This is part of a two-class sequence on financial accounting. FINANCIAL ACCOUNTING I & II, held consecutively, will provide you with a strong foundation to tackle many financial issues. Accounting I covers the basics, while Accounting II deals with more advanced topics. The topics discussed are “general” and apply to accounting practices worldwide – whether in the USA, Europe, Asia, etc. You can take Accounting I on a standalone basis, or, you can take it as part of a two course sequence.
Accounting is “the language of business”. It is spoken by managers, employees, investors, financial analysts, internal and external auditors, supervisory boards, management accountants, bankers and other decision-makers with whom managers regularly interact. It is widely agreed that future business leaders need to understand this language in order to interpret and use financial statements and other accounting information for internal management purposes (e.g., planning, directing, controlling) as well as corporate communication purposes (e.g., capital markets, banks, rating agencies). If you want to compete in this arena, it will be useful for you to acquire a working knowledge of accounting. This class is targeted to students having little, if any, background in financial accounting.
At the end of the day, numbers are what matter in the business world. You just cannot escape them; hence, you should learn them well. Contrary to what you might believe, you cannot become a successful professional unless you master the numbers of the financial world. This is the class that will teach you how.
Overview
Syllabus
- Module 1: Introduction
- Why learn accounting? Because it is an integral part of finance, one of the most sought after and highly paid professions across the world. Financial literacy is extremely valuable from a personal and professional point of view, irrespective of what type of job you are doing.
- Module 2: Balance Sheet - Part 1
- The balance sheet is a THE fundamental financial statement, and learning it is essential when studying accounting. This is a big and complex topic, hence we break it down into two sessions. The learning objectives of this module are: Understand the foundation of double-entry accounting; Understand the accounting equation, Assets = Liabilities + Equity; Understand that every transaction in a company affects at least two accounts and the balance sheet remains balanced; Understand how accountants ensure that financial records are accurate and transactions are properly recorded; Get a snapshot of a company’s financial position; Understanding financial health, by knowing what the company owns (assets), what it owes (liabilities), and what remains to the owners (equity); Understand how to assess liquidity and solvency; Look at current assets (like cash and receivables) and current liabilities, and assess a company’s ability to meet short-term obligations; Understand solvency, by comparing total liabilities to total assets, and evaluate a company's ability to meet long-term debts; Understand how much of a company’s assets are financed by owners, and understand capital structure.
- Module 3: Balance Sheet - Part 2
- This is a continuation of Module 1, we go deeper into the details, and we do a lot of practice to solidify our learning. The objectives remain the same as that of Part 1: Understand the foundation of double-entry accounting; Understand the accounting equation, Assets = Liabilities + Equity; Understand that every transaction in a company affects at least two accounts and the balance sheet remains balanced; Understand how accountants ensure that financial records are accurate and transactions are properly recorded; Get a snapshot of a company’s financial position; Understanding financial health, by knowing what the company owns (assets), what it owes (liabilities), and what remains to the owners (equity); Understand how to assess liquidity and solvency; Look at current assets (like cash and receivables) and current liabilities, and assess a company’s ability to meet short-term obligations; Understand solvency, by comparing total liabilities to total assets, and evaluate a company's ability to meet long-term debts; Understand how much of a company’s assets are financed by owners, and understand capital structure.
- Module 4: Income Statement - Part 1
- The income statement helps us understand performance, which probably is what most people care about the most. This is again a big and complex topic, hence we break it down into two sessions. The learning objectives of this module are: Understand how to measures profitability; Learn to differentiate between revenues vs. expenses vs. profits; Understand bottom line / net income, a key indicator of financial performance; Evaluate the success of the company’s operations; Evaluate operational efficiency, and how a company generates profit from its core operations; Help identify areas where costs can be reduced or revenues can be increased; Understand the components of performance: gross margins, administrative expenses, R&D and marketing, interest expense to bankers, and taxes; Understand how the income statement / company performance affects the balance sheet through equity; Understand the relation between profits and dividends; Understand that concept of accrual accounting: performance and cash flows are not necessarily the same thing.
- Module 5: Income Statement - Part 2
- This is a continuation of Module 2, we go deeper into the details, and we do a lot of practice to solidify our learning. The objectives remain the same as that of Part 1: Understand how to measures profitability; Learn to differentiate between revenues vs. expenses vs. profits; Understand bottom line / net income, a key indicator of financial performance; Evaluate the success of the company’s operations; Evaluate operational efficiency, and how a company generates profit from its core operations; Help identify areas where costs can be reduced or revenues can be increased; Understand the components of performance: gross margins, administrative expenses, R&D and marketing, interest expense to bankers, and taxes; Understand how the income statement / company performance affects the balance sheet through equity; Understand the relation between profits and dividends; Understand that concept of accrual accounting: performance and cash flows are not necessarily the same thing.
- Module 6: Cash Flow Statement - Part 1
- The cash flow statement helps us understand cash movements. Perhaps you know it since you are a child: Cash is King! This is again a big and complex topic, hence we break it down into two sessions. The learning objectives of this module are: Understand how to track movements in cash, inflows and outflows; Understand how much cash is generated and used; Understand how to manage liquidity; Distinguish between different cash activities: operations, investments, financing; Understand the sustainability of the business: are we self-sufficient? Are we liquid? Understand the difference between profitability and cash flows; Understand that accrual accounting used in the income statement has to be complemented by understanding cash positions; Track how much cash goes into investments, whether tangible or intangible; Track what cash is borrowed from banks, and other lenders; Understand how much cash is paid to shareholders in terms of dividends, and how much cash is raised through stock sales; Understand non-cash adjustments, and reconcile between profits and cash movements; Understand how cash flows from the cash flow statement flow into the balance sheet.
- Module 7: Cash Flow Statement - Part 2
- This is a continuation of Module 3, we go deeper into the details, and we do a lot of practice to solidify our learning. The objectives remain the same as that of Part 1: Understand how to track movements in cash, inflows and outflows; Understand how much cash is generated and used; Understand how to manage liquidity; Distinguish between different cash activities: operations, investments, financing; Understand the sustainability of the business: are we self-sufficient? Are we liquid? Understand the difference between profitability and cash flows; Understand that accrual accounting used in the income statement has to be complemented by understanding cash positions; Track how much cash goes into investments, whether tangible or intangible; Track what cash is borrowed from banks, and other lenders; Understand how much cash is paid to shareholders in terms of dividends, and how much cash is raised through stock sales; Understand non-cash adjustments, and reconcile between profits and cash movements; Understand how cash flows from the cash flow statement flow into the balance sheet.
Taught by
Prof. Garen Markarian
