New York University
Stern School of Business
Westchester MBA
B01.1306.91
Financial Accounting & Reporting
Summer 2010
TR 6-9 p.m.
Professor F. Choi
Office: KMC 10-75
Hours:
TR 5-6
e-mail: fchoi@stern.nyu.edu
Course Outline
Course Objectives:
Accounting is a discipline that concerns itself with financial information for a variety of users, both
internal and external to the firm. This course focuses on external users of accounting data, such as
yourself. You will learn about 1) the role of accounting in the financial markets, 2) important
measurement concepts and 3) the uses and limitations of conventional accounting data. It is
important that you understand how numbers appearing in a firm’s published financial statements are
derived, what they mean and how measurement choices affect the analysis and interpretation of
those numbers.
Owing to the globalization of business and finance, more and more countries are embracing
financial reporting standards promulgated by the International Accounting Standards Board. As the
United States is on a similar path, we will examine international financial reporting standards
(IFRS), see to what extent they differ from US GAAP and appreciate their financial statement
effects.
Required References:
Horngren, et.al., (HSEP) Introduction to Financial Accounting, 9th ed. (Prentice-Hall, Inc., 2006 ).
Class Format:
To enhance the learning process, you are required to read the assigned chapter and attempt the
homework assignments before I discuss the topic. During class, I will introduce you to new
concepts and/or measurement issues that you have read about prior to class. I will subsequently post
the solutions to the homework assignments on Blackboard.
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Professor F. Choi
Grading Policy:
A letter grade will be assigned to you on the basis of your score out of 500 possible points in the
course. The sources of points are:
Two mid-term exams (100 points each)
Final exam
Class participation
Cases
Total
200 points
150 points
50 points
100 points
550 points
Cases:
Cases are due in the next class after the material illustrated by the case has been discussed. To
receive credit for the cases, they must be turned in before class begins. I prefer that you turn in a
hard copy. You may choose to work in small groups or individually.
Code of Conduct:
I will “bend over backwards” to help you learn the material in this course. All I ask is that you do
not cheat yourself, your fellow classmates or the Stern School. Upon enrollment in this course, you
agree to adhere to Stern’s MBA Honor Code and accept the consequences of your actions should
you violate that code. Instances of academic misconduct will be immediately reported to the
appropriate administrators.
Students with Disabilities
If you have a disability that you feel may affect your class performance, please let me know
early in the semester so that arrangements can be made, in consultation with the Henry and Lucy
Moses Center for Students with Disabilities, to accommodate your needs. Please see
www.nyu.edu/csd for more information.
General Information:
This is a demanding course that will require at least three hours of preparation for each hour of class
on average. However, if you make the effort you will learn a lot and reap large dividends during
your professional career. If you encounter difficulties completing the assignment, stop, isolate your
problems and bring your questions to class. It is important that you keep up with the coursework.
The subject matter of this course does not lend itself to last-minute cramming as new material builds
on prior concepts.
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Professor F. Choi
COURSE TOPICS AND ASSIGNMENTS
Lecture
Dates
5/18 T
Topics
Economic scarcity; resource allocation decisions; decision-making re-examined; role
of accounting in industrialized and less-industrialized economies.
Read
HSEP, Ch. 1(pp. 2-8)
Nature of investment decisions; time preference for money; compound interest
concepts; decision-making under conditions of certainty - NPV model of
investment choice.
Read
HSEP, Ch. 9 (pp. 418-424)
Prepare
E9-41, E9-42, E9-47, E9-46, E9-47
5/20 Th
Present value model continued; consistency; sensitivity; present value and wealth;
present value and income.
Decision-making under conditions of uncertainty; feasibility of present value data;
cash flow and management forecasts; enterprise performance; cash flow
vs. conventional accounting income.
Read
HSEP, Ch. 2 (pp. 46-61)
Prepare:
E2-36, P2-44, P2-55
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B01.5306.91
5/25 T
Professor F. Choi
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Financial position and the accounting equation; transactions analysis.
Read
HSEP, Ch. 1 (pp. 8-16); Ch. 2 (pp. 63-70)
Prepare:
P2-46, P2-47, P2-53
Conventional accounting-some elaboration; disposable wealth; gains and losses
and performance measurement.
Read
HSEP, Ch. 12 (pp. 565-569)
Prepare
Class Handout
5/27 Th
Conventional accounting and changing prices; price-level adjusted operating
income; price level adjusted net income; monetary gains and losses.
Read
Supplemental Reading: “Accounting for Changing Prices: The General Price Level
Model,” the Replacement Cost Model and the Market Value Model (pp. 1-10)
Prepare
Exercises 1-4 (at end of reading material)
Current exchange valuation framework; money vs. physical capital; current
cost-based rating income; current cost-based net income, market-value-based
accounting.
Read
Supplemental Reading: “Accounting for Changing Prices: The General Price Level
Model, The Current Cost Model and the Market value Model,” (pp. 11-12).
Prepare
Exercises 5, 6, 7, 10, 11 (at end of reading material).
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6/1 T
Professor F. Choi
First Mid-term Exam
Accounting policy-making in a historical and institutional context; globalization
of business and capital markets; international accounting standards and
organizations.
Read
HSEP, Ch. 1, (pp. 26-34).
6/3 Th
Cycle I
Conventional accounting re-visited; accounting cycle as in information system;
aggregation of accounting data; allocating accrual-based measures to appropriate
time periods.
Read
HSEP, Ch. 3 (pp. 90-111), Ch. 4 (pp. 138-151).
Prepare
P3-34, P3-37, P4-35, P 4-38.
Cycle II
Accounting cycle illustrated.
Read
HSEP, Ch. 3 (pp. 111-120); HSEP, Ch. 4(pp. 154-162)
Prepare
P4-30, P4-54
6/8 T
First case due.
The Statement of Cash Flows
Read
HSEP, Ch. 5
Prepare
P5-55, P5-58, P5-63.
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Professor F. Choi
Financial ratios and analysis- horizontal analysis; vertical analysis; ratio analysis
including eps and P/E multiples.
Read
HSEP, Ch. 12 (pp. 534-565), Section entitled, “The Portfolio” between pp. 76 and
77
Prepare
E12-32, E12-39, P12-43
6/10 Th
Revenue recognition refinements; collection uncertainties.
Read
HSEP, Ch. 6(pp. 231-251)
Prepare
E6-35, E6-45, P6-55
Inventories-costing methods; IFRS treatment; financial statement effects.
Read
HSEP, Ch. 7
Prepare
P7-56, P7-71, P7-75
6/15 T
Fixed assets-acquisition, use, IFRS treatment.
Read
HSEP, Ch. 8
Prepare
E8-46, E8-48, E8-55, E8-63.
Corporate investments; marketable securities; long-term investments.
Read
HSEP, Ch. 11 (pp. 488-503)
Prepare
E11-29, E11-36, P11-39
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6/17 Th
Professor F. Choi
2nd Mid-Term Exam
Liabilities I - short-term debt; long-term debt; marking to market.
Read
HSEP, Ch. 9 (pp. 382-404)
Prepare
P9-56, P9-58, P9-61
6/22 T
2rd case due.
Liabilities II - deferred taxes, leases, pensions.
Read
HSEP, Ch. 9 (pp. 405-415)
Prepare
P9-66, P9-69, P9-70
Equity – proprietorships, partnerships, corporations;
treasury stock; stock dividends/splits; stock options.
Read
HSEP, Ch. 1 (pp. 18-23; 29-32), Ch. 10(pp. 440-469)
Prepare
E10-42, P10-45, P10-56
6/24 Th
Q@A
Final Exam
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