2. Course Description
• 1-What is Accounting?
• 2-Who are Accounting users?
• 3-What information can be provided by Accounting?
• 4-How Accounting information can be used?
• 5-What is Accounting process?
• 6-What is the role of Accounting in operating performance
3. Course Objectives
• 1-Understand the source of Accounting information.
• 2-Understand fundamental concepts of Accounting.
• 3-Understand how financial information are used in the
management decision-making process.
• 4-Interpret accounting and financial data and the result of
• 5-use Accounting and Financial data to control the
4. Course Topics
• 1-Introducing Accounting and Financial Statements
• 2-Generally Accepted Accounting Principles
• 3-The Balance Sheet and its Components
• 4-The Income Statement
• 5-Preparing and using a Statement of Cash Flows
• 6-Double-Entry Accounting
• 7-The Corporations
5. Course Topics
• 8-Using Financial Statements for Short-Term Analysis
• 9-Using Financial Statements for Long-Term Analysis
• 10-Budgeting for using in Business
• 11-Audit and Auditors
• 12-Ethics in Accounting
• 13-Managerial Accounting
6. Course Schedule
• Session 1,2:
• Introducing Accounting and Financial Statements
• - What is Accounting
• - Who use Accounting Information
• - Financial Statements
•It is an information system that reports on the
•and financial condition of a business or other
-Accounting is the language of business
•There needs to be a system or set of rules so you are
able to compare entities to each other.
10. Course Schedule(cont…)
• Sessions 3,4:
• Generally Accepted Accounting Principles
• - Who are the SEC, AICPA and FASB
• - What is Generally Accepted Accounting
Users of Financial Statements
• Need information about the profitability, dividend yield and price
• Need information about the profitability and solvency of the
• Need information for planning, policy making and evaluation
• Suppliers and trade creditors
• Need information about the liquidity of business
• Need information about various businesses for statistics and
formulation of economic plan
• Interested in long-tem stability of the business and continuance
of the supply of particular products
• Interested in the stability of the business to provide
employment, fringe benefits and promotion opportunities
• Need information about the trends and recent development
13. Financial accounting practice is governed by
concepts and rules known as generally accepted
accounting principles (GAAP).
Affects the decision of
Reliable Information Is trusted by
Used in comparisons
across years & companies.
14. Course Schedule
• Sessions 5,6:
• The Balance Sheet and its Components
• - Understanding The Balance Sheet
• - The Accounting Equation
• - The Components of the Balance Sheet
• - The Transaction Behind the Balance Sheet
15. Introduction to Financial Statements
stands at a
Statement of Cash Flows
19. Course schedule(cont…)
• Sessions 7,8:
• The Income Statement
• - Understanding The income Statement
• - Transactions that affect the Income Statement
• - The Income Statement Illustration
20. Elements of the Income Statement
• Operating income
• Other income (expense)
21. Introduction to Financial Statements
expenses for a
period of time.
Statement of Cash Flows
What is revenue?
A revenue is an inflow of money or
other assets that results from the
sales of goods or services or from
the use of money or property. It is
also called income.
What is an expense?
An expense is an outflow of cash,
use of other assets, or incurring of a
24. Course schedule(cont…)
• Sessions 9,10:
• Preparing and using a Statement of Cash Flows
• - What is a Statement of Cash Flows
• - How Cash Flows Statement can be provided
• - The Statement of Cash Flows Illustration
25. Cash Flow Statement
A cash flow statement is a summary of the cash
receipts and payments for a specific period of time.
27. Primary Elements of the Statement of Cash Flows
Reports the cash effects of the
elements of net income.
Reports the cash effects of the
acquisition and disposition of
assets (other than inventory
and cash equivalents).
Reports the cash effects of the
sale or repurchase of shares,
the issuance or repayment of
debt securities, and the
payment of cash dividends.
34. Authorization, Issuance, and Repurchase of Stock
The maximum number
of shares of capital
stock that can be
issued to the public.
Treasury shares are
issued shares that have
been reacquired by the
Outstanding shares are
issued shares that are
owned by stockholders.
35. 1. Cash dividends.
2. Property dividends.
All dividends, except for stock dividends, reduce the
total stockholders’ equity in the corporation.
3. Liquidating dividends.
4. Stock dividends.
Types of Dividends
36. Course Schedule(cont…)
• Sessions 15,16:
• Using Financial Statements for Short-Term Analysis
• - Using Short- Term Ratios
• - Current and Quick Ratios
• - Other Short-Term Analytical Ratios
37. Financial Analysis
•Assessment of the firm’s past, present and future
•Done to find firm’s financial strengths and
•Comparison of financial ratios to past, industry,
sector and all firms
38. Framework for Financial Analysis
needs of the
1. Analysis of the funds
needs of the firm.
2. Analysis of the financial
condition and profitability
of the firm.
3. Analysis of the business
risk of the firm.
39. Financial Ratio Analysis
• Financial ratio analysis is the use of relationships among financial statement
accounts to gauge the financial condition and performance of a company.
• We can classify ratios based on the type of information the ratio provides:
s in putting
40. Course Schedule(cont…)
• Sessions 17,18:
• Using Financial Statements for Long-Term Analysis
• - Quality of Earnings
• - Rate of Return on Investments(ROI)
• - Sales-Based Ratios
• - Other Long-Term Analytical Ratios
41. Profitability Ratios
Return on Equity
Net Profit after Taxes
Indicates the profitability to
the shareholders of the firm
(after all expenses and
Income Statement /
42. Common-size Analysis
An analysis of percentage financial
statements where all balance sheet
items are divided by total assets and
all income statement items are
divided by net sales or revenues.
43. Common Size Balance Sheets
Regular (thousands of $) Common-Size (%)
Assets 2005 2006 2007 2005 2006 2007
Cash 148 100 90 12.10 4.89 4.15
AR 283 410 394 23.14 20.06 18.17
Inv 322 616 696 26.33 30.14 32.09
Other CA 10 14 15 0.82 0.68 0.69
Tot CA 763 1,140 1,195 62.39 55.77 55.09
Net FA 349 631 701 28.54 30.87 32.32
LT Inv 0 50 50 0.00 2.45 2.31
Other LT 111 223 223 9.08 10.91 10.28
Tot Assets 1,223 2,044 2,169 100.0 100.0 100.0
44. Course Schedule(cont…)
• Sessions 19,20:
• Budgeting for using in Business
• - What is Budget
• - Planning and Control
• - Advantages of Budgeting
• - The Master Budget
• - Capital Budget
• - Other Useful Budgeted Statements
45. Planning and Control
budgets to achieve
involves the steps taken
by management to
increase the likelihood
that the objectives set
down while planning are
attained and that all
parts of the organization
are working together
toward that goal.
49. External Audit Report and Plan of Action
50. Condition Unqualified Qualified Disclaimer Adverse
Limit on audit
Type of Report
53. Importance of Ethics in Accounting
Fraudis an intentional deception, misappropriation of a
company’s assets, or manipulation of its financial data to
advantage of perpetrator.
Symptoms can include:
•Key executives appearing to be living beyond their means.
•Key executives have close associations with suppliers.
•Company uses several different banks, none sees full financial picture.
•One or two individuals dominate the company.
54. Five Internal Control Components: SAS 78 / COSO
1. Control environment
2. Risk assessment
3. Information and communication
5. Control activities
56. Course Schedule(cont…)
• Sessions 25,26,27:
• Managerial Accounting
• - What is Managerial Accounting
• - Cost-Volume-Profit(CVP) Analysis
• - Break-Even-Point(BEP) Analysis
• - Capital Investment Analysis
57. Managerial accounting is the process
Define Managerial Accounting
Measure the cost of
Identify and eliminate
Cost Management Systems
59. Managerial versus Financial Accounting
Information for decision
making, planning, and
statements and other
60. Major Themes in Managerial Accounting
Types of Cost Classifications by Function
Period costs are expenses not attached to the product.
Administrative costs are
of staff support and
Selling costs are incurred to
obtain orders and to deliver
finished goods to customers.
63. Manufacturing Cost Flows
Material Purchases Raw Materials
64. Course Grading
Each week’s assignment is equally weighed, and then summed for the final quiz
Case Study 25%
Each student will prepare and present a case study to the rest of the class
Exam 1 25% (Closed Book and Note)
Exam 2 25% (Closed Book and Note)