An Introduction to Financial Accounting
Brian J Bushee
https://www.coursera.org/course/accounting
Week One: Introduction and Balance Sheet:
Video lectures posted on September 16, 2013 (all videos will be posted by 12:01 am U.S.
Eastern Time on the start date)
Homework #1 based on this material due by September 29, 2013 (note that an extra week is
given to accommodate late starters)
To learn a foreign language like Accounting, you need quite a bit of practice in the basic
foundations (grammar, syntax, idioms, etc.). This material is not fun, but it is absolutely
essentially for being able to read and to understand books written in the language (in our case,
financial statements.). This week, we will starting building these foundations. We will start with
an overview of financial reporting. What types of reports are required? Who makes the rules?
Who enforces the rules? Then, we will cover the balance sheet equation and define/discuss
Assets, Liabilities, and Stockholders' Equity. We will introduce debit-credit bookkeeping and do
lots of practice in translating transactions into debits and credits. Finally, we will introduce a
case of a start-up company to provide you insights into all of the steps necessary to go from
recording the first transactions of a new business all the way through its first set of financial
statements.
Week Two: Accrual Accounting and the Income Statement:
Video lectures posted on September 23, 2013
Homework #2 based on this material due by September 29, 2013
More foundations this week. If you are not sick and tired of journal entries by the end of this
week, then I have not done my job! We will start with a discussion of Accrual Accounting and
how it affects the recognition of the Income Statement accounts: Revenues and Expenses.
Then, we will cover adjusting entries, which are needed to prepare our internal books for the
upcoming financial statements. Finally, we will discuss closing entries and the preparation of
the Balance Sheet and Income Statement. At each stage, we will continue to work on the case
of our start-up company.
Week Three: Cash Flows:
Video lectures posted on September 30, 2013
Homework #3 based on this material due by October 6, 2013
Cash is King! In what will be our last "foundations" week (i.e., hard and not that much fun), we
will talk about cash flows. We will start with the classification of cash flows into operating,
investing, and financing activities. Then, we will work on preparing and analyzing the Statement
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of Cash Flows. We will wrap up the case on the start-up company by preparing and analyzing
its Statement of Cash Flows. Finally, we will discuss the differences between Earnings, Cash
from Operations, EBITDA, and Free Cash Flow.
Week Four: Working Capital Assets:
Video lectures posted on October 7, 2013
Homework #4 based on this material due by October 13, 2013
Now that we have a solid grasp of the foundations, we are going to work our way around the
Balance Sheet to discuss various types of Assets, Liabilities, and Stockholders' Equity (along
with their associated Revenues and Expenses) in more detail. We kick off with Accounts
Receivable and the problem that some customers that buy goods on credit will not actually pay
us. We will look at the computation, disclosure, and analysis of such "Bad Debts". We will also
briefly discuss other Accounts Receivable issues such as Factoring and Securitization. Then,
we will move on to Inventory. We will discuss how Inventory accounting differs between retail
and manufacturing firms. We will see how companies figure out the cost of the inventory they
sold, which requires assumptions about cost flows. This discussion will lead us into covering
one of the most infamous accounting topics: LIFO.
Week Five: Ratio Analysis and Mid-course Exam:
Video lectures posted on October 14, 2013
Mid-course Exam posted on October 16, 2013, due by October 22, 2013
We will have our first of two exams this week. Because of the exam, I will cover Ratio Analysis,
which will not involve any "new" material. While we will define and discuss a number of ratios,
they will all basically involve dividing one accounting number by another. But, the analysis of
what those ratios mean will involve a deep understanding of Balance Sheet and Income
Statement accounts. Thus, the Ratio Analysis videos will help provide a nice review of the
material so far, which will help you prepare for the exam.
Week Six: Long-lived Assets and Marketable Securities:
Video lectures posted on October 21, 2013
Homework #5 based on this material due by October 27, 2013
Back to new material! This week, we will cover assets that represent longer-term investments.
We will start with Property, Plant, and Equipment, covering questions like: What gets included
in these accounts? How are they depreciated? What happens if their value is impaired? Then,
we will cover similar questions for Intangible Assets, including Goodwill. Finally, we will discuss
how companies account for investments in debt and equity securities and how the treatment for
equity investments in other companies is determined by how much of the other company is
owned.
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Week Seven: Liabilities and Long-term Debt:
Video lectures posted on October 28, 2013
Homework #6 based on this material due by November 3, 2013
We move to the right-hand side of the Balance Sheet this week with a look at Liabilities. We will
start by covering time-value of money, which is the idea that $1 today is not worth the same as
$1 in the future. Almost all liabilities involve a consideration of the time-value of money, so this
will be an important foundation piece for you to understand. Then, we will cover accounting for
bank debt, mortgages, and bonds. Next, we will move into the topic of "off-balance-sheet"
liabilities with a discussion of Contingent Liabilities and Leases.
Week Eight: Deferred Taxes:
Video lectures posted on November 4, 2013
Homework #7 based on this material due by November 10, 2013
There are two certainties in life, and we will cover one of them this week (the other is beyond
the scope of the course). We will NOT teach you how to prepare your own tax return. Instead,
we will discuss how companies have to prepare "two sets of books": their financial statements
and their tax returns. The rules are different for these two sets of books, leading to permanent
differences and to temporary differences. We will cover both types of differences, with a main
focus on "deferred taxes", which are the byproduct of temporary or timing differences between
tax reporting and financial reporting. Finally, we will touch on other tax issues, such as Net
Operating Loss Carryforwards and the rule that requires companies to disclose how much they
are trying to cheat on their taxes (sorry, that should say "use tax planning strategies to manage
their taxable income").
Week Nine: Stockholders' Equity:
Video lectures posted on November 11, 2013
Homework #8 based on this material due by November 17, 2013
Our final week of new material ends at the bottom of the Balance Sheet: Shareholders' Equity.
We will talk about issuing stock, repurchasing stock, Treasury Stock, stock dividends and splits,
Accumulated Other Comprehensive Income, and stock-based compensation. We will also
finally cover the fourth required financial statement: the Statement of Stockholders' Equity.
Week Ten: How to Read an Annual Report and Final Exam:
Video lectures posted on November 18, 2013
Final Exam posted on November 20, 2013, due by November 27, 2013
Final Exam week! The video lectures will give tips on how to read an annual report. These
lectures will also surreptitiously review the material that we covered in the course. The final
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exam will be posted mid-week and be due by November 27, 2013, which is the day before
Thanksgiving Day in the United States. Even if you are not an American, you will certainly be
giving thanks on November 28 because the course will be over and you will be able to impress
your family, friends, and co-workers with your vast knowledge of Financial Accounting!
Video Lectures
Please watch all video lectures for the week. All videos will be posted to the Video Lectures
page by 12:01 am U.S. Eastern Time on Monday of each week. I will post a pdf file with copies
of the slides or other material presented in the video. The pdf files can be found on the Video
Lectures page next to the name of the video.
Suggested Readings
There are no suggested readings! The course is designed to be self-contained. Students
wanting to expand their knowledge beyond what we can cover in this course or who want more
practice problems or more in-depth explanations can consult any Introduction to Financial
Accounting textbook that is geared toward MBA students. Because the material in the course
has been fairly unchanged for the past few years, any used prior editions of textbooks should be
acceptable.
Discussion Forums
Please ask questions or make comments about course material on the Discussion
Forums page. We have set up a Discussion thread for each video, as well as general forums
for course material errors, technical problems, and general discussions about whatever. To
make this most effective for everyone involved, please follow these guidelines.

First, look through the threads to make sure no one has already asked your question. If
your question has been asked, but you have more to say on the topic, add to the specific
thread. Try not to start threads for topics that have already been started elsewhere.

Second, post your question or comment in the appropriate place. If you post a question
about LIFO in the wrong week's forum or in the general discussion forum, you might not
get a response.

Third, please try to answer other students' questions. The professor and TAs will be
monitoring the discussion forums, but unfortunately we cannot be online 24 hours a day,
7 days a week. If you know the answer to a question in a discussion forum, feel free to
help us out!

Finally, please be respectful. We all have fragile egos to some extent, and no professor,
student, or TA will appreciate being called an idiot. Please try not to use offensive or
inappropriate language. Let's use the Discussion Forum to help people learn, rather than
to help people feel bad about themselves.
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E-mail Policy
Please do not send the professor or the TAs any emails! If just 0.5% of students sent us emails
every day, that would amount to over 300 emails per day! We simply cannot respond to
individual student emails. Please post questions to a Discussion Forum. Or, try sending a
message to @Bushee_Coursera on Twitter.
Homework Assignments
There are eight homework assignments. Homework assignments will be due at the end of each
week (11:59 pm U.S. Eastern Time each Sunday night). The only exception is the first week's
homework, which will be due a week later to accommodate late starters. You can attempt each
homework two times. The higher score of those two attempts will count as your score for the
homework.
Exams
There are two exams, which will be posted in Weeks 5 and 10. The Mid-course Exam will cover
all of the material in weeks 1-4. The Final Exam will cover all of the material in weeks 6-9.
Exams will be due at 11:59 pm U.S. Eastern Time on the due dates indicated for each. You
can attempt each exam two times. The higher score of those two attempts will count as your
score for the exam.
Grading Formula
Your total score in the class will be based on 100 total points.
There are eight homework assignments that are worth 10 points each. I will drop the two lowest
homework scores. Thus, your homework grade will be based on your six highest homework
scores.
The Mid-Course Exam and the Final Exam are worth 20 points each. Neither of these scores
can be dropped in computing your total score.
To summarize, the 100 total points will consist of the following:

Homework assignments (6 highest scores): 60 points

Mid-course Exam: 20 points

Final Exam: 20 points
Your must earn at least 70 points to receive a Statement of Accomplishment.
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