ACCOUNTING 215

Introduction to Accounting and Financial Reporting

Course Introduction

Okay! You've decided to learn something about accounting. First, congratulations; you've discovered something I have been suggesting for a long time: Everyone needs to know something about accounting for the following reasons:

• If you are not already considered "management," you probably aspire to become a manager. As such, you will need information to perform your duties; a great deal of that information will be produced by an accounting system. You will also be evaluated, in part, on information produced by the accounting system. Obviously, you should know something about the system that can have a positive impact (bonuses, promotions, salary increases) or negative impact (demotions, salary reductions, no bonuses) on your life. You will discover that accounting is the language of business.
• Practically all of us will accumulate funds during our lifetime. When you are considering how to invest those funds, your investment advisor will most probably use terms such as "earnings per share" and "price earnings." You, of course, need to know not only what those terms mean, but how events affect them. An article in The Wall Street Journal suggested that only one in five Americans has a basic understanding of such terms and the ways various securities are bought, sold, and what they represent. Completing this course will move you away from being one of those "four" who doesn't understand and closer to the "one" who does.
• You may actually be considering accounting as a career field. If so, welcome. This course is the educational beginning of a long and rewarding process. If you are not now considering an accounting career, to the extent you enjoy this course, you may wish to reconsider that decision.
• There are, of course, other reasons to study accounting, not the least of which is intellectual curiosity. Regardless of your motivation, welcome. Whatever you learn, I think it is fair to say it will be in direct proportion to the effort you put into this course.

Probably the first thing you should note is the time commitment required. Accounting 215 is a five-credit course where each credit represents three hours of in- and out-of-class effort per week. Since we teach this course in a 10-week period, we're talking about a 150 hour commitment you will be expected to make over a 12-week period. (You have 12 weeks to complete this course.) You will discover that the earlier lessons require less time, whereas the later lessons require more time, so please plan accordingly.

On campus, this course is a prerequisite to Accounting 225, Introduction to Managerial Accounting; both courses are prerequisites for application to and entry into the Business School. Successful completion of these distance-learning courses will fulfill those prerequisites.

Course Objectives

At the end of this course, you should be able to:

• define the purpose of financial accounting and distinguish it from other forms of accounting;
• describe the role financial accounting plays in a decision process;
• describe the roles and responsibilities of various bodies involved in or with financial accounting;
• record basic transactions, events and circumstances in accounting records according to U. S. Generally Accepted Accounting Principles (GAAP);
• prepare properly formatted financial statements from those records;
• Know the underlying assumptions, principles and exceptions inherent in those statements:
• extract information from those statements to calculate basic financial ratios and understand your calculations and their significance; and
• identify elements of an annual report from a major corporation.

Course Materials

Textbook

Horngren, Sundem, Elliot. Philbrick, Introduction to Financial Accounting, 9th ed. Pearson/Prentice Hall, Upper Saddle River, NJ, 2005. ISBN 0-536-26803-7.

Note: this is a customized version of the Horngren/Sundem text and is available through the campus bookstore.

This text is now in its ninth edition, which should speak for its understandability and popularity. Consequently, the developer has suppressed the desire to rewrite the text—up to a point.

• By assuming the authors have (1) included all topics that should be found in an introductory course and (2) covered each topic to the depth that is necessary. If the topic passes both tests, no further comments will be provided in the lessons other than to assign homework.
• However, accounting is not intuitive. Even though the text may have covered some material adequately, one further test question is asked: Can a topic be easily understood without further explanations, help, or insights for those who know nothing about accounting and do not have access to an accounting instructor? If the material does not pass this test, complementary and supplementary comments, both of which are testable, are included.

Calculator

Handheld battery-powered calculator. If you have one that is described as a "financial" calculator or that has a "time value of money" module, you will be able to solve a number of problems faster and easier than students who do not have such calculators (assuming you learn how to use those functions).

Internet access

You will need to do some limited Internet research. The information you find from those efforts will be testable.

Online Environment

As an online student, you have access to a wealth of Web resources compiled to provide fast, easy access to information that supports your online learning experience. Online Resources link you to sites with help for writing and research, language learning, and library reference materials. All links have been assessed for credibility and reliability, and they are regularly monitored to ensure their usability.

Your online course offers several advantages to the traditional classroom, including a comprehensive Online Student Handbook, the ability to communicate electronically with students and with your instructor, and links to an array of online resources.

Online Student Handbook

This handbook answers questions about your online learning course, such as how to purchase your text, schedule an exam, obtain a transcript, and get technical help if you need it. The handbook also provides additional resources, such as how to order books or journals from the library and how to study for an online course.

Communication with Your Instructor and Student Peers

An online General Discussion Forum, designed by the University of Washington award winning Catalyst team, enables you to communicate with other currently enrolled students and with your instructor. You can use the General Discussion Forum to post questions, share resources, or engage in conversations about topical issues.

E-mail is a quick and efficient way to communicate with your instructor about feedback you've received on an assignment. In fact, many online students comment that they get more support and individual attention about assignments in their online class than in a traditional classroom. You will submit assignments to your instructor via e-mail.

About This Course

The first decision the instructor made when creating this course was how to organize it. There were essentially two choices: 1) the way the course on campus is organized and taught or 2) the way the authors have organized the text. While there is nothing "wrong" with the way the text is organized, the material seems best developed the way it is presented on campus. What this means to you is that in the early parts of this course, you will be asked to do selected readings in, and homework from, several chapters rather than in just one chapter. As the course progresses, "skipping" around will be reduced significantly.

The course contains twenty lessons (divided into three units). Within those lessons, you will find eight assignments to be turned in and three exams. Each lesson has some or all of these components:

• reading assignment
• lesson objectives
• comments about those objectives
• Internet reading (Connection to the Real World)
• Self-Study exercises and answers
• Practice examination questions and answers
• Assignments/Examinations (to be turned in)

You should approach each lesson (other than those that contain an examination) in the following order:

• Read the assigned readings.
• Read my comments in each lesson.
• Do the Practice exercises.
  • Complete the exercises before referring to the answers. Students who skip these exercise or take the easy way out and look at the answers before attempting to work them out do not develop the problem-solving skills needed for examinations.
  • Work any additional unassigned problems to build problem-solving skills. If you send your efforts to the instructor (clearly identifying the exercise), the related answers will be returned without comment.
• Take and correct the practice examination questions.
• Complete and turn in assignments.
• Review all of the above before taking an examination.

The three units mentioned above correspond to the three examinations. Each unit and its components are described below.

Unit One

This unit includes six lessons and one examination (Lessons One–Seven). It will involve the least amount of "number crunching" compared to the other units. This unit does not use debits, credits, journals, or ledgers. The goal of Unit One is to lay a foundation of knowledge that you will use in the rest of the course. Obviously, the stronger the foundation, the easier the remaining units will seem. Unit One includes the following lessons:

• Lesson One: Introduction to Accounting. This lesson introduces the course and the course's topic, financial accounting.
• Lesson Two: Financial Reporting. This lesson develops the accounting equation, financial statements and their formats, the assumptions, principles, and constraints that underlie those statements, and the content of an actual annual report.
• Lesson Three: Financial Accounting—Part 1. This lesson introduces you to various ways to measure economic performance, and then gets into some detail recording measurable economic events. I use an Excel spreadsheet approach in this lesson, as opposed to the traditional debit/credit/journal/ledger approach (Those topics are introduced in Unit Two).
  
  You should submit Assignment 1 when you have completed this unit. This is the only lesson in Unit One that requires you to turn in an assignment.

• Lesson Four: Business Entity. This lesson introduces you to the entity that accounts for and reports its measurable economic events: the business itself.
• Lesson Five: Control. Although recent events have suggested that control over accounting and reporting may not have been effective, there is a set of bodies that contribute to controlling financial reporting. This lesson introduces you to those bodies and provides insight into the audit process and product. It also briefly introduces international accounting standard settings.
• Lesson Six: User. The financial reports are issued so that others may use the information therein to make investing, lending, and other decisions. This lesson introduces you to users and usage of financial reports.

• Lesson Seven: Preparing for the First Examination. This is your first examination, which covers all material presented to date. You will need a calculator during all three examinations. You will find instructions for arranging your proctored examinations in the Online Student Handbook. To receive the full benefit of your homework and assignments, do not take any examinations until I have returned all relevant assignments and you have reviewed them.

Unit Two

This unit includes six lessons (Lessons Eight–Fourteen). It requires a moderate amount of "number crunching." The goal of Unit Two is twofold:

• First, you will be introduced to the more traditional accounting process and recording techniques.
• Then, armed with that information, you will study events that affect assets and related income statement accounts.

Specific lessons in Unit Two include:

• Lesson Eight: Financial Accounting—Part 2. This lesson introduces the process that leads to the production of financial reports. It involves recording events using debit and credit entries in a journal, posting the totals to related ledger accounts, adjustments, trial balances, and the closing process. This lesson is not easy, but it should be a lot easier than you might expect because the groundwork was laid in Lessons Two and Three. This lesson also is the beginning of Assignment 2, which you will turn in after completing Lesson Nine.
  
• Lesson Nine: Adjustments. Adjustments are one facet of the complete accounting process. They are introduced separately in this lesson solely because of their significance and substance.
  
  You should submit Assignment 2 for grading.
• Lesson Ten: Assets, Current Assets, Cash, and Investments. Specific issues developed are asset-related ratios, classification of cash and near-cash items, internal controls, and various forms of investments and how they are accounted/reported.
• Lesson Eleven: Revenue Recognition and Short-Term Trade Receivables. Specific issues developed include criteria for determining when revenue should be recognized, receivables recorded, and bad debts accounted/reported.
  
  You should submit Assignment 3 for grading.
• Lesson Twelve: Cost of Goods Sold and Merchandise Inventory. Specific issues developed include which costs and items to include in inventory, which costs to associate with the goods sold and unsold, inventory flow assumptions, and reporting inventory when its market value is less than its original cost.
  
  You should submit Assignment 4 for grading.

• Lesson Thirteen: Long-Term Assets. Specific issues include determining which costs become part of long-term assets, how those costs are spread over the asset's useful life, modifications to estimates used in that process, betterments, and other related events.

  You should submit Assignment 5 for grading.

• Lesson Fourteen: Preparing for the Second Examination. See my comments in Lesson Seven. While the second examination will require general knowledge of the topics addressed on the first examination, it will include questions directly relating to material introduced after the first examination.

Unit Three

This unit includes five lessons (Lessons Fifteen–Twenty) and requires the largest amount of "number crunching." The goal of Unit Three is to complete the examination of balance sheet accounts and then examine the Statement of Cash Flows. Specific lessons in Unit Three include:

• Lesson Fifteen: Current Liabilities, Deferred Taxes and Errors. Coverage of "errors" could have been introduced anytime after the first midterm. I choose to introduce the topic here because, by this time, you should be comfortable enough with the mechanics that you can use that knowledge to solve error-related problems.
• Lesson Sixteen: Time Value of Money. This lesson describes techniques underlying accounting for long-term debt (and to a limited degree, selected long-term assets.); it is also a topic that you will encounter in many other courses. The lesson also introduces nine aspects of time-value-of-money, and you will be responsible for each.
• Lesson Seventeen: Long-term Liabilities. Issues developed center on accounting for long-term leases and debt using time-value-of-money techniques.
  
  You should submit Assignment 6 for grading.
• Lesson Eighteen: Owners' Equity. Specific issues include issuing and repurchasing stock, cash and stock dividends, stock splits, and ratios that include equity as a component.
  
  You should submit Assignment 7 for grading.

• Lesson Nineteen: Statement of Cash Flows. Specific issues include classifying cash flows, deriving cash flow amounts, presenting operating cash flows using two different methods, and preparing an entire cash flow statement.
  
  You should submit Assignment 8 for grading.
• Lesson Twenty: Preparing for the Final Examination. See comments under Lessons Seven and Fourteen.

Course Activities

This course includes several additional activities to help reinforce the lesson material, both on- and off-line, including Internet Readings, Self-Study Exercises, Practice Examinations, and a Discussion Forum.

Internet Readings: Connection to the Real World

Over the years, various articles, primarily from The Wall Street Journal, about real-life events that relate to the topics in this course have been collected. Those articles are available to you through Electronic Reserves maintained by the UW. Each lesson suggests you read various articles in that reserve.

Practice Exercises

Practice exercises are for your own use, so you will not turn them in. There is no requirement to complete these exercises, but they are included to allow you to test your understanding of the subject. Answers to these exercises are included in pop-ups. You are encouraged to do these exercises and check your answers. If you are having trouble with them, contact your instructor for further help.

Practice Examinations

Questions and answers from previous exams used for this course are included not only to reinforce the material, but to help you prepare for your exams. Answering the questions before you look at the answers will give you a better of idea of what material to review.

Discussion Forum

You will find an online discussion forum on your course syllabus that allows you to communicate with other currently enrolled students. You are encouraged to use the forum to exchange ideas, resources, and comments about your course work with other students in this course. This unstructured forum is not monitored by your instructor.

Please use the discussion board for questions dealing with topical material. Use the instructor's e-mail for personal/individual course issues only.

About the Exams

Three equally weighted examinations are included in this course. You will find complete instructions for arranging your proctored examinations in the Online Student Handbook. To receive the full benefit from your homework and assignments, do not take an examination until your instructor has returned all relevant assignments and you have reviewed them.

Your instructor may ask every type of examination question imaginable. The best way to prepare for each exam is to review the practice examination questions, the Practice exercises, instructor commentary for each lesson, and the assigned readings, in that order. Working the practice examinations immediately after each lesson as you progress will quickly give you feedback about your comprehension of the material (as opposed to working them all just before an examination) .

While the second examination will require general knowledge of the topics addressed on the first examination, it will only include questions directly relating to material introduced after the first examination. The same comment applies to the final examination; neither examination will be comprehensive. You will need a calculator during all three examinations.

Course Grading

The course will consist of 600 points, distributed as follows:

First Examination	150
Second Examination	150
Final Examination	150
Assignments (8)	150
Total	600

There are eight graded assignments, the answers to which are not included in the online course materials. In general, these assignments are on the "harder" side and inform me of both your progress and comprehension of the course material.

Submit your assignments in either Excel or Word format as an e-mail attachment to your instructor. Help your instructor catalogue assignments by naming each assignment with your last name followed by the assignment number; for example, Wells1 for the first assignment.

The grades you earn on these assignments will be expressed as "18/25," which is read as earned 18 points out of a possible 25 points. All assignment grades will be added together and compared to the total possible points, i.e., a percentage will be derived. That percent will then be multiplied by 150 possible points to derive an overall grade for all assignments. In turn, that grade will be added to the grades you receive on each of the three exams to determine your final course grade. You will not receive a final course grade until you have completed and submitted all assignments.

Examinations are graded as soon as your instructor receives them and are returned to the UW Extension office. Your instructor will attach a sheet to the examination that will eventually be mailed to you that describes the topic covered and points lost (if any) on each topic. If you want to review your examination in detail, you must go to the UWEO office (See the Online Student Handbook.)

Completing this Course

Procrastination is the major obstacle to completing an online learning course. Without the set schedule of a classroom course, online learning students tend to put off doing lessons, and then forget about them completely. One does not have to have superhuman discipline to finish this course successfully; all you need is an organized structure for your studies.

• Get started as soon as possible. Studies show students who submit their first assignment within the first few weeks after registration are more likely to complete the course than those who delay.
• Mark your own deadlines on the calendar included on the course syllabus. If you submit assignments regularly, you are more likely to complete the course.
• Estimate the time it will take you to complete your first lesson. From this you can set a target date for turning in your first assignment. If this schedule proves realistic, you can plan your deadlines for the rest of the course.

Please keep the following points in mind as you work out your schedule:

• Allow enough time before each exam to receive my feedback on all your previous assignments.
• While you are waiting for each assignment to be graded, work ahead on the next assignment.

When stuck, get in touch with me. I'll get back to you as soon as possible. Usually I can talk you through the problem, so when possible, include a phone number and time to reach you. Good luck, and welcome to Online Learning and Accounting 215.

About the Course Developer

Bill Wells teaches in the University of Washington's Business School, specifically in the Department of Accounting. He graduated from the University of California, Berkeley, where he majored in business and finance. Bill's subsequent education includes a Master of Business Administration from Syracuse University and a Master of Professional Accounting from the University of Washington. He has held a variety of government and private industry-related positions including financial analyst, controller, director of administration, and executive director.

Bill joined the faculty of the Department of Accounting at the University of Washington in 1989, and taught Accounting 210 and 220 until 1996 when both courses were combined into Accounting 215. He has taught Accounting 215 since then. Bill teaches the online-learning course as well, which practically mirrors his on-campus course in organization and content. He also teaches Accounting 480, Government and Nonprofit Accounting.

Bill has received the following awards:

• Alpha Kappa Psi (national business student organization) business professor of the year 1994
• Beta Alpha Psi senior-level professor of the year—1995
• Outstanding business educator at the sophomore level as voted by graduating Business School seniors in 1997, 1999, 2000, 2001, 2002, 2003, 2004
• Wells Fargo Faculty Award for Excellence—awarded annually to " a faculty member who has evidenced unusually significant and meritorious achievement in undergraduate teaching", 2004
• Mortar Board Excellence in Teaching Award—awarded annually to one faculty member in any discipline taught on the Seattle campus, 2004
• University of Washington's Distinguished Teaching Award—awarded annually to selected university-wide faculty members regardless of school/discipline, 2006

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