John Sperling School of Business

Syllabus
ACC/305 Version 1 Financial Accounting Transaction Analysis

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Syllabus ACC/305 Version 1

Edited in accordance with University of Phoenix editorial standards and practices.

Syllabus ACC/305 Version 1

Course Description
This course covers the reporting of transactions for plant assets, liabilities, accounting for corporations, investments, statements of cash flows, time value of money, payroll accounting, and other significant liabilities.

Course Topics & Objectives

Week One: Inventory Record the transactions that involve the purchases, sale of merchandise, and cost of goods sold. Describe the impact of different inventory valuation methods on ending inventory and cost of goods sold. Explain the treatment of inventory errors. Week Two: Principal Assets Prepare journal entries to account for transactions related to accounts receivables and bad debt using both the percentage of sales and the percentage of receivables methods. Identify the entries associated with the acquisition, disposal, and sales of plant assets. Calculate depreciation and amortization expense using various methods. Week Three: Liabilities Identify an account for accounts payable, notes payable, and accrued expenses. Prepare necessary journal entries for payroll transactions. Prepare necessary journal entries to record the issuance of bonds, the periodic interest, and amortization of bond premiums and discounts. Week Four: Equity and Investments Explain the characteristics of a corporation and the different types of stocks issued by corporations. Prepare journal entries associated with the issuance of preferred and common stocks and the declaration and payment of dividends. Examine stock dividends and stock split transactions. Record treasury stock transactions. Week Five: Statement of Cash Flows and Cash Versus Accrual Basis Prepare a statement of cash flows using both the indirect and direct methods.

Syllabus ACC/305 Version 1

Course Materials
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2010). Financial accounting (7th ed.). Hoboken, NJ: Wiley. All electronic materials are available on your student website.

Recommended Weekly Point Values

Week One Individual Assignment: Online Practice Progress Report Week Two Individual Assignment: Textbook Exercises Week Three Learning Team Assignment: Textbook Exercises and Online Practice Progress Report Week Four Individual Assignment: Textbook Exercises and Online Practice Progress Report Week Five Individual Assignment: Final Examination Individual Assignment: Online Practice Progress Report Learning Team Assignment: Textbook Exercises All Weeks Participation & Discussion Questions Assignment Totals Individual Learning Team Point Total

5 10 15 10 15 10 15 20 70 30 100

Syllabus ACC/305 Version 1

Week One
Inventory Record the transactions that involve the purchases, sale of merchandise, and cost of goods sold. Describe the impact of different inventory valuation methods on ending inventory and cost of goods sold. Explain the treatment of inventory errors.

Course Assignments
Readings Read Ch. 5 (including Appendix 5A) & 6 of Financial Accounting. Read the following items available on the student website: o o o o o Learning Team Handbook Guide to Charter Learning Team Charter Learning Team Log Learning Team Evaluation

Individual Assignment: Online Practice Progress Report ALEKS Online Practice progress reports are due in Weeks One, Two, Three, and Five of this course. Spend some time each week working on the assigned sections of ALEKS Online Practice to complement your study of the topics and to avoid a large workload in the weeks the progress reports are due. Resource: ALEKS Online Practice Log in to the ALEKS Online Practice system via your student website and register yourself as a user. You may do this by selecting the link Online Practice for Students located on your student website. You are now able to log in to the ALEKS Online Practice system. Complete the tutorial in ALEKS Online Practice after registering. Your instructor may provide you with a course code to register for your specific course section. This code, however, is not required to use the ALEKS Online Practice system. Complete the Review section of ALEKS Online Practice. E-mail a progress report of your advancement in ALEKS Online Practice to your instructor. Print a copy of the report for your own records and submit a copy to your instructor.

Discussion Questions

First in, first out (FIFO) and last in, last out (LIFO) are the two most common cost flow assumptions made in costing inventories. The amounts

Syllabus ACC/305 Version 1 assigned to the same inventory items on hand may be different under each cost flow assumption. If a company has no beginning inventory, explain the difference in ending inventory values under the FIFO and LIFO cost bases when the price of inventory items purchased during the period have been increasing, decreasing, and remaining constant. A survey of major U.S. companies revealed that 77% of those companies used either last in, first out (LIFO) or first in, first out (FIFO) cost flow methods, whereas 19% used average cost, and only 4% used other methods. Why are LIFO and FIFO so popular? Since computers and inventory management software are readily available, why are more companies not using specific identification? Errors occasionally occur when physically counting inventory items on hand. Identify the financial statement effects of an overstatement of the ending inventory in the current period. If the error is not corrected, how does it affect the financial statements for the following year?

Lois Howe and Ron Dole are department managers in the housewares and shoe departments, respectively, for Litwins, a large department store. Ron has observed Lois taking home inventory from her own department, apparently without paying for it. He hesitates to confront Lois because he is due to be promoted and needs Lois' recommendation. He also does not want to notify the company management directly, because he does not want an ethics investigation on his record, believing that it will give him a goody-goody image. This week, Lois tried on several pairs of expensive running shoes in his department before finding a pair that suited her. She did not, however, buy them. That very pair was missing this morning. Litwins recently replaced its old periodic inventory system with a perpetual inventory system using scanners and bar codes. In addition, the annual inventory is to be replaced by a monthly inventory conducted by an independent firm. On hearing the news of the changes, Ron relaxes. "The system will catch Lois now," he says to himself. Is Ron's attitude justified? Explain why or why not. What, if any, action should Ron take now?

Week Two
Principal Assets Prepare journal entries to account for transactions related to accounts receivables and bad debt using both the percentage of sales and the percentage of receivables methods. Identify the entries associated with the acquisition, disposal, and sales of plant assets. Calculate depreciation and amortization expense using various methods.

Course Assignments
1. Readings Read Ch. 8 & 9 of Financial Accounting. Individual Assignment: Textbook Exercises

Syllabus ACC/305 Version 1 Prepare written answers to the following assignments from Financial Accounting: o o Ch. 5: Exercises E5-7, E 5-15, and P5-2A Ch. 6: Exercises E6-7, E6-11, P6-3B, and P6-7B

Discussion Questions Your friend Stan has opened an office supply store. He will extend open credit to local businesses and is concerned about potential bad debts. What might Stan do to reduce potential bad debts? Management may choose between two bases in calculating the estimated uncollectible accounts under the allowance method. One basis emphasizes an income statement viewpoint whereas the other emphasizes a balance sheet viewpoint. Identify the two bases and contrast the two approaches. How do the different points of view affect the amount recognized as Bad Debts Expense during the accounting period?

Restor-It is a company specializing in the restoration of old homes. To showcase its work, the company purchased an old Victorian-era home in downtown Pittsburg, Kansas. The original home was purchased for $125,000. A new heating and air-conditioning system was added for $30,000. The house was completely rewired and replumbed at a cost of $50,000. Custom cabinets were added and the floors and trim were refurbished to their original condition at a cost of $75,000. The project was such a success, that Restor-It decided to purchase another very large home, this time in nearby Joplin, Missouri. A realtor offered to purchase the home in Pittsburg for $175,000. He plans to lease it as luxury short-term apartments for visiting dignitaries. Restor-It decided that a modest return was all that was required and so they agreed to sell. Only afterward did they learn that they had a $10,000 loss on the sale. The president of the company, Dan Carlin, does not believe that a loss is possible. "We sold that house for more than we paid for it," he said. "I know we put some money in it, but we had depreciated it for 3 years. How in the world can we have a loss?" Explain to Mr. Carlin how a loss is possible. You do not have to use specific numbers for cost or depreciation. The declining-balance method is an accelerated method of depreciation. Briefly explain what is meant by an accelerated method of depreciation and justify the choosing of an accelerated method.

Week Three
Liabilities Identify an account for accounts payable, notes payable, and accrued expenses. Prepare necessary journal entries for payroll transactions. Prepare necessary journal entries to record the issuance of bonds, the periodic interest, and amortization of bond premiums and discounts.

Course Assignments

Syllabus ACC/305 Version 1 1. Readings Read Ch. 10 (including Appendix 10A, 10B, & 10C) & Appendix D of Financial Accounting.

Learning Team Assignment: Textbook Exercises and Online Practice Progress Report Part A Prepare written answers to the following assignments from Financial Accounting: o Part B Resource: ALEKS Online Practice Complete the Inventory and Assets, sections of ALEKS Online Practice. E-mail a progress report of your advancement in ALEKS Online Practice to your instructor. Print a copy of the report for your own records and submit a copy to your instructor. Ch. 8: Exercise E8-2, P8-7A, and P8-1B, o Ch. 9: Exercises E9-7, E9-9, E9-13, P9-5, and P9-7A

Discussion Questions What types of industries have unearned revenue? Why is unearned revenue considered a liability? When is the unearned revenue recognized in the financial statements? Provide a specific example. Hannah Co. maintains two separate accounts payable computer systems. One is known to all the users and is used to process payments to vendors. Employees enter the vendor code or the name and address of new vendors, the amount, the account, and so on. The other system is a secret one. It is used to cross-check the vendors against an approved vendor list. If a vendor is not listed as approved, the payment process is halted. Internal audit employees seek to verify the existence of a valid claim by the vendor. All inquiries are made at the top management level and very discreetly. No one but top management, the internal audit staff, and the Board of Directors of the company is even aware of the second system. Is it ethical for a company to have a secret system like the one described? Explain. What are the payroll taxes paid by employees? What are the payroll taxes paid by the employer? What types of reports are used to document to the government the payroll taxes paid by the employee and employer? The owner of a small business in Kansas has 6 full-time employees and 15 part-time employees. The owner pays his part-time employees in cash from the register at the end of their shift, rather than by check like the full time employees. The owners accountant has told the business owner on several occasions to pay everyone by check. The business owner says it saves him money in taxes and the employees prefer the cash. What internal control principle is the owner violating? What legal and ethical concerns of which the business owner should be made aware? What is the accountants responsibility in this situation?

Syllabus ACC/305 Version 1

Week Four
Equity and Investments Explain the characteristics of a corporation and the different types of stocks issued by corporations. Prepare journal entries associated with the issuance of preferred and common stocks and the declaration and payment of dividends. Examine stock dividends and stock split transactions. Record treasury stock transactions.

Course Assignments
1. Readings Read Ch. 11 (including Appendix 11A & 11B) of Financial Accounting.

2. Individual Assignment: Textbook Exercises and Online Practice Progress Report Part A o Prepare written answers to the following assignments from Ch. 10 of Financial Accounting: Exercises E10-2, P10-6A, and P10-9

Prepare written answers to the following assignments from Appendix D of Financial Accounting: o Exercises ED-3

Part B Resource: ALEKS Online Practice Complete the Liabilities section of the ALEKS Online Practice. E-mail a progress report of your advancement in ALEKS Online Practice to your instructor. Print a copy of the report for your own records and submit a copy to your instructor.

3. Discussion Questions Why would a company choose to form as a corporation? What are the steps that are required to become a corporation? What are the advantages and disadvantages of the corporate form of doing business? Companies frequently issue both preferred stock and common stock. What are the major differences in the rights of stockholders between these two classes of stock? Matthew Lundquist, the president and CEO of a waste management firm, was recently hospitalized, suffering from exhaustion and a heart ailment. Immediately prior to his hospitalization, Earth Systems had experienced a sharp decline in its stock price and trading activity became almost nonexistent. The primary reason for

Syllabus ACC/305 Version 1 this was concern expressed in the media over a new untested waste management system implemented by the company. Mr. Ludwig had been unwilling to submit the procedure to testing before implementation, but he reluctantly agreed to limited tests after the system was operational. No problems have been identified by the tests to date. The other members of management called a meeting to determine what they should do. Dick Markley, the marketing manager, suggested that the company purchase a large number of shares of treasury stock. In that way, investors might notice that activity had picked up and might decide to buy some more shares. This plan would use up most of the company's available cash, so that there will be no money available for a cash dividend. Earth Systems has paid cash dividends every quarter for over 10 years. Is Mr. Markley's suggestion ethical? Explain. Is it ethical to discontinue the cash dividend? Explain. For what reasons might a company purchase treasury stock? How is treasury stock reported? Is the purchase of treasury stock ever a good idea?

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Week Five
Statement of Cash Flows and Cash versus Accrual Basis

Prepare a statement of cash flows using both the indirect and direct methods.

Course Assignments
1. Readings Read Ch. 13 (including Appendix 13B) of Financial Accounting. 2. Individual Assignment: Final Examination

Resource: Financial Accounting Click the link to the Final Examination on your student website available from the end of Week Four through the end of Week Five. Complete the Final Examination. You are allowed one attempt to complete the exam, which is timed and must be completed in 3 hours. Results are auto graded and sent to your instructor. 3. Individual Assignment: Online Practice Progress Report Resource: ALEKS Online Practice Complete the Equity and Cash Flows sections of ALEKS Online Practice. E-mail a progress report of your advancement in ALEKS Online Practice to your instructor. Print a copy of the report for your own records and submit a copy to your instructor.

4. Learning Team Assignment: Textbook Exercises Prepare written answers to the following assignments from Financial Accounting:

Syllabus ACC/305 Version 1 o o Ch. 11: Problem E11-2, E11-6, E11-7, E11-16, P11-5A, P11-6A, and P 11-6B Ch. 13: Problems P13-9A, and P13-10A

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5. Discussion Questions Why are companies required to prepare a statement of cash flows? Why is the statement of cash flows divided into three sections? What does each section tell you about the operations of a company? Can a company experience a net loss, but have positive cash flows? Provide an example of a scenario that might cause this. What are the differences between the direct and indirect presentation of cash flows? Why does the Financial Accounting Standards Board (FASB) allow both methods? Which does FASB prefer? Which do you prefer? Explain why. What can we learn about a company from the Statement of Cash Flows that we might not be able to learn from viewing other financial statements? Provide specific examples.