Intermediate Accounting I
ACCT 355
Fall, 2010
W. David Albrecht, Ph.D., CPA
Associate Professor of Accounting
School of Business
Concordia College
Moorhead, MN
Last update: December 14, 2010
Word count: 59,373
Intermediate Accounting I
ACCT 355
Fall, 2010
Table of Contents
Instructor contact information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Course time and location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Prerequisites & position in the accounting program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Who should take this course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
What Intermediate Accounting is all about . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Why you should take this course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
1
2
3
Approach to the course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Holistically educating the entire student . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Concordia College and holistic education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Professor’s goals for this course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Foundational knowledge and application learning outcomes
and assessment for students . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Learning outcomes and assessment for holistic education
What each class is like . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Required materials (textbook & calculator) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Grading policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How to study for this course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Attendance policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Homework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Learning notebook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reading blogs for commentary about current events . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computers and e-mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accommodations for disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Religious holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Codes of conduct and academic policy statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Academic honesty for ACCT 355 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real Money Simulation Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
About the professor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Schedule of approximate due dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Topical content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Papers and projects (part of course grade) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . start on 20
Resources (to supplement textbook) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . start on 32
Homework problems (essential for learning, not part of course grade) . . . . . . . start on 81
Solutions to homework problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . start on 122
© 2010 by W. David Albrecht
Intermediate Accounting I
ACCT 355
Fall, 2010
Professor: Dr. David Albrecht
Associate Professor of Accounting
Office:
401A Old Main
Phone:
218-299-3523
419-575-4513 (cell, call any time)
E-mail:
albrecht@cord.edu
Accounting can be
the key
to your future.
albrecht@profalbrecht.com
Web:
http://profalbrecht.wordpress.com
http://accountingprofessor.wordpress.com
Classes:
INQ100 1:20 MWF 432 Old Main
355
11:50 MWF 232 Old Main
355
2:40 MWF 202 Old Main
Off Hrs:
10:15-11:45
MWF
Contact me for other times
Walk-ins are always welcome
Prerequisites & position in
the accounting program
The prerequisites of this course for undergraduate students are (1) passing Principles of
Accounting I (ACCT 155) or the equivalent, and (2) passing Principles of Accounting II (ACCT 156).
Undergraduate accounting students must take at least six accounting courses to
graduate with an accounting degree. If you plan on taking the CPA exam in
Minnesota or North Dakota, you can sit for it during the semester you are to reach
150 hours, or you can wait until after you complete 150 hours.
Who should take this course
All accounting majors. Every finance major. Possibly, everyone else (i.e., healthcare).
© 2010 by W. David Albrecht
1
What Intermediate Accounting is all about
Financial accounting refers to the financial statements (and the entire process involved in creating
the financial statements) published by a company for an audience of interested parties outside the
company. It is very important to our economy because many people, such as investors and lenders,
need information to help them make informed decisions. For example, an investor is a person with
excess money who wants additional income. The investor sometimes has the opportunity to buy stock
in a particular company. Many factors go into the investor's decision, such as:
What to do?
- Is the person running the company capable?
- Is the manager someone I can trust?
- Can the business make money?
- How long before I can get my profits & money out of the investment?
- What are the chances of losing my investment?
A company prepares financial reports, financial accounting's product, to inform investors and
other interested parties about its financial performance. The four financial reports are the
income statement, balance sheet, statement of cash flows, and statement of
changes in stockholders equity. For example, the investor looks at the income
statement to see if the company has made a profit in the past. Past profitability
is a factor in predicting future profitability. The investor can look at the
balance sheet to see if the company owes others a lot of money. A small debt
load lessens the investment's risk. The statement of cash flows reveals the rates of dividend
payout in the past.
To help the investor, the manager hires a credible outsider (a Certified Public
Accountant) to check on the truthfulness of the financial statements. This may not
help the investor trust the manager, but it will enable the investor to trust the financial
statements. Financial reports don't directly evaluate the manager, but they can be
used by investors to help them form an opinion about the manager.
© 2010 by W. David Albrecht
2
Why you should take this course
I believe that Intermediate Accounting I and Intermediate
Accounting II are the most valuable courses in the undergraduate
accounting program, and possibly the most valuable courses you will ever
take. There are many reasons for this, however, I will focus on only four.
Taking Intermediate Accounting now is more important than ever because the
rules of financial accounting change all the time. Perhaps you knew something
about the financial accounting rules in place two years ago. Well, they have
changed so much that publishing houses are giving up on revising older texts that
teach accounting. They are commissioning authors to start from scratch in
explaining the current rules of accounting.
Second, American businesses are measured by the amount of profit they make. If ever you will
be in a position to evaluate a business–for investing in it, selling to it on credit, lending money to it,
auditing it–then you will need to know as much as you can about the primary evaluation criterion of
profit. If you don’t know about or understand profit, then any decision you will make would have to be
suspect–a gamble in part or in whole. Well, the measurement of profit is net income, and net income is
an accounting calculation. I don’t know that calculating net income is as difficult as calculating the
trajectory needed to take a space shuttle from launch pad to orbiting space station, but I think it is
arguable. Net income is the most important number that financial accounting produces and reports. In
the same way that the person guiding a space shuttle needs to know about trajectory,
business people need to know about accounting’s net income
Third, accounting is more than the calculation of net income. It is the
language of business! This language is composed of vocabulary (business and
accounting words), grammar (rules for constructing the equivalent of sentences and
paragraphs) and idiom (expression of a given language that cannot be understood from
the individual meanings of its elements). In the same way that you would need to know
Chinese if you were going to emigrate to China, you should know accounting if you are going to work
in business.
Finally, there are people who will try to dupe you
when they communicate to you in accounting. There are
subtle ways to influence the meaning of accounting
reports. There are dozens of recent stories of corporate
fraud, and the resulting coverup in which the financial
statements have been deliberately misstated. Enron, for
example, was a complex situation of infectious greed on
the part of corporate management. Once their coverup in
the financials was discovered, the company went
bankrupt, its auditor (Arthur Andersen) was forced out
© 2010 by W. David Albrecht
3
of business and the financial markets of the world crashed.
WorldCom, another example, was a case of a company whose
unprecedented growth suddenly stopped. As it turned out, its large,
costly investments in additional capacity were unnecessary and
bankrupted the company. It hid its losses by a simple (but effective)
misstatement of the financials. Then, the truth came out.
In the past six years, there have been nearly 5,000 instances of
corporations restating their previous financials to correct an error. In many cases, this has been the
result of companies pushing the envelope of what is a reasonable disclosure and auditors now finally
forcing better accounting.
The public outcry following Enron and WorldCom motivated Congress to pass the SarbanesOxley Act of 2002, the most significant legislation pertaining to the financial markets since the
Securities Act of 1933 and the Securities Exchange Act of 1934. We are in a new age where
companies simply have to get the numbers right.
And if the companies don’t get the
numbers right? It is the responsibility of
auditors and users of financial information
to be able to dig into the financial
statements to discover what is really going
on!
Most of you hope to start a career in
accounting, say as a CPA or a company
accountant. Many of you are finance
majors who anticipate needing to know
about accounting in your future positions.
All of you need to understand the precise
composition of every financial statement
item. We will therefore cover each of the
financial statements in great detail.
© 2010 by W. David Albrecht
4
Approach to the course
Knowledge of generally accepted accounting principles is the foundation of this course.
Application of the rules and uses of accounting information cannot be understood until you have
mastered the knowledge.
Accounting can be taught from two distinct approaches: learner centered or content/teacher
centered. In a learner centered approach, students learn by doing. Content is only important to the
extent that students can do something with it after the course is long over. In the content/teacher
centered approach, students must learn what the professor knows–factual knowledge, concepts and
applications..
The content/teacher centered approach is the traditional approach used in most
college classrooms. In this approach the professor lectures (or at least is clearly in
charge), the students learn to know what the professor wants them to, and there are
tests of factual knowledge where students must show what they have memorized and
know. Frequently, discussion and homework are included as part of the course grade.
Professors are rated as good if they are organized, good speakers and friendly, and are
rated as excellent if they are mesmerizing. Students are supposed to remember the knowledge through
subsequent courses and into the real world, where they eventually will have to apply what is
remembered. The conclusion from more than one thousand research studies is clear. Most knowledge
that the professor wants students to know (i.e., memorize) will soon be forgotten (even if the teacher is
rated as good or excellent). How soon? Much will be lost even by the end of the course. There is a
rapid decline in retention to three months and by six months hardly anything is left. If the student
doesn’t put the knowledge to use quickly, 100% will be forgotten after one year.
“One should be
able to do what
one knows”
The learner centered approach is in use when the course is
structured to allow the student opportunities to apply (in realistic
simulations) what is learned.
It has frequently been said that
students learn best by doing. It’s true.
If a teacher is able to show a student
what is possible to do with the
knowledge and concepts that have been taught, then that student is
changed for a life-time. Without being able to do something with
knowledge and concepts, the knowledge and concepts soon will be
completely forgotten.
Milt Hakel, BGSU
How can students be shown how to do things with what they have
learned? First, students must be given a realistic context in which to
operate. The realistic context should simulate the after-school world as
much as possible. Second, in this realistic context, professors show
© 2010 by W. David Albrecht
Learning by doing is a
moo-ving experience.
5
students how to do things with what they have learned, and give them enough guidance and practice so
they can learn how to do these things. When the student starts applying knowledge, a statement like
“Oh that’s how it works. I see now,” is frequently heard. Class time is enhanced when students get an
opportunity to do something during each class. This approach is called learning by doing.
I use the learner centered approach. Don’t get me wrong, learning what to know is still a major
part of the course, but it isn’t the entirety.
Sometimes opportunities to learn by doing will take place in working a problem, either as
homework or work in class. There also will be a major project where the focus will be you putting your
knowledge to play in a simulated but realistic business setting. This will help you learn how to do it,
and at the same time you’ll learn the knowledge better.
From teacher-centered
to learner-centered
© 2010 by W. David Albrecht
6
Holistically educating the entire student
Dee Fink, author of Creating Significant Learning Experiences: An Integrated Approach to
Designing College Courses, [San Francisco: Jossey-Bass, 2003] is the American guru of the learnercentered approach for collegiate education. He presents a taxonomy of significant learning. A
taxonomy is an ordered classification scheme. His taxonomy has six levels, or stages, of learning. He
starts off with a basic or foundational stage, and proceeds through other dimensions to the highest or
ultimate stage. His taxonomy is:
From "Self-Directed Guide to Designing Courses for Significant Learning", p. 10
Fink’s approach to teaching and learning is holistic because it educates not only for cognition, but
other aspects of personality and character that mark us as human being instead of primate. For many
years my goal as a professor has been to change student lives. I have learned that a student should not
only be able to acquire new knowledge, but to have new skills, be able to apply the skills when
appropriate and not to apply them if not appropriate, have new understandings, a greater awareness of
the world, a better understanding of their own character and how they will continue on the path to
future personal growth.
© 2010 by W. David Albrecht
7
Here is my thinking on applying the Fink taxonomy to an accounting course. It is my hope that
different aspects of my course will have positive impacts on a student’s life a few years in the future.
Going through the Fink taxonomy, my course will educate the student for:
(1)
Foundational knowledge. This stage of the taxonomy deals with “the key information (e.g.,
facts, terms, formulae, concepts, principles, relationships, etc.) [that] is/are important for students
to understand and remember in the future?” For intermediate accounting, identifying what needs
to be learned is easy. It deals with all the concepts and rules of American generally accepted
accounting principles.
(2)
Application goals. This stage in the taxonomy deals with “(A) What kinds of thinking are
important for students to learn: Critical thinking (in which students analyze and evaluate) and/or
creative thinking (in which students imagine and create) and/or practical thinking (in which
students solve problems and make decisions), (B) What important skills do students need to gain?
© Do students need to learn how to manage complex projects?” For intermediate accounting,
identifying what needs to be learned is also straightforward. It deals primarily with practical
thinking. There are many technical skills, such as working with accounts, debits and credits,
amortization tables, present values, etc. Being able to manage projects is also good.
(3)
Integration goals. This stage in the taxonomy deals with making connections between
knowledge and skills learned in this course and the underlying economic and societal factors that
give need for the accounting. Fink explains that the connections are made “(A) among ideas
within this course, (B) among the information, ideas, and perspectives in this course and those in
other courses or areas, and © among material in this course and the students' own personal,
social, and/or work life. Again, it is possible for to incorporate this into intermediate accounting
by, for example, having students consider the real world ramifications of a society that permits
excessive credit while simultaneously considering the accounting for credit transactions.
(4)
Human dimension goals. This stage in the taxonomy deals with what students could or should
learn about themselves and what students could or should learn about understanding others and/or
interacting with them. In intermediate accounting, a student could reflect on those aspects of
his/her personality and set of talents that make the student a good or bad fit for becoming a
professional accountant.
(5)
Caring goals. This stage in the taxonomy deals with the changes/values it is hoped students will
adopt. The value changes that possibly could take place in intermediate accounting deal with a
student developing a passion not only for accounting, but for being an accountant and for serving
others.
(6)
Learning-how-to-learn goals. This stage of the taxonomy can deal with becoming a good
students in the course, becoming a good student of the subject matter, or becoming a self-directed
learning for the many years that follow the course and extend throughout a career of professional
service.
© 2010 by W. David Albrecht
8
Concordia College and holistic education
The faculty and administration intend for all students to receive an holistic education from
Concordia College. It is generally agreed that Concordia does of excellent job of imparting this
education through a liberal arts focus. It should be the primary reason for why you chose to come to
Concordia. As a result of this education, you will be prepared to make a valuable impact on the world
from a Christian perspective.
After considerable deliberation, Concordia College adopted its “Goals for Liberal Learning” on
January 16, 2004. Its introductory paragraphs emphasize Concordia’s intention to provide an holistic
education.
Concordia’s Statement of Purpose shows a clear dedication to educating whole persons to lead lives that are both
mindful and intentional. The Goals for Liberal Learning are central to achieving that end, both in the Core and the
Major. They are intended to facilitate learning in a variety of academic and experiential contexts. They enable our
students to become life-long learners, humbly self-confident in mind, body, and spirit, aware of their gifts and of the
need to share these gifts with their neighbor and the world.
The Goals engender in students the following: first, an understanding of the value and purpose of a liberal education
as it was understood by Luther—as a means of freeing oneself from ignorance and prejudice in order to give freely of
one’s knowledge and wisdom to benefit others, guided at all times by both an intellectual and spiritual understanding
of justice and compassion; second, an understanding of the value of questioning, of debate and dialogue, of critically
assessing the truth claims of a variety of perspectives and the values and assumptions they represent; third, an
understanding of who they are as individuals and, as members of communities both large and small, the roles they
may play as leaders and facilitators in the empowerment of others; and fourth, a passion for excellence—not as a
static ideal, but as a call to do better and to be better.
The Goals, then, achieve distinction by being grounded in a tradition that emphasizes the religious and moral
dimensions of learning and knowing, the profound relationship of belief and action, and the continual need to test the
validity of one’s understanding—to leave no potential source of knowledge and truth unexamined.
The Goals should be understood as a means to an end, as a means of educating our students to embrace and
embody those values and habits of mind that are foundational for leading lives of intellectual, physical, and spiritual
well-being. They help students discover not only what potentials they possess, but also how those potentials may be
realized. Ultimately, the Goals help them discover meaning and purpose for their actions, a philosophy of life, and a
wisdom that comes only through the power of love and a curiosity born of an awareness of the essential mystery of
all things.
I whole-heartedly agree with, believe in, and affirm this statement.
Specifically, Concordia Colleges goals for liberal education are:
(1)
(2)
(3)
(4)
(5)
Instill a love for learning.
Develop foundational skills and transferable intellectual capacities.
Develop an understanding of disciplinary, interdisciplinary, and intercultural perspectives,
and their connections.
Cultivate an examined cultural, ethical, physical, and spiritual self-understanding.
Encourage responsible participation in the world.
© 2010 by W. David Albrecht
9
The professor’s goals for this course
After reading the preceding pages, you probably can figure them all out. Of course, I want you to
learn about accounting and financial statements. But you are not just learning about them–you are
learning to be an accountant and become a more capable human being. Here is my list of goals for this
offering of the course:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
To drill and train students in the form and structure of all four financial statements.
To train the student in the basic policies (rules) governing the preparation of financial
accounting reports (especially the asset side of the balance sheet).
To show how external parties can use financial accounting information.
To show the link between specific accounting rules and the economic, societal, political
and conceptual rationales for adopting certain accounting policies.
To show the student how to think like an accountant
when doing the accounting for basic transactions.
To help the student reflect on the “think like an
accountant” learning process so they can apply the
accountant’s thought process to future life situations.
To help students learn to become better accounting
students.
Foundational knowledge and application learning outcomes and
assessment for students
After taking this course, you will be able to:
(1)
(2)
(3)
(4)
Define and explain common accounting terminology without referring to the textbook, your
notes or an accounting dictionary. The professor assesses your ability to do this through
using vocabulary drills, working problems (formative), and knowledge oriented tests
(summative).
Read, use and analyze accounting information using
debits and credits, all three types of journal entries
(transaction, adjusting, closing) and accounts. The
professor assesses your ability to do this through
working problems (formative), and knowledge
oriented tests and the simulation game (summative).
Prepare financial statements (with notes) for a
business with many types of activities. The
professor assesses your ability to do this through using homework problems (formative),
and projects and knowledge oriented tests (summative).
Apply appropriate generally accepted accounting principles for required disclosures related
to current assets and long-term tangible assets. The professor assesses your ability to do
© 2010 by W. David Albrecht
10
(5)
(6)
(7)
this through using homework problems (formative), and knowledge oriented tests
(summative).
Be able to use accounting terminology in presentations and discussions. The professor
assess your ability to do this through using homework problems (formative), and projects
(summative).
Be able to “read” a set of financial statements for comprehension (i.e., understand what the
numbers mean). The professor assesses your ability to do this through using homework
problems (formative), and projects and knowledge oriented tests (summative).
Visually skim through a set of financial statements and form an initial impression as to how
well the company is doing. The professor assesses your ability to do this through using
homework problems (formative), and projects and knowledge oriented tests (summative).
Learning outcomes and assessment for holistic education
After taking this course, you will be able to:
(1)
(2)
(3)
(4)
(5)
To explain your personal reaction to at least one link between specific accounting rules and
the economic, societal, political and conceptual rationales for adopting certain accounting
policies. The professor assesses your ability to do so through class discussion (formative)
your reflection written in your learning notebook (summative).
Understand and describe the degree of fit between yourself as a human being and
accounting as a profession. The professor assesses your ability to do so through informal
discussions in his office (formative) and your reflection written in your learning notebook
(summative).
Understand and appreciate a typical “accountant” thought process, to think like an
accountant when doing the accounting for basic transactions. The professor assesses your
ability to do so through your reflection written in your learning notebook.
Show a passion for financial reporting. The professor assesses your ability to do so through
informal discussions in his office (formative) and your reflection written in your learning
notebook (summative).
To reflect on your learning process so you can decide for yourself
how to learn what is necessary to future professional
situations. The professor assesses your ability to do so
through your reflection written in your learning
notebook (summative).
What each class is like
A fair portion of each class period is conducted in a
Come prepared to get involved.
lecture/clarification format. This doesn’t sound too appealing, but
there is quite a bit of interaction. I have been working for 25 years on developing effective
explanations on how to compute the numbers required by generally accepted accounting principles.
Some of my explanations have spread to other schools. I am best known for teaching pensions, but my
© 2010 by W. David Albrecht
11
explanation of errors and leases have also gained some attention. It is to your advantage to work with
me during every class.
Unless each student can get involved, little or no
learning will take place. I’ll frequently interact with
various students while we go through the material.
During this interactive portion, I usually ask several types
of questions, including: “What is this?” “How is this
I know that!
done?” “Why is it done?” “What’s next.” “What if we
did this?” “Define this.” “Can you relate this to other concepts or
principles we’ve talked about?” “Can you reconcile this accounting with the underlying economic
event?” Can you explain how this accounting principle could be applied to this different issue?”
I never bring a calculator to class. I rely on all students to compute the numbers for examples and
homework. I’ll lay out a problem in class, and students work it, step-by-step with me in the lead. Or, it
might be that I’ll stop and let everyone in the class do a problem on his/her own. I encourage students
to work together in class, check answers with neighbors, and help others until everyone has it figured
out. I think students should be able to talk with each other during class, as well as text each other.
I rely on students to present problem solutions on the board and to walk the class through the
solution.
Periodically, I’ll bring to class financial statements from real companies. Perhaps they will be for
a few companies in the same industry. Through analysis and interpretation, we should be able to see
which one is doing the best job in one respect or another. Perhaps the financial statements will be for
one company over time. Through analysis and interpretation we should be able to describe the stories
being told.
I’m sure you will get your money’s worth if you regularly come to class.
Required materials
Intermediate Accounting, 17th edition., by Earl K. Stice, Fred Skousen and
James Stice
Real Money: A Financial Accounting and
Investment Simulation Game (2003
ed.) by W.D. Albrecht.
Calculator capable of performing present
and future value computations.
© 2010 by W. David Albrecht
12
Grading
Letter grades will be assigned according to relative class standing (in other words, students that
score better on tests and projects will receive better grades). Rest assured that the goal is a fair
assessment of student knowledge and understanding. When all is said and done, grade assignments
remain the result of the professor's professional judgment.
The grade of "A" requires excellent performance on tests and projects. Exam scores are perfect
or nearly perfect. "B" means very good. Students really know their stuff, but make small errors. "C"
stands for competent. Students sometimes really know their stuff, and other times make errors because
they are only familiar with the material. Students who don't get it very well receive a "D." A grade of
"F" is for those who don't get it at all.
Sanford Pinkster has an interesting way of explaining the difference in grades:
An A+ is a touchdown that got the crowd to its feet -- a forty-yard pass play or a seventy-yard run from
scrimmage. As color commentators like to put it, :so and so "took it to the house." Players like this get in
the game's highlight films. An A is a touchdown that generates loud cheers but not necessarily a standing
ovation. True, six points are six points but some touchdowns are simply more graceful than others ...
B grades are akin to field goals. The student got close but at the end had to settle for a good kick and three
points. Granted, teams can win games with field goals but not nearly as many as they can win with touchdowns ...
C students are the sort who can get a first down, even a couple of first downs, but in the end, they punt the ball. ... The most
positive thing one can say about C work is that field position is important and that a good punter can put the opposing team deep
in its own territory. Eventually field position can win games, but field goals and touchdowns win them more often and more
decisively.
D work might be likened to a team that cannot protect its quarterback and that thus suffers the big-time loss of yardage known as
"sacks." When a team loses ground, punting the ball usually puts it in great field position for one's opponents. D papers lug
around enough mechanical mistakes so that a teacher's red grading pencil gets a brisk workout. These can be equated to sacks,
and they have the same bad consequences as do sacks on the football field.
F work is obvious. It can come as an interception or a fumble but, either way, you've given up the ball. Period.
Your course grade will be assigned on the professor’s subjective evaluation of
your tests and papers. The course grade will integrate these items:
Exams (two during term & final)
Homework notebook
Learning notebook
Reactions to blog posts
Real Money project
Financial statement project
65%
0%
8%
6%
12%
9%
100%
Exams are scheduled to be taken at night. The primary reason for this is that it permits students
an unlimited amount of time for taking the test. Exams are problem-oriented, and can contain
problems, written response questions and case analysis. Exams are usually closed-book and
closed-notes. Calculators should always be used Approximately one week preceding the date of the
© 2010 by W. David Albrecht
13
exam, each student will receive a copy of an exam preview (detailed description of content and format
of test) as well as a copy of a test from a previous semester.
Projects are designed to give you an opportunity to work a real-world problem in a realistic
setting. There is no second chance for resubmitting projects.
How to study for this course
A while ago, I wrote an article on how to study for Intermediate Accounting. It was published in an
journal, and it is available on my web site. The last time I checked, it had almost 20,000 downloads.
http://profalbrecht.wordpress.com/2008/12/30/ace-your-accounting-classes-12-hints-to-maximize-your-potential/
Attendance policy
You should attend every class. However, I realize that interviews, work and family commitments
sometimes get in the way. If you miss a class, please make arrangements with another student for a
copy of their notes. If you know about an absence in advance, send a voice recorder of some type.
Finally, if you need to miss a class, send me an e-mail letting me know of your absence. There is no
penalty for missing a class. Please keep in mind that regular attendance is a requirement for retesting.
Assignments
Will be announced on a daily basis. I’ll make announcements far enough in
advance for you to have adequate time to work the problems.
Homework
Completion of homework problems is a nongraded requirement of the class. Homework
problems are assigned for most of the class periods. You will not have to hand in HW solutions on a
daily basis throughout the term. However, you will be expected to be current for discussion purposes.
If the class does not stay current on the HW assignments, then daily quizzes will be given. Solutions to
the HW problems are e-mailed or distributed in class. Many homework problems are worked
interactively in class.
In addition, you must maintain a notebook or collection of
your hand-written attempts to do the homework problems. This
notebook should contain a table of contents listing all homework
problems worked. By the date of the final exam for this course,
you must turn in your notebook/collection for inspection by Dr.
Albrecht. If your notebook does not contain your hand-written
solutions for at least 75% of all problems assigned, then your
course grade will be docked one letter.
© 2010 by W. David Albrecht
14
Learning notebook
It has long been recognized that writing an essay forces the writer to
come to grips with the issue being written about. Writers can actually firm up
what they think by writing about the subject.
Your learning notebook is actually a journal for reflective thinking. You
will write what you think about certain issues. The issues you write about
have no correct or incorrect answer, because you are writing about your
thoughts, opinions and feelings.
Your learning notebook will be graded on how well you accept the assignment to write about
your thoughts and feelings. If your reflections are thorough, well justified, organized and sincere, you
will receive higher marks than if your reflections are incomplete, haphazard, disorganized and brief.
Reading blogs for commentary about current events
Students are expected to pay attention to the business world and accounting world. Each student
will be required to read three commentaries at selected accounting blogs and provide a 300 word
summary and reaction of each one.
© 2010 by W. David Albrecht
15
Class discussion
Everyone is expected to speak up in class. If I do not get adequate participation from each
student, I will establish standards and a process to measure your participation.
Computers and e-mail
All students are required to regularly check their e-mail, whether it be
Concordia or a private e-mail. I will send e-mail to your Concordia account or
your other e-mail account. Check your e-mail often, because I'm going to send
out notes, assignments, etc., by e-mail. I assume that by 24 hours after I send out
an e-mail, everyone has read it.
Accommodations for disability
In accordance with the Concordia policy, if a student has a documented disability and requires
accommodations to obtain equal access in this course, he or she should contact the instructor at the
beginning of the semester and make this need known. Students with disability must verify their
eligibility through the Counseling Center (218-299-3514).
I am committed to going the extra mile in making reasonable accommodations for a student’s
disability.
Religious Holidays
It is the policy of the College to make every reasonable effort allowing students to observe their
religious holidays without academic penalty. In such cases, it is the obligation of the student to provide
the instructor with reasonable notice of the dates of religious holidays on which he or she will be
absent. Absence from classes or examinations does not relieve the student of responsibility for
completing required work missed. Following the necessary notification, the student should consult
with the instructor to determine what appropriate alternative opportunity will be provided, allowing the
student to complete his or her academic responsibilities.
I am committed to going the extra mile to accommodate a student’s religious beliefs. If you have
decided to follow your religion’s prescription to observe a certain day or date, I guarantee that you will
not be penalized in this course.
© 2010 by W. David Albrecht
16
Codes of Conduct and Academic Policy Statement
The instructor and students in this course will adhere to the College’s general Codes of Conduct
defined in the Student Handbook. It that students do not cheat, fabricate, plagiarize or facilitate
academic dishonesty. For details, refer to:
 Student Handbook (http://www.cord.edu/Studentlife/StudentHandbook/AcademicPolicies/academicintegrity.php)
Academic honesty for ACCT 355
You are expected to adhere to Concordia College Academic Integrity
policy. At various times, the professor will describe activities that constitute
academic dishonesty. Violations will be dealt with according to policy. If you
are academically dishonest on an exam, the penalty is score of zero on the exam
and a grade of F for the course. If you are academically dishonest either the Real
Money simulation game or the project, the penalty is a score of zero. If there are
two or more violations by the same student on Real Money, then the penalty will
include a grade of F for the course.
Two well written paragraphs, “What constitutes plagiarism” and “How can you avoid plagiarism
can be found on-line at http://www.westchester.liunet.edu/cwis/cwp/library/exhibits/plagstudent.htm
Real Money Simulation Game
Real Money is a financial accounting and investment
simulation game for use in financial accounting courses at the
collegiate level.
In this simulation game, students separate into groups of
four and then play a game of Monopoly. After the play, they
prepare an annual report to shareholders–including a set of
financial statements with notes).
This game has been played at hundreds of colleges and
universities around the world. Many students refer to it as the
single best learning experience of their life.
© 2010 by W. David Albrecht
17
About the Professor
As an undergraduate student at the University of Iowa, I
majored in playing cards, foosball and pool (and political science).
As you can imagine, I didn’t make much progress toward getting
a good start in life.
After working for a while at making pizzas
and then delivering mail, I saw the light and returned to school
at Iowa to learn something worthwhile–accounting and business.
Subsequently, in no particular order, I married, fathered two sons, received a
Ph.D. from Virginia Tech, and professed accounting at Andrews University, Virginia
Tech, North Carolina-Chapel Hill, and Bowling Green State University.
In 2009 I
came to Concordia.
Helping students learn is very important to me.
the learning-centered approach.
I have become a proponent of
Creating the “learn accounting while playing
Monopoly” simulation game has earned me a reputation in accounting education.
Increasingly adapting the learning-centered approach to my classes has resulted in
much student acceptance.
I present workshops in teaching at several conferences
each year.
I am actively involved in writing essays related to financial accounting and
accounting education.
These essays appear on my blog at
http://profalbrecht.wordpress.com/. I have a national reputation as an accounting
theorist, and my blog essays are read by many.
In my spare time I have several activities to keep me busy.
Professionally, I
read up to 100 articles per day about accounting from Internet newspapers and
magazines.
I am also putting my approach for Acct 255 into a textbook.
the professional realm, I play bridge at several tournaments each year.
about 200 films per year.
Outside of
I also view
In addition, I am always open to receiving your movie
recommendations, favorite cartoons or jokes, and challenging sudoku puzzles.
I also
like playing board games.
© 2010 by W. David Albrecht
18
Schedule of approximate due dates
Test one
Test two
Final exam
Real Money simulation game
Financial statement project
Reflective notebook assignments
Blog short papers
end of week 5 or beginning of week 6, evening
end of week 10 or beginning of week 11, evening
as scheduled (Wednesday 2-4, Friday 11-1)
various dates
Wednesday before final exam week
various dates
various dates
Topical content in 355
Introduction to financial accounting and review
Accounting cycle.
Financial accounting regulation and the accounting environment.
Theoretical structure of financial accounting.
Time value of money review.
Financial Ratio Analysis.
Income statement concepts
Income statement review.
Revenue recognition.
Statement of Cash Flows.
Statement of cash flows review
Statement of Changes in Stockholders Equity
Common Stock
Retained Earnings
Accumulated Items of Other Comprehensive Income
Treasury Stock
Balance sheet components
Balance sheet review.
Cash.
Accounts receivable.
Inventories.
Long term tangible assets.
Long term intangible assets
Other financial statement disclosures
Notes
Subsequent events
Interim financial statements.
© 2010 by W. David Albrecht
19
Papers and projects
ACCT 355
Table of Contents
Reflective writing and the learning notebook . . . . . . . . . . . . . . . . . . 21
Real Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Financial Statement Analysis Project . . . . . . . . . . . . . . . . . . . . . . . . . 27
Make every assignment
a work of art
© 2010 by W. David Albrecht
20
Reflective Writing and the Learning Notebook
Intermediate Accounting I – ACCT 355
It has long been recognized that writing an essay forces the writer to
come to grips with the issue being written about. Writers can actually firm up
what they think by writing about the subject.
Your learning notebook is truly a journal for reflective thinking. You
will write what you think about certain issues. The issues you write about
have no correct or incorrect answer, because you are writing about your
thoughts, opinions and feelings about the issue.
Your learning notebook will be graded on how well you accept the
assignment to write about your thoughts and feelings. If your reflections are thorough, well justified,
organized and sincere, you will receive higher marks than if your reflections are incomplete, haphazard,
disorganized and brief. In addition, good writing will receive higher marks than poor writing.
You should create a single word-processing file for your Learning
Notebook. You can start each assignment on a new page of the
document. Place a large heading, so I can identify where your writing on
one assignment starts and where the next begins. In addition, you should
submit each assignment to me on a timely basis so I can provide feedback.
Your periodic submission of each assignment can be either printed on
paper or e-mailed to me in electronic format. At the end of the semester,
your complete reflective notebook should be e-mailed to me in electronic
format.
© 2010 by W. David Albrecht
21
Your First Thoughts About the Course
due date: prior to Friday, October 8
The syllabus for this course is likely to be the longest syllabus you have ever received. If you
haven’t read it yet, do it now.
Based on what you currently know about the course, what is your best guess
as to how well you are going to do? Why do you think that? Is it some
combination of things you’ve heard about the course/professor or your own
personality/set of skills?
How much do you think you’ll have to study for this course? Why? How are you going to study
for this course? Based on your study skills and habits you’ve used in the past, what do you think will
be the most effective for you to use in this course? Why?
Your Second Thoughts About the Course
due date: prior to Wednesday, October 27
Go back and read what you wrote for “Your First Thoughts About the Course.” Reflect on what
you wrote about how well you might do, what might be difficult or easy, and how you will study for the
course. What do you think now? What was true and what was false? Based on what you know now,
revise your first thoughts.
Look up the definition of skill. What accounting skills do you possess now? Describe two such
skills, and provide a nuts and bolts explanation of how you use and/or apply these skills.
Think ahead to the life after college and your entry into the work force. What business and/or
people skills do you possess now? Describe one such skill. Are all these skills important? What
makes them important?
When making (1) transaction journal entries, (2) adjusting journal entries, (3) closing journal
entries, and (4) posting to accounts, it is possible to “think like an accountant”? What does it mean to
you when someone mentions, “Thinking like an accountant”? Do you think like an accountant? How
do you know? Is thinking like an accountant a good or bad thing for you? Explain.
More of Your Thoughts About the Course
due date: prior to Wednesday, November 17
Go back and read what you wrote for “Your First Thoughts About the Course,” and “Your
© 2010 by W. David Albrecht
22
Second Thoughts About the Course.” Reflect upon what you wrote about how well you might do, what
might be difficult or easy, and how you will study for the course. What do you think now? What was
true and what was false? Based on what you know now, revise your first and second thoughts.
Go back and read what you wrote for “Your Second Thoughts About the Course,” Reflect upon
what you wrote about skills. What do you think now? What was true and what was false? Are you
any better at the skills you wrote about in “Second Thoughts?” Identify one additional skill, either
accounting or business/people/personal skill that you have further developed in the past six weeks. Are
all these skills important? What makes them important?
Look up the definition of passion. What does it mean for a person to be passionate? If it were
possible to be passionate about accounting, what would that be like? Do you think there is potential
value in being passionate about accounting? Why is that? Are you passionate about accounting? If
you are, then describe what that it is like for you? Is this passion a good or bad thing? If you aren’t,
then why not (is it because of something about the accounting profession, or is it because of something
about you?)? Is the lack of passion a good or bad thing?
Your Final Thoughts About the Course
due date: prior to Friday, December 17
You’ve been immersed in financial accounting this semester. What do you think? Are you and
accounting a good fit? Why or why not?
What are you going to do in the future as a result of taking this course?
Focusing on skills, prepare a list of things you have learned in this course. What are the three
most important? Why are they important to you? Why are they more important than other items on
your list?
How effective have you been as a student in this course? What is good about how you’ve
studied? What is bad about how you’ve studied? What changes will you make for next semester?
© 2010 by W. David Albrecht
23
Real Money Simulation Game
Intermediate Accounting I – ACCT 355
Real Money is a fun and effective way to learn the purpose and method of financial accounting. It is a
financial reporting simulation game for use in an intermediate accounting course at the undergraduate
level.
In Real Money, students prepare a series of financial statements
that account for their experiences as they play a game of Hasbro's
Monopoly®. Students use debits and credits for recording
transactions.
The objectives of this simulation game are for the student to (1)
apply the accounting cycle in a dynamic business environment,
and (2) experience the financial statement and investment
decision processes that follow from use of financial reports.
These objectives are accomplished through use of the game
Monopoly®. The students in a class are divided into gaming groups with each game representing a
distinct and separate local market. There are four companies in each market.
Students get together outside of class to play in their game of Monopoly. They play thirteen turns (one
year) and then stop. They note all details of the game at this time because they will be returning to play
year two in a couple of weeks.
Each student does the accounting for his or her experience using journal entries and T-accounts. They
prepare an Annual Report to Stockholders including a balance sheet, income statement and statement of
cash flows. These are graded by the instructor and then published to all students.
After the entire class has had an opportunity to read all the annual reports and perform financial
© 2010 by W. David Albrecht
24
statement analysis, then each student buys shares of stock in those companies expected to dominate or
monopolize each local market. After students complete their investments, they are ready to return and
play year two of their game.
The simulation game continues until annual reports have been prepared for four years. Then, the play
of the game and investment winners are declared and Real Money is over.
© 2010 by W. David Albrecht
25
Annual Report Project
Intermediate Accounting I – ACCT 355
Due Wednesday, Dec 8, 2010
Select one company from the following list and obtain a copy if its annual
report to shareholders (and 10-K if separate)
 CVS Caremark (classic AR to shareholders)
http://investor.cvs.com/ (scroll down page and click on to annual reports)
 Target Corporation (AR to Shareholders with 10-K insert)
http://investors.target.com/ (click on left-hand link to annual reports)
 Safeway (AR to shareholders with 10-K insert)
http://www.safeway.com/IFL/Grocery/Investors (click on link to
annual reports at bottom of page)
 Walmart (classic AR to shareholders)
http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-reportsannual
 Gap Stores (AR to shareholders with 10-K insert)
http://www.gapinc.com/public/Investors/investors.shtml (click on financials, then annual reports)
 Caterpillar (2009 year in review (AR) with separate 10-K)
http://www.cat.com/cda/layout?m=37424&x=7
http://www.cat.com/cda/files/2087036/7/2009%20CFSC%2010K.pdf
© 2010 by W. David Albrecht
26
Stockholders Letter Your annual report should contain a letter (or two) to the shareholders from
one (or two) key officers of the company. Read it (them), and answer the following questions (for each
one).
1.
2.
3.
Who wrote the letter? What is that person’s position in the
company?
In one hundred words or less, explain the basic message in the
letter.
What is the basic pattern for letters of this type? How well
does the letter fit the mold?
Other material Your annual report most likely contains several
pages of material between the Stockholders Letter and the financial
sections, or possibly even before the Stockholders Letter.
4.
Provide a description (one hundred fifty words or less) of this
material and the message it communicates. Does it impress you?
Financial Highlights
5.
6.
7.
8.
Does the company present any financial highlights in the annual report to
shareholders?
If so, what items is the company highlighting this year?
Do the highlighted items show the company in a positive, mixed or
negative light? Explain.
What items are not included in the financial highlights that you think
should have been included in the company’s list of highlighted items?
Explain your answer. [Hint: answer this question after you have completed
the rest of the project.]
Fiscal Year
9.
10.
The fiscal year for the company extends from when to when? Where did you locate this
information?
Explain why the company has chosen this particular time period for its fiscal year.
Balance Sheet
11.
12.
13.
14.
15.
16.
17.
For which dates/years does the company report a balance sheet?
Using totals for each category (total assets, total liabilities, total SHE), what is the balance sheet
equation for the most recent year?
What three assets are largest in amount on the most recent balance sheet?
Does the make-up of the assets seem consistent with what you expected to see for this type of
company? Explain.
What three liabilities are largest in amount on the most recent balance sheet?
Which is larger in amount for the most recent year, contributed capital or retained earnings?
Convert the balance sheet for each year into common size format (vertical analysis) and present
© 2010 by W. David Albrecht
27
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
neatly in columns.
What is the percentage of current assets to total assets for each year?
What is the percentage of current liabilities to total assets for each year?
What is the percentage of total debt (liabilities) to total assets for each year (this is called the debt
percentage)?
Did the debt percentage increase (ratio of total debt to total asset), decrease or stay the same from
the prior year to the current year? What do these numbers say about the company?
What is the percentage of stockholders equity to total assets
for each year?
Does the company’s ratio of stockholders equity to total
assets seem consistent with the business risk of the
company? Explain.
Compute the current ratio for each fiscal year. What do
these numbers say about the company?
What was the percentage change in total assets from the prior
year to the current year? Be sure to mark your answer as an
increase or decrease.
Does the company's common stock have a par value? If so,
how much was the reported par value per share?
How many shares of common stock were issued at the end of
each fiscal year?
Wikipedia: Annual balance sheet of a
State-owned farm. Clay, ca. 2040 BC.
Income Statement
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
For which dates (or periods of time) does the company report income statements?
Using totals for each category (total revenue, total expense), what is the income statement
equation for the most recent year?
What amount of net sales is reported for each year?
What is the percentage change in sales for each year? Describe the trend in revenues.
What amount of net income is reported for each fiscal year?
What is the percentage change in net income for each year? Which is changing faster, sales or
net income?
What three expenses are largest in amount on the most recent income statement?
Convert the income statement for each year into common size
format and present neatly in columns.
Identify significant trends from the common size income
statements.
If the company sells products, compute the gross margin and
the gross margin percentage for each fiscal year?
What is the amount of operating income for each year? What
is operating income as a percentage of sales for each year?
Describe the trend in operating income.
What was the percentage return on sales for each fiscal year?
What is the trend in the ratio?
© 2010 by W. David Albrecht
28
Statement of Cash Flows
40.
41.
42.
43.
44.
45.
Using totals for each category, what is the cash flows equation for
the most recent year?
Does the company report cash flows from operating activities
using the direct or the indirect method? Describe how you can
tell.
Does the ending balance of cash and cash equivalents agree with
the amount reported on the balance sheet?
On what statement(s) would you expect to find information
regarding the declaration and payment of dividends? Did the
company declare or pay dividends in any year?
Do the reported cash flows for operating activities and investing activities for each year follow
the normal pattern for these sections?
Describe the trend in cash flows from financing activities?
Statement of Changes in Stockholders Equity
46.
Using amounts from the statement of changes in stockholders equity, what is the equation for
changes in retained earnings for the most recent year?
Notes to the Financial Statements
47.
48.
49.
How many notes to the financial statements are presented for the most recent year?
The first note to the financial statements lists and describes significant accounting policies.
Identify and summarize two accounting policies.
Choose two of the notes and briefly summarize them.
Report of Independent Public Accountants (Auditors)
50.
51.
52.
53.
What accounting firm audited the company’s financial
statements.
What is the auditor firm’s responsibility with respect to
auditing them?
What type of opinion did the independent auditors issue on the financial statements? What does
it mean?
The auditor firm should have investigated the internal control system of the company. Please
describe what is communicated in the letter reporting on this investigation. What was the
auditor’s opinion on the internal control system?
Management's Discussion and Analysis
54.
Provide a description (200-300 words) of the MD&A.
© 2010 by W. David Albrecht
29
Write up and submission requirements
When finished, word process your results and submit. Your submission should
contain (1) a cover sheet (your name, date and honesty pledge, and (2) your
answers to the preceding 54 questions.
You should submit your write-up electronically via e-mail with attached file to
albrecht@profalbrecht.com (or albrecht@cord.edu). Any files should be named
fsa.yourlastname.yourfirstname.doc
© 2010 by W. David Albrecht
30