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Faculty
Jeffery Douglas Gramlich, University of Southern Maine

Course Coordinator
ISUP Secretariat

Prerequisite/progression of the course

None.

Course content, structure and teaching

As the language of business, financial accounting focuses on how firms report about themselves financially to outsiders (e.g., stockholders, potential investors, creditors, regulatory agencies, etc.). You should find the course important and useful throughout your career and in many other courses in a business program.

This course covers some of the most important material in a business curriculum: the nature of the financial reporting process and the basic accounting principles, conventions, and concepts underlying the current reporting environment of GAAP basis financial statements. No prior knowledge of accounting is assumed. The course begins with an introduction to accounting terminology and the three basic financial statements required of most businesses. The initial pace is fast, and students are strongly advised to keep up with the assignments. There is a "building block" effect for materials covered, and failure to keep up with the assignments will adversely affect your performance. Most students have found that the "crisis approach" to studying is not appropriate for this course.

We will adopt a user perspective, emphasizing the analysis and interpretation of financial statements by working with actual financial statements. However, to do this effectively requires some knowledge of accounting – debits and credits, journal entries, etc., so you will have to know these aspects of the course material. Throughout the world, financial statements are prepared according to sets of rules known as generally accepted accounting procedures (GAAP). Our discussion will begin by focusing on financial statements prepared under US GAAP but we will highlight important differences around the world as we discuss the various financial statement elements.

Learning Objectives

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

1. Read and understand the primary components of a set of financial statements prepared using international or U.S. generally accepted accounting principles.
2. Explain the role of financial accounting in the allocation of capital in a worldwide economy based primarily on capitalism.
3. Prepare basic adjusting entries and understand the need for them.

Teaching methods

The primary teaching method is lecture and in-class exercises.

Examination

Final exam: 4-hour written exam, computer based (open book).

Exam aids: Students are permitted to use a specific corporate annual report that will be distributed in the final class session and a calculator.

Re-take exam: 24-hour written exam.

Recommended literature

Financial Accounting: A Global Perspective, by Libby, Libby and Short, 6th edition (international), published by McGraw-Hill.

Last updated by ISUP Secretariat 29/01/2010