Topic Name Description
Course Introduction Page Course Syllabus
Page Course Terms of Use
1.1: The Accounting Environment File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 1: The Accounting Environment"

Please read and take notes on Chapter 1, found on pages 14 through 29.

This will be the primary textbook used within this course. The beginning of every chapter provides chapter-specific learning objectives. Do not confuse these learning objectives with the learning outcomes you see in the course syllabus and at the outset of each unit. You should use the chapter-specific learning objectives as guide as you read and understand the information presented in the textbook. The learning outcomes indicate what you should know and be able to do at the end of a particular unit of this course.

Section 1.2 initiates a discussion on how to define accounting and what the end result of accounting (accounting information) may be used for. This is a generalized overview; more detail will be provided as you progress through the course. 

In Section 1.3, you will get your first look at some potential employment opportunities associated with accounting for business. Please ponder and place Exhibit 1 (p. 18) in your notes, as this illustration provides information on the functions performed by accountants.

Section 1.4, discusses the difference between financial and managerial accounting. Pay particular attention to this material if you think you might be interested in following your study of financial accounting with Saylor Academy's BUS105: Managerial Accounting course.

Section 1.5 will introduce you to the Generally Accepted Accounting Principles or GAAP. You will also be provided insight into the various organizations that have a major impact on how GAAP is administered, including the Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB), and the American Accounting Association (AAA).

In Section 1.6, you will learn how important it is to be ethical in your application of accounting principles. This section provides specific insight into the importance of managing your reputation. Please be mindful of this information, especially if you are considering a career in accounting.

Reading the final section is optional, but doing so may help you to get more from this textbook.

1.1.1: Financial Accounting vs. Managerial Accounting URL Managerial Accounting, v1.0: "Chapter 1, Section 1: Characteristics of Managerial Accounting"

Please read the introduction to this chapter and the first section. This reading will introduce you to the principles of managerial accounting and points out the differences between managerial accounting and financial accounting. It is important that you recognize that managerial accounting is not used by outside parties. It is primarily used internally by management to make decisions that affect the efficiency of the organization

1.1.2: The Development of Financial Accounting Standards Page Boundless Accounting: "Chapter 1, Section 5: Conventions and Standards"

In this reading, you will learn about the rules that govern accounting. Pay particular attention the second section of this reading, on the US Generally Accepted Accounting Principles, or GAAP. GAAP sets the rules which accounts follow when making journal entries. GAAP standardizes accounting so that comparisons can be made among companies by outside parties. Investors, creditors, even employees count on the consistency of financial reporting in order to evaluate operations. Each of the eight sections in this reading includes at least one learning objective. Be sure you have accomplished each learning outcome before you move on to the next resource.

1.2.1: Basic Accounting Concepts Page Dave Alldredge's "Financial Accounting: GAAP Principles and Concepts"

This video introduces you to the basic accounting principles. Pay close attention as Professor Alldredge explains the various accounting entries and how transactions affect businesses. Even though this is a short video, this is a good introduction. Please understand that this only an introduction and that further reading is necessary to get a good understanding of GAAP.

1.2.2: Introducing Financial Statements Page Dave Alldredge's "Financial Accounting: Interpreting Corporate Financial Statements"

This video demonstrates how transactions lead to the creation of financial statements. Here again, you should understand that vendors, creditors, and investors are only a few of the people who look at and analyze the company financials. Before they should be released to that group, the financials should internally scrutinized to catch and correct any errors. Also if the organization has an outstanding load, generally there are restrictions regarding the ratios that are calculated from the financials. The accountants of the organization should know these ratios as well.

1.3: Accounting and Its Use in Business Decisions File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 2: Accounting and its Use in Business Decisions"

In this chapter, you will learn why accounting is important to the business community. You will learn the different types of businesses and how daily transactions are posted and how they affect the financial statements. These reading will also demonstrate how to prepare the income statement, balance sheet, and statement of stockholders equity. Pay close attention to steps involved in the accounting cycle from beginning to end.

You should read and take notes on Sections 2.1 through 2.12 of Chapter 2 on pages 30 through 53.

In Section 2.1, you are provided with chapter-specific learning objectives.

In Section 2.2, you will get another look at a potential employment opportunity for someone interested in the business discipline of accounting. 

In Section 2.3, there is some discussion of the concept identified as "the entity concept." Please ensure you understand the meaning of this concept. Additionally, this section explains the differences between a single (sole) proprietorship, a partnership, and a corporation. 

Section 2.4 explains that a business entity can be distinguished by the type of activity it performs - i.e., service company, merchandising company, or manufacturing company - as opposed to being identified by the type of business ownership. 

Section 2.5 discusses the four financial statements and provides illustrations to support the discussion. There is also a discussion on revenues and expenses, as they impact net income or net loss. Pay particular attention to this discussion and be sure the listed equation is in your notes. 

Section 2.6 discusses the framework of the entire accounting process, which may also be identified as the accounting equation. The fundamental accounting equation is the basic equation that accountants use to record business transactions. The equation states "assets = liabilities + owners' equity.” There are a number of elements within the accounting equation, and this section of the course will provide you with the direct and alternative identifications of these elements so you can begin to speak the language of accounting.

While you will hear these three elements of the accounting equation discussed and illustrated in multiple ways throughout this course, here is an introduction: Assets are things that expect to have future value to the company. For example, if the company buys a new car, this car has future value to the company. Liabilities are promises to pay. Some companies may not have all of the money to pay cash for the car, so they will typically finance, or obtain credit for, and borrow the difference between the down payment and the final price of the car. If approved, the company now promises to pay back the bank or business entity who gave the company money. Owners' Equity is the owners' claims on assets. This basically means that, as an owner of the company, you have a claim on the asset that is now identified as the new car the company owns. 

Section 2.7 introduces you to a number of concepts on business transactions. This is the beginning analysis of how business transactions impact the accounting equation. Later, you will have an opportunity to complete an assessment that will further assist you with understanding how basic business transactions impact the accounting equation.

Section 2.8 seeks to illustrate how some business transactions will impact the balance sheet. It is recommended that you write out the examples in this section of the course, identified on pages 41 through 44. As you are reading through the content, follow along with these examples. Feel free to take any additional notes on the examples you copy. 

Section 2.9 illustrates how some business transactions will impact the income statement and/or balance sheet. It is recommended that you write out within your notes the examples in this section of the course, identified on pages 46 through 48. As you read through the content, following along with these examples. Feel free to take any additional notes on the copied examples.

Section 2.10 is a summary of balance sheets and income statement transactions. 

Section 2.11 explains what happens when a stockholder receives a dividend (a return on their investment in a company). 

Section 2.12 explains the significance of creditors and stockholders as the basic sources of a company's equity. The equity ratio is introduced and examples are provided to support your understanding of this information. 

1.3.1: Financial Statements Page U.S. Securities and Exchange Commission: "Beginners' Guide to Financial Statements"

Read the article, which acts as a guide to the foundational elements of basic accounting and reading financial statements. You will see some terms that have not yet been covered fully but that will indeed be further explained as you move through the course.

URL Boundless Accounting: "Chapter 3: Overview of Financial Statements"

Read each of the sections of this chapter. This reading explains the purpose of the balance sheet, income statement, and the cash flow statement. It also is a guide to where you will find financials on publicly traded companies. It is important that you get as much practice working on these statements as they provide the backbone of information on any organization. Try to make the connections between each financial statement. The more you understand the connectivity of these statements, the better understanding you'll have of how the entire accounting system works; an important element if you want to pursue a career in auditing. Make sure to click on each section.

1.3.2: Understanding the Accounting Equation Page Dave Alldredge's "Financial Accounting: Interpreting Corporate Financial Statements"

This video demonstrates how transactions lead to the creation of financial statements. These are a great source of reference. Not only does this video demonstrate how transactions are directly connected to the financial statements, they stress the importance how dependant all the individual events of the accounting cycle are connected.

Page Boundless Business: "Chapter 18, Section 3: The Accounting Process: The Accounting Cycle"

This short introduction explains the complete accounting cycle in theory. It takes you from journal entries to the financial statements. I know that some of this is a repeat of prior learned material but this short refresher can help embed principles now that you've had a little hands on work.

1.3.3: Principles of Accounting Transactions Page Dave Alldredge's "Accounting Cycle Step 1: Analyze Transactions"

This video will take you through the various accounting transactions and explain the posting process. Take note of how each transaction affects accounts on the balance sheet and income statement. These steps may seem rather dull and uninteresting; however, please take note that it is important that you utilize great detail when journalizing and posting. If you slip up, you will be out of balance and you will have to go back and retrace your steps.

Page Dave Alldredge's "Accounting Cycle Step 2: Journalize Transactions"

This video takes you through journal entries and posting to T accounts. It is a continuation of the accounting cycle. Great visual to watch and keep as a reference. Sometimes it's easier to "see" accounting in action rather than just read about it.

Page Dave Alldredge's "Accounting Cycle Step 3: Post Transactions"

This video takes you deeper into the accounting cycle, teaching you how to post transactions to the journal at T accounts.

URL Saylor Academy's "Principles of Accounting Transactions"

This article will give you an introduction to the principles of accounting transactions. Accounting transactions record the amount of money spent and received by a given entity. Take notes while you read.

1.3.4: Transactions Affecting the Income Statement and/or Balance Sheet Page Dave Alldredge's "Accounting Cycle Step 4: Unadjusted Trial Balance (Corporations)"

This video teaches you about adjusting entries, which you will need to do to get your worksheet ready for preparation of the financial statements.  Here again, some of this is repeated material but some is new. This will give you a broader picture to understand the process.

URL Boundless Business Fundamentals: "Chapter 9: Financial and Managerial Accounting; Financing Your Organization"

In this reading, the importance of using an accounting system is explained. The financial statements are outlined and several other accounting tools are introduced. Be sure to spend enough time in particular on Section 2: Why an Accounting System is Important. Pay close attention to the last part because understanding why the system is important is crucial to understanding accounting as a whole. Also if your career aspirations are to become an auditor, then this is a very important element.  Make sure to click on each section.

File Openstax CNX: Donald J. McCubbrey's Business Fundamentals: "Discussion Questions"

These discussion questions cover a variety of accounting topics such as: chart of accounts, double book entries, budget preparation, and information given to the public. You will encounter two questions that rely on concepts that you really have not yet touched upon yet. Don't worry -- we'll get there. Please attempt to answer the questions or prompts presented in all of the bullet points on this page EXCEPT for the last three bullet points. Consider posting your responses to Saylor's Discourse discussion forums.

1.4: Accounting Theory File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 6: Accounting Theory"

You should read and take notes on Sections 6.1 through 6.16 of Chapter 6 on pages 253 through 283.

Section 6.1 provides chapter-specific learning objectives.

Section 6.2 provides another look at a potential employment opportunity for someone interested in the business discipline of accounting.

Sections 6.3 and 6.4 introduce you to the foundational assumptions and concepts associated with accounting, providing a detailed definition of each.

Section 6.5 introduces you to other key elements of accounting: double entry, substance over form, and general-purpose financial statements. Be sure to take many thorough notes on this information.

Section 6.6 expounds on assigning the effects of business activity (the transactions) within a specified time frame (accounting period). 

Section 6.7 expounds on the major principles supporting the field of accounting, such as the matching principle or the revenue recognition principle. The major principles are explained and their impact on the overall application of GAAP (Generally Accepted Accounting Principles) is discussed. 

Section 6.8 provides knowledge of specific instances of why a business entity would not be applying the principles of accounting within the business. These instances are identified as cost-benefit, materiality, and conservatism. Pay careful attention to Exhibit 29 in Chapter 6. 

Section 6.9 provides an overview of the dispute and some key points to consider.

Section 6.10 introduces the objectives of financial reporting. The details of each objective are provided, and you should be sure to include these in your own notes. 

Section 6.11 addresses the characteristics that should be present so that the information can be relevant. Pay attention to the hierarchy of accounting quality as illustrated in Exhibit 31 on page 273. The underlying intent behind the creation of financial reports is for the information in the reports to be reliable enough to support sound business decision-making.

Section 6.12 will assist you in developing a conceptual framework for understanding accounting. 

Sections 6.13 and 6.14 teach that most companies will include a copy of their accounting policies when they submit their annual report. This section of the course briefly talks about this summary. 

Section 6.15 covers significant policies associated with accounting. This section of the course briefly introduces you to these terms and guides you to the chapter where you will get more detail on each topic. 

Section 6.16 will review what you have learned as you progressed through this chapter. It will also review and list the key terms from this chapter and provide you with a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The answers to the self-test are on pages 300 and 301.

2.1: Debits and Credits URL Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 3: Recording Business Transactions"

This reading explains the rules regarding debits and credits. You will note that debits and credit increase and decrease certain accounts. Please spend some time learning the rules of debits and credits as they are foundation of accounting principles. posting a debit where a credit should be or vice versa will cause you to be out of balance. You will then have to re-trace all of your postings to uncover your error and this will be very time consuming and frustrating.

URL Wisc-online: Lynette Teal's "The Debits and Credits of Accounting"

In this presentation you learn the 10 steps in the accounting cycle, from recording transactions, posting to the worksheet, and up to the post closing trial balance and preparation of the financial statements.

2.2: The Accounting Process URL Boundless: Accounting: "Chapter 2, Section 2: The Accounting Cycle"

Read this section. You have been exposed to the concepts of recording and journalizing transactions previously, but this reading will flesh out the remainder of the accounting process for you. We may dip back into this section for reference later in this course as we go more in-depth on each of the various steps. Make sure to click on each section.

Page Dave Alldredge's "Accounting Cycle Steps 5-9"

In this subunit, you will watch the remainder of Professor Alldredge's short videos on the accounting cycle. It would benefit you greatly to head back to the beginning and watch the videos for Steps 1 through 4 before you begin viewing the videos for Steps 5 through 9 here. These videos take you through the entire accounting cycle: journals, postings, worksheet, adjusting entries, post closing entries and to the financial statements. Now you get to see the process as one continuous activity. You will notice that the method is slightly different between sole proprietorship companies and corporations. Make a not of this and prioritize learning both completely because over the course of your career you may find yourself working within both types of business organization. This is very similar to real world events that if you become and accountant, you will complete every month end.

URL Edwards and Hermanson's Accounting Principles: "Chapter 2: Recording Business Transactions"

Open this textbook and go to page 76. This page outlines the rules of debits and credits. You have seen this information before in the reading for subunit 2.1, but this is a great page to copy and keep handy as a quick reference. I would suggest laminating it and keeping it in the top drawer of your desk.

Then, jump ahead and read pages 80 and 81. Although you have seen this information previously, it will benefit you now to examine the section on the ledger and the chart of accounts again. Learning about financial accounting for the first time is all about building upon and refining your knowledge of accounting processes and methods step-by-step. Be sure to record in your notes which accounts are permanent and which accounts are temporary. Here again, you have seen this information but like the rules of debits and credits, this a very handy little quick reference to have.

3.1: Adjustments for Financial Reporting URL Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 4: Adjustments for financial reporting"

In this chapter, you will take a deeper dive into the importance of making proper adjustments so that the financial statements truly reflect the current condition of the organization. You were briefly introduced to adjustments in the Professor Alldredge videos. One of the main principles of accounting is accurate and honest presentation of the financial condition of an organization and without the proper posting of adjustments and correcting entries, the financial statements will be incorrect. Pay close attention to the material presented.

You should read and take notes on Sections 4.1 through 4.10 of Chapter 4 on pages 144 through 173.

Section 4.1 provides chapter-specific learning objectives.

Section 4.2 provides another look at a potential employment opportunity for someone interested in the business of accounting. 

Section 4.3 teaches the difference between cash- and accrual-based accounting. The foundational impact rests on the identification of revenues and expenses. There is a figure identified as Exhibit 14, ensure this information is properly detailed in your notes.

Section 4.4 described snapshots. Because the ultimate goal is to obtain useful information, it becomes necessary to take snapshots. What do we mean by a snapshot? Specifically, accounting is typically done within a specified period so that end users can assess the performance of a business entity. The identification of the terms accounting period, fiscal year, calendar year, adjusting entries, and the matching principle will be discussed in this area of the course as well. There will be distinction placed on the two classes and four types of adjusting entries. Ensure exhibit 16 from chapter 4 is properly identified in your notes. 

Section 4.5 provides a more detailed understanding of the classes of adjusting entries as identified in the previous section of the course. A specific example is provided to assist with your analysis of this information.

Section 4.6 focuses on developing an understanding of how prepaid expenses and depreciation impact the accounting equation and the overall processing of these transactions. 

Section 4.7 discusses adjustments. In a business there will be transactions that will have not been recorded by the end of a specified accounting cycle. These items can be identified as accrued assets or interest revenue, to name a couple. This section of the course seeks to help you identify and understand how to process these transactions. There is a great deal of visual support to assist in processing this information, so pace yourself accordingly. 

Section 4.8 refers you to Exhibit 18 to guide your understanding of this information. 

Section 4.9 will introduce you to the concept of trend percentages and provide you with a formula to use when calculating trend percentages.

Section 4.10 reinforces the concepts learned in this unit of the course. The solutions to the self-test are located on pages 188 and 189.

Page Dave Alldredge's "Financial Accounting: Cash Basis vs Accrual Accounting"

This video explains cash versus accrual based accounting. It is similar to the reading but goes much deeper. Many times, watching/seeing the process unfold makes it easier to understand it. Please watch the video and have the reading close at hand so that you can compare the two. This will help to clear up any confusion that you might have about the difference between these two methods of accounting.

3.2: Visualizing the Adjusting Journal Page Dave Alldredge's "Accounting Cycle Step 5: Adjusting Entries Overview'

This video gives a quick overview of the adjusting entries portion of the accounting cycle. You watched this video in Unit 2 in the context of the accounting cycle, but it may help you to see it again having read more about adjustments in the Hermanson, Edwards, and Maher textbook at the beginning of this unit. You will recognize the previously learned content but now you will see some new material added to the process. In accounting, you can't introduce new material without referencing the previous steps. That is why from time to time you will see this re-learning taking place.

Page John Petroff's Accounting I: "Chapter 3: Completing the Accounting Cycle"

This document breaks down completing the accounting cycle. Pay particular attention to the section on adjustments and be sure to take the review quiz linked at the bottom of the section. Looking ahead, this reading will also give you a glimpse of closing out the accounting cycle process and the various steps involved in closing the books, which are covered in much greater detail in the next unit.

4.1: Completing the Accounting Cycle File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 5: Completing the Accounting Cycle"

You should read and take notes on Sections 5.1 through 5.11 of Chapter 5 on pages 190 through 231.

Section 5.1 provides chapter-specific learning objectives.

Section 5.2 gives another look at a potential employment opportunity for someone interested in the business of accounting.

Section 5.3 provides a brief summary of what you have learned from previous chapters and begins the introduction to the use of the accounting worksheet. 

Section 5.4 provides more specific information on the use of the accounting worksheet. There are a series of steps provides to support your foundational understanding of how the worksheet should be established. You will be taken step by step through the functions that you have learned and how the worksheet can aid you in bringing it all together. This is accomplished by revisiting the MicroTrain company introduced earlier in the textbook. Illustrations are provided to support your connection to the previous information you have in the course up to this point. 

Section 5.5 provides a worksheet that can be used to create your financial statements. 

Section 5.6 explains how the accounting worksheet can be your source for making the adjusting entries. Be mindful of the fact that the worksheet is an informal document used to support your analysis of the accounting information; this document is not a part of the formal accounting process. Some people prefer to use the worksheet to prepare for the transferring of data into useful information. You are highly encouraged to learn the basics of using this worksheet. As you become more comfortable with the practices of accounting, you will then be in a position to decide whether or not you would use the accounting worksheet. 

Section 5.7 discusses the term nominal account, which describes a temporary account. When you take your snapshot of a specific accounting period, it becomes necessary to address the nominal accounts. This section of the course explains this information. 

Section 5.8 provides an analysis of how the recording and analyzing of financial accounting information has transitioned and broadened as a result of technology. 

Section 5.9 makes a distinction between a balance sheet and a classified balance sheet. This will be your first introduction to the classified balance sheet.

Section 5.10 discusses and defines the current ratio as a firm's ability to pay off its current liabilities with its current assets. A basic standard suggests that a business should maintain a 2-to-1 ratio with regards to meeting its financial obligations. However, as you will learn in this section of the course, there are many variables that support what is best within a given business situation.

Section 5.11 will reinforce your understanding of accounting concepts. The solutions to the self-test are located on pages 250 and 251.

URL Peter Baskerville's "What is a 10-column worksheet in accounting?"

In this article you will find a series of hyperlinks that direct you to specific accounting information that is used to complete the accounting worksheet. Ensure you review the information as it appears within the main page of this resource. Although this is material that you have been exposed to previously, it is a great resource to present the proper use of a spreadsheet/worksheet.

4.2: The Closing Process Page Dave Alldredge's Accounting Cycle Step 8, Step 9, and Adjusting & Closing Entries

In this series of five videos, you will hear Professor Alldredge speak again about closing entries again. You have already watched the first three videos -- Closing Entries to Retained Earnings, Closing Entries to Income Summary (Corporation), and Post-Closing Trial Balance (Corporation) -- but they are so brief that it will not hurt to re-watch them. Regardless, please do be sure to view the final two videos in this series on adjusting and closing entries with the perpetual method. These videos demonstrate the closing cycle and preparation of the financial statements. Yes, it is material that you've read about previously however, this is a very good video to see the process unfold. Sometimes a visual presentation is just as good if not better than the readings. Also keep this and other videos as a reference. It is a lot easier to view a video that to re-read chapters of a book.

5.1: Financial Reporting URL U.S. Securities and Exchange Commission: "Obstacles to Good Financial Reporting"

This reading will give you insight into the behind the scenes on the issues regarding reporting of financial information for public companies. GAAP is a very integral part in how to report transactions and so it is discussed thoroughly.

URL U.S. Securities and Exchange Commission: "Research Public Companies Through EDGAR: A Guide for Investors"

This is a great introduction to resources that you can use to research any public company. All public companies must report their financials; quarterly reports, end of your tax forms, changes in top management, etc. If you ever need to look up a company, this will give you the tools you need to navigate the public records system.

URL U.S. Securities and Exchange Commission: "How to Read a 10-K"

Although learning how to read a report sounds somewhat pedantic, you might be surprised at how much valuable information is contained in this reading. Give a look, and save it for your reference library.

5.2: Financial Statement Analysis URL Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 17: Analysis and Interpretation of Financial statements"

In this reading you will learn how to analyze financial statements. This short chapter will demonstrate the use of ratios, horizontal, and vertical analysis tools that everyone from creditors to investors, to vendors, to top management use when they want to identify strengths and/or weaknesses in an organization. Take the time to repeat the formulas presented so that you will be able to perform these calculations with ease.

6.1: Introduction to Inventories and the Classified Income Statement URL Edwards and Maher's Accounting Principles: Chapter 6: Introduction to inventories and the classified income statement"

Read all of Chapter 6, and please pay particular attention to the section titled, "Two income statements compared— Service company and merchandising company." This reading starts the discussion of the difference in reporting and financial presentation of information for service and merchandising operations. Here you will learn the differences and commonalities there are when recording inventories for two separate types of businesses. You will learn these two different entities record and classify their inventories.

URL Boundless Accounting: "Chapter 5, Section 1: Controlling and Reporting of Inventories, Understanding Inventory"

Read this section which focuses on the nature of inventory, categories of goods included in inventory, components of inventory cost, and the flow of inventory costs.

URL Boundless Accounting: "Chapter 5, Section 2: Controlling and Reporting of Inventories, Controlling Inventory"

Read this section which focuses on internal controls, perpetual verses periodic counting, conducting a physical inventory, and the impact of measurement error. 

6.2: Measuring and Reporting Inventories URL Hermanson, Edwards, and Maher's Accounting Principles "Chapter 8: Measuring and Reporting Inventories"

This is a continuation of the material learned previously regarding inventories. Since for many organizations, inventory represents a large portion of their assets, it is important that you are familiar with measurement and reporting techniques.

Page Dave Alldredge's "Financial Accounting: Determine Physical Units of Inventory"

This video presents information on inventory reporting.  It also addresses shipping costs and when inventory should be recorded as an asset or not during shipping.

URL Boundless Accounting: "Chapter 5, Section 3: Controlling and Reporting of Inventories, Valuing Inventory"

Read this section, which focuses on the four inventory costing methods and the impact each has on the financial statements.

URL Boundless Accounting: "Chapter 5, Section 5: Controlling and Reporting of Inventories, Additional Topics in Inventory Valuation"

Read this section, which focuses on the lower of cost or market and methods in retail inventory.

URL Boundless Accounting: "Chapter 5, Section 6: Controlling and Reporting of Inventories, Assessing Inventory Management"

Read this section, which focuses on efficiency metrics and the impact of inventory method on financial statement analysis.

URL Boundless Accounting: "Chapter 5, Section 7: Controlling and Reporting of Inventories, Reporting and Analyzing Inventories"

Read this section, which focuses on reporting inventories and inventory turnover ratio.

7.1: Receivables and Payables File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 9: Receivables and Payables"

This reading presents accounts receivable, uncollectible accounts, bad debts and accounts payable. The theory of each is presented and the treatment of these accounts are discussed as well. Some of this is material that you have seen in the videos. This is a reading presentation of very similar material. Watch the video and follow in the text to help embed the principles.

You should read and take notes on Sections 9.1 through 9.9 of Chapter 9 on pages 11 through 54.

Section 9.1 provides chapter-specific learning objectives.

Section 9.2 provides another look at a potential employment opportunity for someone interested in the business of accounting.

Section 9.3 builds from what you have learned through your completion of the material in Chapter 3. The focus in this section of the course is on what should be happening when a receivable is uncollectible. You will be introduced to methods and should pay specific attention to the concept of an aging schedule and how to write off receivables. There is also insight provided on how credit card transactions should be identified and recorded from the business entity's perspective. 

Section 9.4 provides explanations associated with liabilities. Discussion in this section of the course will also distinguish among clearly determined liabilities, estimated liabilities, and contingent liabilities. 

Section 9.5 provides specific language to understand notes (also identified as promissory notes), and how to account for them within the accounting system. As you go through this section of the course, make sure you pay attention to the discussion on interest receivable, interest revenue, interest expense, and interest payable. 

Section 9.6 describes how businesses handle short-term cash flow problems. There are situations when a business may need short-term financial assistance to support strategic business activity. 

Section 9.7 provides a review of the learning objectives, as well as demonstration problems and the solutions in the textbook as 9.7.1 through 9.7.3. 

Section 9.8 revisits the terms from this chapter that you have connected with during your studies. 

Section 9.9 offers a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The solution to self-test is located on pages 66 and 67 in Chapter 9.

Page Dave Alldredge's "Financial Accounting: Types of Receivables" and "Financial Accounting: Notes Receivables"

These videos present material on accounts receivable. Pay attention to the material on uncollectible accounts and how to show this on the balance sheet. Uncollectible accounts can present a real problem to the organization. The video points out different methods employed to manage this.

7.2: Understanding Bad Debt and its Relationship to Receivables Page Boundless Accounting: "Chapter 4, Section 6: Dealing with Foreign Currency and Bad Debts"

This reading covers foreign currency and bad debts on receivables. It discusses the concept of gain or loss and net realized receivables The new material covered addresses how foreign currency is treated by U.S. organizations. Since we are a very global business world, it is important that you see the effect this has on the financials of any MNC.

8.1: Property, Plant, and Equipment File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 10: Property, Plant, and Equipment"

This chapter introduces you to how organizations categorize and account for fixed assets. You will learn that assets are recorded at cost not necessarily market value. You will also learn of the various methods of depreciation and why each method is used. This chapter will also introduce the "rate of return" expected by an organization when they purchase an asset.

You should read and take notes on Sections 10.1 through 10.10 of chapter 10 on pages 68 through 103. 

Section 10.1 provides chapter-specific learning objectives.

Section 10.2 identifies the company accountant's role in managing plant assets.

Section 10.3 explains how to classify assets through the identification of three key elements that must be in place. You will also be introduced to the four steps associated with accounting for plant assets. 

Section 10.4 discusses the initial recording of plant assets. After working through this section of the course, you should be able to identify the terms fair market value, acquisition costs, and historical costs. You will also develop an understanding of which costs are capitalized. There will be some illustration and discussion on how to record the life history of a depreciable asset to ensure the proper account and true financial picture of an organization's assets. Pay careful attention to the discussion on the difference in the cost and accounting for the construction of a new building versus buying land and assets for a specific lumped price. You will also be introduced to the difference between book value and appraised value; be sure you know the difference. 

Section 10.5 discusses the reality that all assets, with the exception of land, have a useful life. Basically, a business should expect some wear and tear on the asset as a direct result of using it to support its business activity. Depreciation is an allocations process that ensures the useful life of an asset is properly identified from an accounting and company valuation. You will be introduced to the three major causes of depreciation; please ensure you take good notes on this area of the course. Finally, an emphasis will be placed on the identification and synthesis of the four methods of depreciation. 

Section 10.6 discusses how to distinguish capital expenditures, revenue expenditures, and betterments. Each of them has a unique impact on the assets value, its useful life, and on the financial statements. This section explains the difficulty in determining the accounting for additional costs incurred related to long-term assets. 

Section 10.7 discusses the use of subsidy ledgers for plant assets. You will also be provided with a visual illustration of what happens to the accounting structure when a revenue expenditure is treated as a capital expenditure; it is important for you to know the difference. 

Section 10.8 reviews the intended chapter learning objectives. It will also work through demonstration problems to reinforce the concepts presented and then show the answers to the demonstration problems. You complete the demonstration problems prior to reviewing the answers.

Section 10.9 revisits the terms from this chapter that you have connected with during your studies.

Section 10.10 provides you with a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The solution to self-test is located on pages 118 and 119 in Chapter 10. 

8.2: Plant Asset Disposal, Natural Resources, and Intangible Assets File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 11: Plant Asset Disposals, Natural Resources, and Intangible Assets"

As this title suggests, this chapter will detail the events necessary to be dealt with when disposing assets. There are balance sheet and income statement entries that must be recorded when getting rid of equipment either by scrapping it or selling it. You will also learn about intangible assets, what they are, how to record them, and how to account for their diminishing value.

You should read and take notes on Sections 11.1 through 11.10 of Chapter 11 on pages 120 through 155. 

Section 11.1 will provide chapter-specific learning objectives.

Section 11.2 provides another look at a potential employment opportunity for someone interested in the business of accounting. 

Section 11.3 discusses how, with the exception of land, all assets become of little to no use and a company will have to make the decision to trade the asset for a newer version, retire the asset altogether, or just simply sell the asset. How is this decision made? This section of the course provides some insight on responding to this question. 

Section 11.4 discusses the sale of a plant asset. There will come a time when many business entities will have to dispose of a plant asset. When this happens, the company will either have a loss or show a gain, depending on the difference between the asset's sale price and its book value. This section shows how the journal entries look in a variety of situations, including a gain on the sale of an asset, a loss on the sale of an asset, how to realize loss, and even what to do in the event of a fire or flood that destroys an asset. 

Section 11.5 provides insight on the concept of depletion of a natural resource and how you would journalize such entries. 

Section 11.6 identifies the sources of an intangible asset. Pay careful attention to the identification of concepts like trademarks, amortization, patents, copyrights, trademarks, goodwill, and franchises. 

Section 11.7 provides an explanation of the total assets turnover ratio, which illustrates the relationship between monetary volume and the average of the total asset. You will also be provided with an explanation of the learning objectives as they have been identified in this chapter. Finally, you will be provided with some demonstration problems and the solutions to those problems.

Section 11.8 revisits the terms from this chapter that you have connected with during your studies.

Section 11.9 provides you with a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The solutions to self-test are located on pages 173­ and 174 in Chapter 11.

9.1: Long-Term Liabilities: Bonds File Hermanson, Edwards, and Maher's Accounting Principles "Chapter 15: Long-term Financing: Bonds"

This reading introduces long term bonds, their value and their comparison with stock. Some companies expand using stock and some use debt (bonds) in this chapter you learn of the difference and what happens to the profits of an organization when they reward their investors.

The example exercises in Chapter 15 refer to an appendix to the textbook, Appendix A, which is missing from this version of the textbook. You may find the values for the net present value factor in the tables presented in Financial Accounting, v.1.0: "Appendix: Present Value Tables" located here.

Page Matthew Shaw's "Valuing Long-term Bonds"

This video explains valuation of various bond types. It discusses finding the market price of a bond. This is somewhat similar to content that you've read in Chapter 15 of the text but this video is very well delivered and sometimes seeing something in action is easier to understand than just reading about it.

9.2: Stockholders' Equity: Capital Stock File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 12: Stockholders' Equity: Classes of Capital Stock"

This reading details stockholders' equity, specifically Capital stock. You learn about the different classes of stock and their characteristics. Also covered is the presentation of capital on the Statement of Stockholders' Equity and the steps involved when issuing stock to the public

9.3: Stockholders' Equity: Corporations File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 13: Corporations: Paid-in Capital, Retained Earnings, Dividends, and Treasury Stock"

This chapter will outline in detail the different sources of paid-in capital and how it is presented on the balance sheet. Topics such as Treasury stock, dividends, stock splits, and price-per-share and price-per-earnings ratios are covered.

10.1: Operating Activities File Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 16: Analysis using the statement of cash flows"

Read sections 16.1 to 16.22 of Chapter 16 on pages 394 to 463. This section explains and shows how to record cash flow from operating activities on the statement of cash flows.

Page Boundless Accounting: "Chapter 14, Section 2: Calculating Cash Flows"

This reading shows the two different methods of preparing a statement of cash flows: direct and indirect.

10.2: Financing Activities URL Financial Accounting, v1.0: "Chapter 17, Section 6: End-of-Chapter Exercises"

This exercise quizzes you on your knowledge of the statement of cash flow and its components.

Study Guides Page Unit 1 Study Guide: Accounting Environment, Decision Making, and Theory
Page Unit 2 Study Guide: Recording Business Transactions
Page Unit 3 Study Guide: Adjustments for Financial Reporting
Page Unit 4 Study Guide: Completing the Accounting Cycle
Page Unit 5 Study Guide: Financial Reporting and Financial Statement Analysis
Page Unit 6 Study Guide: Accounting for Inventory – Measuring and Reporting
Page Unit 7 Study Guide: Receivables and Payables Identified
Page Unit 8 Study Guide: Accounting for Property, Plant and Equipment
Page Unit 9 Study Guide: Long-term Liabilities and Stockholders' Equity
Page Unit 10 Study Guide: Statement of Cash Flows
Course Feedback Survey URL Course Feedback Survey