Implementation Guide for Instructors
Undergraduate Value-Added Teaching Model™ and the
Introduction to Accounting: The Language of Business™ CDs
Used at Brigham Young University
Copyright 2006 Business Learning Software, Inc.
1
Table of Contents:
Introduction _____________________________________________________________________________________________________ 3
How to Use This Guide____________________________________________________________________________________________ 4
Implementation Checklist _________________________________________________________________________________________ 5
The Value-Added Teaching Model & Variants Described _____________________________________________________________ 6
Value-Added Teaching ModelTM __________________________________________________________________________________ 6
Alternate Models _______________________________________________________________________________________________ 7
Student Responsibility & Additional Resources _____________________________________________________________________ 9
Orientation _____________________________________________________________________________________________________ 10
Psychological Effect ___________________________________________________________________________________________ 10
Mimicking a Traditional Model ___________________________________________________________________________________ 10
Outline of Additional Resources __________________________________________________________________________________ 12
Resource Summary Table ______________________________________________________________________________________ 14
Class Size and Number of Instructors _____________________________________________________________________________ 15
Assessment ____________________________________________________________________________________________________ 16
Exams: ______________________________________________________________________________________________________ 16
Quizzes ______________________________________________________________________________________________________ 16
Tips to Performing Well in This Course ____________________________________________________________________________ 19
Managerial and Financial Breakup & Additional Topics _____________________________________________________________ 21
Technical Support for the CDs ____________________________________________________________________________________ 22
Trial Period _____________________________________________________________________________________________________ 23
Site License Described __________________________________________________________________________________________ 26
Ordering the CD Sets ____________________________________________________________________________________________ 28
Using the CDs in Campus Computer Labs _________________________________________________________________________ 29
Possible Pitfalls and Important Notes _____________________________________________________________________________ 30
How to Use the CDs _____________________________________________________________________________________________ 32
Appendix _______________________________________________________________________________________________________ 35
Course Orientation Guide and Video _____________________________________________________________________________ 36
Unlock Statement of Cash Flows and value-added lessons on CD Set #1 ______________________________________________ 47
Syllabus _____________________________________________________________________________________________________ 48
CD Series Topic Breakdown ____________________________________________________________________________________ 71
CD Time Table ________________________________________________________________________________________________ 79
Free Trial Program Details ______________________________________________________________________________________ 81
Learning Resource Packet ______________________________________________________________________________________ 82
Value-Added Session PowerPoint Examples ______________________________________________________________________ 82
Optional Weekly Review Session Materials ________________________________________________________________________ 82
Assessment __________________________________________________________________________________________________ 83
Exam Review Documents (intended for Exam Review Sessions) _____________________________________________________ 83
Exam Review Topics__________________________________________________________________________________________ 130
2
Introduction
Thank you for taking time to read this guide as you learn how to implement the Introduction to
Accounting: the Language of Business™ CDs and the Value Added Teach Model™. We are confident as
you follow this guide to integrate our technology and teaching models into your course, you will observe
increased success in your course and accounting program.
As you may know, we have spent the last seven years developing and refining our Value-Added
Teaching Model™ and the "Introduction to Accounting: The Language of Business™ CDs." Some have
asked why we have entered the market to promote our products— an uncommon move for a reputable
university. This is a great question. Professor Norm Nemrow, the coordinator of the introductory courses
at BYU, heads this project at BYU. Norm has taught at BYU for 14 years as a volunteer after retiring as a
president of a real estate investment company. Norm knew there was a better way to teach introductory
accounting— a way to excite students and teach them better than the traditional method. He began
developing, with his own funds, the Value-Added Model and our Introduction to Accounting CD
technology. Over the last few years, over 14,000 students have taken this class and we are elated with
the results. Our introductory accounting class is now the most popular general education/non-specialty
course on campus. Additionally, our recruitment of high-quality students into the accounting program has
skyrocketed.
As demand grew for the CDs beyond BYU’s campus, Norm created Business Learning Software, Inc. to
continue the development of the CD technology, provide pedagogical counseling, and guide market
promotion. Although BYU owns the CD technology, Norm has exclusive distribution rights; however, he
donates all of his proceeds from the sale of the CD sets back to BYU. BYU uses these funds to
strengthen their accounting program and other projects on campus. Norm is passionate about sharing
his ideologies and technology because he simply desires to help others be more successful.
Our company, which operates much like a non-profit organization, works with BYU to help instructors and
schools to strengthen their accounting, MBA, and distance learning programs. We are pleased you are
taking the first steps in implementing our new approach. Please let us know if we can answer any
questions or provide any additional assistance. You may contact us by going to our website at
www.accountingcds.com
3
How to Use This Guide
For the past six years, we have intensely worked with students on our campus and with instructors and
students at many other schools developing the most efficient and effective methods to implementing our
models and technology. This guide is a result of those efforts.
We have arranged this document to guide you through every aspect of our model. We have also
included a checklist that will help you get a big picture of the entire implementation process and assist
you in organizing the creation of your course more efficiently. This checklist in nowise encompasses
everything you need to know for a successful implementation and effective course. Therefore, it is vital
you read this entire document first and then use this checklist as a reference tool as you begin to develop
your course. We also included an appendix, which we will reference many times throughout this
document. The appendix also contains valuable resources that you will find very helpful.
As with any method of teaching, what works for one school may not exactly fit another. Therefore, you
may need to adjust some aspects of our model to make it fit your unique situation. However, please be
extremely careful when deviating from this established model. Altering seemingly insignificant aspects of
this model can result in serious detrimental effects upon the success of the course, regardless of the
school or the type of student. We will highlight, prioritize, and reiterate1 many of these issues throughout
this document. However, if you have a question about the possible ramifications of an alteration, please
let us know and we can assist you with more information.
Download the Word Version of this Guide
To access the Word version of this document, please go to
www.accountingcds.com/learn/documents/Undergraduate_Guide.doc
1
Before we wrote this guide, we would often counsel instructors regarding certain key issues as they were
implementing our approach. When they experienced difficulties in their course, we often observed they failed to
implement these important points. Therefore, for this guide, we decided to “drive home” a few ideas (such as
students’ responsibility, additional resources, and the orientation process) with several reiterations to make our points
as clear as possible. Please forgive any annoying redundancy.
4
Implementation Checklist
We provided this checklist to help you visualize each aspect of the entire implementation process. This
checklist in nowise encompasses everything you need to know to implement and run this model
successfully. Therefore, it is vital you read this entire document first and then use this checklist as a
reference tool as you begin to develop your course.
□
Choose and Integrate a Teaching Model: Choose the best teaching model for your
course. (page 6)
□ Outline Topics in Course: You need to decide which topics you will teach and if you will
integrate financial and managerial topics into the same course (Page 21)
□ Develop Value-Added Sessions (page 7)
□ Prepare Additional Resources: Prepare all or some of the following resources (page 12) :
o T.A.’s & T.A. Lab
o Telephone Hotline
o Email Support
o Office Hours
o Class Notes and the Learning Resource Packet
o Optional Textbook
o Weekly Review Sessions
o Optional Exam Review Sessions
□ Prepare Exams: Please see our exams and use them in any way you choose. (Page 16)
□ Setup Course Website for Quizzes: Arrange with your IT staff to setup your course
management website (i.e., Blackboard, WebCT, Etc), which you will use to deploy quizzes and
other information to your students. We can provide the quizzes in Blackboard electronic form.
However, you may also administer the quizzes in hard form. (Page 16)
□ Order CDs: Arrange with your bookstore to acquire the Introduction to Accounting: The
Language of Business CDs sets from us. You may also want to make an optional text available
(page 28)
□ Prepare Computer Labs: Coordinate with your IT technicians to prepare the campus labs to run
accounting software. The fastest way to accomplish this is to have your IT people contact us.
(page 29)
□ Prepare Class Notes: Prepare the hard copy of the class notes (also called the Learning
Resource Packet) for your students. (Page 82)
□ Prepare Course Syllabus: Please use our syllabus and copy it as needed as you draft your own
syllabus. (Page 48)
□ Setup Trial: If you are conducting a trial, understand the following issues (page 23):
o Evaluation of Course
o Required Review Sessions
o Student Questions
o Isolate CD From Textbook
o Experimentation
Orientation
□ Watch the orientation video and read the enclosed orientation document. (Page 36)
□ Accomplish all seven objects with your students on the 1st and 2nd day of class. (Page 42)
□ Become familiar with the accounting software. (Page 32)
Miscellaneous
□ Learn how to resolve technical support issues (Page 22)
□ Learn how to respond to students complaints (Page 30)
□ Learn how to mimic a traditional model within the Value-Added Model (Page 10)
□ Learn the tips students can use to perform well in the course (Page 19)
□ Learn how to promote student responsibility within this model (Page 9)
□ Learn the psychological effects of additional resources within this model (Page 10)
5
The Value-Added Teaching Model & Variants Described
Value-Added Teaching ModelTM
To learn more about the features and benefits of this model, please go to
www.accountingcds.com/learn/undergraduate/undergradmodel.htm.
Brief description: Students learn all the core content of the course outside of class on their own time. To
learn the all the necessary core content, the students use the Introduction to Accounting: The Language
of BusinessTM CDs. Valuable class time is not spent reviewing material that can be learned outside of
class. When students come to the classroom, the instructor uses class time to apply the concepts learned
on the CDs to real-world scenarios and applications. In addition, the instructor can teach the broad role of
accounting in business today, and the range of opportunities available through a degree in accounting.
Orientation (two sessions)
We suggest you schedule two class periods to introduce the course to our students. The success or
failure of this orientation process is probably the best predictor of the course’s success. To learn how to
conduct these sessions effectively please see the orientation guide in the appendix (page 36).
Value-Added Sessions (eight sessions)
At BYU, we hold eight required value-added sessions throughout the term. These sessions are the only
times we meet together as a class on a required basis. In these sessions, we apply the core content that
the students are learning from the CDs to real world scenarios and applications. The topics of the eight
sessions are:
1. The Importance of Financial Accounting in U.S. and Global Economies
2. Management Information Systems Today: Their Effect on Business and Accounting, and
Career Opportunities
3. Business Fraud, Ethics, and the Accounting Profession
4. The Importance of Tax Planning in Business Decisions and Career Options in Taxation
5. Financial Accounting Information, Stock Valuations, and Stock Market
Investing
6. Money, Family, and Other Considerations in Career Choices
7. Managerial Accounting: Current Trends in Practice and Career Opportunities
8. Key Elements in Successful Personal Financial Planning and the Value of an
Accounting Education
To learn more about what we do specifically in each session, please watch an online video by going to
the following address: http://www.accountingcds.com/video/qa/qa39.html. You may also watch the actual
sessions with our accounting software. We use these sessions on the CDs for our online and
Independent Study students. To access these sessions, please open the accounting software, click File,
Click settings, type 6A35A9F6 in the curriculum code box, click OK, click File, click Open Lessons, the
eight sessions are now part of the lesson list.
We highly discourage instructors from using our eight recorded video sessions in their course. Instructors
should conduct these sessions live with their students. In addition, we created these sessions for BYU
students, which are a religious student body. We refer to our church and faith several times in these
videos. Therefore showing these sessions to other students outside of BYU would probably be
inappropriate.
Before each of these sessions, we assign our students to read current event articles from the Wall Street
Journal and other sources and take an online quiz to assist in their pre-class preparation. We also assign
a post-class quiz to encourage active participation in the presentation and class discussion. Many
students indicate that these eight sessions are the most relevant and useful classroom experiences they
have had in their entire college experience. To watch a short five-minute video describing these required
lectures, please go to the following address: http://marriottschool.byu.edu/introaccounting
6
We often invite other faculty members, usually experts in the given topic area, to come in the classroom
and conduct the sessions.
The pre and post-class quizzes and current event articles are also available within our Blackboard file we
send to schools. However, if you choose to use our readings you must acquire permission to use them
from the publishers. Many schools already have this permission through the various subscriptions they
buy every year through their library.
Creating Your Own Sessions
Much of your time will be spent designing your own sessions. You may use our outline or devise a
completely new set of topics. Due to our large number of students in the classroom, we can only interact
with them on a limited basis. You may have smaller classes, which enables you to interact more with
your students or have the students split into groups to work on corporative assignments. The choice is
yours.
Some instructors decide to use this class time for case analyses. This helps students see how the core
content on the CDs directly applies to real-world scenarios. We believe this is an excellent use of the
session’s time.
We will be happy to assist you in developing these sessions in any way we can.
Other Class Sessions
At BYU, the only required sessions that students must attend are the first two days of orientation and the
eight required value-added sessions. All other sessions are optional.
We hold optional weekly review sessions (see the Student Responsibility & Additional Resources section
on page 9) of which about 10-15 percent of the students attended. In fact, these review sessions can
double as the standard lecture in a traditional model if a student prefers the standard textbook/ lecture
model (see page 10 for more information on this issue).
Alternate Models
Models contained below are variations of the Value-Added Teaching Model. These variants help
strengthen student motivation and responsibility. These variants are by no means the only possible
variations.
Lab Model Variant
This is the model variant used at BYU-Hawaii. In this model, the class meets in a computer lab at a
specified time two or three days per week. Each student uses a lab computer and watches the CD
lessons assigned for that week. The instructor walks around the room and asks students if they need
anything clarified or if they need any additional help. The instructor has the opportunity to interact oneon-one with each student and give more attention to those that are struggling.
Additional details:
 Designed for smaller class sizes
 Students take the 25 standard quizzes online and the standard 3 exams
 Class attendance is not optional
Advantages:
 Increases the personalized attention toward students
 Allows the instructor to ensure their students are studying the material
Disadvantages:
7


Sometimes it is difficult to find and schedule a computer lab large enough to accommodate an
entire class
Uses more faculty time than standard model
Responsibility Model Variant
This model is a great model if your students need more motivation than provided in the Value Added
Model. This model runs the same as the Value-Added Model, except the quizzes are provided in class
rather than online. As discuss in the quiz section below, the quizzes are the main motivational tool in this
course. As you increase the quizzes’ point values, students are more motivated to study the CD lessons
and perform well. However, when you deliver the quizzes online and increase the point value, students
are more motivated to cheat. In this variant, the instructor can allocate more points to the quizzes and
deliver them in a proctored environment to prevent cheating, thus providing an optimal motivational
setting. The downside to this method is delivering the quizzes and grading them is not as automated as
an online delivery method.
Another distinctive attribute to this model is once the students are finished taking the quiz, those students
who performed well are allowed to leave the class. However, those students who did not do well on the
quiz must remain and listen to a lecture. This gives an added incentive to the students to perform well on
the quizzes.
This variant does take more time for instructors and students. Because you have to attend class more
often, you may not enough time to the hold as many value-added sessions as described above.
However, this model does provide more assistance to struggling students while allowing higher aptitude
students to learn without being held back by students who grasp the content at a slower pace. This
learning environment will make the good students feel more liberated, which will likely lead to better
performance, higher course evaluations, and recruitment.
A Q&A video clip on our website addresses this issue in part. To watch this clip, please go to the
following address: http://www.accountingcds.com/video/qa/qa15.html.
To learn more how the value-added model helps struggling students and inspires good students, please
watch a short video clip at the following address: http://www.accountingcds.com/video/qa/qa38.html.
Time Motivator Variant
The Responsibility Model Variant above does present a small problem from an administrative standpoint.
When compared to the online quizzing system, distributing hard copies of the quiz, grading the quizzes in
class, recording the scores, and then ensuring certain students stay for the lecture can be cumbersome.
A possible solution is to modify this model slightly by keeping the quizzes online and then requiring those
who scored poorly to attend class or the optional review sessions.
If the students study hard and perform well on the quizzes then they are not required to attend the review
sessions. This ability to save time can be a great motivation for many students.
8
Student Responsibility & Additional Resources
One of the greatest benefits if this model is it allows you to give your students more learning tools than
they have ever had in the past. However, many students are initially skeptical this course will be a good
experience because they initially feel the course is all about the CDs— meaning, sometimes they view
the CDs as just merely replacing the textbook or feel they paid tuition for an instructor and received CDs
instead. In reality, the CDs main benefit is to save valuable class time while simultaneously providing
excellent instruction.
Students must realize this course is all about giving them more tools than they have ever had before.
Students have the CDs, optional textbook, optional review sessions, one-on-one faculty assistance, the
accounting lab, Accounting T.A.’s, telephone hotline, email support, etc (a discussion of these resources
is provided below). The students choose how they want to learn. Even though it likely that over
95%percent of your students will only use the CDs and never use any of the other resources, they MUST
feel like there are several options for their learning.
The idea behind this increase in resources centers around the idea of student responsibility. The basic
premise is when all things remain equal, students who feel totally responsible at the end of a course for
the result of their grade generally perform better, feel they were treated fairly, and liked the course.
Students, who feel lost and unsure where to find additional assistance, often have poorer performance,
blame weak performance on the instructor, and dislike the course.
Therefore, one of the primary goals in a course is to help every student feel completely responsible for
the outcome of their grade. In a traditional course, instructors can emphasize this directive less because
college students should already know how to be responsible. However, this model is not traditional and
instructors should not require their students to adapt instantly to this new model. Students may initially
feel uncomfortable.
Therefore, to create a successful course and to instill a sense of solid responsibility to your students, we
highly recommend instructors provide the two following items. These two items are the most important
aspects of a successful implementation. (1) An Effective Orientation: instructors should take time on at
the beginning of the course to guide the students through every aspect of the course. (2) Provide
Resources: Instructors should make available every possible resource within the budget and time
allowances.
9
Orientation
We cannot over emphasize the importance of the first and second day of class enough. Many instructors
who implement our model, approach the orientation process as they would the first day of any normal
course when they outline their syllabus with their students. Please do not do this. This model is often
very different from any other course your students have taken. They need assurance and guidance as
they approach this model. A good orientation session should leave the students excited about the
course, comfortable with the technology, comfortable with the course structure, and resolves all their
questions and concerns. In addition, students should leave with a firm understanding of the value-added
approach and their responsibilities in the course. Because this implementation process is so crucial, we
developed a special implementation video and document that helps instructors make this day as effective
as possible. The document is available in the appendix on page 36. You can download the video at
www.accountingcds.com/links/orientation_video.htm. You may also request a DVD version by emailing
us at info@accountingcds.com.
Resources
Before we outline all the additional resources available for your course, we want to share with you a few
thoughts regarding the psychological effect of these additional resources and the benefits of providing a
traditional-like model within the value-added approach.
Psychological Effect
The resources below are not only beneficial to your students as they learn the material but they also have
a profound psychological effect upon the students by dramatically increasing their sense of security and
responsibility. When a student feels they can receive help from additional resources, they immediately
feel secure and responsible for the outcome of their learning. At BYU, we use all of the following
resources and virtually never receive complaints from our students regarding the outcome of their grade.
Interestingly, over 90 percent of all students never use any of the additional resources (except for the
exam review sessions). Therefore, the primary benefit is not necessarily that students use the resources
(although this is important), but simply that the resources exist.
Probably only a small percentage of your students will ever use the additional resources; however, the
mere notion that the resources existence will greatly influence every student.
Mimicking a Traditional Model
One of the best attributes of the Value-Added Teaching Model is it accommodates for students who
prefer a traditional model with a textbook and follow-up lecture. By providing the optional textbook and
weekly review sessions (described below) students can experience a traditional model. At BYU, less
than 1 percent of the students choose this option. However, as noted in the preceding section, this option
has a huge psychological effect upon ALL students. When students observe they can choose which
method to learn from, they immediately feel empowered and responsible for their learning (even though,
virtually none of your students will ultimately choose this traditional method).
Students, who choose to complain, sometimes report our value-added model and CDs were too radical
for them to perform well. They further insist that had this model been more traditional they would have
performed better. These students are actually just seeking to blame their performance on something else
besides themselves. We ask these students if they read the textbook and attended the optional review
sessions, which would have provided them with the traditional model. Invariably, these students fail to
accomplish both of these items. When we remind these students that they can have a traditional
experience, they have little recourse but to admit their mistake, accept responsibility, and move forward in
the course.
Not only does this method instill more responsibility within your students, but it also provides an
alternative for students who genuinely choose to use the textbook and the follow-up lecture. Even though
10
only a few students would ever use this traditional method, we highly recommend you provide this
alternative because it will strongly benefit our course. In most cases, you do not need to do anything
extra, except inform your students of this option.
11
Outline of Additional Resources
Teaching Assistants & T.A. Lab: At BYU, we provide an accounting lab for all our accounting students.
This lab is open for about 16 hours a day and is staffed by MACC students and other upper-class men
and women in the accounting program. This lab is a great place for students to study and ask questions.
We provide about 18 computers in this lab, so students can watch the CDs and have quick access to a
T.A. if they need help.
With 3000 annual accounting students and one instructor, a T.A. lab makes a lot of economical &
practical sense for us. Other institutions with smaller programs may find this option unrealistic. However,
there are many ways to reap the same benefits without sacrificing precious resources. For example, you
may want to consider at least one T.A. who has regular office hours and who can answer emails.
Telephone Hotline: We provide a telephone hotline for our students to call for answers to their questions.
This phone is located in the T.A. lab and is answered by the T.A.’s. In reality, the hotline is more of a
psychological confidence booster. Students actually use our hotline very rarely; however, they know the
hotline is always available. The hotline gives them the confidence to use the CDs at home, knowing that
if they need to ask a question they can call and get immediate assistance.
Email Support: Students can email questions to the instructor or T.A.s and receive timely responses
through email.
Instructor’s Office Hours: Instructors should explain to students that because the class meets less
often, they have more time to meet with students in their office. In reality, instructors will probably not see
students in their office much more than in a traditional model. However, the students MUST feel like the
instructor is readily available and interested in personalized attention.
Class Notes and the Learning Resource Packet: Students will find greater success in this course if
they use a hard copy of the class notes contained on the CDs. To access the notes, students need to
open the accounting software, click on Resources> Lesson Notes, Problem, and Solutions, then select a
lesson. Students should print these documents and take notes as they watch the CDs.
Printing out the all the lesson notes for each lesson can become cumbersome. Therefore, we created the
Learning Resource Packet (250 pages), which serves a summarized textbook and combines all the class
notes from every lesson and other printed resources such as sample exams, exam review topics, and the
financial practice set.
At BYU, we print this document and provide it to our students through our campus bookstore at our
printing costs ($10.10). We suggest you do the same and tell your students it is very important they buy
and use this document in their studies. To clarify, everything in the Learning Resource Packet is
available on the CDs; however, it is our experience the students will use the printed resource more if they
can buy it in the bookstore or at a copy center.
When you decide to use the CDs for your course, you may freely copy this document and provide it to
your students; however, we only ask that you sell the document for the price of printing. If your university
bookstore is to provide the document then a reasonable markup is allowed.
The Learning Resource Packet is available on the CDs or online at
http://www.accountingcds.com/learn/documents/Learning_Resource_Packet.pdf
Optional Textbook: The CDs are a stand-alone product and need no textbook supplementation.
However, if a student wishes to reference a textbook in connection with their studies they may certainly
do so. For those students we suggest they use the “Accounting Concepts and Applications”, by Albrehct,
12
Stice, Stice, and Swain from Thomson South-Western. We reference page numbers from this book in our
syllabus so students who wish to read on a given topic may do so. To access more information on this
book, please go to http://www.swlearning.com/ibc/albrecht9e/main.html
Students can also use the text if they want a more traditional experience. (See Mimicking a Traditional
Model on page 10).
Optional Weekly Review Sessions: At BYU, we hold an optional weekly review session for any student
who wants additional help. Only about 10-15 percent of our students come to these sessions. We have
one of our head teaching assistants teach these sessions. At BYU, we hold these sessions at the regular
scheduled class time.
We do provide some PowerPoint presentations and quizzes to help guide these sessions. Please see
the appendix for these materials.
Read the section above entitled “Mimicking a Traditional Model” on Page 10 to learn more how you can
use these sessions to mimic a traditional model for some students.
Optional Exam Review Sessions: We recommend instructors hold an optional review session before
each exam. At BYU, we hold one review session for all sections. Therefore, we schedule these sessions
either at night or on a weekend and typically last for a few hours. We provide exam review materials to
help guide these sessions. Please see the appendix for these materials on page 83.
13
Resource Summary Table
Resource
Importance2
T.A.’s & T.A.
Lab
6-9
(depending
on class
size)
T.A.’s
Telephone
Hotline
6-9
(depending
on class
size)
4-7
(depending
on class
size)
Psychological
effect3
Summary
Having a place where students can go to get
immediate assistance is very helpful. If you
have a small class, office hours and maybe a
T.A. can suffice. If your class is very large,
then a T.A. lab is more important.
T.A.’s are a great asset if you have larger
course. They can manage the weekly review
sessions and staff the lab if you are over
burdened.
Like the textbook, the hotline is a
psychological tool. The phone may never ring,
but by just having it available will make you
students feel secure and responsible.
Email support is inexpensive to provide and
very helpful for students who have a question.
Students must feel that you are ready to help
them if they need assistance. Even if you
already have office hours, you will want to
strongly emphasis this to your students.
This is really a must. Students can print this
out on their own from their CDs. However,
because it is a large document we suggest the
school provides the document through the
bookstore.
When you provide an optional text with
optional weekly review sessions, you will have
a are excellent psychological tools. By just
having the text available, students have the
option more than anything. This text would be
used in conjunction with the weekly review
sessions for a traditional model.
The weekly review sessions are the single
most important resource you can provide to
your students; however, not for the obvious
reasons of reviewing core material. Weekly
review sessions with the text mimic a
traditional model, thus automatically putting
responsibility back on the students.
This is a great resource for all students to get
ready for the exam. You should strongly
promote these sessions to your students.
10
10
10
Email Support
7
8
Office Hours
10
10
Class Notes and
the Learning
Resource
Packet
10
10
Optional
Textbook
5
10 when
combined with
the weekly
review
sessions
Weekly Review
Sessions
10
10
Optional Exam
Review
Sessions
10
8
2
Scale from 1 to 10, with 10 being the most important
3
Scale from 1 to 10, with 10 being the most important
14
Class Size and Number of Instructors
At BYU, we have about 3000 annual students enroll in our introductory accounting course. One instructor
teaches all these students. We have three main sections throughout the semester:
Section 1 (about 400 students) Morning section
Section 2 (about 700 students) Afternoon section
Section 3 (about 100 students) Night section. We call this the night section, but in reality,
it is an online section. The class only meets once at the beginning of the term to discuss
the syllabus.
Other schools may want to use the CDs with smaller class sizes. The only real advantage to this
scenario is smaller groups for the value-added sessions. You can hold one optional review session for all
sections, or perhaps two to accommodate more students’ schedules.
One of the biggest advantages of the CDs is the ability to run many students through this course with only
one or two instructors.
15
Assessment
Exams: We use three exams:
 Exam #1: (100 points): Covering Lessons 1 - 4 and the Financial Practice Set concepts, (33
multiple choice worth 3 points each with 1 point for simply taking the exam)
 Exam #2: (120 points): Covering Lessons 5 - 10 (40 multiple choice worth 3 points each)
 Final Exam: (150 points): Covering Lessons 11 - 15, (10 True/False worth 2 points each and 43
multiple choice worth 3 points each with 1 point for simply taking the exam)
As you can notice, our final exam is not comprehensive; however, you may want to change the final exam
to include questions from throughout the entire course. We allocate points in such way to allow students
to redeem themselves if they do poorly on the first exam. You of course can reallocate the points in any
way you wish by either assigning a different point value to each question or varying the number of
questions per exam.
We do not use class time to administer the exams. At BYU, we have a testing center that handles about
1000 students at any given time. Students can take our exams on any day throughout the term, as long
as they do take the exam after the deadline as described in the course syllabus.
Because we keep our exams under tight security, we do not provide them in this document. To obtain our
exams, please email us at info@accountingcds.com. Please use your university email account so we can
verify your identity.
Quizzes
Instructors often ask us how we keep our students moving through the course at a regular pace. While
simple in nature, the secret is online quizzes. The only way to make students go through the CDs at a
regular pace is to make their efforts (or lack thereof) affect their grade. Therefore, we quiz our students
frequently throughout the course.
When we first started this course several years ago, we gave one quiz per lesson, each quiz having 10
questions. We instructed our students to complete each quiz about every six days as directed by the
course syllabus. We also told them they must complete the quiz by midnight of the given day or they lose
all the quiz points.
Unfortunately, we discovered a problem with this method. With some lessons taking over three hours to
complete with a good level of comprehension, students were waiting until the last moment and moving
through the lessons too fast so they could complete the quiz before the midnight deadline. Students’
performance on the quizzes was poor, which carried over to the exam scores as well. Students could
have remedied this problem by dividing their workload over a few days or allocating a solid three to four
hour time block to study a lesson. Unfortunately, most undergraduates are not responsible enough to
study in this manner.
To remedy this problem, we restructured the 15 quizzes into 25 smaller quizzes (five questions each).
We then directed our students to complete a quiz about every half lesson as indicated by the course
schedule. In this scenario, students only had to allocate about 1.5 hours of time to watch the CDs before
completing the quiz. Fortunately, this small change fixed the problem. Students performed much better
on the quizzes and the exams. We suggest you quiz your students with the same frequency.
While online quizzes are tremendously simple to distribute to a large class and even easier to score, they
have one inherent disadvantage— students can cheat them. Because online quizzes are not proctored,
some students will do whatever they can to perform well on the quiz— even if that means being
dishonest. To combat this problem, instructors will sometimes design pooling systems, where they pull
each question from a large pool of questions. While this system does help inhibit students from copying
16
each other’s work, it does not divert students from referencing their notes, a text, or in this case, the CDs
while taking the quiz. Another way to fight this problem is to time the quizzes. Because referencing notes
and other forms of cheating can sometimes take more time than just pulling the information from one’s
brain, timing the quizzes can work to a limited degree. We allow 5-10 minutes per quiz; however, you
may want to reduce that number (most of our quizzes only take about 3 minutes to complete). We also
tell the students on the first day of class that if we see a student performing very well on the quizzes and
performing poorly on the exams then we reserve the right to lower their quiz scores.
Remember, the primary purpose of the quizzes is to motivate the students to watch and learn the CD
content. Therefore, with all advantages and disadvantages considered, we decided to allocate enough
points to the quizzes to motivate the students to watch the CDs, learn the material, and complete the quiz
but not enough to affect their grade seriously. We want the majority of their assessment points to come
from the exams in a proctored environment. In our course, the quizzes make up about 17 percent of the
final grade, which seems to be about the right number, at least for us. However, if you decide your
students need more incentive to motivate them properly to learn the core content, then you may want to
attribute more points to the quizzes (perhaps up to 25-30 percent). However, as you increase the point
value of the quizzes you also increase the likelihood the students will cheat.
Therefore, if you want to increase the value of the quizzes to motivate your students more and combat
cheating simultaneously, we suggest you consider the Responsibility Model Variant described on page 8.
We also allow students to drop seven quizzes to accommodate for students who do not take them (for
whatever reason), perform poorly on some of the quizzes, or think a question is ambiguous.
Because we keep our quizzes under tight security, we do not provide them in this document. To obtain
our quizzes either in hard or electronic Blackboard form, please email us at info@accountingcds.com.
Please use your university email account so we can verify your identity.
Tips to Hinder Cheating With Online Quizzes
 Warn students if a disassociation is observed between quiz scores and exams scores,
the administration reserves the right to lower the quiz scores.
 Use a pooling system so quizzes vary from one student to another.
 Time the quizzes (less than 5 minutes is reasonable for many of our quizzes)
 Make all or some of the quizzes available at a specific block of time— perhaps just prior
to your regular scheduled class time. This hinders students from being able to work in
collusion. This technique is especially useful in the Time Motivator Variant (page 8).
Some course management software does provide this feature.
Quiz Schedule
In the past, students sometimes became confused on which quiz corresponds to a given lesson segment.
For example, quiz #6 corresponds to the first half of lesson 4— not lesson 6. While this distinction is
clearly delineated in the course schedule (page 60) within the syllabus, students would sometimes take
the wrong online quiz. To remedy this problem, we developed a simple color-coding system (see the
picture below).
17
Most lessons4 have two colors (red and blue), which identifies part A and part B of a lesson. The colored
sections designate the topics covered in the corresponding quiz. In addition, we separated the lessons in
a similar manner for the Practice Module and the Glossary. Instructors should make sure their students
understand this feature.
If you do not want to use our quizzes, have your students turn off the color coding system by clicking
File>Settings and uncheck the Enable setting.
4
Some lessons have only one color because there is only one quiz for that entire lesson (see lesson 7).
18
Tips to Performing Well in This Course
We have directed the following information to the student. This information is also in the syllabus (Page
50). Make sure your students understand this information before starting the course. Students should
particular attention to the Homework Problems, the Glossary, and the Practice Module.





Study Hard and Actively Participate: As with any subject, the more you study the better you
will perform. Be an active participant as you watch the CD lessons. Students who sit back idly
and just casually watch the CDs do not perform as well. Use the provided controls to stop the
lessons to take notes or rewind difficult topics to review them again.
VSP: Make sure you are responsible with the Variable Speed Playback controller. Setting the
speed too high just to finish faster is not responsible.
Homework Problems: Although the homework problems in each lesson will not be submitted or
graded, your ultimate success on quizzes and exams will be directly correlated to your ability to
understand and do the homework problems on your own. Because homework solutions and
explanations are provided, many students are tempted to simply refer to the solutions rather than
hammering through a problem on their own. This is a serious mistake. The best learning takes
place when students work through problems on their own before resorting to a provided solution.
You must be able to understand and do these homework problems on your own without
references to do well on the exams or quizzes.
Take Good Notes: Make sure you have a hard copy of the lessons notes (or Learning Resource
Packet) when you are watching the lessons. You should be taking good notes on this hard copy
as you progress through the lesson.
Seek Assistance: If you are having difficulty, seek additional assistance by attending the review
sessions or talk with your instructor or T.A.
Do the Following Before Taking a Quiz or an Exam
 Homework Problems: Make sure you can answer and feel comfortable with every homework
problem in the table of contents in each lesson.
 Glossary: Open the Glossary and make sure the “By Lesson” button is depressed. Make sure
you know the definitions of every word in the section(s) you are studying. Clicking the blue
hyperlinked words will help you learn the definition of a word by establishing context within
another definition. See picture below.
 Practice Module: Open the practice module and work through each problem in the section(s)
you are studying. Take time to work the solutions on paper and then review your work by clicking
on the “Show Answer” button. See picture below. If you answer a question incorrectly, review
that topic in the lesson again.
 Review Sessions: Attending the exam review sessions is an excellent way to prepare for the
exams.
 Review Notes: Review your notes just prior to taking a quiz or exam.
 Review lessons: Go through each line in the table of contents and make sure you are
comfortable with every topic. Some students find great success by reviewing the lessons at the
highest attainable VSP speed.
 Review Slides: By clicking the next and back buttons, you can move through the lessons and
review the slides. If you find a slide you need to review, click on the synchronize button to
synchronize the video to the slide.
19
Glossary
Practice Module
20
Managerial and Financial Breakup & Additional Topics
At BYU, we combine financial and managerial topics into both of our introductory accounting courses. To
learn why we do this, please watch the undergraduate video presentation by going to
http://www.accountingcds.com/learn/undergraduate/undergraduate.htm and clicking on Play
Presentation.
We feel very strongly about this content restructuring. We believe this model provides a better
pedagogical model for retained learning and enhanced recruitment. We also believe this model allows
departments to restructure their courses, which can save precious departmental resources. Ultimately, a
decision to change this content structure will take time and departmental approval.
Regardless if you decide to make the change, the CDs continue to be the best learning tool option, even
within the separate financial and managerial content structure. Many schools discover CD Set #1 covers
all the financial topics they need except for a statement of cash flows lesson. For this reason, we added
a statement of cash flow lesson to CD Set #1, which you can view by “unlocking” the lesson. To unlock
this lesson please see page 47.
However, you may cover topics in your financial course or managerial course that CD Set #1 does not
cover, which you must have in your course. If this is the case, please tell us what topics you need.
Oftentimes we can accommodate you by bundling those extra topics with CD Set #1.
21
Technical Support for the CDs
We went to tremendous strides to make sure our software is as error free as possible. However, on
occasion students may have a technical issue. Our goal is to divert every technical question way from
instructors. Therefore, we have setup three resources your students can use to get help if they have
trouble running the CDs. On average, we can solve problems in less than five minutes. Of the three
options below, the last option (#3) is usually the most efficient because it gives us the most information.
1. Toll-Free Tech Support: Our toll free number is 1-800-583-3840 extension 1.
2. Email Support: Our technical support email address is
technical_support@accountingcds.com
3. Automatic Diagnostic: We developed a function that automatically analyzes a
student’s computer and sends us a diagnostic report. From this report, we can
usually solve the student’s technical issue in less than one minute. We will then
email the students back with the solution. To access this function, open the
accounting software, click Help on the menu bar (not the round help button) and
then click Send Diagnostics. Follow the directions to send us a diagnostic of
your machine.
If you choose to have the software in your campus computer labs, please have your technicians call or
email us if they have any problems with installation.
22
Trial Period
The best method to assess if the CDs are a good solution for your course is to put them to the test with
your students. We will often provide the CDs to your students at no cost for the first term. You then will
be able to assess if they are a better learning tool than a traditional textbook and if they provide more
classroom time for the value-added classroom experiences. (For details on how to sign up for our trial
program, please see the appendix on page 35.)
Instructors typically choose to conduct the trial in one of the following methods:
1. Section Trial: In this trial, instructors take one of their sections and implement the CD model.
They then compare the outcome of the CD section with other concurrent sections using a
traditional model.
We strongly recommend using this method for a few reasons. Students and instructors usually
observe this method as more organized and fluid than the hybrid model below. Additionally,
instructors who use this method find it easier to evaluate the results of the trial because the data
is not convoluted by other variables (For a short discussion on this issue, read the “Evaluation of
Course” section below, located under the Tips and Possible Pitfalls heading).
This method also allows the instructor to implement the actual Value-Added Model, at least in
part, and observe how it works. For the trial period, instructors do not need to create all the
value-added sessions; however, they may want to create a few to observe how they influence
their students.
As you decide which trial method to use in your course, we recognize this method may give you
some apprehension, especially if you have limited interaction and knowledge of our CDs and
model. Therefore, we recommend you read this document and interact with our team to help you
feel comfortable with our model. This preparatory process may take a few more weeks than the
next method, however we feel this method delivers the best results.
2. Hybrid Textbook & CD Trial: Sometimes instructors choose to conduct the trial by using the
CDs and the textbook in the same course, thus allowing them and their students to compare the
CDs along side the textbook. While this method does certainly work and can give you an
excellent demonstration of our model, we do not recommend it as readily as the first method. We
have noted some of our reservations for this method above. In addition, we should reiterate this
method might amplify the problem associated with your students comparing the relative effort
required between the CDs and textbook models (discussed below in the “Evaluation of Course”
section). If you choose to try this method, please make sure you pay particular attention to the
trial guidelines delineated below.
Trial Guidelines and Possible Pitfalls:

Experimentation: NEVER tell your students you are using the CDs on an experimental basis.
Students who feel they are part of an experiment often rebel against this model, especially if they
perform poorly in the course. Students who feel experimented upon often relinquish their
responsibly in protest. You must portray to your students that this is the establish method for this
course.

Isolate CD From Textbook: As you develop your syllabus under the hybrid trial method, you
need to develop a course schedule that isolates the CDs from the textbook, at least for part of the
course, so you can evaluate the CDs without the inference of other variables. Instructors should
not make both the text and the CDs available to the students and let the students choose which
learning tool they want to use for any given lesson. This method is confusing for the students and
difficult to evaluate.
For example, if there are 15 lessons in the course, perhaps the students use the CDs to learn all
the core content for lesson 1-8. We suggest to instructors to never re-teach the CD content in
class, except for optional review sessions. If the students know they can get the core content
23
rehashed in class, they will not watch the CDs. However, if your only goal is to directly compare
the textbook with the CDs and you do not want to change your course structure drastically, then
you may proceed with the rehash lectures in the classroom; nevertheless, we discourage this use
of the CDs. When students use the CDs, class attendance should be less frequent and focused
on application-based analysis of the core content.
For the other lessons 9-15, students can use the textbook and come to the follow up lecture. We
do not suggest you alternate between the text and CDs for each successive lesson. This rapid
switching may inhibit contextual growth of the subject. Rather, we suggest students use the CDs
in at least 3 to 4 lesson blocks.

Student Questions: Student questions should be answered through the optional review
sessions and other additional resource channels. We suggest instructors not use class time, or a
limited amount of time, to answer questions relative to the CD content. Class time should be
used for value-added topics. At BYU, we never answer questions in our eight required class
periods— we simply do not have enough time. In addition, this forces the students to take more
responsibility in their learning.
As you are conducting your trial, you may still have enough class time to answer questions
without any serious drawbacks. However, we suggest you only allow students to ask specific
questions. Questions like, “I don’t understand the CDs” is not an appropriate question and means
the student did not truly study.
Our ideology is not to inhibit students from asking questions— quite the contrary. True learning
comes through good questions. However, some settings are not as conducive for questions as
other settings.

Required Review Sessions: Some instructors decide to hold required class sessions to review
the CD material. While, we do not ideologically support these types of sessions, this option can
work very well with your course depending on the type of student you have. However, you run the
risk of students not truly studying the CDs if they know they will receive the content in class.
Therefore, we suggest students direct these sessions through questions to the instructor.
Understanding answers to questions requires students to have a pre-established context, which
they can only obtain through proper studying of the CDs.

Evaluation of Course: As you judge the effectiveness of this course, make sure you are not
deceived by lurking variables. If you base the success of this course upon the evaluations from
students, be careful about the types of questions you ask your students and the method of
interpreting the responses. For instance, in a traditional model, instructors require students to
read the text before coming to class to prepare for the lecture. However, in reality, students
seldom read the text, at least with any serious level of depth, before coming to class. As you
have observed, this phenomenon is unfortunately plaguing higher education in nearly every
subject, especially in undergraduate education.
We designed the CDs to replace the pre-class textbook reading and the in-class follow-up lecture.
Therefore, when students are confronted with the notion that they actually have to use the CDs to
study outside of class, some may resist. In effect, you have just added 30+ hours of homework to
their schedule— even though they should be studying at least this many hours under a traditional
model.
Therefore, when you ask your students at the end of the course if they liked this method over a
standard textbook-lecture approach, and some respond in the negative, you must be very careful
on what they are actually reporting. It is highly probable they are saying they prefer the traditional
model because they can more easily shirk responsibility. They may have learned better with the
CDs, but due to the forced increase of responsibility, they may initially shy away from this model.
By the way, as your strength of developing and delivering the value-added sessions increases,
this issue will fade dramatically. The more students feel benefited in class by good value-added
sessions, the more satisfaction they will have in the course.
24
As you analyze your trial period be watchful of spurious data. Most students love the CDs and
have no issue adapting to this new model. However, we feel it necessary to provide you with as
much information as possible to prepare you for any scenario.
25
Site License Described
The basic terms of our site license are as follows: every student who takes the course and chooses to
use our CDs must purchase a new CD set. Due to new built-in security features, students who purchase
used CDs from past students of this course will discover they do not work. The CD sets will only work
properly when the student purchases them new.
Since we require every student to buy a new CD set every term, we set the purchase price of the CD sets
to $45 (wholesale)—roughly half the cost of a textbook. The cost of the CDs is about the same as if a
student purchased a textbook and then resold it to the bookstore after the completion of the course. The
standard non-site license version is very expensive and students would end paying much more.
We created the terms of this license for a few reasons. Unlike a textbook, our software requires our
programming staff to be constantly modifying our code so it remains compatible with current technology.
For instance, Microsoft regularly modifies or upgrades elements of their software, which on several
occasions has caused our software to work improperly. In these cases, our staff must rewrite our code to
remedy the problem.
If students resold their CD packs to the campus bookstore then the CD sets would circulate for several
years. In turn, students would buy CD packs that were no longer compatible with current technology. This
would create a technical support nightmare for the school, the students, and our technical support team.
In addition, publishers typically sell textbooks in three-year cycles— meaning, every three years textbook
publishers release a new version. Instructors then require students to buy the new book; making previous
editions obsolete, which can be very frustrating for students who just bough the book the previous term
and now are unable to resell it. This problem never occurs with our CDs.
What is interesting about this three-year buying model is the bookstores, not the publishers, make the
most profit. When bookstores buy textbooks back from students and then resell them, they net
approximately $30-40 per book (depending upon the initial cost of the book. In the case of accounting
textbooks, they typically range from $110-130 retail). In the life of a given textbook, it is not uncommon for
this cycle to repeat 5-8 times—thus giving the bookstore between $150-320 of profit per book, which
excludes the markup profit on the initial sale (usually between 23 and 40 percent). Therefore, a bookstore
may profit between $190-350 for the life of a textbook. A publisher in this scenario would only profit
around $70-80. We find no objection with this standard business plan of bookstores— its capitalism at its
finest.
One of the important distinctions between textbook publishers and us is we must provide support for our
products after we sell them. We are involved with the students through the entire course. This support
increases our costs. Therefore, if the bookstore were buying and selling the CDs, we would be forced to
sell the CDs at a high cost to cover our recurring expenses. In this scenario, the student loses. They pay
high prices for products that would work more erratically has time progressed for the reasons outlined
above in the third paragraph. By eliminating the resell market, we can afford to provide great support,
deliver our products at low costs, and provide brand new products to each student. In this scenario, the
student greatly benefits.
Students who Retake the Class
Students, who decide to retake the class, do not need to buy the CDs again. These students can obtain
a free code from us that unlock the CDs for an additional five months. To authorize a new code, we must
make sure the student is legitimately retaking the course. Therefore, the instructor must substantiate a
student’s request for a new code.
26
To obtain a new code, a student must write an email to their instructor requesting the new code, making
sure to include their name, email address, school, and indicating they are retaking the course. The
instructor should verify this student to be retaking the class and then just simply forward the email to
technical_support@byu.net. We will then issue a new code to the student.
CD Usage Extensions
We designed our security features to encourage every student to buy a new set of the CDs. These CD
sets will stop working after five months from the first usage date. However, we want to allow those who
previously took the course to review the material anytime. Often times, those students who want to
review the course, only need to review a small segment of the CDs. For these students, we will give them
a free temporary usage license. The license will work for about 10 days. This allows those students to
review the CDs while simultaneously keeping our technology safe. If a student wants another 10 days
extension, we can usually accommodate them, as long as we are confident those students are legitimate
past users. Recurring requests made by the same person every 10 days for several weeks is probably a
sign of an illegitimate user.
To request an extension, have the student email the following information to
technical_support@accountingcds.com:
 Name
 Address
 School name
 Email address
 Instructor’s name
 Previously used Serial Code in the CD case
Once we receive this information, we will verify the information and send a new code. Please allow 24
hours for this process to complete.
27
Ordering the CD Sets
You can acquire the CD sets in a few different ways. See below.
Campus Bookstore: This is the traditional method for ordering the CD sets. Please have your bookstore
go to http://www.accountingcds.com/purchase/form.htm and download the order form. This document
contains all the necessary information your bookstore will need to initiate an order. They can either
complete the form and send it to us, or fax their own purchase order to 1-800-583-3840. We sell the CDs
to bookstores and other distributors at the wholesale price of $45.
We (Business Learning Software, Inc.) do not sell the Learning Resource Packet (see below) but rather
suggest you provide this document to your students directly through your copy center. The students can
also freely print this document from their CD sets; however, the document is 250 pages, which can be
very cumbersome to print. If you would prefer not to hassle with providing this document directly, you can
have your bookstore order it directly from the BYU campus bookstore by calling them at 801-422-3003.
The cost is $10.10 + shipping. DO NOT order the CDs from the BYU bookstore, as they are forced to sell
the CDs at the retail price of $61.75.
Departmental Purchases: Some schools choose to provide the CDs to their students directly without
going through their campus bookstore. Instructors distribute the CDs to the students and then seek
reimbursement either directly form the students or through a student course fee. This is the least
expensive method as it eliminates the bookstore’s markup. To use this method, go to
http://www.accountingcds.com/purchase/form.htm and complete the order form.
BYU Online Bookstore: Use this method if you have a very small class (less than 10) and do not want to
hassle with your bookstore or if your students are not on your campus (i.e., online students or precampus executive MBA students). These students can go the BYU bookstore website and purchase the
CDs and the Learning Resource Packet. The cost of buying the CDs on this site is the retail price $61.75
+ shipping. Only CD Set #1 is currently available on this site. Please go to
http://www.accountingcds.com/purchase/purchase_CD_Set1.htm and click the link under individual
purchases. The obvious drawback of this option is the shipping time and product returns.
28
Using the CDs in Campus Computer Labs
Allowing students to use the CDs on campus computers can be a great benefit to their studies. Some
student appreciate the convenience of campus labs while other students, who do not own a computer,
use the labs more out of necessity.
To make the accounting software available in the labs, we will need to talk with your lab technicians.
Please have them contact us at technical_support@accountingcds.com or have them call 1-800-5833840 option 1. We can usually help the technicians setup the labs in just a few minutes.
Please note: students will still have to use their CDs to run the accounting software in the labs. The
technicians will only install our shell program, which allows the CD lessons to run properly. Copying the
entire CD lessons to your campus computers, which include all the audio and video files, is against our
site license.
29
Possible Pitfalls and Important Notes
These possible pitfalls and important notes come from years of working with various schools across the
country. Fortunately, these problems are easily fixable by following the counsel below. However, if one of
these problems is left unchecked, severe consequences can result. Some of these items were
mentioned previously in this document; however, we feel it is important to reiterate them again.
Blame:
With regards to students’ blaming their performance on something besides themselves, the following
statement is commonly heard, “I did poorly in this course (or on an exam). Had this been a traditional
model, I would have done much better.”
Response:
“If you are looking for a traditional model, then did you read the textbook and go to the optional weekly
review sessions? Because if you had, you would have found this course to be much like a traditional
model.”
Students who perform poorly in this course will seek to blame their performance on some aspect of the
course. They will contend that had the course been a traditional model (textbook/ lecture approach) they
would have performed well. The fastest way to make these students realize they are responsible for their
performance is to ask them if they read the optional textbook and attended the optional review sessions.
If they did, then they would have experienced a traditional model. Almost invariably, students who try to
blame their performance on the course do not attend the optional sessions. This is because these are
poorly motivated students who view optional class time as “no class time.” What is great about this model
is if a student wants a traditional textbook/lecture course then they can have it. Unfortunately, poorly
motivated students perform badly regardless of the teaching model. By conducting optional review
sessions, you give the students no excuses for their performance.
Students may try to blame their performance on other issues within the course. However, we designed
each additional resource as a tool to combat each excuse or complaint. Simply remind your students
they can always find help if they are truly seeking it.
Bad Attitude by Faculty: If any faculty member has a negative attitude towards this course and displays
their opinion in any way toward the students then this course will greatly suffer. Students will initially feel a
little burdened because this course requires more out-of-class learning than other classes. If the students
feel the instructor does not like this course then they will almost invariably dislike the course. This will
cause the students to not work as hard and blame their performance on the CDs or lack of interaction
with the instructor. This is why the enthusiasm of the faculty is paramount in implementing this course.
Course Experimentation: If students feel the instructor or department is conducting an experiment to
observe how this model works, then this course is doomed for failure. You must approach this course as
if this is the established method for teaching this class.
Students may feel you using the CDs and this model to get out of work. You must show the students
that despite the lack of regular class sessions you are very occupied by the daily functions of this course.
They must understand by learning the core content outside of class, you are able to use class time for
value-added material. Furthermore, this model allows the instructor to work one-on-one with the students
who desire further help. Instructors may want to address this concern up front with their students.
Instructors should also post regular messages on the course website to communicate with their students.
This is a great way to maintain a connection with your students despite the lack of frequent live
interaction.
Despite your portrayal, students may feel this course is only about the CDs. This is actually a
common problem. Sometimes students view the CDs as just merely replacing the textbook or feel they
30
paid tuition for an instructor and received CDs instead. Students must realize this course is all about
giving them MORE tools than they have ever had before. Students have the CDs, textbook, optional
review sessions, one-on-one faculty assistance, the accounting lab, etc. The students choose how they
want to learn. Even though it likely that over 95% percent of your students will only use the CDs and
never come to the review sessions, they must feel like there are several options for their learning.
31
How to Use the CDs
It is very important as an instructor to be well versed on how the CDs operate. The best way to learn how
the CDs work is to use them for a while. We recommend you watch the orientation video (see the
appendix on page 36) as it shows how to use the CDs in detail. In addition, we have included many of
the function of the CDs for your reference. This information is also included on each CD set in the help
guide by clicking the round Help button from the main program interface..
Software Interface
1. Video Window - This is the video portion of the lesson. This window now has the ability to double
in size. To change the video to double size, Click "View" and then click "Double size video."
2. Fast Forward - This button fast-forwards the video at about 10 times the original speed.
3. Fast Rewind - This button fast rewinds the video at about 10 times the original speed.
4. Video Status Window - This section now provides better video information. The status window
tells the user the present state of the video and the video now counts in real-time.
5. Time Bar - The time bar is now much more advanced and responsive over the previous version.
The time bar now moves in real-time as the video plays. The user can also manipulate the time
bar with greater ease.
6. Play/Pause Button - The play and pause button are now combined.
32
7. Stop Button - This button stops the video and returns the time bar to the beginning of the video
segment.
8. Ten Seconds Back button - This button moves the video back ten seconds. We changed this
button from five seconds to ten seconds because most students move through the material at 2X
the original speed and five seconds was simply not enough time.
9. Synch Button - This button synchronizes the video with the current slide. Students can click the
next or back buttons to find a particular slide. Then they can click the Synch Button to hear the
video associated with that slide. This feature is particularly useful for reviewing and studying.
10. Volume Control Slider - This slider controls the volume of the presentation.
11. VSP (Variable Speed Playback) Module- This integrated module allows the user to increase or
decrease the presenter's rate of speech without distorting the pitch of the voice. The module can
be set to 2.0 (twice the normal rate) to .5 (half the normal rate) This module only works properly in
Windows XP with Windows Media Player 9 installed. If a student has windows 2000 or an earlier
edition, they can install the Enounce plug-in and achieve the same VSP results.
12. Table of Contents - This is an outline of the content in the lesson.
13. Help Button- This displays the user guide
14. Practice Module Button- This displays more homework problems to help students with their
studies. They should be able to answer all the questions correctly before taking a corresponding
quiz or exam.
15. Glossary Button - (see below for more information about the glossary).
16. Calculator - This button loads the internal program calculator. If you desire, you can set the
program to load the default Windows calculator in the settings menu when you click this button.
17. Close - This button shuts down the program.
18. Quiz Information Legend – This feature helps students to know what topics are in each lesson
segment and when to take a quiz. Please see page 17 for more information.
19. Slide Window - This is the flash animation window.
20. Back Button - This button causes the slide window to show the previous slide.
21. Next Button - This button advances the slide window to the next slide.
Menu System
Below is a description of each item under in the menu system.
File







View




Open Lesson - This lists available lessons. Click on a lesson title to view the lesson.
Open Session - This allows the user to load a previously saved session.
Save Session - This allows the user to save their session so they can return later to the exact
spot where they left off.
Settings - This loads the Settings menu. In the Settings menu, a user can turn the VSP module
on or off, choose another calculator, and adjust many other settings.
Recent Lessons - This lists recent lessons the user has viewed.
Recent Sessions - This lists recent sessions the user has saved.
Exit - This closes the program.
Double-size video - This doubles the size of the video. This is very useful for monitors that have
very high resolution.
Glossary - This loads the glossary. See page 20.
Calculator - This loads the calculator.
Practice Module - This loads the practice problems module, which will help you test your
knowledge of the CD content. See page 20.
Resources
Please note: to load the documents (PDFs) in this menu, Adobe Acrobat must be installed.
 Company Website - This loads our website in a browser.
 Lesson Notes, Problems and Solutions - This list the lesson notes, problems and solutions for
each lesson. Click on a title to load the document.
33




Help




Learning resource Packet - This document combines all the PDFs into one body.
Financial Practice Set - This list the financial practice set and solutions. Click on the title to load
the document.
Exam Topics - This list the three exam topic documents. Click on a title to load the document.
Sample Exams - This list the three sample exam documents. Click on a title to load the
document
Help - This loads the Help window.
Beta Feedback - This function loads a beta feedback form in Microsoft Internet Explorer. Please
use this form if you notice a bug with the new version or if you have an idea that will enhance the
program. Your feedback is greatly appreciated.
Send Diagnostics - This function is helps us diagnose your problem.
About - This displays the developmental team and version number.
34
Appendix
Miscellaneous Items
 Orientation Guide (for first day of class)_______________________________________ 36
 Unlock Statement of Cash Flows and value-added lessons on CD Set #1____________ 47
 Sample Undergraduate Syllabus for CD Set #1_________________________________ 48
 Topic Breakdown (CD Sets 1&2)____________________________________________ 71
 CD Time Table (student time commitment for CD Lessons)_______________________ 79
 Free Trial Program Details_________________________________________________ 81
 Learning Resource Packet_________________________________________________ 82
 Value-Added Session PowerPoint Examples___________________________________ 82
82
 Optional Weekly Review Session Materials
Assessment__________________________________________________________________ 83
 Standard 3 Exams
 Standard 25 Quizzes
 Supplemental True/False Quizzes
 Supplemental Quizzes for review sessions or other purposes
Exam Review Documents (intended for the Exam Review Sessions)
 Exam 1 Questions________________________________________________________ 83
 Exam 1 Answers_________________________________________________________ 89
 Exam 2 Questions________________________________________________________ 99
 Exam 2 Answers_________________________________________________________ 104
 Exam 3 Questions________________________________________________________ 116
 Exam 3 Answers_________________________________________________________ 123
 Exam Review Topics (Also found on CD Set #1 and in the Learning Resource Packet)__ 130
35
Introduction to Accounting: The Language of Business TM
Course Orientation Guide and Video
TABLE OF CONTENTS:
Introduction ________________________________________________________________________ 37
Class Orientation Sessions ____________________________________________________________ 38
Orientation Objectives ________________________________________________________________ 38
Day One Objectives _________________________________________________________________ 38
Day one Assignments ________________________________________________________________ 40
Day two Objectives __________________________________________________________________ 40
Summary of Objectives _______________________________________________________________ 42
Possible Pitfalls and Important Notes ____________________________________________________ 43
Chapter Reference __________________________________________________________________ 45
36
Introduction
Thank you for taking time to read this document and watch the accompanying video. This document and
video explain how to properly introduce BYU’s accounting CDs and the Value Added Teaching ModelTM to
your students.
We CANNOT emphasis enough that much of the success of this course is predicated upon an effective
student orientation process. Schools who adopt our program are asking their students to change the way
they usually approach education. While this course gives students more learning tools than they have
ever had before, it does require them to take more responsibility for their education. Students may initially
be inclined to resist this responsibility. However, by shifting the focus from the increase of individual
responsibility to the exciting learning environment, these students will perform well and will be excited by
the advantages this model provides.
We strongly counsel instructors to view this video in its entirety and then review it as needed.
We provide the orientation video in two formats. The first is a Windows Media file, which you can
download immediately by clicking the following link: www.accountingcds.com/links/orientation_video.htm.
The second is a standard DVD, which we can ship to you. Please contact us at info@accountingcds.com
for this DVD.
Please note: Brigham Young University is a religious institution. We taped this video live in front of
actual BYU students on the first and second days of class. As we converse with our students in this video
about ethics, morals, and character, we make a few references to our faith, our university Honor Code,
and other aspects of our church. We initially considered editing these references out as to not offend
viewers of this video. However, after some consideration, we decided not to remove these references.
We feel there is an inherent value to other instructors who view this video to see an accurate portrayal of
exactly how we appeal to our students as we explain the aspects of this course. Our hope is other
instructors will find this video helpful as they tailor their presentation to appeal to their students at both
religious and secular institutions.
37
Class Orientation Sessions
We strongly suggest you use two class periods for the orientation process. At BYU, we use two 80minute class periods to accomplish this objective. The reasons for two class periods are due to the two
assignments given on the first day.
Orientation Objectives
We have outlined seven main objectives divided between the first two days of orientation. We strongly
suggest you accomplish each objective. In addition to these objectives, many other smaller objectives
exist that if accomplished will greatly add to this course. You can find those other objectives on the
Orientation Checklist below. You may also watch how we meet all the objectives by viewing the video.
Next to many of the objectives and explanations, you will see a DVD chapter number (if you plan
watching video via the Windows Media file then please see the next paragraph). This number refers to
the DVD chapter that contains a demonstration of how we accomplish this objective. Please use the
forward and back buttons on your DVD player to navigate to the correct chapter. We demonstrate some
objectives throughout the video and therefore do not necessarily correlate to any particular segment.
Additionally, we may identify one or two main chapters that reference a given objective; however, this
does not suggest these chapters are the only references to that objective. Therefore, it is best to view the
entire video and then use the chapters for review.
If you plan to watch the video via the Windows Media file then you will not be able to reference the video
by chapters. Instead, you will need to reference the video by the time counter. Please refer to the
Chapter Reference section on page 45 to find the corresponding time code for each chapter. For
example, if you wish to view chapter 47 then navigate in the video to 1:24:14 (1 hour, 24 min and 14
seconds).
Day One Objectives
Objective One: Excite the students about this course.
Objective Two: Introduce and demonstrate the Introduction to Accounting CDs.
Objective Three: Introduce yourself and build a rapport with the students.
I.
Objective One: Excite the students about this course. To accomplish this objective effectively
the students must understand the following:
 An accounting course is applicable to all students regardless of their intended major.
- Students must understand that an accounting course is one of the most applicable
courses they will take in their college experience regardless of their major. The
information they learn in this course will immediately influence their lives for good.
(DVD chapters 6, 7, 10 & 11)
- Students become much more excited about any subject when they can see how the
information they are learning is immediately applicable to their lives. (DVD chapters
14. also review 45, & 46 in day two’s presentation)
 A degree in accounting is NOT specifically designed to produce accountants but
rather business decision makers and business leaders.
- All students will at sometime in their life become business decision makers
regardless if they ever own or manage a business. Whether they ultimately become
an executive of company, start their own business, or just plan for their retirement
they will need to become savvy with the language of business concepts learned in
this course. (DVD chapter 11)
- The instructor must abolish and rebuild the student’s current paradigms of
accountants and the accounting profession. Most students initially believe the
accounting industry is primarily centered around taxes, “bean counting”, math, or
38

other misconceptions. This paradigm is very damaging and if not corrected can
affect the success of this course. (DVD chapters 9 & 10)
This course will allow students to see the depth and breadth of the accounting
world. Additionally, the CDs create an exciting and efficient learning environment.
- In day two’s presentation, you will discuss the details of the Value-Added Teaching
model. However, today you will want to briefly mention how this model works and the
benefit to students. (DVD chapters 14. also review 45, 46 & 47 in day two’s
presentation)
II. Objective Two: Introduce and demonstrate the Introduction to Accounting CDs. To accomplish
this objective effectively the students must understand the following:
 The students must realize that the CDs are an extra-ordinary tool designed to make
their learning faster and more effective. (DVD chapter 14)
- The instructor must explain to the students that the CDs do a better job at explaining
the core content compared to a standard lecture approach.
- The CDs allow students to go at their own pace. In addition, one student is not held
back while a classmate needs more time to comprehend the material.
 Students should understand that this course gives them more learning tools than
they have ever had before.
- The students must realize that while the CDs are the best learning tool, they are not
the only tool for learning the core content. Students can use the optional textbook,
TA lab (if available), optional review sessions, instructor support, etc. Students DO
NOT just have a new learning tool—now, they have MORE tools than they have ever
had before. This is one of the biggest issues that must be communicated to the
students. (DVD chapters 14. Also review 32, 33, 45, & 46 from day two’s
presentation)
 Students need to know how all the leaning tools work on the CDs and how those
tools enhance their learning.
- Demonstrate the variable speed playback tool (Enounce or the integrated VSP
module). Show students how their learning is maximized through this tool. (DVD
chapters 21 & 22)
- Demonstrate the play, stop, ten-seconds-back button, and synch button. (DVD
chapters 20, 25, 26, & 28 )
- Demonstrate the Next and Back buttons. Show the students how these buttons are
helpful in reviewing material and self-testing. (DVD chapter 27)
- Demonstrate the glossary. Show students how the glossary is like a mini-textbook
with expanded definitions. Explain that before they take a quiz they should know all
the vocabulary words associated with that quiz. (DVD chapters 42 & 43)
 Students must know how homework is accomplished.
- We suggest you demonstrate the homework by showing the students problem six in
lesson two. (DVD chapter 35)
- Demonstrate the Answer, Hint, and Walk Through Buttons. (DVD chapters 36, 37, &
38)
- Explain how the Walk Through is much more comprehensive and helpful than a
traditional course. (DVD chapter 38)
- Explain to students why the homework is not graded. They must realize that this
requires a significant amount of discipline and responsibility to make sure they
understand the concepts covered by the homework. (DVD chapters 40 & 41)
- Warn the students that many students perform poorly on the first exam because they
either do not take the homework seriously or think they know how to accomplish the
homework without actually doing it on their own. (DVD chapters 40 & 41)
III. Objective Three: Introduce yourself and build a rapport with the students. DVD chapters 2, 12,
& 79) To accomplish this objective effectively the students must understand the following:
39

Students must feel the instructor is their friend and available if they need help.
- Because this course has the ability to meet less often than a traditional course,
students can easily feel abandoned by the instructor. If this occurs, the
repercussions can be extremely detrimental to the success of this course. The
students must feel you are dedicated to their education despite the lack of regular
direct interaction.
- The fastest method we have discovered to building a good initial rapport with the
students is to take several minutes to introduce yourself and explain why you became
interested in accounting and why you are excited about this course.
- Explain to students that this course allows you as an instructor to spend less time in
the classroom, which frees up time so you can have more one-on-one interaction
with the students outside of class in your office.
- Tell students that you are excited for students to come to your office and ask for help.
Chances are you will not have any more students actually come to your office than
compared to a traditional course.
- What is important is that the students feel you are waiting and eager to help them.
- Do not allow students to have a legitimate excuse that you were not there to help
them. The students that perform poorly in this course almost invariably choose to
blame their performance on some aspect of this course. Typically, they try to blame
the lack of contact they had with the instructor. If the instructors truly make
themselves available then the students will not be able to honestly blame the
instructor for their poor performance.
Day one Assignments (to be accomplished before day two’s class period)
1. Have the students read the entire syllabus. (DVD Chapter 13)
2. Have the students obtain the Introduction to Accounting CDs from the Bookstore and get them
working on their computer or a lab computer. (DVD chapter 16)
Day two Objectives
Objective Four: Make sure the students have tried to get the CDs to work and know where to get help if
they have trouble.
Objective Five: Introduce the Value-Added Teaching Model.
Objective Six: Introduce the course website.
IV.
Objective Four: Make sure the students have tried to get the CDs to work and know where to
get help if they have trouble. To accomplish this objective effectively the students must understand
the following:
- Student must know where to go for help if they are having technical difficulty. They
can call the technical support phone number or email our tech support team.
V.
Objective Five: Introduce the Value-Added Teaching Model. To accomplish this objective
effectively the students must understand the following:
 Relate to the students that the Value-Added Teaching Model is the best and most
exciting approach for this class.
- Explain to students how class time is used for value-added discussions. Students will
see the real-world applications of the core content they learn outside of class.
Additionally, The students will be able to see the exciting world of business and
accounting as they learn the depth and breadth of the accounting industry. (DVD
Chapters 45, 46 & 47)
- Explain to students how exciting these value-added sessions will be. You may want
to give them a short summary of some of the topics you will be discussing in these
sessions. (DVD Chapter 46)
40
Spend a little time explaining how the students will be learning both managerial and
financial accounting. Explain how this approach allows the students to see the full
spectrum of the accounting industry. Additionally, explain how this model is a better
pedagogical approach by not allowing them to go too deep too quickly into complex
topics in the first course. Then relate how in the second course this model allows
students to review and expand upon the topics learned the first course. (DVD chapter
47)
The Value-Added Teaching Model is an ideal learning environment that cultivates
the concept of being a life-long learner. (DVD chapters 40 & 41)
- This model gives students flexibility and choice of when and where they want to
learn. While they are in control of how they learn, they must understand this freedom
requires great responsibility. It is the student’s responsibility to complete the
homework assignments even though they are not turned in or graded. They need to
be responsible and seek help if they are struggling.
-

-
This idea of using discretionary time to learn is in large part the essence of being a
life-long learner.
VI.
Objective Six: Introduce the course website. To accomplish this objective effectively the students
must understand the following:
 Show students how to take quizzes, submit reports, and acquire other information.
- Log onto your course website and visually show your students how to navigate
through the site (DVD chapter 49)
- Show your students the Course Documents and Course Information sections of the
website and explain how each section is used. (DVD chapters 50, 52, 55 - 59, & 61)
- Show your students how to submit a report (DVD chapter 53)
- Show your students how to take a quiz. We suggest you take the first quiz with them
in class. (DVD chapters 60 – 66)
- Tell your students the potential problems while taking a quiz, i.e. quiz numbers do not
correspond to lesson numbers. (DVD chapter 70)
- Tell your students how many quizzes they can drop. (We allow students to drop
seven quizzes to accommodate for students who don’t take them (for whatever
reason), perform poorly on some of the quizzes, or think a question is ambiguous.)
(DVD chapter 77)
- Tell your students all the ways they can cheat so they do not think they can out trick
the instructor. (DVD Chapter 73)
- Tell your students why they should not cheat on these quizzes. (DVD chapter 74)
Additionally, tell them you will exercise judgment when reviewing quiz scores to
make changes where someone has obviously cheated. (DVD chapter 75)
VII.
Objective Seven: Make sure the students know exactly what is expected of them and that
they have no questions regarding how the course is administered
- The students must read and comprehend the syllabus or they will have problems in
the course. You will want to ensure students have read the syllabus by either
verbally quizzing the students in class or giving them a small written exam.
41
Summary of Objectives
Objective One: Excite the students about this course.
 An accounting course is applicable to all students regardless of their intended major.
 A degree in accounting is NOT specifically designed to produce accountants but rather
business decision makers and business leaders.
 This course will allow students to see the depth and breadth of the accounting world.
Additionally, the CDs create an exciting and efficient learning environment.
Objective Two: Introduce and demonstrate the Introduction to Accounting CDs.
 The students must realize that the CDs are an extra-ordinary tool designed to make their
learning faster and more effective.
 Students should understand that this course gives them more learning tools than they have
ever had before.
 Students need to know how all the leaning tools work on the CDs and how those tools
enhance their learning.
 Students must know how homework is accomplished.
Objective Three: Introduce yourself and build a rapport with the students.
 Students must feel the instructor is their friend and available if they need help.
Objective Four: Make sure the students have tried to get the CDs to work and know where to get help if
they have trouble.
Objective Five: Introduce the Value-Added Teaching Model.
 Relate to the students that the Value-Added Teaching Model is the best and most exciting
approach for this class.
 The Value-Added Teaching Model is an ideal learning environment that cultivates the
concept of being a life-long learner.
Objective Six: Introduce the course website.
 Show students how to take quizzes, submit reports, and acquiring other information.
Objective Seven: Make sure the students know exactly what is expected of them and that they have no
questions regarding how the course is administered.
42
Possible Pitfalls and Important Notes
These possible pitfalls and important notes come from years of working with various schools across the
country. If left unchecked, any one of the items below can cause a disaster. Please pay particular
attention to these items.

Blame: Students who perform poorly in this course will seek to blame their performance on
some aspect of the course. They will contend that had the course been a traditional model
(textbook/ lecture approach) they would have performed well. The fastest way to make these
students realize they are responsible for their performance is to ask them if they read the optional
textbook and attended the optional review sessions. If they did, then they would have
experienced a traditional model. Almost invariably, students who try to blame their performance
on the course do not attend the optional sessions. This is because these are poorly motivated
students who view optional class time as “no class time.”
What is great about this model is that if a student wants a traditional textbook/lecture
course then they can have it. Unfortunately, poorly motivated students perform
badly regardless of any teaching model. However, having these optional review
sessions will in turn cause these students to realize they are responsible for their
education.

Bad attitude by faculty: If any faculty member has a negative attitude towards this course and
displays their opinion in any way toward the students then this course will greatly suffer. Students
will initially feel a little burdened because this course requires more out-of-class learning than
other classes. If the students feel the faculty does not like this course then they will have no
reason to like this course. This will cause the students to not work as hard and blame their
performance on the CDs or lack of interaction with the instructor. This is why the enthusiasm of
the faculty is paramount in implementing this course.

Course experimentation: If students feel they are being experimented upon then this course is
doomed for failure. You must approach this course as if this is the established method for
teaching this class.

Students may feel you using the CDs and this model to get out of work. You must show the
students that despite the lack of regular class sessions you are very occupied by the daily
functions of this course. They must understand by learning the core content outside of class that
you are able to use class time for value-added material. Furthermore, this model allows the
instructor to work one-on-one with the students who desire further help. Instructors may want to
address this concern up front with their students

Despite your presentation, students may feel this course is only about the CDs. This is
actually a common problem. Sometimes students view the CDs as just merely replacing the main
learning tool (the textbook) or feel as if they paid tuition for an instructor and received CDs
instead. Students must realize this course is all about giving them MORE tools than they have
ever had before. Students have the CDs, textbook, optional review sessions, one-on-one faculty
assistance, the accounting lab, etc. The students choose how they want to learn. Even though it
likely that over 95% percent of your students will only use the CDs and never come to the review
sessions, they must feel like there are several options for their learning. This course can be
designed to function like a traditional course with a rehash lecture by using the textbook and
optional review sessions— and the students must know that. We suggest you discuss this issue
with your students up front to avoid any problems. Additionally, it is good idea to reiterate to the
43
students the benefits that this model provides when class time is maximized through out-of-class
learning.
44
Chapter Reference
We provided the information below for those who wish to watch the video via the downloadable Windows
Media file. Please use the table below to find the corresponding time code for each chapter. Once you
find the corresponding time code, use the Windows Media Player to navigate to the correct location in the
video (see picture below). For example, if you wish to view chapter 35 then navigate in the video to
1:06:58 (1 hour, 6 min and 58 seconds).
h:m:s
Chapter
Chapter 1
0:00:00
Chapter 31
1:00:31
Chapter 61
1:47:06
Chapter 2
0:00:16
Chapter 32
1:01:39
Chapter 62
1:48:38
Chapter 3
0:01:28
Chapter 33
1:04:01
Chapter 63
1:49:17
Chapter 4
0:02:37
Chapter 34
1:05:32
Chapter 64
1:50:59
Chapter 5
0:04:07
Chapter 35
1:06:58
Chapter 65
1:51:06
Chapter 6
0:04:58
Chapter 36
1:09:21
Chapter 66
1:53:03
Chapter 7
0:06:23
Chapter 37
1:10:05
Chapter 67
1:55:27
Chapter 8
0:07:52
Chapter 38
1:10:42
Chapter 68
1:57:30
Chapter 9
0:09:24
Chapter 39
1:11:47
Chapter 69
1:59:18
Chapter 10
0:13:45
Chapter 40
1:12:38
Chapter 70
2:01:18
Chapter 11
0:18:13
Chapter 41
1:14:23
Chapter 71
2:02:17
Chapter 12
0:21:03
Chapter 42
1:15:56
Chapter 72
2:03:42
Chapter 13
0:40:38
Chapter 43
1:18:07
Chapter 73
2:06:01
Chapter 14
0:42:13
Chapter 44
1:19:48
Chapter 74
2:07:22
Chapter 15
0:42:50
Chapter 45
1:22:17
Chapter 75
2:09:30
Chapter 16
0:43:37
Chapter 46
1:23:02
Chapter 76
2:10:20
Chapter 17
0:45:21
Chapter 47
1:24:14
Chapter 77
2:10:50
Chapter 18
0:45:50
Chapter 48
1:27:05
Chapter 78
2:11:36
Chapter 19
0:46:50
Chapter 49
1:27:34
Chapter 79
2:12:00
Chapter 20
0:48:54
Chapter 50
1:29:47
Chapter 21
0:50:06
Chapter 51
1:31:13
Chapter 22
0:52:23
Chapter 52
1:31:29
Chapter 23
0:53:18
Chapter 53
1:33:56
Chapter 24
0:54:30
Chapter 54
1:36:18
Chapter 25
0:55:17
Chapter 55
1:39:06
Chapter 26
0:56:14
Chapter 56
1:42:34
Chapter 27
0:56:29
Chapter 57
1:43:14
Chapter 28
0:57:19
Chapter 58
1:43:53
Chapter 29
0:58:40
Chapter 59
1:45:08
Chapter 30
0:58:48
Chapter 60
1:45:23
45
Window Media Player
Time Code
46
Unlock Statement of Cash Flows and value-added lessons on CD Set #1
To access Statement of Cash Flow and value-added lessons, please open the accounting software, click
File, Click Settings, type 6A3DA9FE in the curriculum code box (see picture below), click OK, click File,
click Open Lessons, the Statement of Cash Flows and the eight value-added lessons are now part of the
lesson list. Simply click on a lesson to watch it.
Note: we highly discourage instructors from using the value-added lessons in their course. Instructors
should conduct these sessions live with their students. In addition, we created these sessions for BYU
students, which are a religious student body. We refer to our church and faith several times in these
videos. Therefore showing these sessions to other students outside of BYU would probably be
inappropriate.
47
Syllabus
Below is the actual syllabus we use at BYU. You are free to copy and use this syllabus in any way you
wish. Reading this syllabus will also inform you of how we conduct the day-to-day operations of the
course, including assignments, such as the Financial Practice Set and Financial Statement Review
assignment, the course schedule, and the lesson breakdown.
Accounting 200 Syllabus
Principles of Accounting
Office hours: MW 2:30 p.m. – 3:45 p.m.
TA email: acc-200@email.byu.edu
TA telephone: 422-3783
Welcome to Accounting 200: Accounting 200 is a great introduction to the world of business. In fact,
accounting is sometimes referred to as the language of business. That’s because the very purpose of
accounting is to provide meaningful financial information to individuals and institutions that have an
interest in business, whether they be investors, creditors or managers. Most Americans today invest in
business through the stock market. Intelligent investors seek out financial information on companies to
make more informed investment decisions. It is a company’s accounting system that creates and provides
the information used by investors. Business managers likewise need information produced through
accounting in making the day-to-day operational decisions that improve a company’s performance and
profitability. If you hope to become a successful investor or manager, you will need to understand
accounting information to improve your decision-making. In some respects, this class will actually be a
"principles of business" class in that it is necessary to understand what a business is and how it operates
in order to account for its activities and generate useful financial information. Our study of accounting will
provide insight into many basic business issues and questions including the following:
* In the start-up of a new business, what options are available for the raising of capital
and what are the advantages and disadvantages of those options?
* How do stockholders realize a return on investment and what tools are available to
investors to reasonably predict such returns?
* What can cause a profitable business to fail?
* How can an unprofitable company pay dividends to its shareholders?
* How can management accurately anticipate the impact on profits given changes in
product pricing, costs, and volume?
This class will be an important class for anyone who is interested in someday participating in or investing
in a business. Welcome to the world of business!
Keys to Success in Accounting 200: Accounting 200 is not a class that requires proficiency in higher
math. Although accounting and business finance are numbers oriented, the math involved is basic. What
is important in a study of accounting and business is the ability to organize and analyze information.
Business language and terms are carefully defined, and business communication requires the precise
and proper use of those terms. An ability to read and communicate with clarity is critical to success in this
class.
Because this class is being taken with relatively few classroom lectures and homework is not turned in for
credit, a higher level of self-discipline may be required in order to successfully complete this course. You
cannot afford to get behind. It is strongly recommended that you set up a personal study schedule that
48
specifically earmarks time when you will regularly work on the material for this course. If you do not stay
up with the Course Schedule provided in this syllabus, you will not successfully complete this course.
Is this an Online Course and what are my options? This course is being taught on a hybrid basis
through the use of optional CD's and/or textbook, limited in-class lectures, and online quizzes, report
submissions, and communication. A textbook is available for this course, but is not required. This is the
only way the course is available at BYU. All sections of Acc 200 are taught in this format.
Course Website: All class communications, including any announcements or schedule changes along
with all quizzes, submissions of reports, checking of grades, etc., will be handled through the course
website. The website can be found by logging in to Route Y through the BYU homepage at www.byu.edu.
Click on "Blackboard Courses" in the "School" section of your Route Y Interchange page, then click on
Acc 200, and the course website should appear. If you have any problems accessing this website,
please go immediately to the Instructional Media Center (IMC) to get assistance. The IMC is located at
3704 HBLL (entrance is on the south side of the HBLL). If you cannot go there personally, the IMC
telephone # is 422-1888.
When on the course web page, take some time and explore the tools available to you by clicking on all
the menu options. DO NOT, however, click on any quiz until you are actually ready to take it. You
only have one opportunity to complete each quiz. Once started, a quiz cannot be exited in a way
that allows for it to be subsequently available to you.
CDs, Text and Homework: All of the material that you will be held accountable for on quizzes and exams
for this course is contained in the Introduction to Accounting: The Language of Business CD set (Version
2.0) available at the BYU Bookstore. The textbook for this course is optional. The textbook may be used
in lieu of the CDs or as a learning supplement. The textbook is available at the BYU Bookstore and is
Accounting Concepts and Applications by Albrecht, Stice, Stice, and Skousen (9th edition). The
appropriate readings from the text are noted in the Course Schedule in this syllabus. A number of
textbooks are available for your review and use in the Accounting TA Lab located in 1820 HBLL (1st floor
south end).
The CDs have been prepared by Professor Norm Nemrow acting as an agent of BYU. BYU has invested
hundreds of thousands of dollars in the development of the CDs, and BYU now owns the rights to the
CDs. The School of Accountancy and Information Systems has licensed the CDs for use with Acc 200.
The price that you pay when you buy the CDs at the BYU Bookstore is a licensing fee. This licensing fee
allows you to use the CDs for Acc 200 and for any other personal, non-business purpose. The CDs may
not be copied or shared, with the following two exceptions:
a. A wife-and-husband pair who both take Acc 200 during the same semester may share one set of
CDs.
b. A sibling pair who both take Acc 200 during the same semester may share one set of CDs.
To ensure that BYU’s licensing rights are protected, we will require each Acc 200 student to report his or
her CD code number (included with each CD pack) as a condition of receiving a grade in the course. We
will collect these unique code numbers, via an online survey, during the semester.
The CD lessons present course material in a video lecture format with synchronized graphic displays,
sample problems, and homework problems and solutions. Although the homework problems in each
lesson will not be submitted or graded, your ultimate success on quizzes and exams will be directly
correlated to your ability to understand and do the homework problems on your own. Because homework
solutions and explanations are provided, many students will be tempted to simply refer to the solutions
rather than hammering out a problem on their own. This will be a serious mistake. The best learning takes
place when students work through problems on their own before resorting to a provided solution. You
must be able to understand and do these homework problems on your own without references to do well
on the exams. Students opting to utilize the textbook as the primary learning source may access the
homework problems and solutions through the Accounting 200 Learning Resource Packet available at the
BYU Bookstore as noted below.
49
Tips to Performing Well in This Course:





Study Hard and Actively Participate: As with any subject, the more you study the better you
will perform. Be an active participant as you watch the CD lessons. Students who sit back idly
and just casually watch the CDs do not perform as well. Use the provided controls to stop the
lessons to take notes or rewind difficult topics to review them again.
VSP: Make sure you are responsible with the Variable Speed Playback controller. Setting the
speed too high just to finish faster is not responsible.
Homework Problems: Although the homework problems in each lesson will not be submitted or
graded, your ultimate success on quizzes and exams will be directly correlated to your ability to
understand and do the homework problems on your own. Because homework solutions and
explanations are provided, many students are tempted to simply refer to the solutions rather than
hammering through a problem on their own. This is a serious mistake. The best learning takes
place when students work through problems on their own before resorting to a provided solution.
You must be able to understand and do these homework problems on your own without
references to do well on the exams or quizzes.
Take Good Notes: Make sure you have a hard copy of the lessons notes (or Learning Resource
Packet) when you are watching the lessons. You should be taking good notes on this hard copy
as you progress through the lesson.
Seek Assistance: If you are having difficulty, seek additional assistance by attending the review
session or talk with your instructor or T.A.
Do the Following Before Taking a Quiz or an Exam:







Homework Problems: Make sure you can answer and feel comfortable with every homework
problem in the table of contents in each lessons.
Glossary: Open the glossary and make sure the “By Lesson” button is depressed. Make sure
you know the definitions of every word in the section(s) you are studying. Clicking the blue
hyperlinked words will help you learn the definition of a word by establishing context within
another definition.
Practice Module: Open the practice module and answer each problem in the section(s) you are
studying. Take time to work the solutions on paper and then review your work by clicking on the
“Show Answer” button
Review Sessions: Attending the exam review sessions is an excellent way to prepare for the
exams.
Review Notes: Review your notes just prior to taking a quiz or exam.
Review lessons: Go through each line in the table of contents and make sure you are
comfortable with every topic. Some students find great success by reviewing the lessons at
highest attainable VSP speed.
Review Slides: By clicking the next and back buttons, you can move through the lessons and
review the slides. If you find a slide you need to review, click on the synchronize button to
synchronize the video to the slide.
Other Important Learning Resources: The following learning resources are available in PDF format on
the CDs and can be printed to hard paper copy or are preprinted and available at the BYU Bookstore as
the Accounting 200 Learning Resource Packet for about $10:
Lesson Notes, Homework Problems and Solutions (The Notes, Problems and Solutions
are organized Lesson by Lesson with the Notes for each lesson provided first followed by
the Problems and Solutions for that lesson)
Financial Practice Set Problem and Solution
Exam Topic Sheets (notes topics to be included on exams)
Sample Exam Problems/Solutions
50
Instructions and Advice on CD Use: Instructions on the computer hardware and software requirements
to run the CDs are found on the Blackboard course website by clicking on “Course Information” and then
“Technical Information.” If you have problems getting the CDs to work after having reviewed this
“Technical Information,” feel free to call 836-5649 for technical support.
Students from previous semesters recommend that the CD Lessons are most effectively used by first
printing or purchasing a copy of the Lesson Notes included in the Accounting 200 Learning Resource
Packet discussed above and then utilizing those notes for additional note-taking while viewing the CD
Lessons.
Lesson Quizzes: Twenty-five (25) Lesson Quizzes will be given online through the course website during
the semester. The primary purpose of these quizzes is to encourage and reward your timely progress
through the course materials. Each lesson quiz covers only the material for the CD lesson(s) or textbook
readings noted in the Lesson Breakdown included in this syllabus. A student should be well prepared for
a quiz if they have reviewed the CD materials (or read the optional textbook materials), understand the
CD Lesson Notes and can do the homework problems on their own. Students may also wish to review
sample exam questions and glossary terms broken down quiz by quiz in the course website’s “Course
Documents.” The glossary is found on the CDs or the text and the sample exam questions are found in
the Sample Exams included in the Accounting 200 Learning Resource Packet.
Each Lesson Quiz has five (5) True/False or Multiple Choice questions worth 1 point each, or a total of 5
points per quiz. Only the 18 best out of the 25 possible quiz scores will be used in determining a student's
final grade. No late quizzes will be given for any reason. If you are unable to take a quiz due to illness or
for any other reason, then that quiz will become one of the seven to be dropped for grading purposes.
All Lesson Quizzes are to be taken online by clicking on “Assignments” in the course Blackboard site. The
quizzes are to be taken on your own without notes or any other reference materials. The quizzes are
timed and limited to 10-20 minutes depending on the particular quiz. You may use a calculator and some
scratch paper to perform any work required for the quiz questions and you should have them readily
available before you begin. You may take the quizzes as early as you wish but not later than 12:00 a.m.
(midnight) on the dates noted in the Course Schedule. If the Blackboard server goes down any time after
5:00 p.m. on a quiz's drop-dead date, an additional one-day extension will automatically be provided.
Remember, do not click on a quiz until you are actually ready to take that specific quiz. Once
started, a quiz cannot be exited in anyway that allows for it to be subsequently available to you.
You must be careful when selecting a quiz to make sure it is the correct quiz # and that you are
ready to go. If you have technical problems in accessing or submitting a quiz or the server goes
down while taking a quiz, then e-mail the TAs as soon as possible at "acc-200@email.byu.edu"
and report the problem. The TAs will reset the quiz for you if you experience technical problems
within two working days of notification. All correspondence with the TAs must include your
Route Y ID # and a clear description of the problem experienced.
It is possible to print out the quiz questions and your responses immediately following quiz submission by
simply typing Ctrl P. Printed quizzes may be used for future exam preparation and study. However, these
printed quizzes are not to be used for cheating. No one should utilize another person's printed quiz in
preparation for the taking of a quiz themselves. It would also be a violation of the Honor Code to provide a
printed quiz to another student for use prior to their taking of that quiz. Because the same quizzes are
used from semester to semester, the use or providing of quizzes from prior semesters would also
constitute cheating. If you have in hand any quizzes from a prior semester they are to be thrown away
before proceeding with this course. Please honor this institution and yourself by following these
guidelines for printed quiz use.
Required Class Time, Pre-Class Assignments, Quizzes and Reports: Class attendance is required
only eight times during the semester on the dates noted in the Course Schedule included in this syllabus.
These class times will be used to enhance your introduction to the real world of business and accounting
and presentations will be made by some of our top faculty with experience in the field.
51
Before each required class, there are pre-class readings and an assignment posted in the "Course
Documents" section of the course website. These assignments may require online submission of a report
or the taking of an online quiz that must be completed at least one-half hour before the start of class.
Following the class, an online quiz or report will be given with a midnight deadline on the day following the
class. Points for grading purposes on these pre and post-class quizzes and/or reports will amount to 5
points each. To accommodate missed classes due to illness, any other student absence excused or
otherwise, or to cushion the effect of poor performance on a quiz or assignment, the lowest four quizzes
or assignments will be dropped from the total point accumulation for grading purposes. As a result, the
total possible points available from these required class quizzes and/or assignments will be 60 points (8
classes x 2 quizzes or reports each (pre and post), less the lowest 4 quizzes or assignments equals 12
quizzes or assignments to be counted at 5 points each).
If a student cannot attend a class due to an excused absence or illness, arrangements may be made to
attend at another section's class time (subject to seat availability). Students should check with the course
instructor to verify time, location, and seat availability.
The material covered in these required classes will not be included on the course exams.
Exams: Three exams will be given throughout the course as noted below. You may take the exams as
early as you wish but not later than the dates noted in the Course Schedule.
Exam #1 (100 points): Covering Lessons 1 - 4 and the Practice Set concepts, (33 multiple
choice worth 3 points each with 1 point for simply taking the exam) 3 hour time limit.
Exam #2 (120 points): Covering Lessons 5 - 10 (40 multiple choice worth 3 points each), 3.5
hour time limit.
Final Exam (150 points): Covering Lessons 11 - 15, (10 True/False worth 2 points each and
43 multiple choice worth 3 points each with 1 point for simply taking the exam) 4 hour time
limit.
The exams are to be taken at the Testing Center on campus. Check with the Testing Center to verify
operating hours and policies. Make sure that you have allowed for sufficient time in dealing with possible
lines and allow for adequate time to complete the exam. No late exams will be given except upon
professor pre-approval for documented health problems, family emergencies, or university-approved
absence. The exams are not comprehensive and will cover only the materials in the lessons designated.
Only basic four-function or scientific calculators may be used in the Testing Center. An optional review of
the exam solutions will be held in class subsequent to each exam as noted in the Course Schedule.
Exam Preparation: In order to perform well on exams, a student must not only have a solid
understanding of the course material but must also be able to apply that understanding to actual
problems. The best evidence of a student’s adequate preparation for the exams is his or her ability to do
the lesson homework problems on their own without assistance. Students must understand how to do the
problems and the reasoning behind the solutions. If students are having difficulty understanding the
homework problems, they should consider reviewing the CD problem walkthroughs a number of times
and may also need to review the actual lecture or text materials. A basic overall review of the course
materials may also be helpful exam preparation and can be facilitated by simply reviewing the Lesson
Notes.
Included on the CDs or in the Accounting 200 Learning Resource Packet are three sample exams with
solutions provided at the end of each exam. These sample exams provide students with an opportunity to
experience typical exam questions in a multiple-choice format. These sample exams are not intended to
provide complete coverage of topics, but can be a valuable tool in exam preparation. If a student takes
52
the sample exam and does poorly, it probably means there is need for additional study of the lesson
examples and homework problems. Also available through the CDs and the Accounting 200 Learning
Resource Packet are Exam Topic Sheets, which simply highlight the topics to be covered in each exam.
Students who are struggling to understand the course material are encouraged to utilize the Accounting
TA Lab and/or see the course instructor for assistance.
Financial Statement Review Assignment: The purpose of this assignment is to make students aware
that financial statements are actually prepared and available to the public to assist in investment
decisions. The things to be discussed in this class have actual practical application in the real world of
business. (Note the CDs mistakenly say this assignment is not to be handed in. That is incorrect.
The report noted below must be submitted for credit.)
Following CD Lesson #2, you are to access a publicly held company’s web page on the Internet and read
the company’s most recent annual report. (You do not need to print out a hard copy to do this
assignment.). The annual report is typically available in an "Investor Relations" section of a company’s
web page. A simple way to access a report can be accomplished by clicking on "External Links" on the
course website. Not all companies provide a copy of their full annual report on the internet. In such cases
you may wish to select another company, or you can call the company and request a printed copy from
their investor relations department. Most companies will provide a printed copy free of charge; however, it
may take a week or more to actually receive the report through the mail. If you wish, you may access an
annual report for this assignment by simply going to the Business School section of the HBLL found in the
south end of the 1st Floor (an assistant at the information desk located there can help you locate the
section containing corporate annual reports). If you cannot locate a report for the current year, then
simply use the most recent year available. You are looking for a full annual report, not some summary
information. The full annual report will typically have a letter or report to shareholders from the president
of the company, a section providing general business information and a section devoted to
management’s discussion and analysis of the business. In addition, an annual report contains the actual
financial statements with an auditor’s report along with supplemental notes to those basic financial
statements. Once you have access to an annual report, complete the following items. (This assignment
and report are to be done on your own, but you may ask questions of the lab TAs or other students if you
need assistance.)
A. Review the general business information provided in the annual report, the letter or report
to shareholders and management’s discussion and analysis of the company. It is not
necessary that you read every word, but you should read enough to write a brief
description of the company’s business activities and summarize management’s
characterization of the company’s recent performance and prospects for the future. (This
portion of the report must be a minimum of 400 words.)
B. Review the auditor’s report, actual financial statements, and accompanying notes to the
financial statements and respond to the questions below. (This part of the report may
simply be a listing of your responses from 1 to 11.) The purpose of this part of the
assignment is not to test your knowledge, but to simply expose you to the fact that the
language we are introducing in this course is actually used in real world financial
statements. Do your best to respond to each of the following questions.
1. Who is responsible for the preparation of the financial statements?
2. Who performed the company’s audit?
3. Does the auditor’s report note any problems in the financial statements? If so,
what?
4. Have total assets, total liabilities, and total stockholders’ equity increased or
decreased over the years reflected in the balance sheet, and by how much?
5. Identify the company’s largest asset, liability, and stockholders’ equity account
reflected on the balance sheet for the most recent year presented.
6. Identify the increase (decrease) in retained earnings over the most recent period
and note, as best you can, the cause of the increase (decrease).
53
7.
8.
9.
10.
By how much has net income increased (decreased) over the last year?
Note the Company’s EPS (earnings per share).
By how much has cash increased (decreased) over the last year?
What was the source of the largest cash inflow to the company over the last
year?
11. Skim the accompanying notes to the financial statements, and summarize briefly
the kind of supplemental information provided in one of the notes.
This assignment is not intended to take more than two to three hours. The assignment is worth 5 points
towards your final grade and is to be turned in online through the course website by midnight (12:00 a.m.)
on the date noted in the Course Schedule. If you plan to use the campus AccessPoint Labs to prepare
and submit this assignment, you should not procrastinate. It is likely the labs will be crowded on the due
date, and you may find it difficult to complete the assignment if you wait until the last minute. Full credit (5
points) for grading purposes will be given if it appears you have made a reasonably complete effort to
fulfill the assignment requirements. No late submissions will be accepted. It is strongly encouraged that
this and all reports for this course be prepared and saved in your word processing software (Word or
WordPerfect, etc.). Once prepared and saved, report submission is to be made online by first copying the
report (highlighting and then pressing Ctrl C), then going to “Assignment” on the course website and
pasting (Ctrl V) the report into the properly identified report submission form.
The report will be graded within 10 days of submission.
Financial Practice Set: The "Financial Practice Set" is included in the CD Lesson Resources and is
printable to hard paper copy or is alternatively available in the Accounting 200 Learning Resource Packet.
You must obtain a hard paper copy of the Practice Set before this exercise can be completed. This
Practice Set is designed to simulate a simplified real world accounting experience and will reinforce your
understanding of the flow of information in a company’s accounting system. Although accounting systems
used today are typically computerized, this manually-prepared accounting practice set will be helpful in
understanding the underlying basis for small business computerized systems. You should not begin this
Practice Set until you have completed Lesson #4 and reviewed the "Financial Practice Set" CD which
explains in detail how to proceed with and complete the assignment. It should be completed before you
take the first exam as noted in the Course Schedule.
This Practice Set will not be graded and will not be turned in; however, a number of concepts to be
learned through the successful completion of the Practice Set will be covered on the first exam. The
solution to the Practice Set is available in the CD Lesson Resources and is printable from the CD or
available in the packet. The solution is provided to assist you in completing the Practice Set and helping
you through the process. Some students will be tempted to simply review the solution rather than actually
complete the assignment themselves. Such an approach is shortsighted and will rob you of an excellent
learning experience. Actually working through the Practice Set on your own or with the assistance of a
fellow student will be a terrific review in preparation for the first exam and will reinforce much of the
material in Lessons 2-4. Do not spend more than a couple of hours on the Practice Set.
Having Fun and Doing Good: Too often students get so caught up in their studies that they forget that
there is life out there beyond books. It is important to maintain your perspective. To assist you, this class
rewards you for having some fun. You will be given 5 points to embark on an adventure and report on it
through the online website by clicking on "Assignments" on the cover page of the site. For our purposes,
an adventure will be defined as something fun that you would not have taken the time to do except it be
for this assignment. The report should be a simple one-paragraph description of what you did.
In addition, it is important to remember the value of service in our everyday lives. There are times when
things get tough and the pressures of life seem overwhelming. When we take the time to look beyond our
own problems and serve others, not only do we make someone else's life more bearable but we are lifted
too. To encourage you in this area, 5 points will be given for a simple act of service done this semester
and reported in a short one-paragraph report submitted through the online web site. This does not need
54
to be elaborate service -- even cleaning up after a roommate is great if done in the proper spirit. These
reports must be submitted by the end of the semester in order to receive credit.
Grading is based on the following:
Exam #1
100 points
Exam #2
120 points
Final Exam
150 points
Lesson Quizzes (18 x 5 points)
90 points
Have Fun/Do Good Reports
10 points
Required Class Quizzes/Assignments (12 x 5 points)
60 points
Financial Statement Review Assignment
5 points
Total Possible Points
535 points
55
Grade Breakdown:
Grade
Percent
Point Range
A
92%
492 - 535
A-
89%
B+
Grade
Percent
Point Range
C
69%
369 – 394
476 - 491
C-
64%
342 – 368
86%
460 - 475
D+
60%
321 – 341
B
81%
433- 459
D
55%
294 – 320
B-
77%
411 - 432
D-
50%
267 – 293
C+
74%
395 - 410
E
Below 50%
Below 267
There are NO make-up, grade improvement projects or curving in this class. These are the final
grade breakdowns...period.
Completing the Course on an Expedited Basis: Students may take the lesson quizzes and exams as
early as they wish. Lesson quizzes are to be taken online and exams are to be taken at the Testing
Center. However, the Required Classes must still be attended and the accompanying
quizzes/assignments must be completed if all points are to be obtained for grading purposes.
Accounting Lab, TA Assistance, Tutoring, Professor Assistance: An accounting lab (Room 1820
HBLL , 1st floor south) will be open during the term from 10:00 a.m. to 10:00 p.m. (Monday through
Friday) and 11:00 a.m. to 4:00 p.m. (Saturday). Teaching Assistants (TAs) will be in the lab to give you
needed assistance in understanding the material. The lab also has 16 computers available for viewing the
CDs. This lab will be a valuable tool for those who find the material difficult to understand and need
additional help along the way. In addition, you can call the TAs to ask any questions by phone at 4223783. Free tutoring is also available through the Jacobsen Center for Service and Learning at 2010 WSC
or call 422-1277. Students are encouraged to request a tutor early in the semester. Students should also
feel free to visit their professor during office hours or make other personal appointments if they have
questions or need assistance on any of the course material. We want to help you be successful in your
learning.
Entry into the School of Accountancy and Information Systems: Students considering application to
the School of Accountancy and Information Systems (SOAIS) should be aware of the importance of this
class in gaining admittance to the school. If you have any questions regarding the admissions process
and standards of admissions, you should inquire at the SOAIS student advisement office in 560 TNRB.
What should students do or think if they struggle in this course? To be honest, experience has
shown that some students seem to have a natural talent or gift in accounting and perform well on the
multiple choice exams with what seems to be relatively little effort. Other students struggle but can master
the course material with considerable study, review, and practice in doing the homework and sample
exam problems. Finally, for some students, the analytical thinking process associated with accounting is a
skill that they seem to have been born without and, regardless of the time and effort put into the course, it
just doesn’t come. Even though these students understandably become frustrated, they should not
become too discouraged. A lack of talent in accounting is not the end of the world. It probably just means
that you have a personality and will end up hiring an accountant rather than doing it yourself.
Do the best you can. Learn as much as you can about business and do not become too concerned about
your ultimate grade. Remember, your grade in Acc 200 has no significance in the eternities! If you must
retake the class in order to get a minimum grade for graduation or entry to a certain program, retaking the
course can be done fairly efficiently on an expedited basis. Most students do considerably better the
second time around in this class although we would like to avoid this.
56
Some students express concern that they do not perform well on multiple-choice exams. The nature of
business and accounting information makes examination through multiple-choice exams a logical testing
vehicle rather than essay or other means. Experience has shown that the multiple-choice exams for
accounting do provide a fair reflection of comprehension and ability in the subject. It is true that many
students may understand basic business and accounting concepts but have trouble when detailed
information is provided and has to be organized, analyzed, and used to produce a problem solution.
Unfortunately, that is the nature of accounting and business information, and an exam that eliminates
those characteristics is not a fair reflection of the course content.
Finally, if you are one of those students with your heart set on a degree in business but cannot seem to
overcome an accounting stumbling block, be comforted in the fact that most people who are hired in and
become successful in business do not have an undergraduate degree in business. Businesses are
interested in people who are personable, can get along and work well with others, and can learn on the
job. Your college degree is not the most significant factor in determining your ultimate success in
business. Please see the course professor if you are struggling in the course and need any
counsel or advice.
Don't blame the technology! Students struggling in this course might be inclined to blame the
technology for their performance in the class. Even though average performance in this class is equal to
or better than that previously experienced with a more traditional classroom approach, they suggest that
use of a textbook and live lecture is a better way for them to learn. Frankly, the only possible advantage
of having a live lecture as opposed to the CD Lesson is the ability to ask questions during the lecture.
Unfortunately, in a large live lecture class there is in reality very little opportunity for the answering of
individualized questions in a way that still leaves time for the coverage of the assigned material. In
addition, because students vary so much in their abilities in this class, it is difficult to respond to one
student's questions when it may not be shared by a majority of students. The TA Lab and professor office
hours have been set up specifically to provide the kind of personalized assistance that some students
may need. In addition, as noted in the Course Schedule, optional review sessions (lead by one of the
TAs) are held during selected regularly-scheduled class periods; these sessions will provide substantial
opportunity to ask questions. Students who do not utilize these review sessions, the TA Lab, or the
professor's office hours to seek out personalized help in understanding the course material and ask
questions have little justification in blaming the CD course format for their failings. It is also recommended
that students form study groups in or outside of the Lab so that they can review and discuss the material
together. If you need assistance in forming a group, the Lab TA's can help you. Maybe the best learning
method of all is found in attempts to explain concepts to others.
It is worth noting that the CD Lessons are far superior in terms of content than can be achieved in a
classroom lecture. The CDs have more graphics and more detailed explanations than can be provided in
limited class time. One of the great advantages of the CD's is that they allow students to pause and take
notes without missing any discussion. In addition, they can be replayed if a concept is missed along the
way. The CDs are a terrific learning tool if properly used. They should be viewed at a place and time
where you can concentrate. Utilize the printed Lecture Notes for note taking while viewing the CDs. Do
not try to watch too much at one sitting. Break it up. Do the homework problems yourself to the best of
your ability before viewing the hints and walkthroughs. Use the TAs and the professor to respond to
questions you have on the material.
Honor Code: Although the vast majority of students are honest and live their lives in accordance with the
Honor Code, we do on occasion have individuals who seem to think that the Honor Code does not apply
to them. Just so we all understand: everyone is expected to adhere to the BYU Honor Code. Cheating or
other violations may result in a failing grade for the course or other disciplinary action.
Cheating, as the term is used in the Marriott School, refers to actions such as the following on the part of
a student:
57
1. A student sharing information with other students about the content of, or answers to,
examinations, quizzes or other graded work in which student interaction is not specifically
allowed.
2. A student getting another person to take a quiz or exam in his/her place, or to prepare submitted
work which is then submitted as the student’s work.
3. A student who, either before or while taking a quiz or exam, visually or otherwise obtains
information from another person’s quiz or exam.
4. A student using "crib" sheets or other unauthorized information while taking a quiz or exam.
5. A student gaining access, by theft or by any other means, to a quiz or exam or unauthorized
information about a quiz or exam before it is taken.
Violations of the Honor Code in this class are taken very seriously. Do not compromise your integrity for
something as insignificant eternally as a grade in this class.
Preventing Sexual Harassment:
Title IX of the Education Amendments of 1972 prohibits sex discrimination against any participant in an
educational program or activity that receives federal funds. The act is intended to eliminate sex
discrimination in education. Title IX covers discrimination in programs, admissions, activities, and
student-to-student sexual harassment. BYU's policy against sexual harassment extends not only to
employees of the University but to students as well. If you encounter unlawful sexual harassment or
gender-based discrimination, please talk to your professor; contact the Equal Employment Office at 4225895 or 367-5689 (24-hours); or contact the Honor Code Office at 422-2847.
58
Students With Disabilities:
Brigham Young University is committed to providing a working and learning atmosphere that reasonably
accommodates qualified persons with disabilities. If you have any disability that may impair your ability to
complete this course successfully, please contact the University Accessibility Center (422-2767).
Reasonable academic accommodations are reviewed for all students who have qualified documented
disabilities. Services are coordinated with the student and instructor by the UAC. If you need assistance
or if you feel you have been unlawfully discriminated against on the basis of disability, you may seek
resolution through established grievance policy and procedures. You may contact the Equal Employment
Office at 422-5895, D-282 ASB.
59
Course Schedule
Students are expected to check the course website every day for announcements and schedule
changes. You are accountable for any changes in the course schedule or any other course
modifications posted on the website. To miss any assignment, required class, quiz, exam, etc.
because of a date change or modification that has been posted on the website because you did
not check it on a daily basis will not be excused!!!!!
Section 1 (Tuesday/Thursday) Course Schedule
Date
Event
4 Jan T
Course Introduction
6 Jan Th
Course Introduction (continued)
Lesson 1a should be completed but there is no quiz required (See the "Lesson
Breakdown" to note material to be covered in each lesson segment.)
11 Jan T
Quiz 1, Lesson 1b deadline
13 Jan Th
Optional Review Session
13 Jan Th
Quiz 2, Lesson 2a deadline.
18 Jan T
Required Class #1, "The Importance of Financial Accounting in U.S. and Global
Economies." Pre-Class Report due 1/2 hour before start of class.
18 Jan T
Quiz 3, Lesson 2b deadline.
19 Jan W
Class 1 Post-Class Quiz deadline.
20 Jan Th
Optional Review Session
20 Jan Th
Quiz 4, Lesson 3a deadline
21 Jan F
Financial Statement Review Assignment deadline.
24 Jan M
Quiz 5, Lesson 3b deadline
25 Jan T
Optional Review Session
27 Jan Th
Optional Review Session
27 Jan Th
Quiz 6, Lesson 4a deadline
31 Jan M
Quiz 7, Lesson 4b deadline
1 Feb T
Required Class #2, "Management Information Systems Today, Future Trends and
Career Opportunities." Pre-Class Report due one-half hour before the start of class.
1 Feb T
Comprehensive Exam Review Session (time and place to be announced)
1 Feb T
Financial Practice Set should be completed (not turned in or graded).
2 Feb W
Class 2 Post-Class Quiz deadline.
60
3 Feb Th
Exam #1 Deadlines: The exam is to be taken at the Testing Center and there is no
late fee if taken by 2:00 p.m. on Thursday (3 Feb). With a late fee the exam may be
taken as late as NOON on Friday (4 Feb). The exam will not be available after
NOON on Friday (4 Feb). Plan to take the exam early enough to accommodate for
possible delays due to lines.
7 Feb M
Quiz 8, Lesson 5a deadline
8 Feb T
Last day to drop the class for academic reasons.
8 Feb T
Optional Exam #1 Solution Review
9 Feb W
Quiz 9, Lesson 5b deadline
15 Feb T
Optional Review Session
15 Feb T
Quiz 10, Lesson 6a deadline
17 Feb Th
Optional Review Session
17 Feb Th
Quiz 11, Lesson 6b deadline
22 Feb T
Quiz 12, Lesson 7 deadline
24 Feb Th
Required Class #3, "Business Fraud, Ethics and the Accounting Profession." PreClass Quiz due one-half hour before the start of class.
24 Feb Th
Quiz 13, Lesson 8a deadline
25 Feb F
Class 3 Post-Class Quiz deadline
28 Feb M
Quiz 14, Lesson 8b deadline
1 Mar T
Optional Review Session
2 Mar W
Quiz 15, Lesson 9a deadline
3 Mar Th
Required Class #4, "Taxation and Business Decisions, Career Options In Taxation."
Pre-Class Quiz due one-half hour before the start of class.
4 Mar F
Quiz 16, Lesson 9b deadline
4 Mar F
Class 4 Post-Class Quiz deadline
8 Mar T
Optional Review Session
8 Mar T
Quiz 17, Lesson 10a deadline
10 Mar Th
Optional Review Session
10 Mar Th
Lesson 10b to be completed (No quiz is given for this lesson)
12 Mar Sat
Comprehensive Exam Review Session (time and place to be announced)
15 Mar T
Required Class #5, "Financial Accounting Information and Stock Valuations." PreClass Quiz due one-half hour before the start of class.
61
15 Mar T
Exam #2 Deadlines: The exam is to be taken at the Testing Center and there is no
late fee if taken by 2:00 p.m. on Tuesday (15 Mar). With a late fee the exam may be
taken as late as NOON on Wednesday (16 Mar). The exam will not be available after
NOON on Wednesday (16 Mar). Plan to take the exam early enough to
accommodate for possible delays due to lines.
16 Mar W
Class 5 Post-Class Quiz deadline
17 Mar Th
Optional Exam #2 Solution Review
17 Mar Th
Quiz 18, Lesson 11 deadline
21 Mar M
Quiz 19, Lesson 12a deadline
22 Mar T
Required Class #6 "Money, Family and Spiritual Considerations in Career Choices"
Pre-Class Report due one-half hour before the start of class.
23 Mar W
Quiz 20, Lesson 12b deadline
23 Mar W
Class 6 Post-Class Report deadline
24 Mar Th
Optional Review Session
25 Mar F
Quiz 21, Lesson 13a deadline
29 Mar T
Optional Review Session
29 Mar T
Quiz 22, Lesson 13b deadline
31 Mar Th
Required Lecture #7, "Managerial Accounting: Current Trends in Practice and
Career Opportunities." Pre-Class Quiz due one-half hour before the start of class.
31 Mar Th
Quiz 23, Lesson 14a deadline
1 Apr F
Class 7 Post-Class Quiz deadline
5 Apr T
Optional Review Session
5 Apr T
Quiz 24, Lesson 14 b deadline
7 Apr Th
Optional Review Session
7 Apr Th
Quiz 25, Lesson 15a deadline
12 Apr T
Required Lecture #8, "Key Elements in Successful Personal Financial Planning."
Pre- Class Quiz due one-half hour before the start of class.
12 Apr T
Lesson 15b to be completed (no quiz is given for this lesson)
13 Apr W
Class 8 Post-Class Quiz deadline.
14 Apr Th
Optional Exam Review Session (time and place to be announced)
21 Apr Th
Final Exam deadline (allow for enough time to finish the exam by the Testing Center
closing time)
62
Section 2 (Monday/Wednesday) Course Schedule:
Date
Event
5 Jan W
Course Introduction
10 Jan M
Course Introduction (continued)
Lesson 1a should be completed but there is no quiz required (See the "Lesson
Breakdown" to note material to be covered in each lesson segment.)
11 Jan T
Quiz 1, Lesson 1b deadline
12 Jan W
Optional Review Session
13 Jan Th
Quiz 2, Lesson 2a deadline.
17 Jan M
MARTIN LUTHER KING, JR. COMMEMORATION
18 Jan T
Quiz 3, Lesson 2b deadline.
19 Jan W
Required Class #1, "The Importance of Financial Accounting in U.S. and Global
Economies." Pre-Class Report due 1/2 hour before start of class.
20 Jan Th
Class 1 Post-Class Quiz deadline.
20 Jan Th
Quiz 4, Lesson 3a deadline
21 Jan F
Financial Statement Review Assignment deadline.
24 Jan M
Optional Review Session
24 Jan M
Quiz 5, Lesson 3b deadline
26 Jan W
Optional Review Session
27 Jan Th
Quiz 6, Lesson 4a deadline
31 Jan M
Required Class #2, "Management Information Systems Today, Future Trends and
Career Opportunities." Pre-Class Report due one-half hour before the start of class.
31 Jan M
Quiz 7, Lesson 4b deadline
1 Feb T
Class 2 Post-Class Quiz deadline.
1 Feb T
Financial Practice Set should be completed (not turned in or graded).
1 Feb T
Comprehensive Exam Review Session (time and place to be announced)
2 Feb W
Optional Review Session
3 Feb Th
Exam #1 Deadlines: The exam is to be taken at the Testing Center and there is no
late fee if taken by 2:00 p.m. on Thursday (3 Feb). With a late fee the exam may be
taken as late as NOON on Friday (4 Feb). The exam will not be available after
NOON on Friday (4 Feb). Plan to take the exam early enough to accommodate for
possible delays due to lines.
7 Feb M
Optional Exam #1 Solution Review
63
7 Feb M
Quiz 8, Lesson 5a deadline
8 Feb T
Last day to drop the class for academic reasons.
9 Feb W
Optional Review Session
9 Feb W
Quiz 9, Lesson 5b deadline
14 Feb M
Optional Review Session
15 Feb T
Quiz 10, Lesson 6a deadline
16 Feb W
Optional Review Session
17 Feb Th
Quiz 11, Lesson 6b deadline
21 Feb M
PRESIDENT’S DAY – George Washington (Feb 22), Abraham Lincoln (Feb 12)
22 Feb T
Optional Review Session (Monday sections meet on Tuesday on this day.)
22 Feb T
Quiz 12, Lesson 7 deadline
23 Feb W
Required Class #3, "Business Fraud, Ethics and the Accounting Profession." PreClass Quiz due one-half hour before the start of class.
24 Feb Th
Class 3 Post-Class Quiz deadline
24 Feb Th
Quiz 13, Lesson 8a deadline
28 Feb M
Optional Review Session
28 Feb M
Quiz 14, Lesson 8b deadline
2 Mar W
Required Class #4, "Taxation and Business Decisions, Career Options In Taxation."
Pre-Class Quiz due one-half hour before the start of class.
2 Mar W
Quiz 15, Lesson 9a deadline
3 Mar Th
Class 4 Post-Class Quiz deadline
4 Mar F
Quiz 16, Lesson 9b deadline
7 Mar M
Optional Review Session
8 Mar T
Quiz 17, Lesson 10a deadline
9 Mar W
Optional Review Session
10 Mar Th
Lesson 10b to be completed (No quiz is given for this lesson)
12 Mar Sat
Comprehensive Exam Review Session (time and place to be announced)
14 Mar M
Required Class #5, "Financial Accounting Information and Stock Valuations." PreClass Quiz due one-half hour before the start of class.
64
15 Mar T
Exam #2 Deadlines: The exam is to be taken at the Testing Center and there is no
late fee if taken by 2:00 p.m. on Tuesday (15 Mar). With a late fee the exam may be
taken as late as NOON on Wednesday (16 Mar). The exam will not be available after
NOON on Wednesday (16 Mar). Plan to take the exam early enough to
accommodate for possible delays due to lines.
15 Mar T
Class 5 Post-Class Quiz deadline
17 Mar Th
Quiz 18, Lesson 11 deadline
21 Mar M
Optional Exam #2 Solution Review
21 Mar M
Quiz 19, Lesson 12a deadline
23 Mar W
Required Class #6 "Money, Family and Spiritual Considerations in Career Choices"
Pre-Class Report due one-half hour before the start of class.
23 Mar W
Quiz 20, Lesson 12b deadline
24 Mar Th
Class 6 Post-Class Report deadline
25 Mar F
Quiz 21, Lesson 13a deadline
28 Mar M
Optional Review Session
29 Mar T
Quiz 22, Lesson 13b deadline
30 Mar W
Required Lecture #7, "Managerial Accounting: Current Trends in Practice and
Career Opportunities." Pre-Class Quiz due one-half hour before the start of class.
31 Mar Th
Class 7 Post-Class Quiz deadline
31 Mar Th
Quiz 23, Lesson 14a deadline
4 Apr M
Optional Review Session
5 Apr T
Quiz 24, Lesson 14 b deadline
6 Apr W
Optional Review Session
7 Apr Th
Quiz 25, Lesson 15a deadline
11 Apr M
Required Lecture #8, "Key Elements in Successful Personal Financial Planning."
Pre- Class Quiz due one-half hour before the start of class.
12 Apr T
Class 8 Post-Class Quiz deadline.
12 Apr T
Lesson 15b to be completed (no quiz is given for this lesson)
14 Apr Th
Optional Exam Review Session (time and place to be announced)
21 Apr Th
Final Exam deadline (allow for enough time to finish the exam by the Testing Center
closing time)
65
Lesson Breakdown:
Lesson &
(Quiz)
1a
CD Lesson/ (time)
HW
Problems
#1 (Beginning through “General
Purpose Financial Stmts.”) 49*
minutes
None
*Excludes time to review Hints and
Walk Throughs
#1 (“Brief Review” through End) 97
Quiz 1 (cover minutes
1a and 1b)
1b
2a
Quiz 2
2b
Quiz 3
3a
Quiz 4
3b
Quiz 5
4a
Quiz 6
Topics
#1, 2 ,3
moderate*
*indicates
degree of
difficulty and
time required
Text
Chap: Pages
-What is a business?-Kinds of
businesses -Financing a
business, debt vs. equity
financing -Financial vs.
managerial accounting -General
purpose financial statements
1: 1-12
-Useful business information Comparable and credible -The
role of GAAP, SEC, FASB,
AICPA, IRS -CPA's and external
audits -Accounting education and
careers -Legal forms of business
ownership: proprietorship,
partnership, corporation Corporate governance
1: 13-21
-The general purpose financial
statements -The Balance Sheet Assets, liabilities, owners' equity
defined -The Income Statement Revenues and expenses defined
2: 32-35
12: 587-588
2: 50-51
6: 272-277
12: 587-590
#2 (Beginning through Prob.#5) 78
minutes
#4, 5 (light)
#2 (“Expanded Equation” through
End) 68 minutes
#6,7,8 (heavy)
-The expanded accounting
2: 32-49
equation -Relationship of financial
statements -The Statement of
Cash Flows -Financial statement
formats
#3 (Beginning through Prob. #9) 85
minutes
#9 (moderate)
-Asset Valuation -Historical Cost
2: 51-54
Principle -Monetary Measurement
3: 82-103
Concept -Separate Entity
Concept -First steps in an
accounting system -Recording
transactions/journal entries
#3 (“Posting to the General Ledger”
through End) 28 minutes
#10,11,12
(heavy)
-Steps in an accounting system,
continued -Posting to the general
ledger -Trial balance: What and
Why? -Preparing the financial
statements
3: 104-112
-Steps in an accounting system,
continued -Accrual vs. cash basis
accounting -Revenue recognition
and matching principles Adjusting for prepaid expenses adjusting for unearned revenues
4: 140-144
#4 (Beginning through Prob. #15) 69
minutes
#13,14, 15
(moderate)
66
2: 40-41
2: 35-39
2: 40-44
4: 144-151
4b
Quiz 7
Financial
Practice Set
5a
Quiz 8
5b
Quiz 9
6a
Quiz 10
#4 (“Unrecorded Expenses and
Revenues” through the End) 81
minutes
Financial Practice Set (all) 117
minutes
#16,17,18, 19
(heavy)
Complete
Practice Set
(Very Heavy)
-Adjusting for unrecorded
expenses and revenues -Closing
the books -Computerized
accounting systems -Account
analysis
4: 144-151
4: 157-160
3: 111-112
-Role of subsidiary ledgers and
See the
special journals in an accounting Financial
system -Comprehensive review of Practice Set
accounting system
#5 (Beginning through Prob. #20) 61
minutes
#20 (light)
-Complicating revenue
7: 298-304
transactions -Accounting for sales
2: 40-43
discounts -Accounting for sales
returns and allowances -Gross
margin and % markup defined
#5 (“Uncollectible A/R Overview”
through the End) 75 minutes
#21,22,23, 24
(heavy)
-Accounting for uncollectible
accounts receivable -Accounting
credit card receipts
7: 304-311
#6 (Beginning through Prob. #26) 69
minutes
#25,26 (light)
Perpetual inventory accounting Purchase discounts and returns Perpetual inventory cost flows:
specific identification, LIFO, FIFO,
and moving weighted average
(Exclude
periodic
inventory
approach)
8: 357-362
8: 365-370
8: 376-377
6b
Quiz 11
#6 (“Effects of Inflation” through the
End) 48 minutes
#27,28
(heavy)
Perpetual LIFO, FIFO and
moving weighted average
applications -The effects of
inflation and deflation on results Physical inventory: What and
Why?
(Exclude
periodic
inventory
approach)
8:362-364
8: 365-370
8: 376-377
7
Quiz 12
#7 (All) 85 minutes
#29,30,31
(moderate)
Multi-step formatted income
9: 414-415
statement -Payroll taxes -Sales
9: 422
taxes -Other operating expenses 9: 433
Internal Controls
6: 256-264
6: 270-271
7: 303-304
67
8a
Quiz 13
#8 (Beginning through “Subsidiary
Ledger for Equipment”) 59 minutes
#32 exclude
part d (light)
Also do Prob. 32, parts a,b,c and e at
this time. Part d is to be done with 8b.
8b
Quiz 14
9a
Quiz 15
9b
Quiz 16
10a
Quiz 17
#8 (“Repairs, Maintenance,
Improvements” through the End) 67
minutes
No Quiz
9: 428-430
10: 464-465
10: 470-472
10: 474-476
#32 part d, 33, Long-term assets, continued 34 (light)
Accounting for repairs,
maintenance and improvements Accounting for sale or disposal Accounting for intangible assets
and goodwill -Accounting for
natural resources
10: 476-477
#9 (Beginning to Prob. #36) 59
minutes
#35, 36
(moderate)
Long-term liabilities -Accounting
for notes payable -Accounting for
mortgage notes payable
11: 532-535
#9 (Bonds Payable to the End) 91
minutes
#37, 38,39,
40, 41 (heavy)
Long-term liabilities, continued Bonds and common bond
terminology -Debt vs. equity
financing -Characteristics of
common and preferred stock Accounting for the issuance of
common and preferred stock Calculating preferred dividend
rights -Accounting for dividend
declarations and payments
11: 538-540
Introduction to financial analysis Measures of liquidity: current and
acid-test (quick) ratios -Measures
of leverage: debt and debt/equity
ratios -Pros and cons of leverage
-Calculating % increases from
year to year -Measures of
management: A/R and inventory
turnover and Days sales in A/R
and Inventory
5: 204-213
Measure of profitability: EPS Measures of stock value: book
value per share and P/E ratio Forecasting earnings: vertical
analysis (common-size income
statements)
5: 208-209
#10 (Beginning through “Days Sales
in Inventory: Analysis”) 99 minutes
#42, 43
(moderate)
Also do Prob. #42 and #43 at this
time
10b
Long-term or operating assets Accounting for acquisition Accounting for depreciation, Straight-line and units of
production methods of
depreciation -Partial-year
depreciation
#10 (“Measure of Profitability” to the
End) 80 minutes
# 44, 45
(heavy)
Exclude Prob. #42 and #43
68
10: 480-482
10: 482-486
11: 540-541
(bonds
issued at
face value
only)
12: 587-593
12: 597-601
7: 311-312
8: 370-371
11: 546-547
5: 212-214
9: 430-433
11
#11 (All) 44 minutes
#46, 47 (light)
Financial vs. managerial
accounting -Cost terminology:
product vs. period costs for
merchandising and manufacturing
companies -Stages of
manufacturing inventory: raw
materials, WIP, finished goods
15: 756,758
#48, 49 (light)
Product cost accumulation
methods for a manufacturing
business: process cost vs. job
order cost systems -Job order
costing: job cost record and the
flow of costs
17: 868-876
#50,51, 52
(very heavy)
Job order cost system's basic
journal entries -Utilization of a job
cost record -Complications in
accounting for manufacturing
overhead -Predetermined
overhead rates and application of
overhead to WIP
17: 876-885
#53, 54
(moderate)
Cost behaviors with changing
volume -Variable costs, fixed
costs, stepped costs and mixed
costs defined -Relevant range
implications in analysis
16: 796-808
#55,56,57, 58
(heavy)
Approaches to CVP analysis:
graphical and equational Determining profit or loss with
changing volume -Contribution
margin defined -Expanded CVP
equation and applications
16: 809-823
#14 (Beginning through “Sequencing
of a Budget”) 53 minutes
None
Business planning and budgeting
overview -The steps in preparing
an operating budget
19: 10081014
#14 (“Example: Operating Budget” to
the End) 72 minutes
#59,60,61, 62,
63 (very
heavy)
Preparing an operating budget for
a manufacturing business: sales,
production, direct material
purchases, direct labor and cash
flow budgets -Pro-forma financial
statements
19: 10141024
#67
(moderate)
Non-routine business decisions Relevant costs and revenues in
decision making -Make vs. Buy
decision example
15: 769-773
Quiz 18
12a
Quiz 19
#12 (Beginning through “Job Order
Cost Example: Flow of Costs”) 33
minutes
Also do Prob. #49 at this time
12b
Quiz 20
#12 (“Basic Journal Entries” to the
End) 89 minutes
Exclude Prob. #49
13a
Quiz 21
#13 (Beginning through “Mixed Cost
Analysis: High-Low Method”) 74
minutes
Also do Probs. #53 and #54 at this
time
13b
Quiz 22
#13 (“Approaches to CVP Analysis”
to the End) 58 minutes
Exclude Probs. #53 and #54
14a
Quiz 23
14b
Quiz 24
15a
Quiz 25
#15 (Beginning through “Make vs.
Buy”) 79 minutes
Also do Prob. #67
69
15: 764-767
17: 873-874
21: 11521154
19: 10361038
23: 12731286
15b
No Quiz
#15 (“Discontinue vs. Add” to the
End) 70 minutes
#64,65,66, 68
(very heavy)
Exclude Prob. #67
70
Discontinue or add a product line 23: 1287-Pricing a special order -Selecting 1296
product emphasis given limited
critical resources -Determining
whether to further process a
product
CD Series Topic Breakdown
Please Read First
As you can notice by going through our topic breakdown, we combine both financial and managerial
topics in each CD set. To learn why we designed our courses in this unconventional manner, please
watch the first 10 minutes of our online presentation by going to
http://www.accountingcds.com/learn/undergraduate/undergraduate.htm and clicking on Play
Presentation. We invite all programs to consider changing to this content structure.
Regardless if your program follows the traditional topic breakup for its introductory courses (a financial
course followed by a managerial course), our products continue to be an excellent learning tool. We can
bundle the CD sets together, enabling your students to have every topic these need for the course.
Please let us know if your school needs this accommodation.
Topics:
Introduction to Financial Accounting:
- What is a business?
- What are the keys to a successful business?
- What is business capital and why is it necessary?
- What options exist in accessing needed capital for
a business?
- What information do providers of capital need in
their investment decisions?
- Financial vs. managerial accounting.
- General-purpose financial statements.
- What are the key characteristics found in useful
financial statement information?
- What is GAAP?
- What is the role of the SEC, FASB and the AICPA
in the providing of useful information to providers
of business capital?
- International standards and the IASB.
- What is the role of a CPA and an independent
audit in the providing of useful information to
providers of capital?
- Why is accounting worth studying?
- What distinguishes a corporation, partnership and
proprietorship as legal forms of doing business?
Introduction
to Accounting
(CD set #1)
Expanded
Introduction
(CD set #2)
Lesson 1
X
X
Lesson 1
X
X
X
X
X
Reviewed
Reviewed
X
X
Reviewed
Reviewed
X
Reviewed
X
X
X
Reviewed
X
71
General-Purpose Financial Statements:
- The balance sheet and basic accounting equation.
- Assets, liabilities and owners’ equity defined.
- Contributed capital, retained earnings and
dividends defined.
- The income statement.
- Revenues and expenses defined.
- The expanded accounting equation.
- Financial statement articulation.
- The statement of cash flows.
- The statement of retained earnings.
- A classified balance sheet
- Key concepts and principles:
Historical cost
Conservatism
Monetary measurement
Entity Concept
Lesson 2
Accounting Cycle:
- An accounting system.
- Steps in an accounting system designed to
produce financial statements:
Identify transactions
Analyze transactions
Record transactions:
Journal entries
Debits/Credits
Posting to general ledger
Trial balance
Adjusting entries:
Cash vs. accrual basis accounting
Prepayments of expenses:
Initially accounted for as asset
Initially accounted for as expense
Collection of revenues in advance:
Initially accounted for as liability
Initially accounted for as revenue
Accruing expenses
Accruing revenues
Closing entries
Preparation of financial statements
- Account analysis
Lesson 3
X
Lesson 1
Reviewed
X
X
X
X
X
X
X
X
X
X
X
X
Reviewed
Reviewed
Reviewed
Reviewed
Reviewed
Reviewed
Reviewed
Reviewed
Reviewed
Reviewed
Reviewed
Reviewed
X
Reviewed
Reviewed
X
Reviewed
Reviewed
Reviewed
Reviewed
Reviewed
72
N/A
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Financial Practice Set: Special journals and subsidiary
ledgers are introduced and a manual accounting system is
set up for a fictional company. Students complete all steps of
the accounting cycle for a series of transactions including the
preparation of financial statements. (These financial
statements are then subject to ratio analysis in a later lesson
focusing on the determination of a reasonable stock value for
the company.) NOTE: Students are told that although this
kind of manual system is seldom used in today’s world, most
computerized systems are programmed to follow the same
flow of information. For that reason, this is a worthwhile
exercise, but not the kind of thing accountants actually do.
X
Sales Revenues and Receivables:
- Revenue recognition issues (expanded):
FOB destination, shipping point
Consignment
Long-term contract
Guarantees
- Sales (cash) discounts
- Sales returns and allowances
- Gross margin % and % markup
- Uncollectible accounts receivable:
- % of ending A/Reviewed and aging methods
- % of net credit sales revenues method
- Credit card sales
- Trade notes receivable
- Factoring A/Reviewed and Discounting /Reviewed
- Sales denominated in a foreign currency
Lesson 5
Lesson 4
X
X
X
X
X
X
X
Reviewed
Reviewed
Reviewed
Cost of Goods Sold and Inventory:
- Perpetual inventory accounting for purchases,
discounts, returns and sales
- Periodic inventory accounting for purchases,
discounts, returns and sales
- Inventory costing methods:
Specific identification:
Perpetual
Periodic
Cost flow assumptions (FIFO, LIFO,
MWA):
Perpetual
Periodic
- Comparison of affects of different cost flow
assumptions
- Physical inventory
- Gross margin method of estimating inventory
- Effect of inventory errors
- Lower of cost or market valuations
Lesson 6
Lesson 5
X
Reviewed
Internal Controls
73
X
Reviewed
X
X
X
X
X
X
X
Reviewed
X
X
Reviewed
X
X
X
Reviewed
Reviewed
X
X
X
Lesson 7
X
Lesson 5
Reviewed
Employee Compensation, Taxes, Contingencies and
Other Items:
- Employee salaries and wages
- Employer payroll taxes
- Employee benefits:
Health insurance
Compensated absences
Bonuses
Stock options
Pension plans
Other postretirement benefits
- State sales taxes
- Property taxes
- Income taxes (current and deferred)
- Contingencies
- Warranty obligations
- Multi-step formatted income statement
- Other income statement items
Extraordinary items
Discontinued operations
Changes in accounting principles
Restructuring charges
Time Value of Money
Lesson 7
X
X
X
X
X
Lesson 6
Reviewed
Reviewed
X
X
X
X
X
Reviewed
Reviewed
X
X
X
X
X
X
X
X
N/A
Lesson 7
(Note: No present or future value tables are used. Students
are required to have a financial calculator with time value of
money capabilities. Examples and problems are
demonstrated with HP10bii and TI BA II Plus calculator
keystrokes)
-
PV and FV of single cash flows
PV and FV of annuities
PV and FVs with uneven cash flows
X
X
X
74
Long-Term Assets:
- Capitalized costs vs. expenses
- Property, plant and equipment:
Acquisition
Basket purchases
Self-constructed assets
Operating and capital leases
Depreciation:
Straight-line and units-of- production
methods
-
-
-
Accelerated methods
Repairs and maintenance
Improvements
Sale and disposal
Intangible assets
Acquisition
Research and development costs
Advertising costs
Amortization
Goodwill accounting
Natural resources
Acquisition
Depletion
Asset valuations and asset impairment
Lesson 8
X
Lesson 8
Reviewed
X
Reviewed
X
X
X
X
Reviewed
X
Reviewed
Reviewed
Reviewed
X
X
X
X
X
X
X
Long-Term Liabilities:
- Basic notes payable
- Mortgage notes payable
- Building equity in real estate
- Bonds:
Common characteristics
Issued at face value
Issued at premium and discount:
Calculating issuance price
Straight-line amortization
Effective-interest amortization
Early retirement
Reviewed
Reviewed
X
Reviewed
Reviewed
X
X
Reviewed
Reviewed
X
Lesson 9
X
X
X
Lesson 9
Reviewed
Reviewed
X
X
Reviewed
Reviewed
X
X
X
X
75
Owners’ Equity:
-
Issuance of common and preferred stock
Dividends distributions on preferred and common.
Accounting for cash dividends
Stock dividends
Stock splits
Treasury stock transactions
Statement of retained earnings
Prior-period adjustments
Statement of owners’ equity
Other comprehensive income items
Equity financing in proprietorships and
partnerships
Financial Statement Analysis:
- Users of financial statements
- Technical and fundamental analysts
- Liquidity Analysis:
Working capital
Current ratio
Quick (acid-test) ratio
- Asset management:
A/Reviewed turnover
Number of day’s sales in A/Reviewed
Inventory turnover
Number of day’s sales in inventory
- Financing operations:
A/P turnover
Number of day’s purchases in A/P
Operating cycle and financing operations
Use of statement of cash flows
Leverage measures:
Debt ratio (debt to total assets)
Debt to equity ratio
Times interest earned
- Performance analysis:
Return on assets
Return on equity
DuPont formula for ROE
EPS
Dividends per share
Dividend payout ratio
Dividend yield
Stockholder return on investment
- Stock valuation:
P/E ratio
Market capitalization
Book value
Book value per share
- Profit projections:
Vertical and horizontal analysis
76
Lesson 9
X
Lesson 10
Reviewed
X
X
Reviewed
Reviewed
X
X
X
X
X
X
X
X
Lesson 10
X
Lesson 2
Reviewed
Reviewed
X
X
X
Reviewed
Reviewed
X
X
X
X
Reviewed
Reviewed
Reviewed
Reviewed
X
X
X
X
X
X
X
X
X
X
Reviewed
Reviewed
X
X
X
X
Reviewed
Reviewed
Reviewed
X
X
X
Reviewed
X
X
Reviewed
X
Reviewed
Statement of Cash Flows and Cash:
By inputting a special code in CD Set 1, you can access a full
Statement of Cash Flow lesson like the lesson found on CD
Set 2. Please contact us to obtain this code.
- Usefulness of statement in analysis
- Preparation of statement:
Direct method
Indirect method
- Bank reconciliation
Lesson 2
Lesson 3
X
Reviewed
X
X
X
Investments in Equity and Debt Securities:
- Why companies invest in other companies
- Accounting for investments in equity securities:
Trading securities
Available-for-sale securities
Equity method
Consolidated financial statements
- Accounting for investments in debt securities:
Trading securities
Available-for-sale securities
Held-to-maturity
N/A
Introduction to Managerial Accounting:
- The purpose of managerial accounting
- Distinguishing characteristics of managerial vs.
financial accounting
Lesson 11
X
Lesson 12
Reviewed
X
Reviewed
Cost Accounting:
- Product vs. period costs in merchandising and
manufacturing businesses
- Flow of product costs in a manufacturing business
- Job order cost system:
Basic entries and use of job cost record
Manufacturing overhead issues and
accounting
- Process cost system:
Basic entries
Equivalent Units
- Product cost accumulation in a merchandising
business
- Product costing in a service business
Lesson 11
Lesson 12
X
Reviewed
X
Reviewed
X
Reviewed
X
Reviewed
Performance Evaluation:
- Responsibility accounting
- Standard costing
- Cost variances
X
X
X
X
X
X
X
X
X
X
X
N/A
77
Lesson 11
X
Lesson 14
X
X
X
Activity-based costing (ABC)
Traditional vs. ABC approach
Analyze individual overhead costs
Overhead cost activities
Cost drivers
Assigning overhead
Using ABC data to make decisions
N/A
Lesson 15
X
X
X
X
X
X
Cost Behaviors with changing volume:
- Variable, fixed, stepped and mixed costs defined
Analysis of mixed costs:
Scattergraph method
High-low method
Least Squares method
- Contribution margin income statement
Lesson 13
X
Lesson 16
Reviewed
X
X
Reviewed
Reviewed
X
Reviewed
CVP Analysis:
- Equational approach
- Graphical approach
- Change in sales mix
- Operating leverage
Lesson 13
X
X
Lesson 16
Reviewed
Reviewed
X
X
Budgeting:
- Strategic, capital and operational budgeting
introduced
- The benefits of budgeting
- Operating budget for:
Manufacturing business
Merchandising business
Service business
- Capital budgeting:
Payback method
IRR method
NPV method
Lease vs. buy
Sensitivity analysis
Screening and ranking
Income tax effects
Lesson 14
Lesson 17
X
X
Reviewed
Reviewed
X
Reviewed
X
X
Non-Routine Business Decision Making:
- Quantitative vs. qualitative factors
- Relevant, differential, direct, sunk and opportunity
costs defined
- Examples of relevant costs in non-routine
decisions:
Make or buy a component part
Pricing a special order
Add or eliminate a product or process
Additional product processing
Product emphasis given a critical limited
resource
Lesson 15
X
78
X
X
X
X
X
X
X
X
X
X
X
X
X
X
CD Time Table
Below is a set of timetables outlining the length of each lesson on both CD sets. We provide this
information to help instructors ascertain the student-time commitment of each lesson. However, on
average, students watch the lessons at two times the normal rate using the Variable Speed Playback 5
module. Therefore, an hour lecture in the CD lessons actually takes approximately 30 minutes in real
time.
The time totals below are the raw unadjusted-rate times of each lesson. Please see the footnotes below
for added information.
CD Set 1: Introduction to Accounting: The Language of Business TM
Lesson
Number
Introduction
Lesson Content &
Problem
Introductions6
hh:mm:ss
Problem
Walkthroughs &
Hints7
hh:mm:ss
Total Lesson
Time
hh:mm:ss Lesson Title
5:20
N/A
Lesson 1
2:18:58
20:51
Lesson 2
2:28:17
1:01:03
Lesson 3
1:59:38
48:05
2:47:43 Accounting Cycle Part 1
Lesson 4
2:09:02
48:34
2:57:36 Accounting Cycle Part 2
Lesson 5
2:02:46
47:19
2:50:05 Sales Revenue
Lesson 6
1:58:08
39:12
2:37:20 Inventory
Lesson 7
1:18:08
14:28
1:32:36 Operating Expenses and Internal Controls
Lesson 8
2:07:24
24:10
2:31:34 Long Term Operating Assets
Lesson 9
2:32:55
45:48
3:18:43 Debt and Equity Financing
Lesson 10
3:06:05
1:09:23
Lesson 11
46:24
18:42
Lesson 12
2:02:42
1:16:20
3:23:02 Manufacturing Product Costs
Lesson 13
2:21:42
1:31:30
3:53:12 Cost Volume Profit Analysis
Lesson 14
2:13:13
2:06:48
4:20:01 Operational Budgeting
Lesson 15
2:26:36
56:41
32:01:20
13:08:54
Totals
5:20 Introduction
2:39:50 Introduction to Financial Accounting
3:29:30 General Purpose Financial Statements
4:15:28 Financial Statement Analysis
1:05:06 Introduction to Managerial Accounting
3:23:17 Non-routine Business Decision
45:10:14
Supplemental Lessons in CD Set 1
Financial
Practice Set
2:01:35
N/A
2:01:35
Statement
of Cash
Flow
1:26:14
48:10
2:14:28
5
Students who watch CD Set 1 at two times the normal rate may not desire to listen to CD Set 2 at the same rate.
CD Set 2 is more technical and some students slow the VSP module to approximately 1.7 times the normal rate.
6
The Problem Introductions are tied to the main lecture video file and therefore are included in the Lesson Content
column. The Problem Introductions are very small and are only 2-3 percent of the Lesson Content time.
7
Not all students use the Hint feature. Therefore, use discretion when calculating the total time commitment for each
lesson. Hints are approximately 10-20 percent of the walkthrough's time. In addition, those students who answer a
problem correctly may not desire to watch the corresponding Walkthrough.
79
CD Set 2: Expanded Introduction to Accounting: The Language of Business TM
Lesson
Number
Lesson Content &
Problem
Problem
Introductions2 Walkthroughs
hh:mm:ss
hh:mm:ss
Total Lesson
Time
hh:mm:ss Lesson Title
Lesson 1
12:37
49:50
1:08:37 Review of the Accounting
Environment and the
Basic Accounting Cycle
Lesson 2
1:16:46
51:37
2:08:23 Expanded Financial
Statement Analysis
Lesson 3
1:32:54
46:46
2:19:40 The Statement of Cash
Flows
Lesson 4
30:23
23:08
53:31 Sales and Receivables
Lesson 5
44:06
50:39
1:34:45 Cost of Goods Sold and
Inventory
Lesson 6
37:15
17:25
Lesson 7
35:36
5:08
Lesson 8
40:19
42:16
1:22:35 Long Term Assets
Lesson 9
35:23
32:42
1:08:05 Bond Financing
Lesson 10
39:01
37:19
1:16:20 Equity Financing
Lesson 11
47:06
36:38
1:23:44 Investment in Equity and
Debt Securities
Lesson 12
17:51
36:25
Lesson 13
1:06:21
29:12
1:35:33 Product Costing
Continued…
Lesson 14
1:19:42
28:31
1:48:13 Standard Costs and
Responsibility Accounting
Lesson 15
1:41:37
19:51
2:01:28 Activity Based Costing
Lesson 16
21:35
55:01
1:16:36 Cost Volume Profit
Analysis
Lesson 17
2:13:51
46:39
3:00:30 Capital Budgeting
Totals
15:12:23
10:15:26
54:40 Accounting for Employee
Compensation, Taxes,
Contingencies, and other
Items
40:44 The Time Value of Money
54:16 Introduction to Managerial
Accounting and Review of
Product Costing
25:27:498
8
CD Set 2 is more concise as it builds upon the foundational topics of CD Set 1. While CD Set 2 is shorter, it is still
full of rich content and covers more difficult and complex topics than CD Set 1.
80
Free Trial Program Details
The best way to assess if the CDs are a good solution for your course is to put them to the test with your
students. You do not need to change your course for this trial—just give your students a copy of the CDs
and let them evaluate the CDs against their textbook.
Free Trial Sponsorship
Every year we sponsor a few schools with free copies of the CDs for each of their students. This no
obligation offer will be a great way for you to see if these CDs will work in your program. While we
recommend you implement the Value Added Teaching Model, you may use the CDs in a traditional model
along with a textbook. Let your students compare the CDs to the textbook and evaluate which learning
tool works best for them. Even though this is a trial, the CD sets are the full versions.
Your school will pay absolutely nothing for the CDs except standard shipping costs— usually between
$10-$15 total, depending on the size of the shipment and if the destination is domestic. We will ship the
CDs to your office and then you can distribute the CD sets to your students. This offer is limited, is subject
to change at any time, is only valid as a one-time offer for each school, and is granted on a first-come
first-serve basis (conditions apply— see below).
Free Trial Summary:
 We will give a free copy of the CDs to each of your students.
 You do not need to change your model of teaching to evaluate the CDs.
 Students can use the CDs along with your standard textbook to evaluate the CDs.
 You are not obligated in any way to use the CDs in your course after the trial.
 You determine the amount of contact you want with us (see below).
Partial Trial Sponsorship
If we run out of free sponsorships, we also provide a limited number of partial sponsorships. These
sponsorships reduce the price of the CD sets by approximately 90 percent off the wholesale price— or
about $4.50 per student. Again, this offer is limited, is subject to change at any time, is only valid as a
one-time offer for each school, and is granted on a first-come first-serve basis (conditions apply— see
below).
Partial Trial Summary:
 We will give a copy of the CDs to each of your students for a drastically reduced price.
 You do not need to change your model of teaching to evaluate the CDs.
 Students can use the CDs along with your standard textbook to evaluate the CDs.
 You are not obligated in any way to use the CDs in your course after the trial.
 You determine the amount of contact you want with us (see below)
Our Commitment
If you choose to participate in our sponsorship program, you will still receive all the benefits of a regular
customer. You will receive all the resources we have to offer including free consultation. In addition, your
students will receive free technical support if they should have any difficulties running the CDs. In
addition, we do not believe in pressuring instructors to use our products. Some individuals are more
comfortable if we limit our contact with them while they evaluate our products. If you desire limited contact
or no contact with our team during the trial, we will certainly honor your wishes.
Request a Free Trial
Please contact us at trial_program@accountingcds.com and we will arrange the free trial.
81
Learning Resource Packet
The Learning Resource Packet (LRP) is the document used by students as they watch the CD lectures
and take notes. The LRP is 250 pages, and can be accessed on CD Set #1 or online at:
www.accountingcds.com/learn/documents/Learning_Resource_Packet.pdf
The LRP contains the following:
 Lesson Notes for lessons 1-15
 Financial Practice Set and Solution
 Sample Exams (the same questions are available in the Practice Module. See page 19)
 Exam Review Topics
The students can freely print this document from their CD sets; however, the document is 250 pages,
which can be very cumbersome to print. Therefore, we suggest you provide this document to your
students. If you would prefer not to hassle with providing this document directly, you can have your
bookstore order it directly from the BYU campus bookstore by calling them at 801-422-3003. The cost is
$10.10 + shipping. DO NOT order the CDs from the BYU bookstore, as they are forced to sell the CDs at
the retail price of $61.75.
Value-Added Session PowerPoint Examples
As delineated on page 6, you can learn more about what we do conceptually in each value-added
session, by watching an online video by going here: http://www.accountingcds.com/video/qa/qa39.html.
You may also watch the actual sessions through our accounting software. To access these sessions,
please open the accounting software, click File, click Settings, type 6A35A9F6 in the curriculum code box,
click OK, click File, click Open Lessons, the eight sessions are now part of the lesson list. Note: we highly
discourage instructors from using our actual eight recorded video sessions in their course. Instructors
should conduct these sessions live with their students. In addition, we created these sessions for BYU
students, which are a religious student body. We refer to our church and faith several times in these
videos. Therefore showing these sessions to other students outside of BYU would probably be
inappropriate.
We also have six of our eight value-added sessions available in PowerPoint form. You can access these
files by clicking on the link below. You will need to unzip the file once you download it. You may use,
copy, or edit these files for your course.
Value-Added Sessions PowerPoint Example Files:
http://www.accountingcds.com/learn/documents/resources/Value-Added_Sessions.zip
Optional Weekly Review Session Materials
We designed the following files to help guide the discussion in our weekly review sessions. These
resources are available for Lessons 1-10. You can access these files by clicking on the link below. You
will need to unzip the file once you download it. You may use, copy, or edit these files for your course.
Weekly Review Session PowerPoint Files:
http://www.accountingcds.com/learn/documents/resources/Weekly_Review_All.zip
82
Assessment
We include no actual assessment documents in this guide for obvious security reasons. To acquire these
documents, please email info@accountingcds.com. To authenticate you as an instructor, please email us
using your university email account. The following documents are available:
 Standard 3 Exams (exam 1, exam 2, and final exam)
 Standard 25 Quizzes (both in hard and electronic forms)
 Pre and post-class value-added session quizzes
 Supplemental True/False Quizzes
 Supplemental Quizzes for review sessions or other purposes
Exam Review Documents (intended for Exam Review Sessions)
We designed the following documents to help guide the Exam Review Sessions. These questions will
help the students prepare for the exams. You may copy and distribute these documents to your students.
The documents appear in the following order:
 Exam 1 Questions
 Exam 1 Answers
 Exam 2 Questions
 Exam 2 Answers
 Exam 3 Questions
 Exam 3 Answers
Exam #1 Review Session— Questions
1. What do businesses do? What are the 3 basic kinds of businesses per the CDs?
2. What are the 3 keys to a successful business discussed in the CDs?
3. What are the only two sources of capital available to start a business and what are their basic
advantages and disadvantages?
4. What are the two ways basic ways owners/investors provide equity capital to a business?
5. What are the 3 basic legal forms of business ownership and identify some of their key distinguishing
characteristics in terms of
Proprietorship
General Partnership
The number of
owners allowed.
Red-tape involved in
formation and
operation
Separate legal
liability (business/
owners)
Ability to raise equity
capital
Transfer of
ownership
Income taxation
83
Corporation
6. What is the role of the stockholders, the board of directors and senior management (i.e. CEO) in
corporate governance and operations?
7. Why is accounting often referred to as the “language of business?”
8. What are some of the distinguishing characteristics of financial as opposed to managerial
accounting?
9. What are the three general-purpose financial statements required under generally accepted
accounting principles and what is the purpose of each?
10. What are the “notes to the financial statements?”
11. What is the SEC and what is its role with regards to publicly-held companies?
12. How does the SEC seek to insure that financial statement information provided to the public is
credible and comparable?
13. What is GAAP and why is it important to financial statement users?
14. Who is legally authorized to determine GAAP?
15. What is the FASB and what is its role?
16. How do the SEC and the FASB relate to one another?
17. What is the IASB and what is its role?
18. Why are international accounting standards not allowed for companies whose securities trade in the
United States and what would be the benefit if they were allowed?
19. Who is primarily responsible for a company’s financial statement accuracy and compliance with
GAAP?
20. How does a person become a CPA and what do CPAs do besides audits of financial statements?
21. What is the AICPA and what is its role?
22. Why aren’t CPA firms completely independent in the performance of an audit?
23. Given the following information for ABC Company for the year ended 12/31/X1:
Cash
Accounts Payable
Capital Stock (10,000 shares)
Notes Payable
Dividends
Sales Revenues
Cost of Goods Sold
Accounts Receivable
Wages Payable
Wage Expense
Retained Earnings (at 1/1/X1)
Interest Revenues
Utilities Expense
$ 10,000
$ 15,000
$ 30,000
$ 225,000
$ 30,000
$ 800,000
$ 500,000
$ 30,000
$ 5,000
$ 180,000
$ 73,000
$ 5,000
$ 40,000
84
Interest Expense
Inventory
Utilities Payable
Land and Building
Equipment
Other Expenses
Income Tax Expense
a.
b.
c.
$ 15,000
$ 70,000
$ 2,000
$ 200,000
$ 50,000
$ 20,000
$ 10,000
Prepare an income statement for ABC for the year-ended 12/31/X1.
Prepare a statement of retained earnings for ABC for the year-ended 12/31/X1.
Prepare a balance sheet for ABC as of 12/31/X1.
24. Given the following comparative information:
Assets
Liabilities
Owners’ Equity
a.
b.
c.
d.
12/31/X2
$500,000
$300,000
?
12/31/X3
$425,000
?
$176,000
Determine the change in total liabilities for the year ended 12/31/X3.
What could have caused the decrease in owners’ equity in 20X3?
Assuming 20X3 capital contributions amounted to $50,000, no dividends were paid and
total expenses amounted to $1,500,000 for the year, calculate the amount of total
revenues earned in 20X3.
How is this company doing?
25. If assets total $100,000 at the beginning of the year and liabilities increased by $20,000 during the
year, determine the amount of assets at the end of the year given the following additional information:
Capital Contributions
Dividends
Expenses
Revenues
$
0
$ 10,000
$ 820,000
$ 960,000
26. At what value should land be reflected on the balance sheet if it was purchased from an unrelated
party three years ago for $100,000 but is currently worth $300,000. What if it is currently worth only
$50,000?
27. What does the entity concept and the monetary measurement principle have to do with a company’s
financial statements?
28. Fill in the blanks reflecting the effect of recorded transactions on:
Assets
Liabilities
Owners’ Equity:
Capital Stock
Retained Earnings
Revenues
Expenses
Dividends
Debit (Dr)
+
29. Respond to the following (true/false):
85
Credit (Cr)
-
a.
b.
c.
Debits always reflect an increase in an account.
Debits reflect an increase in assets.
Debits to an expense account have an increasing effect on expenses, net income,
retained earnings and owners’ equity.
30. What does “double-entry accounting” refer to?
31. Record the following transactions in general journal entry form:
a.
Owners contribute $50,000 cash and a $20,000 truck to the company in exchange for
1,000 shares of stock in the company.
b.
The company buys a building for $250,000 paying $50,000 cash and signing a $200,000
note requiring payment in full in ten years with interest to be paid annually at a annual
rate of 10%.
c.
Inventory costing $5,000 is purchased on account.
d.
Cash purchase of office supplies costing $300.
e.
Inventory costing $2,000 sold to a customer on account for $3,500.
f.
Paid accounts payable of $5,000.
g.
Collected $3,500 of accounts receivable from customers.
h.
Collected dividends of $500 on an investment in the stock of another company.
i.
Paid a $700 utility bill.
j.
Paid $4,000 of employee wages that had been previously recorded.
k.
Paid a $2,000 cash dividend to stockholders.
32. Put the following into proper sequence:
____ Post recorded transactions to the general ledger
____ Prepare a trial balance
____ Record transactions in a journal
____ Identify and analyze transactions as they occur
____ Prepare an adjusted trial balance
____ Prepare financial statements
86
____ Record adjusting entries in the general journal
____ Post closing entries to the general ledger
____ Record closing entries in the general journal
____ Prepare a post-closing trial balance
33. What are special journals and subsidiary ledgers and what purpose do they serve?
34. Why is this stuff worth knowing when computers are programmed to do all this accounting stuff pretty
much automatically?
35. What is accrual basis accounting and why is it required under GAAP?
36. On 4/1/X1, Norm’s Real Estate Company received one-year’s rent in advance in the amount of
$12,000 from a tenant.
a.
Prepare the 4/1/X1 original entry and the appropriate 12/31/X1 adjusting entry associated
with this transaction.
b.
What principle of accounting mandates the adjusting entry in this case?
c.
What would the impact be on the balance sheet and income statement if Norm failed to
make the 12/31/X1 adjusting entry.
37. Guido’s Legal Service completed $2,000 of contracted legal work for a customer in December, 20X1.
As of 12/31/X1 these fees were unbilled and unrecorded on Guido’s books. What adjusting entry, if
any, is required by Guido at year-end, 12/31/X1 if the fees are to be billed and collected in January,
20X2? What is the governing principle of accounting in this case?
38. On 9/1/X3 Joe’s Auto Repair paid a $2,400 insurance premium on a 12-month policy extending
through 8/30/X4. Prepare the journal entry to record the payment at 9/1 and any adjusting entry
subsequently required at year-end, 12/31/X3.
39. Prepare the 12/31/X2 adjusting entry for unpaid and previously unrecorded wages of $5,000 due
employees for the month of December, 20X2. Failure to record this adjusting entry would cause net
income to be over or understated?
40. Prepare the closing entry or entries required given the following adjusted trial balance at 12/31/X1
and determine the ending balance of retained earnings:
DR
$ 10,000
$ 30,000
Cash
Inventory
Accounts Payable
Capital Stock
Retained Earnings (at 1/1/X1)
Dividends
Sales Revenues
Cost of Goods Sold
Other Expenses
CR
$ 7,000
$ 10,000
$ 13,000
$
3,000
$100,000
$ 60,000
$ 27,000
41. If beginning and ending inventory amount to $40,000 and $45,000, respectively, and inventory
purchases for the period total $342,000, determine the amount of cost of goods sold for the period.
42. If beginning and ending accounts payable amount to $30,000 and $27,000 respectively, and
inventory purchases on account for the period amount to $150,000, determine the amount of cash
payments made on accounts payable for the period.
87
88
Exam #1 Review Session— Solutions
1. A business is an organization, which seeks to provide goods or services to customers. The three
basic kinds of businesses are:
a. Manufacturing
b. Merchandising
i. Retail
ii. Wholesale
c. Service
2. The three keys to a successful business are:
a. Idea—A good idea for a product or service that can be sold at a profit.
b. Capital—Money or resources to bring that product or service to life.
c. Management Skill—The ability to effectively employ those resources and produce a
profit.
3. The two sources of capital are:
a. Debt Financing (borrowing from creditors)
i. Advantages—no sacrifice of ownership rights
ii. Disadvantages—(1) must be paid back – temporary (2) consequences of failure
to pay can be harsh – bankruptcy or foreclosure (3) can be difficult to qualify for.
b. Equity Financing (contributions from investors/owners)
i. Advantages—no requirement to repay contributed capital
ii. Disadvantages—some sacrifice of ownership rights (voting, profit-sharing, posttermination resources)
4. The two basic ways owners/investors provide equity capital.
a. Capital contributions. (Owners contribute assets for ownership rights.)
b. Retained earnings. (Owners allow assets created through profitable operations to be
retained in the business.)
5.
The number of
owners allowed.
Red-tape involved in
formation and
operation
Separate legal liability
(business/ owners)
Ability to raise equity
capital
Transfer of ownership
Income taxation
Proprietorship
One
General Partnership
More than one
Corporation
One or more
None unless
employees are hired
None unless
employees are hired
No
No
State regulations
govern formation and
operation.
Yes
Limited to resources of
the one owner
Limited to resources of
partners
Involves sale of entire
business
Business profits
included in owners
personal income
Typically requires
partner approval
Business profits
included in partners’
personal income
Unlimited number of
owners (stockholders)
possible
Easy transfer through
sale of stock
Corporation pays tax on
profits and owners pay
additional tax on any
distribution of those
profits.
6. Different roles in corporate governance and operations
a. Stockholders have the right to vote for a corporation’s Board of Directors (typically one
vote per share). They benefit from dividend distributions and increasing stock values and
89
have the right to share in any net assets available after the payment of liabilities in the
event of business termination and liquidation.
b. The Board of Directors hires and monitors the performance of senior management.
They’re also involved in the making of long-term strategic decisions. Board members
may or may not be stockholders and are typically compensated for their time and effort.
c. Senior management is responsible for daily operations of the company. They are paid a
salary by the company and may or may not own shares of stock themselves.
7. Accounting is often referred to as the language of business because its sole purpose is to
communicate business information.
8. Financial accounting seeks to provide information to current or future providers of capital
(investors or creditors) and other interested parties outside of management (government
agencies, etc.). This is done through periodic general-purpose financial statements prepared in
accordance with generally accepted accounting principles (GAAP) or standardized rules of
accounting. These financial statements provide summarized historical information on a
company’s financial position, results of operations and cash flows.
Managerial accounting seeks to provide information that’s useful to a company’s managers. In
most cases this information is not released to the public and, as a result, is not governed by any
rules or standards of accounting. Management accounting reports often provide detailed
information and many times include forecasts of future results or budgets.
9. The three general-purpose financial statements and their purposes are:
a. Balance Sheet or Statement of Financial Position—reflects a company’s financial position
(assets, liabilities and owners’ equity) as of a point in time
b. Income Statement, Statement of Operations, Statement of Earnings, or Profit and Loss
Statement—reflects a company’s results of operations or profits/losses over a period of
time.
c. Statement of Cash Flows—reflects a company’s cash inflows, outflows and changing
cash balance over a period of time.
A Statement of Retained Earnings or Statement of Owners’ Equity is often included as
part of a company’s general purpose financial statements but is not required by
GAAP.
10. The notes to the financial statements provide important supplemental information in support of a
company’s general- purpose financial statements. This often includes information on accounting
methods as well as more detailed information relative to certain financial statement amounts.
11. The SEC (Securities and Exchange Commission) is a federal agency responsible for the
regulation of public capital markets in the United States. All businesses that seek capital from
large numbers of investors in the United States (“publicly-held businesses”) are subject to SEC
rules and regulations requiring the disclosure of financial statement and other information to
investors.
12. The SEC requires an annual audit of the financial statements of all publicly-held companies by
independent certified public accounting (CPA) firms to insure that the information provided in
those statements is accurate and prepared in accordance with GAAP.
13. Generally accepted accounting principles (“GAAP”) are the methods of accounting and the
financial statement disclosures required of SEC regulated companies. The purpose of GAAP is
to improve the comparability and usefulness of financial statement information to investors,
creditors and other external users. Although not required, companies not subject to SEC
regulation will also typically prepare financial statements in accordance with GAAP to add
credibility for current or potential investors and creditors.
90
14. The SEC has the legal authority to determine GAAP for companies required to file financial
statements with the SEC; however, the SEC currently allows the FASB to function in this
capacity.
15. The Financial Accounting Standards Board (FASB) is a private non-profit organization currently
responsible for the establishment of GAAP in the United States. The SEC recognizes the
pronouncements of the FASB as authoritative.
16. Because the SEC has the ultimate power to determine GAAP, the FASB exists and functions at
the SEC’s pleasure. As a result, when the SEC talks the FASB listens. The SEC has
considerable influence over the pronouncements issued by the FASB.
17. The International Accounting Standards Board (IASB) is a private organization headquartered in
London and committed to developing a single set of high quality global accounting standards. In
addition, the Board cooperates with national accounting standard setters in an attempt to achieve
convergence in accounting standards around the world.
18. At this time, the SEC requires the use of FASB accounting standards (GAAP) because it currently
deems FASB standards superior in providing fuller and fairer disclosure of financial information.
As the IASB continues to develop and improve their standards it is possible that the SEC could
modify its position. A clear benefit in the application of international standards among countries is
the breakdown of a significant investment and trade barrier. Capital markets will never be truly
global until common accounting standards are applied to companies world wide.
19. A company’s management is primarily responsible for financial statement accuracy and
compliance with GAAP. In fact, management failure to provide accurate financial information
may constitute a crime under current law.
20. CPA certification is administered by each state. All states require CPA candidates to be college
graduates with credit earned in designated accounting courses. Candidates must also pass a
uniform CPA exam administered by the American Institute of Certified Public Accountants
(AICPA). In addition, certain supervised work experience with a licensed CPA firm is also
required. Subsequent to initial certification, a CPA must complete continuing professional
education (CPE) requirements to maintain the right to practice.
In addition to financial statements audits, many CPAs provide a number of other services
including tax planning and management advisory services.
21. The AICPA is a private professional organization made up of CPAs across the nation. In addition
to the administration of the CPA exam, the AICPA also determines generally accepted auditing
standards (GAAS), which govern the practices and procedures to be used by CPA firms in the
conduct of a certified audit of financial statements.
22. CPA firms conducting financial statement audits are paid by the companies they audit creating an
inherent conflict of interest. In most cases, a company’s management team is motivated to
prepare financial statements that present the most favorable financial impression possible. If
management/auditor disagreements arise on financial statement presentation, management may
threaten to change auditors. As a result, CPA firms may be tempted to compromise the integrity
of their audit work in order to preserve the engagement and resulting fee income.
91
23. Financial Statements for ABC Company for year ended 12/31/X1
a.
ABC Company
Income Statement
For the year ended 12/31/X1
Revenues:
Sales revenues
Interest revenues
Total revenues
Expenses:
Cost of goods sold
Wage expense
Utilities expense
Other expenses
Interest expense
Income tax expense
Total expenses
Net income
$800,000
5,000
$805,000
500,000
180,000
40,000
20,000
15,000
10,000
765,000
$ 40,000
b.
ABC Company
Statement of Retained Earnings
For the year ended 12/31/X1
Beginning Retained Earnings, 1/1/X1
Add: Net income
Less: Dividends
Ending Retained Earnings, 12/31/X1
c.
92
$73,000
40,000
(30,000)
$83,000
ABC Company
Balance Sheet
as of 12/31/X1
Assets:
Current AssetsCash
Accounts receivable
Inventory
Total current assets
Long-Term AssetsLand and building
Equipment
Total long-term assets
Total assets
$ 10,000
30,000
70,000
110,000
200,000
50,000
250,000
$360,000
Liabilities and Owners’ Equity:
Current LiabilitiesAccounts payable
Wages payable
Utilities payable
Total current liabilities
Long-Term LiabilitiesNotes payable*
Total liabilities
Owners’ EquityCapital stock
Retained earnings
$ 15,000
5,000
2,000
22,000
225,000
247,000
30,000
83,000
113,000
Total owners’ equity
Total liabilities and
owners’ equity
$360,000
* Assumes obligation is due in more than one year.
24.
A
=
a.
b.
c.
d.
$51,000 decrease
Net loss or dividends greater than net income for the period
$1,426,000
It looks like they’re not doing too well.
L
+ OE
93
12/31/X2
12/31/X3
“∆”
500k = 300k + 200k
425k = 249k + 176k
75k = 51k + 24k
∆C.C. + ∆R/E
50k + 74k
N.I. - Dividends
-74k - 0
Revenues - Expenses
1,426,000 - 1,500,000
25. Assets at the end of the year = $250,000
A
=
L
+ OE
Beg. 100k =
? + ?
End
250k =
? + ?_
“∆” 150k = 20k+ 130k
∆C.C. + ∆R/E
0 + 130k
N.I. - Dividends
140k - 10k
Revenues - Expenses
960,000 - 820,000
26. If the land is currently worth $300,000, then it would be reflected at its historical cost of $100,000.
Assets are never written up above their historical cost, but they are written down if values
decrease over time. If the land is currently worth only $50,000, then the land is written down to
its lower $50,000 value with a $50,000 loss recorded.
27. Entity concept: The personal assets of a company’s owners are not included in the company’s
balance sheet… the business is a separate accounting entity.
Monetary measurement principle: In the U.S., financial statement amounts are stated in U.S.
dollars, not Japanese yen or any other denomination or unit of measure..
28. Fill in the blanks
94
Assets
Liabilities
Owners' Equity
Capital Stock
Retained Earnings
Revenues
Expenses
Dividends
Debit (DR)
+
-
Credit (CR)
+
+
+
+
+
+
-
29. True/False
a. False (Not true for liabilities, capital stock, retained earnings and revenue accounts.)
b. True
c. False (Debits increase expenses. Increasing expenses cause a reduction in net income,
retained earnings and owners’ equity.)
30. All transaction are recorded with entries to at least two accounts having total debits equal total
credits.
31. Record General Journal Entries;
a. Cash
Truck
50k
20k
Common Stock 70k (1,000 shares @ $70 each)
b. Building
250k
Cash
50k
Note Payable
200k
(Interest expense to be recorded with the passage of time.)
c.
Inventory
A/P
5k
5k
d. Office Supplies
Cash
300
e. A/R
3,500
300
Sales Revenue
COGS
3,500
2,000
Inventory
f.
A/P
2,000
5,000
Cash
g. Cash
5,000
3,500
A/R
h. Cash
3,500
500
Dividend Rev.
i.
If not previously recorded:
Utilities Expense
700
Cash
500
700
95
j.
k.
If previously recorded:
Utilities Payable 700
Cash
700
Wages Payable 4,000
Cash
4,000
Dividends
Cash
2,000
2,000
32. Put in order.
a. 3
b. 4
c. 2
d. 1
e. 6
f. 7
g. 5
h. 9
i. 8
j. 10
33. Special journals are used to originally record transactions having certain common
characteristics. For example, a cash receipts journal is a special journal used to exclusively
record all transactions involving receipts of cash. Other special journals commonly used by
companies include a purchases journal to record all purchases of inventory on account, a cash
disbursements journal to record all transactions involving payments of cash, and a sales journal
to record all transactions involving credit sales. These journals were originally developed in
manual accounting systems to facilitate the posting process and improve internal controls by
facilitating the segregation of employee duties. In computerized accounting systems today,
special journals may represent software modules designed to facilitate the programming
necessary to handle the accounting for various kinds of transactions.
A subsidiary ledger is a file which serves as a detailed supplement to a general ledger account.
For example, the A/R general ledger account will typically have a supporting subsidiary ledger file
referred to as the "accounts receivable subsidiary ledger" which notes the running balance of
each credit customer’s account. Other general ledger accounts that commonly have supporting
subsidiary ledgers include inventory, property, plant and equipment and A/P. These accounts
maintain detail that is valuable information for a company’s management. Managers must know
the balance of units on-hand for each of their products as well as the total balance of all
inventories. Likewise, the detail of accounts payable for each of a company's vendors is critical in
making timely payments on account. General ledger accounts supported by a subsidiary ledger
are referred to as the "control account" for the related subsidiary ledger. The total of all of a
subsidiary ledger's account balances should equal the balance in its related general ledger
control account.
34. There is value in understanding where the information provided on a company’s financial
statements comes from. The better you understand the source of information, the more useful
that information becomes.
35. Accrual basis accounting is made up of the revenue recognition and the matching principles and
deals with the timing of revenues and expenses. The revenue recognition principle states that
revenues are to be recorded in the period in which those revenues are earned, not necessarily
when cash is collected from customers. The matching principle requires that the costs of
operating a company be recorded as expenses in the period in which those costs provide benefits
96
to the company, not necessarily when those costs are actually paid in cash. Expenses are to be
matched or recorded in the same period as the revenues they helped generate.
36.
a. 4/1/X1 original entry:
Cash
12,000
Unearned Rent Revenue
12,000
12/31/X1 adjusting entry:
Unearned Rent Revenue
Rent Revenue
9,000
9,000
(12,000  9/12 = 9,000)
b. Revenue recognition principle which part of accrual basis accounting
c. Liabilities would be overstated, and revenues, net income, and owners’ equity would all
be understated.
37.
Fees Receivable
2,000
Sales Revenue
2,000
Revenue recognition principle.
38.
9/1/X3 original entry:
Prepaid Insurance
Cash
2,400
2,400
12/31/X3 adjusting entry:
Insurance Expense
800
Prepaid Insurance
39.
800
(2,400 x 4/12 = 800)
Wage Expense
5,000
Wages Payable 5,000
Failure to record this adjusting entry would understate expenses and therefore overstate
net income.
40. Method one:
Sales Revenue
100,000
Retained Earnings
100,000
R/E
60,000
COGS
60,000
R/E
27,000
Other Expenses 27,000
R/E
3,000
Dividends
3,000
R/E
13,000
100,000
60,000
27,000
3,000
Balance in R/E @ 12/31/X1 = 23,000
97
23,000
Method two:
Sales Revenue
100,000
COGS
60,000
Other Expenses 27,000
R/E
13,000
R/E
3,000
Dividends
3,000
R/E
13,000
13,000
3,000
23,000
Balance in R/E @ 12/31/X1 = 23,000
41.
Inventory
Beg.
40,000
Purch. 342,000
End
337,000  COGS
45,000
42.
A/P
30,000 Beg.
150,000 Purchases on account
Cash Paid  153,000
27,000 End
98
Exam #2 Review Session— Questions
1.
Prepare journal entries for Norm’s Bicycle Shop for the following transactions assuming Norm
uses a perpetual inventory accounting system:
A.
Norm purchases 30 bikes on account for $100 each, terms of 2/10,n/30.
B.
Norm returned 2 defective bikes to the supplier receiving full credit on account.
C.
Norm paid the net amount due the supplier within the discount period net of the discount.
D.
Norm sold 10 bikes on account to a customer for $200/each, terms of 3/10,n/30.
E.
The customer returns 1 bike for full credit on account. (The bike is not damaged)
F.
The customer pays off his account within 10 days of purchase, net of the discount.
2.
Calculate Norm’s gross margin given the transactions noted above. What kind of account is Sales
Discounts, real or nominal? Calculate the net percentage markup on the sale. What would the
gross margin have been if the returned bike had been damaged yet full credit on account was
allowed the customer due to a liberal return policy?
3.
How is Operating Income different from Gross Margin and Net Income?
4.
Prepare the journal entry to record the sale of 2 bikes for $200/each to a customer paying with a
VISA credit card. Assume that Norm’s processing costs run at 4% of the sales price.
5.
Determine the cost of goods sold for the month and the balance of ending inventory using a
perpetual FIFO inventory accounting method given the following information:
#/units
cost/unit
Balance at 11/1
250
$90
Purchase at 11/5
100
$95
Sale at 11/10
120
Purchase at 11/16
50
Sale at 11/21
120
$100
6.
Given the information above, determine the cost of goods sold and balance of ending inventory
using perpetual LIFO. Prepare the journal entry to record the 11/21 sale using perpetual LIFO.
Prepare the journal entry to be made for the 11/10 sale using the MWA method.
7.
Under what circumstances is the specific identification inventory cost flow method appropriate?
When is use of an inventory cost flow assumption (LIFO, FIFO, MWA) appropriate?
8.
a.
b.
c.
In a period of declining inventory costs (deflation) which inventory cost flow assumption
will be used if the primary motive is to impress investors with the highest determination of
net income possible? Will that assumption produce a higher or lower inventory balance
on the balance sheet than the other possible assumptions?
Assuming inflationary times, which assumption will produce the lowest income tax
obligation? Will that assumption produce a higher or lower inventory balance on the
balance sheet than the other possible assumptions?
Can any assumption be used regardless of the actual physical flow of inventory? Can
different assumptions be used from year to year?
99
9.
What is a physical inventory and why must it be done when a perpetual inventory accounting
system is used?
10.
If A/R at year-end (12/31/X1) total $270,000, the Allowance for Uncollectible A/R has a zero
balance and given the following aged estimate of year-end uncollectibilty
A.
Amount
Estimated % Uncollectible
current
$170,000
3%
0-30 days
$50,000
5%
30-60 days
$25,000
7%
60 + days
$25,000
10%
Prepare the adjusting journal entry required at year-end to record Bad Debt Expense for
the year X1.
What kind of account is the Allowance for Uncollectible A/R, real or nominal?
Will the Allowance account always have a credit balance after any year-end adjusting
entry to record bad debt expense?
What would be the journal entry to record the actual writeoff of $16,200 of uncollectible
A/R in the following year X2? Why is this writeoff not recorded as an expense for the
year X2? When is any bad debt expense recorded for the year X2? What does a debit
balance in the Allowance account before any year-end adjustment to record bad debt
expense for the year X2 represent? How is this error in the prior year estimation handled
in the books?
What would be the adjusting entry to record bad debt expense for the year X2 if ending
A/R totaled $300,000 and an aging produced an estimation of uncollectibles of $18,000?
What would be the recorded bad debt expense if the Allowance account balance before
adjustment had been a credit balance of $1000?
B.
C.
D.
E.
11.
Period Past Due
Given the following information for January’s employee wages:
Gross Wages
$10,000
Employee FICA
$600
Federal. Income Tax
Withholding
$2,000
State Income Tax
Withholding
$900
Net Wages
$6,500
Federal Unemployment Insurance
State Unemployment Insurance
$300
$200
Prepare the journal entries as of January 31st to record the obligations to pay all of these
payroll costs in the future.
12.
Prepare the journal entry to record the cash sale of merchandise costing $100 to a
customer at a price of $200 plus 6% sales tax. Also record the subsequent remittance of
the sales tax proceeds to the state.
13.
What are internal controls? Provide examples. Who is responsible to establish and
implement such controls for a company? Who benefits from these controls? What is the
role of an external auditor (CPA) relative to a company’s internal controls?
100
14.
On 4/1/X1, XYZ Company.purchases a used truck for $30,000 by paying $10,000 of its
own cash and borrowing the remainder from a local bank. The $20,000 loan matures in
three years and bears interest at an annual rate of 12% payable annually on 4/1 of each
year. In addition XYZ pays a 6% sales tax on the total purchase price, overhauls the
engine for $1,200 and pays $2,000 for a paint job deemed necessary before putting the
truck in service. XYZ also prepays $2,400 of insurance premiums for one year’s
coverage on the truck.
A.
Prepare the journal entry or entries required for the purchase of the truck and all
associated expenditures including insurance. (Exclude payments under the bank
loan)
B.
Prepare the adjusting entry for depreciation at 12/31/X1 using the straight-line
method and assuming a $5,000 salvage at the end of its estimated 5 year useful
life.
C.
Prepare the adjusting entry at 12/31/X1 for the bank loan interest.
D.
In ‘X2 the company pays $500 for new tires. Record the journal entry. When
does an expenditure qualify as an “improvement” which must be “capitalized” as
part of the cost of the truck?
E.
Prepare the journal entry for the 4/1/X2 payment of interest on the bank loan.
F.
Prepare the adjusting entries at 12/31/X2 for depreciation on the truck and
interest on the loan.
G.
Determine the book value of the truck at 12/31/X2.
H.
Prepare the journal entry to record the sale of the truck at 12/31/X2 for $28,000
cash. Also record the associated payoff of the bank loan. What would have been
the entry if the truck had sold for $20,000 cash?
I.
Recalculate the truck’s 12/31/X1 depreciation using the units of production
method under the following assumptions: 100,000 miles of anticipated usage,
$5,000 estimated salvage value, and 10,000 miles of actual usage from 4/1/X1 to
12/31/X1.
15.
A.
C.
E.
How are research and development costs incurred in the development of a
patentable technology over a ten year period recorded under GAAP?
B.
How about $5,000 in legal fees incurred in actually applying for a
successful patent and $100,000 in legal fees in the successful
prosecution of a patent infringement case? The allocation of any
capitalized costs of a patent or other intangible asset to expense over its
useful life is referred to as what?
Record the $1,000,000 cash purchase of a music copyright. Using straight line
amortization over a 50 year copyright life, prepare the adjusting entry required at
the end of each full year’s during the period of copyright ownership.
D.
Define “goodwill.” When is it recorded as an asset? Record the
$1,000,000 cash purchase of a company with assets having a combined
fair market value of $500,000 (book value on the seller’s books of
$350,000) and liabilities to be assumed by the buyer in the amount of
$50,000.
Are capitalized costs incurred in the acquisition and improvement of natural
resources ever recorded as an expense?
16.
A.
B.
Prepare the 3/1/X1 journal entry to record the purchase of $500,000 of real
estate ($100,000/land and $400,000/building) paying $50,000 cash down and
financing the remainder through a 30 year fully-amortizing mortgage note bearing
8% annual interest compounding monthly with monthly payments of $3,301.94.
Prepare the journal entries to record the first and second mortgage payments
made on 4/1 and 5/1, respectively. Determine the balance of the mortgage
payable following the 2nd monthly payment.
101
17.
What is a bond and a bond indenture? What are some of the common types of bonds?
Prepare the journal entry to record the 5/15/X1 issuance of $10,000,000 of bonds at face
value bearing interest at an annual rate of 7% payable quarterly. Record the first interest
payment made on 8/15/X1.
18.
Prepare the journal entries to record 1,000 shares of common stock issued for $90/share
assuming the stock has
A. a par value of $.01 per share.
B. a stated value of $.01 per share.
C. no par or stated value.
19.
Prepare the journal entries to record a $250,000 dividend at the dates of declaration,
record and payment.
20.
Prepare the journal entry to record the issuance of 10,000 shares of 7%, $20 par value
cumulative preferred stock at a price of $22 per share. Determine the annual dividend
preference on this preferred stock per share and in total. What are dividends in arrears
and how are they to be accounted for?
A.
Assuming dividends in arrears amounting to $25,000 what portion of a $100,000
dividend declaration would go to common stockholders?
B.
Assuming the preferred stock was non-cumulative and therefore
no dividends are in arrears, what portion of a $100,000 dividend would
go to common stockholders?
21.
Given the following financial statements
XYZ Company
Income Statement
for the years ended 12/31/X1 and X2
X1
Sales Revenues
X2
$ 500,000
$ 600,000
Less: Cost of Goods Sold
300.000
350,000
Gross Margin
200,000
250,000
Less: Operating Expenses
100,000
120,000
100,000
130,000
25,000
30,000
$ 75,000
$ 100,000
$ 15.00
$ 20.00
Income before Income Taxes
Less: Income Taxes
Net Income
Earnings Per Share
(continued)
102
XYZ Company
Balance Sheet
as of 12/31/X1 and 12/31/X2
12/31/X1
12/31/X2
Assets:
Liabilities:
Current Assets
Current Liabilities
Cash
12/31/X2
$ 56,000
$ 65,000
$ 20,000
$ 18,000
A/R, net
45,000
52,000
Other Payables
34,000
42,000
Inventory
82,000
74,000
Unearned Revenues
12,000
10,000
Prepaids
4,000
6,000
102,000
117,000
152,000
150,000
Property & Equip
457,000
516,000
233,000
255,000
Less: Accum/Dep
54,000
64,000
335,000
372,000
403,000
452,000
Stockholder’s Equity
$555,000
$602,000
Common Stock,
(5,000 shares)
Retained Earnings
200,000
20,000
200,000
30,000
Total Liabilities and
Stockholders’ Equity
$555,000
$602,000
Total Assets
A
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
Accounts Payable
12/31/X1
Long-Term Liabilities
Notes Payable
Calculate the current ratio at 12/31/X2. What does this measure?
Calculate the acid-test (quick) ratio at 12/31/X2. What does this measure?
Calculate the A/R turnover and days sales in A/R for X2. What does this
measure?
Calculate the inventory turnover and days sales in inventory for X2. What does
this measure?
Calculate the debt ratio (total debt to total assets) at 12/31/X2. What does this
measure?
Calculate the debt to equity ratio at 12/31/X2. What does this measure?
How is EPS determined? What was the dividends per share in X2?
What would XYZ’s stock be worth if it was selling at a P/E multiple of 25 on
12/31/X2? Why do some stocks sell at a multiple of 10 while others sell at
mutiples of 50 or more?
By what percentage did assets grow in X2?
By what percentage did sales revenues grow in X2?
Calculate the gross margin percentage in both X1 and X2. What might have
given rise to the change?
L.
Calculate net income as a percentage of sales in X1 and X2?
Evaluate the results relative to prospects for income growth in the future.
103
Exam #2 Review Session— Solutions
Question 1
A. Inventory
Accounts Payable
B. Accounts Payable
Inventory
3,000
3,000
200
200
C. Accounts Payable
Cash (98%  2,800)
Inventory (2%  2,800)
2,800
D. Accounts Receivable
Sales Revenue
2,000
Cost of Goods Sold
Inventory (10  $98)
(Assumes LIFO inventory cost flow)
2,744
56
2,000
980
980
E. Sales Returns & Allowances
Accounts Receivable
200
Inventory
Cost of Goods Sold
98
F. Cash
Sales Discount (1,800  3%)
Accounts Receivable
200
98
1,746
54
1,800
104
Question 2
Sales revenues
Less: Sales returns
Sales discounts
Net Sales revenues
Less: Cost of goods sold
Gross margin
$
$
2,000
(200)
( 54)
1,746
(882)
864
Sales Discounts is a nominal account; it relates to sales for a specific year and must be closed at
the end of the year.
864
Net Percentage
=
=
98% rounded
Markup
882
Gross margin if the returned bike was damaged and full credit on account was allowed the
customer:
Sales revenues
Less: Sales returns
Sales discounts
Net Sales revenues
Less: Cost of goods sold
Gross margin
$
$
2,000
(200)
( 54)
1,746
(980)
766
Question 3
Sales revenues
Less: Sales returns
Sales discounts
Net Sales revenues
Less: Cost of goods sold
Gross margin
Less: Operating expenses
Operating Income
Other revenues and expenses
Income before income taxes
Less: Income taxes
Net Income
$
$
XXX
(XXX)
(XXX)
XXX
(XXX)
XXX
(XXX)
XXX
XXX
XXX
(XXX)
XXX
EPS:
$
XXX
Question 4
Cash
VISA Expense
Sales Revenue
384
16
400
105
Cost of Goods Sold
Inventory
(Amount not give
?
?
106
Question 5
FIFO
Purchase at 11/5
Cost/unit
$
250 90
$
100 95
Sale at 11/10
120
Units x
Cost
#/Units
Balance at 11/1
Purchase at
11/16
Sale at 11/21
COGS
Unit
Balance
$
120 x $90 10,800
$
50 100
$
120 x $90 10,800
120
$
21,600
COGS
Price
$
250 90
$
250 90
$
100 95
$
130 90
$
100 95
$
130 90
$
100 95
$
50 100
$
10 90
$
100 95
$
50 100
Inventor
160 y
$ 900
$
9,500
$
5,000
$15,400
Question 6
Balance at 11/1
Purchase at 11/5
Sale at 11/10
Purchase at 11/16
Sale at 11/21
#/Units
Cost/unit
250 $
90
100 $
95
120
50 $
120
Units x Cost COGS
100 x $95 $ 9,500
20 x $90 $ 1,800
100
50 x $100 $ 5,000
70 x $90 $ 6,300
COGS
$ 22,600
LIFO Journal Entry on 11/21
107
LIFO
Unit Balance Price
250 $
90
250 $
90
100 $
95
0 $
95
230 $
90
230 $
90
50 $
100
0 $
100 $
160 $
90 $ 14,400
160 Inventory $14,400
Cost of Goods Sold
Inventory
11,300
11,300
MWA Journal Entry on 11/10
Cost of Goods Sold
Inventory
10,971
10,971
Weighted Average price per unit = $91.43 * 120 = $10,971
Question 7
Specific identification is an inventory cost flow method used to determine the cost of goods sold
for companies that have inventory that tends to be easily differentiated unit by unit in its nature
and cost. Under the specific identification method, the cost of a specific inventory item is
determined and accounted for as the cost of goods sold upon sale of that item. For example, an
art dealer will use the specific identification method of accounting for its inventory of paintings
because of the unique nature and cost of each painting. To do otherwise would most likely distort
the dealer's reported profits for a period of time. Companies that sell products that are similar in
nature and cost, but for which costs may change over time due to factors of inflation or deflation
rather than product differentiation, will typically use an inventory cost flow assumption (LIFO,
FIFO, MWA) rather than specific identification in accounting for the cost of goods sold.
Question 8
A. The LIFO inventory cost flow assumption will be used to produce the highest net income in a
period of deflation. Under LIFO, the last inventory costs are the ones used for Cost of Goods
Sold. Because these costs are lower in a deflationary environment Cost of Goods Sold will
be lower and net income will be higher. Since the last (lower) costs are used for Cost of
Goods Sold, the first (higher) costs are used for valuing ending inventory. The inventory
balance will therefore be higher than under the other methods.
B. LIFO will produce the lowest income tax obligation in inflationary times. During inflation, the
last costs for inventory purchases are the highest. These higher costs are used to calculate
Cost of Goods Sold for the period; since the costs are higher, net income will be lower, and
the taxes will also be lower. Because the higher costs are used for Cost of the Goods Sold,
the remaining lower costs are used to value ending inventory, which will produce a lower
ending inventory balance than the other methods.
C. Any assumption can be used to value inventory and Cost of Goods Sold, regardless of the
actual physical flow of inventory. The same method must be used for both financial reporting
and income tax purposes and must be used consistently over time.
Question 9
A physical inventory refers to an actual physical count of inventory items on hand. This must be
done at least once a year even when a perpetual inventory accounting system is used. An
adjustment must be made to correct the perpetual records if any difference exists between the
physical count and perpetual records. Perpetual records may be inaccurate due to unaccounted
for waste, pilferage and simple accounting errors.
Question 10
108
Period Past Due
Current
0-30 Days
30-60 Days
60 + Days
Total
$
Amount
Estimated % Uncollectible
170,000
3%
50,000
5%
25,000
7%
25,000
10%
A. Bad Debt Expense
Allowance for Uncollectible A/R
Estimated $ Uncollectible
$
5,100
$
2,500
$
1,750
$
2,500
$
11,850
11,850
11,850
B. Uncollectible A/R is a real account. It’s a contra-asset account on the balance sheet, tied to
A/R.
C. Yes, after the adjusting entry, the Allowance account will always have a credit balance… it is
a contra-asset account and its only purpose is to reduce A/R for estimated uncollectibles.
D. Allowance for Uncollectible A/R
A/R
16,200
16,200
This entry to write off the uncollectible account isn’t recorded as an expense for Year 2,
because we already accounted for Bad Debt Expense for Year 1 on an estimated basis. The
difference between the previously recorded estimate and the actual accounts written off will
be corrected at the end of the 2nd year and compensated for in the amount of Year 2 Bad
Debt Expense.
Bad Debt Expense for Year 2 will be recorded at the end of the year as an adjusting entry.
A debit balance in the Allowance account before any year-end adjustment means that more
accounts were written off during the year than was previously estimated: we underestimated
bad debt expense in the prior year.. This error in estimation will be fixed in the current year
when we make the adjusting entry for Bad Debt Expense.
E. Bad Debt Expense
Allowance for Uncollectible A/R
22,350
22,350
(Allowance Account had a debit balance before adjustment of 4,350; this year’s estimated
uncollectibles is 18,000. We need a credit balance in the Allowance account of 18,000, so a
22,350 credit entry to the allowance account is required to produce the 18,000 credit
balance.)
Entry if the balance in the Allowance account before adjustment had been a credit balance of
1,000:
Bad Debt Expense
Allowance for Uncollectible A/R
17,000
17,000
(Allowance Account had a credit balance of 1,000; this year’s estimate is 18,000. To get a
total credit balance of 18,000, then a credit entry for 17,000 would be required.)
109
Question 11
Wage Expense
Wage Payable
Employee FICA Payable
Employee FIT Payable
Employee SIT Payable
10,000
Payroll Tax Expense
Employer FICA Payable
Employer FUI Payable
Employer SUI Payable
1,100
6,500
600
2,000
900
600
300
200
Question 12
Cash
Sales Revenue
Sales Tax Payable
212
200
12
COGS
Inventory
(Amount not given.)
?
Sales Tax Payable
Cash
12
?
12
Question 13
Internal controls are policies and procedures implemented by a business that are designed to
safeguard assets and ensure accurate accounting records.
Examples:
 Fencing around inventory and supplies
 Computer passwords
 Segregation of duties of accounting personnel.
Management is responsible to establish and implement internal controls. Shareholders benefit
from internal controls along with employees and customers who might be otherwise tempted and
get into trouble. CPAs have expertise in the area of internal controls. The external auditor will
test these controls to make sure that they are working and are reliable during the conduct of a
financial statement audit. The quality of controls will affect the scope of an auditor’s work and any
deficiencies are reported to management.
Question 14
A. Truck
Cash
Note Payable
Truck
30,000
10,000
20,000
5,000
110
Cash
(Capitalized expenditures)
Prepaid Insurance
Cash
5,000
2,400
2,400
B. (35,000 – 5,000) / 5 = 6,000  9/12 of a full year
Depreciation Expense
4,500
Accumulated Depreciation—Truck
C. Interest Expense
Interest Payable
(20,000  12%  9/12)
4,500
1,800
1,800
An adjustment also needs to be made for prepaid insurance ($2,400  9/12):
Insurance expense
1,800
Prepaid Insurance
1,800
D. Repair Expense
Cash
500
500
Normal repairs and maintenance costs are expensed when incurred. Improvements that
extend the asset’s useful life or productivity above and beyond the life or productivity
originally anticipated upon purchase are capitalized as part of the cost of the asset.
E. Interest Payable
Interest Expense
Cash
1,800
600
2,400
F. Depreciation Expense
6,000
Accumulated Depreciation—Truck
Interest Expense
Interest Payable
G. Capitalized Cost
- Accumulated Depreciation
H. Cash
Accumulated Depreciation
Truck
Gain on Sale of Truck
Note Payable
Cash
Interest Payable
Cash
1,800
1,800
35,000
(10,500)
24,500
28,000
10,500
35,000
3,500
20,000
20,000
1,800
1,800
If the truck had sold for $20,000:
Cash
Accumulated Depreciation
6,000
20,000
10,500
111
Loss on Sale
Truck
I.
4,500
35,000
(35,000 – 5,000) / 100,000 = .3 or $.30/mile
Depreciation Expense
Accumulated Depreciation
3,000
3,000
Question 15
A. Under GAAP, Research and Development costs incurred in the development of patentable
technology are all expensed in the period incurred.
B. The $5,000 in legal fees and the successful prosecution of a patent infringement suit would
be capitalized. The allocation of capitalized costs is known as amortization expense (for
patents and other intangible assets).
C . Copyright
1,000,000
Cash
1,000,000
Amortization Expense
20,000
Accumulated Amortization
20,000
(1,000,000 / 50 years = 20,000 per year)
D. Goodwill is defined as a business being worth more than its net assets (total assets – total
liabilities). It is only recorded when purchasing a business at a price above the fair market value
of the assets purchased less any liabilities assumed. (Note: Goodwill is the one intangible
asset that is not amortized to expense over time. Under current GAAP, the fair market
value of any recorded goodwill is determined at the end of each year and a loss is
recorded with any reduction in value. Gains on increasing values are never recorded.)
Assets
Goodwill
Cash
Liabilities
500,000
550,000
1,000,000
50,000
E. Yes, as the resources are depleted:
Depletion Expense
Accumulated Depletion
XXX
XXX
Question 16
Land
Building
Cash
Mortgage Payable
100,000
400,000
50,000
450,000
Entry on 4/1
Interest Expense
3,000
Mortgage Payable
301.94
Cash
(Interest: 450,000  .08  1/12 = 3,000)
Entry on 5/1
112
3,301.94
Interest Expense
2,997.99
Mortgage Payable
303.95
Cash
3,301.94
(Interest: 449,698.06  .08  1/12/ = 2,997.99)
Mortgage Payable balance after 5/1 payment is: $449,394.11
Question 17
A bond is a note payable arising from the borrowing of cash from the public. A bond indenture is
the written contract that spells out the legal terms and conditions of the obligations of the bond
issuer and the rights of the bondholders.
Debentures—Unsecured bonds
Secured or mortgage-backed bonds—Bonds for which property or real estate are specified as
collateral
Junk bonds—Unsecured bonds issued by companies with low credit ratings
Subordinated bonds—Typically unsecured bonds designated as having some subordinated
rights to other unsecured creditors
Term bonds—Bonds that require principal repayment in full at maturity
Serial bonds—Bonds that require the payment of principal periodically over the term of the bond
(Amortizing bonds)
Convertible bonds—Bonds that can be converted into shares of stock at an agreed upon rate.
Entry on 5/15
Cash
Bonds Payable
10,000,000
10,000,000
Entry on 8/15
Interest Expense
Cash
(Interest: 10,000,000  .07  3/12)
175,000
175,000
Question 18
A. Cash 90,000
Common Stock at par value
Paid in Capital in Excess of Par
10
89,990
B. Cash
90,000
Common Stock at stated value
Paid in Capital in Excess of Stated Value
10
89,990
113
C. Cash
90,000
Common Stock
90,000
Question 19
Entry at date of declaration
Dividends
Dividends Payable
250,000
250,000
Entry at date of record
No entry made on this date. On the date of record, a record is compiled of all current
hareholders of the outstanding stock. The shareholders as of this date are they who will
receive the dividend.
Entry at date of payment
Dividends Payable
Cash
250,000
250,000
Question 20
Cash
Preferred Stock at par value
Paid in Capital in Excess of Par
220,000
200,000
20,000
Annual Dividend Preference: $20 par value  7% = $1.40 per share  10,000 = $14,000
Companies are never obligated to declare dividends. In the event dividends are declared in a
particular year, preferred shareholders have a right to receive those dividends before any
common shareholders to the extent of their annual dividend preference. In the case of noncumulative preferred stock, there are no carryover rights if insufficient dividends are declared to
meet the current year dividend preference. If the preferred stock is cumulative, then the right to
any unpaid preference in a particular year is carried over to future years and is referred to as
dividend in arrears.
A. Dividends in arrears = 25,000 + current year dividends 14,000 = 39,000 dividends
payable to preferred stock. 100,000 – 39,000 = 61,000 available for common
stockholders.
B. Current preferred stock dividends = 14,000. 100,000 – 14,000 = 86,000 available for
common stockholders.
Question 21
A. Current Ratio = Current Assets / Current Liabilities = 150,000 / 117,000 = 1.28
Measures liquidity (the ability to meet short-term obligations).
B. Acid Test/Quick Ratio = Selected Current Assets / Current Liabilities:
Cash & A/R Test:
(18,000 + 52,000) / 117,000 = .59
Cash Only:
18,000 / 117,000 = .15
114
A more stringent measure of liquidity.
C. A/R Turnover = Total Net Credit Sales Revenue / Average Balance of A/R for Period
= 600,000 / (45,000+52,000)/2 = 600,000 / 48,500 = 12.37 times
Days Sales in A/R = 365 / A/R Turnover
= 365 / 12.37 = 29.5 days or average collection period
Measures the company’s performance in the collection of A/R
D. Inventory Turnover = Cost of Goods Sold / Average Inventory Balance for Period
= 350,000 / (82,000 + 74,000)/2 = 350,000/78,000 = 4.49 times
Days Sales in Inventory = 365 / Inventory Turnover
= 365 / 4.49 = 81.3 days or the period it takes to sell inventory.
Measures the company’s performance in the management of inventory levels.
E. Debt Ratio = Total Liabilities / Total Assets = 372,000 / 602,000 = .62
Measures the percentage of total assets financed with debt (leverage).
F. Debt to Equity = Total Liabilities / Total Owners Equity = 372,000 / 230,000 = 1.62
This is another way to measure leverage. For every $1.62 of debt there is $1 of equity.
G. EPS = Net Income / # of Shares Outstanding
Dividends per Share = Dividends / # of Shares Outstanding = 90,000 / 5,000 = 18
(The amount of dividends is determined by taking beginning Retained Earnings, plus Net
Income, less Dividends equals ending Retained Earnings. 20,000 + 100,000  x =
30,000; x = 90,000)
H. PE Multiple (Ratio) = Market Price Per Share / EPS
If the PE multiple is 25, then the Market Price is equal to $500 per share given:
500/20 = 25
I.
Asset Growth = “” in Assets / Base Year Assets
= 602,000 – 555,000 / 555,000 = .085 or 8.5%
J.
% Sales Revenue Growth = “” in Sales Revenues / Base Year Sales Revenues
= 600,000 – 500,000 / 500,000 = .20 or 20%
K.
Sales Revenue
Cost of Goods Sold
Gross Margin
X1
500,000 100%
(300,000) 60%
200,000 40%
Possible causes of increase:
115
X2
600,000 100%
(350,000) 58.3%
250,000 41.7%
1. Increase in sales price per unit sold above any increase in the cost per unit sold
2. Decrease in cost per unit sold.
L.
Net Income / Sales Revenues 75,000 / 500,000
= 15 %
100,000 / 600,000
= 16.6 %
Exam #3 Review Session— Questions
1.
What are some of the distinguishing characteristics of managerial vs financial
accounting?
2.
For a merchandising business, what common costs are included in its
a. product costs?
b. period costs?
How are these costs accounted for?
3.
For a manufacturing business, what common costs are included in its
a. product costs?
b. period costs?
How are these costs accounted for?
Diagram the flow of costs through the three stages of inventory for a manufacturing
business.
4.
Do service companies have product costs that are accounted for as inventory?
5.
What kinds of manufacturing businesses would choose to use a job order cost system as
opposed to a process cost system? What are the distinguishing characteristics of the two
methods of accounting for manufacturing product costs?
6.
Prepare the general journal entries for Custom Boat Manufacturing (“CBM”) given the
following transactions:
a. CBM purchases on account $100,000 of direct materials (lumber, sails, glue, nails,
paint, etc.) and $10,000 of indirect materials (factory supplies, sandpaper, paint
brushes, etc.)
b. CBM receives an order for two “Bullet” sailboats and initiates a manufacturing job (job
order #303) to build four “Bullets” to meet the order and provide for two additional
boats for future anticipated sales. The following job cost sheet is set up for job
#303:
Job Cost Sheet
Job # : 303
Descrip.: 4 Bullet Sail Boats
Start Date: 11/30/X1
Completion Date: _____
Direct Material Costs: Req. #
______
Direct Labor Costs: Time Card #’s
___________________
Manufacturing Overhead: DL Hours
X
116
Amount
$______
$______
OH Rate
______
_______
$______
Total
$______
Divided by  ______
Cost Per Unit $______
c. Direct materials costing $12,000 are requisitioned (Requisistion # 2255) from raw
materials and placed into production exclusively for job #303. (Also make any
entry necessary to the Job #303 Job Cost Sheet)
d. Indirect materials amounting to $3,000 (sandpaper brushes, etc.) are requisitioned
and will be used in the production of Job #303 and other jobs.
e. Nails and glue costing $1,500 are requisitioned and placed into production for Job
#303 and other jobs.
f. Total wages paid to direct manufacturing employees for the month amount to $50,000
(2,500 hours at an average rate of $20/hr.) of which time card #’s 222 and 224
show a total of 320 hours at a rate of $20/hour for job #303. (Also make any
entry necessary to the Job #303 Job Cost Sheet)
g. Total manufacturing supervisor and production maintenance salaries paid for the
month amount to $30,000.
h. Total factory utility, rent, insurance, property taxes and other costs amounting to
$40,000 for the month are paid.
i. Depreciation of factory equipment for the month amounts to $8,000.
j. Assume manufacturing overhead is applied to WIP jobs based on a predetermined
rate of $32 per direct labor hour. (Also make any entry necessary to the Job
#303 Job Cost Sheet)
k. Job #303 ‘s production is completed.
l. Two of the four Bullet boats completed in Job #303 are shipped to the customer. The
customer has agreed to pay a price of $15,000 each for the boats within 30 days
of delivery. Determine the gross margin made on this sale. Is this the amount of
net income made by CBM on these two boats?
m. Sales, accounting and all administrative salaries and wages for the month totaling
$40,000 are paid.
n. Total selling and administrative building rent, utilities, supplies, insurance, property
taxes, and other costs amounting to $25,000 are paid during the month.
o. The manufacturing overhead account is closed-out at the end of the month.
7. How is a predetermined overhead rate, such as the $32 rate per direct labor hour used in
Problem 6 above, derived?
117
8. Given the following past and budgeted information for RST, Inc, determine the best
measure upon which RST’s overhead rate would be based and calculate the
predetermined overhead rate to be used in ‘X3.
‘X1
‘X2
Budget ‘X3
Manufacturing Overhead
$2,000,000
$2,200,000
$2,500,000
Direct Material Costs
$4,250,000
$3,750,000
$5,500,000
Machine Hours
30,000 hrs.
24,000 hrs.
19,000 hrs.
Direct labor hours
60,000 hrs.
65,000 hrs.
71,500 hrs.
9. What is CVP analysis and what purpose does it serve for management? (To perform
simple CVP analysis, all of a company’s costs (product and period) must be identified
and characterized and quantified as either perfectly fixed or perfectly variable in their
behavior with changes in volume.)
10. Define variable costs. Give examples of common variable product and period costs.
Graph the total cost of direct materials in the manufacture of bicycles if the a direct
material costs amount to $50 per bicycle within a range of production volume from
- 5,000 units. What does relevant range mean and what are its implications in CVP
analysis?
11. Define fixed costs. Give examples of common fixed product and period costs. Graph
the total cost of building rent in the manufacture of bicycles if the rental rate is $30,000
per year within a range of production volume from 0 - 5,000 units. What does relevant
range mean and what are its implications in CVP analysis from the standpoint of fixed
costs? Graph the fixed rental costs per bicycle produced at a volume of 1,000 - 5,000
units.
12. a. What are stepped costs and how should they be dealt with in CVP analysis?
b. What are mixed costs and how should they be dealt with in CVP analysis?
13. Given the following information for a company’s utility costs over the last four months:
Actual Production
Volume
Months
February
10,000 units
Actual
Utility Costs
$ 25,000
March
8,000 units
$21,000
April
15,000 units
$35,000
May
12,000 units
$32,000
a. How would one apply the scattergraph method to determine the fixed and variable
elements of this mixed cost?
118
0
b. Determine the fixed and variable elements of this mixed cost using the high-low
method? If June’s budgeted volume of production is 20,000 units, what would be the
amount of utility costs budgeted for the month?
c. Which of the two methods is the best approach for the real world? .....for the exam?
14. Given the following information, prepare a contribution margin income statement:
Accounts Receivable
$ 50,000
Fixed Selling and Admin. Expenses
$ 125,000
Sales Revenues
$ 760,000
Variable Portion of Costs of Goods Sold
$ 346,000
Fixed Portion of Costs of Goods Sold
$ 127,000
Variable Selling and Admin. Expenses
$ 85,000
Accounts Payable
$ 47,000
a. What is the variable cost ratio?
b. What is the contribution margin ratio?
c. Does it make sense that the variable cost ratio plus the contribution margin ratio is
equal to 1?
d. If the company sold 100,000 units what was the sales price per unit, variable cost per
unit, the contribution margin per unit, and the fixed cost per unit. Does variable
cost per unit change with changes in volume? Does the fixed cost per unit
change with changes in volume?
15. Given the following for Norm’s Bikes:
Sales price per unit
Variable cost per unit
Total fixed costs per month
$100/unit
$ 40/unit
$ 24,000
a. How many units must Norm sell to breakeven during the month?
b. How many units must Norm sell to make a profit of $10,000 for the month?
c. If Norm currently sells 400 bikes a month and could increase volume by 20% with a
10% discount in the sales price, what would be the impact on net income?
16. Given the following:
Variable cost ratio
45%
Total fixed costs for the period $100,000
What must sales revenues be for the period to generate a $1,000,000 profit?
17. Given the following:
Contribution margin per unit
$ 70
Total fixed costs for the period $ 50,000
How many units must be sold to breakeven?
18. Given the following:
Sales price per unit
$ 100
119
Breakeven volume
1,000 units
Total fixed costs
$ 30,000
Determine the volume required to achieve a targeted net income of $ 180,000.
19. Given the following:
Budgeted sales volume
25,000 units
Variable cost ratio
60%
Total fixed costs
$50,000
Determine the sales price that must be charged per unit to achieve a $100,000 profit.
20. Given the following:
Sales price per unit
$ 120
Variable cost per unit
$ 80
Breakeven sales revenues
$360,000
Determine the number of units that must be sold to achieve a profit of $100,000.
21. Note the three basic planning or budgetary processes which should be implemented by a
business as noted in the CD lessons.
22. Diagram the operating budget sequence required to produce a cash flow budget for a
merchandising company. Remember: The operating budget process always begins with
the sales budget. Do the same for a manufacturing business.
23. What are the benefits of doing an operating budget for a business.
24. Assuming the following for a manufacturing company:
April - 10,000 units
May - 13,000 units
June - 15,000 units
of sales are made on account and 50% of such sales are collected in the month
of sale, 35% in the month following sale and 15% in the 2 nd month following sale.
month equal to 20% of the following month’s budgeted sales volume. The April
1st finished goods inventory balance amount to 1,900 units. All production
initiated during a month is completed during the month.
3 per unit and $3,000 of direct
materials inventory is to be maintained on-hand at all times. The April 1st
balance is equal to $3,300.
the month of purchase and the remainder to be paid in the following month.
month incurred.
Fixed manufacturing overhead costs total $12,000 per month including $2,000 of
depreciation expense. All manufacturing overhead costs are paid for in the
month incurred.
fixed selling and administrative costs total $10,000 per month, including $1,000
of depreciation. All of these costs are paid in the month incurred.
st
balance sheet includes the following amounts: Cash of $8,000 and
Accounts Receivable of $54,000 of which $20,000 is from February sales that is
all expected to be collected in April and $34,000 is from March sales of which
70% is expected to be collected in April. Accounts payable outstanding on April
1st amounts to $14,000 from March direct material purchases.
120
a. To the extent possible prepare for the months of April, May and June a sales budget,
production budget, direct materials purchases budget and direct labor budget.
b. Prepare a cash flow budget for the month of April.
c. Determine the amount of cash inflows from customers for the month of June.
d. Determine the ending balance of Accounts Receivable on a June 30th pro forma
balance sheet.
e. Explain how the ending balance of finished goods inventory on an April 30 th pro forma
balance sheet would be determined.
25. a.
b.
c.
c.
What are non-routine business decisions and note some examples.
What are relevant costs in non-routine decision making.
What are direct costs of a decision option? Are they relevant costs?
What is a sunk cost and is it every relevant in non-routine business decision making?
Provide some examples.
d. What are opportunity costs and are they relevant in non-routine business decision
making? Provide some examples.
26. Assume the following unit cost data for Ace Lighting’s production of a lamp:
Direct material
Direct labor
Variable manufacturing overhead (avoidable)
Fixed manufacturing overhead
$20
8
4
6*
$ 38
*Amount reflects unavoidable fixed costs of $60,000 reflected here on a per unit basis
given a budgeted volume of 10,000 units of production.
If a new customer wishes to place a special order for 900 units but is only willing to pay
$35 per unit, how much profit (loss) would be made on the special order if accepted,
assuming that sufficient unused production capacity exists to produce the order?
27. Jones Company produces 5,000 units per month of a needed component part, incurring
per-unit costs as follows: direct material, $7; direct labor, $11; variable manufacturing
overhead, $2. Total fixed manufacturing overhead costs amount to $54,000 per month.
The purchasing department can buy comparable units for $22 per unit. Assuming
one-half of the fixed costs are direct and could be avoided if the component is purchased
rather than manufactured and $8,000 per month of revenue could be generated by
renting out the excess factory space, purchase of the units would result in what amount
of savings or loss?
28. ZZZ Company has total income from all departments of $55,000. Department Q reports
the following information for this year:
Revenue
Variable cost of goods sold
Fixed cost of goods sold
Variable selling expense
Fixed selling expenses
Net Income (Loss)
$625,000
350,000
70,000
225,000
50,000
$ (70,000)
121
Assuming that 50% of department Q's fixed costs and expenses are direct and could
have been avoided, what would the firm's total net income have been if Department Q
had been discontinued at the beginning of this year's operations?
29. Dakota Company makes its standard model, which sells for $96 per unit, with the
following variable per unit costs:
Direct material
Direct labor
Variable manufacturing overhead
(25% of direct labor cost)
$20
$32
$8
Total fixed manufacturing overhead amounts to $25,000. To use part of its existing
excess capacity without incurring additional fixed manufacturing overhead costs, Dakota
plans to process the standard model further by adding an additional finish, which would
raise the selling price to $120. Additional unit costs would include direct material, $10,
direct labor, $8 and variable manufacturing overhead. What would the amount of
increase or decrease in profit per unit from processing the product further?
30. Jordan, Inc., manufactures products A, B, and C with the following information per unit:
Sales Price
Variable costs
Machine hours required 10
A
$60
20
B
$80
50
6
C
$40
16
4
Machine hours are a constraining resource for Jordan's operation. If Jordan has excess
capacity, the company should emphasize which of the three products in its marketing
efforts?
31. A company has a noncancellable lease on equipment with three years remaining on the
original lease at a cost of $1,000 per year. The equipment cannot be subleased or sold
and has no anticipated residual value at the end of the lease. Given these
circumstances, the future lease payments under any decision which contemplates the
purchase of newer replacement equipment should be characterized as a(an)
a. opportunity cost.
b. differentiating cost.
c. sunk cost.
d. direct cost.
e. avoidable cost.
If the equipment could be subleased out for the remaining term for $500/month, the $500
lease income would be referred to as an_________.
122
Exam #3 Review Session— Solutions
1. See Slides 1& 2 of Lesson #11 notes
2.
a. Product costs- Costs incurred in acquiring and receiving merchandise inventory,
including the purchase price, freight-in costs, import fees, etc.
Inventory
Cash
COGS
Inventory
xxx
xxx
xxx
xxx
b. Period costs- All other operating costs including selling and administrative costs.
Selling and Administrative Expense
Cash/Payable
xxx
xxx
3.
a. Product costs- Cost of direct materials, direct labor, manufacturing overhead.
b. Period costs- All other operating costs including selling and administrative costs.
How to Account for this?
See diagram on slide 8 of Lesson #11 notes
4. Yes. All costs incurred in providing partially completed services are included as an asset
on the company’s balance sheet. This is sometimes referred to as WIP-Services or
Unbilled Service Costs.
5. Job Order Costing- Used by companies that manufacture a variety of products (in
batches or jobs) from a common factory or process. Costs per unit of production are
determined through the use of separate job cost records which accumulate the costs
incurred in the production of each job.
Process Costing- Used by companies that continuously manufacture the same product
using the same process or procedures over an extended period of time. The cost per
unit of production is determined by dividing the total costs associated with the factory or
manufacturing process for a period by the number of units produced over that same
period.
6.
a. Raw Materials xxx
Accounts Payable
xxx
b. No entry made
c. Work in Process*
12,000
Raw Materials
12,000
* Accompanying entry made to job cost record:
Direct Materials Costs Req.#- 2255
d. Mfg. Overhead 3,000
Raw Materials
3,000
e. Mfg. Overhead 1,500
Raw Materials
1,500
123
Amount- $12,000
(Even though these are direct material costs, they’re accounted for the same as
indirect materials to avoid having to allocate them directly on a job-by-job basis.)
f.
Work in Process*
Cash
50,000
50,000
* Accompanying entry made to job cost record:
Direct Materials Costs Req.#- 2255
Direct Labor Costs: Time Card#’s- 222 & 224
320 x 20
g. Mfg. Overhead 30,000
Cash
30,000
h. Mfg. Overhead 40,000
Cash
40,000
i.
j.
Mfg. Overhead 8,000
Accum. Depn.
Amount- $12,000
$ 6,400
8,000
Work in Process*
80,000
Mfg. Overhead 80,000
(2,500 total hours  $32 = $80,000)
* Accompanying entry made to job cost record:
Direct Materials Costs Req.#- 2255
Direct Labor Costs: Time Card#’s- 222 & 224
320 x 20
Manufacturing Overhead: DL Hours x OH Rate
320
x
32
k.
Finished Goods 28,640
Work in Process*
Amount- $12,000
$ 6,400
$ 10,420
28,640
* Amount comes from job cost record:
Direct Materials Costs Req.#- 2255
Direct Labor Costs: Time Card#’s- 222 & 224
320 x 20
Manufacturing Overhead: DL Hours x OH Rate
320
x
32
Amount- $12,000
$ 6,400
$ 10,420
Total
$28,640
Divided by 4
Cost/Unit $7,160
l.
Accounts Receivable 30,000
Sales Revenue
30,000
COGS
14,320
Finished Goods 14,320
(2 units  $7,160 per unit = $14,320)
Gross Margin = 30,000 – 14,320 = 15,680*
124
* This is not the amount of Net Income. It doesn’t reflect other operating
costs (selling and administrative period costs).
m. S & A Expenses
Cash
.
n. S & A Expenses
Cash
o. COGS
40,000
40,000
25,000
25,000
2,500
Mfg. Overhead 2,500
Mfg. Overhead
3,000
1,500
30,000 80,000 Applied to WIP
40,000
8,000
2,500
2,500 Closing entry
0
Actual costs
Under-applied
7.
Predetermined
Overhead Rate
=
Total Budgeted Manufacturing Overhead Cost for the Period
Total Budgeted Measurable Activity that drives Overhead Costs for
the Period
8. Divide Manufacturing Overhead each year by each possible measure to determine which
seems to be most consistent.
Manufacturing
Overhead
Direct Material
Costs
Machine
Hours
Direct Labor Hours
‘X1
$2,000,000
‘X2
$2,200,000
Budget ‘X3
$2,500,000
$4,250,000
$.47
30,000 hrs.
$.67
60,000 hrs.
$.33
$3,750,000
$.59
24,000 hrs.
$.92
65,000 hrs.
$.34
$5,500,000
$.45
19,000 hrs.
$132
71,500 hrs.
$35
9. (part 2) See Lesson 13 - Slide 17
10. Variable Costs: Costs that vary in total with changes in volume but are the same per unit.
Relevant Range: The anticipated range of operating volume for a period of time. In CVP
analysis, variable costs are assumed to be the same on a per unit basis within the
relevant range.
11. Fixed Costs: Costs that remain constant in total with changes in volume. Fixed costs
calculated on a per unit basis change with any changes in volume.
125
12. Stepped Costs: Costs that change in total in a star step fashion with changes in volume
of activity. In CVP analysis these costs are assumed to be either fixed or variable within
the relevant range of productions and are treated as such.
Mixed Costs: Costs that contain both fixed and variable components. In CVP, the fixed
and variable components are broken out using either a scattergraph or a high/low
approach.
13.
a. Plot the points on a graph and sketch the line to estimate fixed and variable
costs.
b. First determine the VC/unit by calculating the slope of the line that intersects the
high and low point in terms of volume.
(35,000-21,000) / (15,000-8,000) = 14,000 / 7,000 = $2 per unit
Then calculate the fixed cost using either the high or low point:
At high point:
Total Costs
35,000
35,000
5,000
=
VC
+
= (2  15,000) +
= 30,000
+
=
FC
At low point:
Total Costs
21,000
21,000
5,000
=
VC
+ FC
= (2  8,000) + FC
= 16,000
+ FC
=
FC
FC
FC
FC
Total cost budgeted for June at a volume of 20,000
Total Costs
=
VC
+ FC
TC
= (2  20,000) + 5,000
TC
=
40,000
+ 5,000
TC
=
45,000
In the real world the best approach is the scattergraph method because it takes
into consideration more data. However, for the exam the high/low method will be
used because it is objective in its result.
14. Sales Revenue
Less: Var. COGS
Var. Selling & Adm.
Contribution Margin
Less: Fixed COGS
Fixed Selling & Adm.
Net Income
$760,000
(346,000)
(85,000)
329,000
(127,000)
(125,000)
77,000
a. VC Ratio = VC/SR variable costs as a % of sales revenues
431,000 / 760,000 = 56.7%
b. CM Ratio = CM/SR contribution margin as a % of sales revenues
329,000 / 760,000 = 43.3%
c. Yes!
126
d. SP/unit = 760,000 / 100,000 = $7.60/unit
VC/unit = 431,000 / 100,000 = $4.31/unit
CM/unit = 329,999 / 100,000 = $3.29/unit
FC/unit = 252,000 / 100,000 = $2.52/unit
The VC/unit doesn’t change with changes in volume within the relevant range.
The FC/unit changes with changes in volume.
15.
a. 100x – 40x – 24,000 = 0
60x = 24,000
x = 400
b. 100x – 40x – 24,000 = 10,000
60x = 34,000
x = 566.7 or 567 units
c. 90(480) – 40(480) – 24,000 = 0
16.
x – .45x – 100,000 = 1,000,000
.55x – 100,000 = 1,000,000
.55x = 1,100,000
x = 2,000,000
17.
70x – 50,000 = 0
18.
First calculate VC/unit at breakeven:
100(1,000) – 1000y – 30,000 = 0
1,000y = 70,000
y = 70 (variable cost per unit)
Then:
100x – 70x – 30,000 = 180,000
30x – 30,000 = 180,000
30x = 210,000
x = 7,000 units
19.
25,000x – .6(25,000x) - 50,000 = 100,000
20.
First calculate the total FC at breakeven:
120(3,000) – 80(3,000) – y = 0 FC = 120,000
x = 714.29 round up to 715 units
$15 = cost/unit
Then
120x – 80x – 120,000 = 100,000 x = 5,500 units
21.
Lesson 14 – Slide #1
22.
Lesson 14 – Slide #5
23.
Lesson 14 – Slide #3
24.
a)
127
Sales Budget
Sales Price Per Unit
Projected Sales
Expected Sales Revenue
April
May
12
10000
120000
12
13000
156000
Production Budget
Expected Sales in Units
Add Desired Ending Inventory
Total Units Needed
Less Beginning Inventory
Number of Units to Produce
10000
2600
12600
-1900
10700
13000
3000
16000
-2600
13400
Direct Materials Purchase Budget
Direct Materials Usage
Direct Materials Usage Per Unit
Units Produced
Materials Cost
3
10700
32100
3
13400
40200
Direct Materials Purchases
Desired Ending Inventory
Materials Needed for Production
Total Materials Needed
Less Beginning Inventory
Materials to be Purchased
3000
32100
35100
-3300
31800
3000
40200
43200
-3000
40200
10700
2
21400
13400
2
26800
Direct Labor Budget
Production Units
Direct Labor Cost Per Unit
Direct Labor Costs
b)
Cash Flow Budget
Beginning Cash
Cash Inflows
Add April Cash Sales
Add April A/R Collected
Add March A/R Collected
Add February A/R Collected
Total Cash Available
Less Disbursements
Direct Materials (31800/2+14000)
Direct Labor
Manufacturing Overhead
Selling and Administrative Expenses
Total Disbursements
Ending Cash
8000
24000
48000
23800
20000
123800
-29900
-21400
-42100
-19000
-112400
11400
128
c)
Cash Flows from Customers in June
June Cash Sales
June A/R Collected
May A/R Collected
April A/R Collected
Cash Collected
d)
June 30th A/R Balance
April A/R
May A/R
June A/R
36000
72000
43680
14400
166080
0
18720
72000
90720
e) To find Pro-Forma finished goods inventory on April 30 th you take May’s projected sales
in units and multiply by 20%. This is the amount of inventory the company wants on
hand on April 30th.
25.
a. Non-routine business decisions are decisions that are rare or unusual. They
don’t happen on a regular basis. Ex: Make or buy decision. Sell new product,
etc.
b. Relevant costs are future costs that are different among decision options.
c. Direct costs are differentiating costs associated with a specific decision option.
They are always relevant.
d. Sunk costs are unrecoverable past costs. In other words they are already spent
and should not be taken into account when making a decision. In a decision to
buy a new computer, the cost off your old one is a sunk cost if its not resaleable.
e. An opportunity cost is forgone revenue under a decision option. Ex: If you buy a
car, then your opportunity cost is the lost revenue you won’t make by investing
that money.
26. 20 + 4 + 8 = $32
Sales Price / Unit of $35 – Per Unit Costs of $32 = $3 Profit / Unit
900 * 3 = $2700 profit
27. Make
Purchase
$7
$22
11
2
20 variable costs 22
x 5,000 units
5,000
100,000
110,000
+54,000
+27,000
- 8,000
154,000
129,000
154,000 – 129,000 = 25,000 savings ($5/unit)
129
28. Net Loss with Department Q = (70,000)
Net Loss without Department Q = (35,000) fixed COGS & (25,000) fixed selling
expenses = (60,000) Total
The firm’s total net income would go up by 10,000 without department Q
55,000 + 10,000 = 65,000 Net Income
29. Additional Revenue per Unit = 120 – 96 = 24
24 – 10 – 8 – 2 = $4 increased profit per unit
30. Calculate contribution margin per machine hour:
A: 40 / 10 = 4
B: 30 / 6 = 5
C: 24 / 4 = 6
Use C (highest contribution margin per machine hour).
31. c
a
Exam Review Topics
Students can find the following information on the accounting CDs by opening the accounting
software and clicking Resources> Exam Topics. Students should use this information to identify
the general topics for each exam. We have included this information here for your reference.
Lesson 1:
 What is accounting?
 What is business? Kinds of businesses?
 Keys to a successful business.
 Raising capital. Debt vs. Equity financing.
 Define financial vs. managerial accounting and note distinguishing characteristics.
 Characteristics of useful information.
 What is GAAP? Explain its significance?
 Role of SEC and the FASB.
 GAAP and international business
 What do CPA’s do? Role of AICPA.
 External audits: who, what and why?
 Importance of auditor independence.
 Basic characteristics of proprietorship,
 partnership and corporation.
Lesson 2:
 The general purpose financial statements required under GAAP.
 Basic accounting equation.
 Understand terms: assets, liabilities, owner’s equity, contributed capital (capital stock),
retained earnings, revenues, expenses, dividends, EPS (earnings per share)
 The expanded accounting equation over time.
 Interrelationship of financial statements.
 Basic format of balance sheet (current vs. long-term assets and liabilities), income
statement (including EPS) and statement of cash flows.
Lesson 3:
 Understand the application of the:
o Historical cost principle.
o Entity concept.
130




o Monetary measurement principle
Understand the effect of basic transactions on A = L + OE
Debits and credits and their effect on assets, liabilities, owners’ equity, revenues,
expenses, and dividends
Understand and implement the first steps of the accounting cycle given some basic
business transactions:
o Identify transactions.
o Analyze transactions.
o Journalize transactions.
o Post journal entries to the general ledger accounts
Purpose of a general journal, general ledger and trial balance.
Lesson 4:
 Accrual vs. cash basis accounting? The revenue recognition and matching principles.
 The why and how of basic adjusting entries for
o Unrecorded revenues
o Unrecorded expenses
o Prepaid expenses
o Unearned revenues
 Real vs. nominal accounts.
 The why and how of closing entries.
 Account analysis.
 Financial Practice Set:
 The purpose and use of subsidiary ledgers and special journals.
 The steps in an accounting system designed to produce financial statements.
Exam 2 Topics
Lesson 5:
 Accounting for sales discounts and returns.
 Accounting for uncollectible receivables.
 Accounting for credit card transactions.
Lesson 6:
 Perpetual inventory accounting.
 Accounting for inventory purchase discounts and returns.
 Inventory Cost Flow Methods (Perpetual)
o Specific Identification
o FIFO, LIFO, Moving Weighted
 Average
 Effects of FIFO, LIFO, MWA methods on net income, income taxes and ending inventory
given inflation vs deflation.
 Physical inventory.
Lesson 7:
 Accounting for payroll:
 Salaries/wages and employee payroll tax withholdings.
 Employer payroll tax expense.
 Accounting for sales taxes.
 Other operating expenses.
 Internal controls: Who, what and why?
Lesson 8:
 Accounting for acquisition of operating
 (capital) assets:
131









Property, Plant, Equipment
Intangible Assets
Natural Resources
Straight-Line and units of production methods of depreciation.
Accounting for repairs and improvements.
Accounting for sale or disposal of operating assets
Accounting for intangibles including goodwill.
Accounting for research and development costs.
Accounting for natural resources.
Lesson 9:
 Current vs. Long-term Debt.
 Accounting for interest bearing note payable.
 Accounting for mortgage payable (typical amortizing mortgage).
 Types & characteristics of bonds.
 Accounting for bonds issued at face value.
 Debt vs. Equity Financing.
 Accounting for issuance of common stock:
o par value
o stated value
o no par
 Accounting for issuance of preferred stock.
 Calculating cash dividends payable to common vs. preferred stockholders.
 Accounting for declaration and payment of dividends.
Lesson 10:
 Basic financial statement analysis.
 Ratio calculations and analysis
 Vertical and horizontal analysis of income statement amounts for purposes of future
projections.
Exam 3 Topics
Lesson 11:
 Managerial vs. Financial Accounting
 Types of Business - merchandising, manufacturing, service
 Product vs. Period Costs in merchandising and manufacturing businesses
 Product costs in a manufacturing business
o Direct materials
o Direct labor
o Manufacturing overhead
o Indirect materials
o Indirect labor
o Other overhead costs
 Stages of manufacturing product costs
o Raw materials inventory
o Work in process inventory
o Finished goods inventory
Lesson 12:
 Job order vs. Process cost systems
 Job order cost system basic journal entries and cost flows
 Complications in accounting for manufacturing overhead costs:
o Calculation of a Predetermined Manufacturing Overhead Rate and applications
of overhead to WIP.
132
o
o
Utilization of the Manufacturing Overhead Account for actual overhead costs and
applications to work in process.
Disposition of over/under applied overhead to Cost of Goods Sold
Lesson 13:
 Variable vs. Fixed costs defined
 Relevant range assumptions
 Mixed costs - fixed vs. variable components
 Scattergraph and High-Low methods.
 Why and how?
 Contribution margin income statement format vs. GAAP functional format
 CVP analysis to determine:
o Breakeven points in # units, sales $
o Target income in # units, sales $
o Net income at varying volumes of production or sales
o Other information
 Graphs - understanding cost, volume, profit
Lesson 14:
 Operating budgets - why?
 Basic formats and flows of budgetary information
 Production and Material Purchase budget complications involving budgeted changes in
inventory
 Cash flow budget complications and preparation
 Pro forma financial statements
Lesson 15:
 Relevant/Differential costs defined
 Sunk costs, opportunity costs defined
 Product emphasis given a limited critical resource
 Whether to add/drop a product line
 Whether to make or buy a product or component part
 Whether to sell a product as is or process it further (Joint Costs)
 Pricing a special order
Copyright 2006 Business Learning Software, Inc.
133