BA 215
Agenda for Lecture 1
• Course administration
• Introductions
• Break
• A Brief History of Business
• In-Class Exercise
BA 215
Administration
• Syllabus
• Course Requirements
• Course Materials and Resources
• How to Succeed
BA 215
Course Requirements
Final
Exam
32%
Two
Midterms
43%
In-Class
Activities
25%
Grades will be posted to Blackboard
BA 215
Course Materials
• Custom Primis Textbook, containing
chapters from three textbooks:
– Edmonds, Edmonds, McNair and Olds:
Fundamental Financial Accounting Concepts
– Altfest: Personal Financial Planning
– Kapoor, Dlabay and Hughes: Focus on Personal
Finance
• Management Accounting Concepts and
Techniques, by Dennis Caplan. Available at
www.IntroToCost.info.
BA 215
How to Succeed
• Participate in the in-class exercises.
• Read the assigned materials prior to the
exams, and complete as many of the suggested
self-study homework problems as possible.
• In class, focus on following the lecture rather
than on taking extensive notes. All materials on
the overhead slides will be available to you via
the COB website.
• Be clear on the subject content of the exams,
and be a “smart” test-taker.
BA 215
Agenda for Lecture 1
• Course administration
• Introductions
• Break
• A Brief History of Business
• In-Class Exercise
My Background
• BA in Economics and Psychology,
Washington University in St. Louis
• Touche Ross & Co.
• Levi Strauss & Co.
• Ph.D. in Accounting from UC Berkeley
• Columbia University (1994 – 2000)
• Iowa State University (2000 – 2004)
• Oregon State University (2004 - )
Index Card
• Your name
• Nickname, if applicable (what you
want me to call you)
• Your major
• A current or past job that you have
found rewarding.
• What you plan to do after you
graduate (5 or 6 words max.)
BA 215
Agenda for Lecture 1
• Course administration
• Introductions
• Break
• A Brief History of Business
• In-Class Exercise
BA 215
Agenda for Lecture 1
• Course administration
• Introductions
• Break
• A Brief History of Business
• In-Class Exercise
BA 215
Course Overview
Economics
Finance
Financial
Accounting
Managerial
Accounting
A short quiz
1. How old is accounting?
2. How old is double-entry bookkeeping,
and which European country invented
it?
A short quiz
• The three sectors of the economy are
– Manufacturing
– Merchandising
– Services
3. In what order did these three appear in
the post-Industrial Revolution
economy? In other words, which came
first and which came last?
A short quiz
4. Which four of the following companies
made important contributions to
accounting and corporate finance:
– The Disney Corporation
– General Electric
– Ford Motor Company
– General Motors
– The Coca-Cola Company
– DuPont
– Carnegie Steel
A short quiz
5. What is the fundamental
economic problem that we all
face?
A short quiz
1. How old is accounting?
2. How old is double-entry bookkeeping,
and which European country invented
it?
This tablet is from Sumaria,
circa 2500 BC
Tax compliance
in Egypt was
taken seriously
Financial Accounting
Financial accounting is as
old as the separation of
ownership of the enterprise
from management of the
enterprise.
Financial Accounting
The spice trade required large capital
investments, long time horizons, and significant
risk, but could yield high returns.
Hudson’s Bay Company
The Hudson’s Bay Company is one of the
world’s oldest commercial entities. It was
incorporated in 1670 by a royal charter from
England’s King Charles II.
Beginning in 1670, the company operated
trading posts on Hudson Bay. These posts were
outfitted by ships from London.
The “made beaver” – a beaver pelt – was the
standard of trade (the common denominator for
transactions both inbound and outbound from
the posts).
The Hudson’s Bay Company was
“decentralized” and actively managed from
London, which required a rudimentary
management accounting system.
A short quiz
1. How old is accounting?
2. How old is double-entry bookkeeping,
and which European country invented
it?
Luca Pacioli Pacioli was a
Franciscan friar born in
Tuscany. He was a
contemporary of
Leonardo DaVinci.
In 1494, Pacioli
codified double-entry
bookkeeping, which
was already in use by
Venetian merchants
A short quiz
• The three sectors of the economy are
– Manufacturing
– Merchandising
– Services
3. In what order did these three appear in
the post-Industrial Revolution
economy? In other words, which came
first and which came last?
The Industrial Revolution
What did the Economy prior to the Industrial
Revolution look like?
Textile mills in the U.K. and U.S. in the early
19th century
The Railroads
A Service Sector Industry
Retail Chains, 1875 to 1900
Processing Customer Orders at Sears
Marshall Fields in Chicago
A short quiz
4. Which four of the following companies
made important contributions to
accounting and corporate finance:
– The Disney Corporation
– General Electric
– Ford Motor Company
– General Motors
– The Coca-Cola Company
– DuPont
– Carnegie Steel
Carnegie opened his first steel mill, in
Braddock, Pennsylvania, in 1875.
A Steel Mill
Frank Bunker Gilbreth,
1868 – 1924
Lillian Moller Gilbreth,
1878 – 1972
Frederick Winslow Taylor, 1856 – 1915
Alexander Hamilton Church, 1866 - 1936
Du Pont, 1903 - 1915
General Motors, founded in 1912 by
William Durant
Pierre DuPont succeeded Durant as
president in 1920
A short quiz
5. What is the fundamental
economic problem that we all
face?
Question:
What is the fundamental
economic problem that we
all face?
Answer:
The allocation of scarce
resources
Accounting and
Allocation of
Scarce Resources
Financial
Accounting
Accounting, Finance,
and the allocation of
scarce resources
Financial Accounting
and Finance
Management Accounting
and Corporate Finance
BA 215
Agenda for Lecture 1
• Course administration
• Introductions
• Break
• A Brief History of Business
• In-Class Exercise
Carpooling Exercise
• Chestnut Ridge - N.Y.C.: 60 mi. r.t.
• Tenafly, NJ - N.Y.C.: 30 mi. r.t.
• 150 commutes per year
• Gas: $2 per gallon; 20 miles per gal
• Total miles driven per year: 18,000
COMMUTE COSTS
• Gas
• Bridge Toll
• Parking
• Insurance
• Maintenance
• Traffic Tickets
• Opportunity
Costs
Carpooling
Gasoline:
60 miles round trip x 150 days/yr
= 9,000 miles  20 miles/gal
= 450 gallons x $2.00 = $900 per year
Parking: =
$100 per mo.
Speeding Tickets:
driver pays
Carpooling
Insurance:
$1,200 per year
Repairs & Maintenance:
$800 per year
Depreciation Expense:
$0
COMMUTE COSTS
• Gas
• Bridge Toll
• Parking
• Insurance
• Maintenance
• Traffic Tickets
• Opportunity
Costs
• Variable, Indirect
• Variable, Direct
• Fixed, Direct
• Fixed, Indirect
• Mixed, Indirect
ALLOCATE GAS COSTS
Total Annual Gas Expense
Total Annual Miles Driven
= Gasoline Cost per mile
This is the “overhead rate” for applying gas
expense to my commute.
Multiply this rate/mile by the 4,500 shared miles
of the commute to derive the “shared gas
expense.”