
Midterm exam
20%
Final exam
20%
Midterm team project
20%
Final team project
20%
Assignments
20%
Grading Scale
93-100%
A
90-92.9%
A-
87-89.9%
B+
83-86.9%
B
80-82.9%
B-
77-79.9%
C+
73-76.9%
C
70-72.9%
C-
67-69.9%
D+
63-66.9%
D
60-62.9%
D-
below 60%
F
Course Outline
Module 1 The Accounting Model, Financial Statements, Transaction Analysis and The Accounting Cycle
Understanding of accounting as an information system.
Explaining of the assumptions, principles and main restrictions of accounting.
Discovering of the usefulness of financial accounting in the decision making process.
Distinguishing between the accrual and cash bases of accounting.
Analyzing the Balance Sheet.
Recording business transactions in the Journal.
Posting from the Journal to the Ledger.
Summarizing the accounting process.
Determining the steps involved in the preparation of the Income Statement.
Interpreting and analyzing the Income Statement.
Understanding the importance of Income Statement in measuring the owner's wealth.
Understanding and distinguishing between the operating, investing and financing cash flows.
Prepare a sample set of financial statements.
Develop a global vision of a company based on information from the prepared financial statements.
Understand the relationship between the expected return and risk of investment alternatives and the role financial statement analysis can play in providing information about returns and risk.
Understanding the objectives in performing Financial Statement Analysis.
Applying different analysis such as Profitability and Risk Analysis using Financial Ratios.
Understanding the limitations of a Ratio Analysis.
Module 2 Financial Statement Analysis and Ratio Analysis, Sales, Cost of Goods Sold and Inventories
Analyzing Inventory disclosures.
Understand the accounting for bad debt.
Develop sensitivity to issues in recognizing and measuring revenues and expenses in various industries.
Apply the principles of cost inclusion for assets to both purchased and manufactured inventories.
Understand the effect of changes in the valuation of inventories and costs subsequent to acquisition on both balance sheet and income statement amounts.
Calculate cost goods sold and ending inventory using a first-in, first-out (FIFO), a last-in, first-out (LIFO), and a weighted-advantage cost flow assumption.
Analyze the effects of choices that firms make for valuation of inventories and cost of goods sold on profitability and risk.
Midterm Exam
Module 3 Long- Lived Assets, Depreciation, Liabilities and Time Value of Money
Recognizing the different kinds of liabilities included in financial statements.
Valuing liabilities as a function of whether they're short or long-term.
Understanding how liabilities should be valued or estimated in regard to the specific characteristics of each.
Identifying economic results when using alternative valuation methods in liabilities.
Recognizing off-balance sheet financing and interpreting its impact on the financial statements.
Identifying capital versus operating leases.
Understanding accounting for income taxes, pension benefits and other deferred compensation.
Understand the concepts distinguishing expenditures that accountants capitalize as assets, and subsequently depreciate or amortize, from expenditures that accountants' expense in the period incurred.
Develop sensitivity to issues in recognizing and measuring revenues and expenses in various industries.
Understand and apply the concept of an accounting liability to obligations with uncertain payment dates and amounts.
Understand the effective interest method and apply it to debt amortization.
Understand why firms structure debt financing to keep it off the balance sheet.
Distinguish between operating and capital leases.
Understand why firms may recognize revenues and expenses in different periods for financial reporting purposes than they do for income tax purposes.
Understand accounting issues related to retiree benefits.
Module 4 Investments, Stockholders' Equity and Quality of Earnings
Understanding the accounting for short-term investments.
Developing skills to apply the market value and equity methods of accounting for short-term investments.
Understanding the concepts underlying consolidated financial statements.
Understanding the priority of claims of common and preferred shareholders.
Understanding the concepts and apply the procedures for issuance of capital stock.
Understanding the concepts and apply the procedures for purchase and issuance of treasury stock.
Understanding the format for reporting different kinds of income and why it matters.
Understanding the distinction between earnings and comprehensive income.
Recognizing the quality of reported earnings.
Develop and understanding of the quality of earnings as a concept for evaluating financial performance.
Final exam
Schedule of Classes and Professional Visits
The detailed schedule of classes and professional visits for each session is available online at www.forum-nexus.com/schedules
Please note that this course will be offered as a Section 2 class.
Academic Integrity
The Ramon Llull University places a high value on the integrity, good conduct and academic honesty of all students. Students are expected to maintain high standards of academic integrity at all times. Any instance of academic dishonesty, including plagiarism, will result in a grade of F for the course.
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