Financial Accounting and Information
Systems
By: Asad Ilyas, CPA
COURSE SYLLABUS
MBA FALL Semester 2012
INSTITUTE OF BUSINESS ADMINISTRATION
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KARACHI
Course Framework
The course’s framework is based on a model of the accounting process in a business setting. The
model views financial accounting as a financial information system that tracks and records an
organizations business transactions and aggregates them into reports for decision makers both
inside and outside the business. A transaction is an event that has consequences for a business
financial condition.
The course materials are presented in two modules.
Module 1: The initial 13 sessions cover the accounting basics, such as basic accounting concepts
and the nature and preparation of the balance sheet, income statement and the statement of cash
flows.
Module 2: The second part from session 14 through to session 24 (11 Case Studies) cover more
advanced accounting practices that the user will encounter through case studies.
Course Text
1 - www.principlesofaccounting.com (Introduction)
principlesofaccounting.com and Utah State University (USU) have come together for a high
quality introductory financial accounting course. Each chapter consists of related text, basic and
involved exercises. All the chapters are also tagged with a Lecture Video by a representative of
USU
2 – Cases
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Case descriptions are posted for each session. All cases would be available on the yahoo group
Session 1-2
Introduction to Accounting Concepts: Accounting Definition, Accounting Equation, Financial
versus Managerial Accounting, Users and their Objectives, Financial Accounting Objective
Reading Material:
www.principlesofaccounting.com
Chapter 1 (Accounting Cycle):

Textbook for Chapter 1

Study Guide:
o Goals Achievements
o Fill in the Blanks
o Multiple Choice

Assignments:
o Problems B-01.01 – B-01.09
o Problems I-01.02, I-01.03, I-01.08
Session 3
Introduction to Accounting Concepts: Financial Statements (BS, IS and SCF), Recording process
concept (Debit/Credit, General Journal, General Ledger and Trial Balance)
www.principlesofaccounting.com
Chapter 2 (Information Processing):

Textbook for Chapter 2

Study Guide:
o Goals Achievements
o Fill in the Blanks

Assignments:
3
o Multiple Choice
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Reading Material:
o Problems B-02.01 – B-02.09
o Problems I-02.01, I-01.02, I-02.08
Session 4 - 5
Accounting Principles: Accrual Basis of Accounting (Timing, types, recognition and
classification of revenues and expenses); Main Principles (Matching, Materiality, Consistency
and Conservatism); Accounting Policies, estimates and errors
Reading Material:
www.principlesofaccounting.com
Chapter 3 (Income Measurement):

Textbook for Chapter 3

Study Guide:
o Goals Achievements
o Fill in the Blanks
o Multiple Choice

Assignments:
o Problems B-03.01 – B-02.10
o Problems I-03.01, I-03.04, I-03.06 and I-03.07
Session 6 – 8
Accounting Cycle Recording: Identify, Analyze Transactions, Journal Entries; Posting to Ledger,
Trial balance, Financial Statements; Closing Entries (Soft Closing vs Hard Closing), After
closing Trial Balance
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Accounting Cycle Closing: Closing of Temporary Accounts, Generation of Financial Statements
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Accounting Cycle Adjusting Entries concept: Trial Balance phase adjusting entries, Balance
Sheet items adjusting entries, income statement items adjusting entries, Error items adjusting
entries
Reading Material:
www.principlesofaccounting.com
Chapter 4 (The Reporting Cycle):

Textbook for Chapter 4

Study Guide:
o Goals Achievements
o Fill in the Blanks
o Multiple Choice

Assignments:
o Problems B-04.01 – B-02.09
o Problems I-04.01, I-04.02, I-04.5 and I-04.07
Session 9
Property Plant and Equipment and Depreciation: Acquisition, Disposal and Depreciation of
Assets; Gain or Losses on Sale of Assets; Impairment Testing
www.principlesofaccounting.com
Chapter 10 (Property, Plant and Equipment):

Textbook for Chapter 10

Study Guide:
o Goals Achievements
o Fill in the Blanks
o Multiple Choice
Assignments:
o Problems B-10.01 – B-10.09
o Problems I-10.01 to I-10.05 (5 exercises)
5

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Reading Material:
Session 10
Accounts Receivable: Estimating bad debt expenses under different methods; Quality of A/R;
A/R Turnover and average collection period
Reading Material:
www.principlesofaccounting.com
Chapter 7 (A/R):

Textbook for Chapter 7

Study Guide:
o Goals Achievements
o Fill in the Blanks
o Multiple Choice

Assignments:
o Problems B-07.01 – B-07.11
o Problems I-07.01 to I-07.04
Session 11
Inventory Management: Valuation of Inventories; Measurement of COGS, Issues in inventory
Management; Periodic and Perpetual Inventory systems
www.principlesofaccounting.com
Chapter 8 (Inventory):

Textbook for Chapter 8

Study Guide:
o Goals Achievements
o Fill in the Blanks

Assignments:
6
o Multiple Choice
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Reading Material:
o Problems B-08.01 – B-08.12
o Problems I-08.01 to I-08.03 and I-08.05
Session 12 – 13
Business Organizations: Sole proprietorships, Partnerships and Corporations; Introduction to
Partnerships; Current and Capital Accounts; Profit and Loss appropriation exercises; dissolution;
changes in partnerships and its effects on the composition of a firm; concepts of goodwill
Reading Material:
www.principlesofaccounting.com
Chapter 3 (Income Measurement):

Textbook for Chapter 3

Study Guide:
o Goals Achievements
o Fill in the Blanks
o Multiple Choice

Assignments:
o Problems B-03.01 – B-02.10
o Problems I-03.01, I-03.04, I-03.06 and I-03.07
Session 14
Introduction to Business Activities and Overview of Financial Statements and the Reporting
Process
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Thumbs-Up Video Inc: A Start up video rental business is described to provide a basis for a
bookkeeping and financial reporting exercise for an accounting course. Both start-up and
operating transactions are included along with situations requiring judgments about depreciation
policies and end of period adjustments
Session 15
Balance Sheet: Presenting the Investments and Financing of a Firm
Maria Hernandez & Associates: This case presents the situation of an unemployed web page
designer who starts a new consulting firm with personal savings and a family loan. Two months
later, she is to report on operations to her father, using financial reports she must design and
construct
Session 16
Income Statement: Reporting the Results of Operating Activities
Chemalite, Inc: A chemical engineer who has set up a company to manufacture and market one
of his inventions is trying to prepare his state of the corporation report. This case is designed to
serve as a vehicle to introduce students to basic bookkeeping and accounting functions
Session 17
Reporting the Effects of Operating, Investing and Financing activities on Cash Flows
Statement of Cash Flows (Three Examples): This case introduces the statement of cash flows
through three examples of multi-year statements of cash flows from three unidentified companies
Session 18
Introduction to Financial Statement Analysis
Colgate-Palmolive Co: Analyzing an Annual Report: United States; Global; $7.6 billion
revenues 1994
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A directed analysis of the Colgate-Palmolive Co. annual report. Focuses on the basics of reading
an annual report including analysis of financial statements, calculations of financial ratios and
study of the layout and message of the report. Industry financial ratios are included for
comparison
Session 19
Receivables and Revenue Recognition
Circuit City Stores, Inc. (A): Retail Industry; Large; $2 Billion sales
Circuit City sells consumer electronic equipment, appliances and extended service and warranty
contracts which supplement those provided by equipment manufacturers. Equipment is sold at
low margins, while warranties carry very high margins. A question has been raised about the
proper method for recognizing revenues on the warranty portion of the combined sale. Deferring
revenue will cur profit reported at the time of sales but may better match costs of warranty
service
Session 20
Inventories: The source of Operating Profits
Seitel, Inc: Petroleum industry; Natural Gas; $33 Million revenues
The company’s accounting for its seismic data library is questioned.
Learning Objective Inventory Accounting
Session 21
Inventories: The source of Operating Profits
Summit Distributors (A); Mid Size $150 Million in Revenues
Summit Distributors was in danger of violating loan covenants because of slow economic
activity and forecasted losses and was faced with a choice. Changing the inventory valuation
method from LIFO to FIFO would avoid default but would require higher future income taxes.
Not changing could mean default on covenants, renegotiating loan terms at less favorable interest
rates or possible bankruptcy
Depreciation at Delta and Pan Am; Airline Industry
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Long Lived Tangible and Intangible assets: the source of Operating Capacity
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Session 22-23
Depreciation policies of Delta Air Lines and Pan Am Corp are compared and contrasted against
a summary of operating data from each airline. Questions with the case require projection of
future depreciation on a new aircraft using the policies of each company
Session 24-25
Liabilities: Introduction
Accounting for the Intel Pentium Chip Flaw; Computer Industry, $8.7 Billion revenues 1994
Investigates the 1994 Intel Pentium plan. To encourage discussion of whether Intel should
provide a wide recall and if so, what this would cost. To examine the accounting implications of
this decision using a FAS #5 (contingent liability) framework
Session 25-26
Shareholder’s Equity: Capital Contributions, Distributions and Earnings
Butler Capital Partners and Auto-distribution: Putting Private Equity to work in France
Describes a proposed buyout transaction of Auto-distribution, an entrepreneurial firm that is the
leading car parts distributor in France. The deal became feasible because of a failed takeover
battle for auto distribution’s parent company. Private equity investor Butler Capital partners must
make an investment decision within three weeks. Other private equity firms compete with Butler
for the deal. Butler must assess the potential for margin improvement and expansion within
France and to other European Countries. Furthermore, since the price of the deal is set, Butler
must focus on finding an advantageous structure for all parties to secure the deal
Session 27 – 28
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Course Overview
Grading
Class Participation
25%
Quizzes
10%
Assignments
10%
Mid Term / WAC
20%
Final Exam
35%
Quizzes
Quizzes most of the times will be unannounced but expect more than 5 quizzes during the
semester. My target would be to take at least 10 quizzes. There will be no retake if you miss a
class.
Assignments
Assignments for each session are due the session before. For example; homework and reading
assignments for session 4-5 is due at the beginning of session 3. This will ensure that you have
prepared for the lecture or the case and are ready for active participation.
Class Participation
Conduct:
Each session will be of 90 minutes and the doors will be locked 1 min prior to the start time of
the class. There will be zero tolerance for tardiness. There will be no retake If you miss an quiz,
assignments or class.
Rules:
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2. Your class participation will help you develop your communication skills, your critical
thinking skills and build your self-confidence. Every class is a chance to polish your
functional knowledge and leadership skills. Therefore, please take responsibility of your
own development
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1. You will only raise your hand in the class and will speak only when acknowledged
3. It is extremely important that you follow instructions to the tee.
CP and WAC Grading: (0-5)
1. Weak (0-1)
o Poor class participation
o Mostly cold calls
o Wrong Facts / data in class about the case
o Creating disruption and not allowing others participants to speak
2. Adequate to Good (1-2)
o Shows comprehension of the case and the reading
o Speaks in a coherent manner
o Present ideas and arguments clearly
o Provides key elements of the case, basic facts / knowledge of the case during the
discussion
3. Very Good (2-3)
o Shows advance level of case knowledge
o Shows basic competence in synthesis and critical thinking
o Logically organized ideas
o Clear thoughts about the case issues and analysis of different alternatives
o Confidently defending argument and position in class discussion
4. Excellent (3-4)
o Well organized and structured ideas with no errors
o Able to perform critical analyses, identification of dilemmas and tension points
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o Strong evidence of critical thinking and intellect
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o Shows clear understanding about case concepts (Both core issues and conceptual
issues)
o Able to indentify paradoxes and build thinking around it
o Builds arguments from thinking two opposite ideas at the same time during the
class discussions
o Shows synthesis – connections amount various details and ideas
o Shows ability to develop an idea, build content and substance and able to develop
real application and action plan
5. Exceptional in all respect (4-5)
o Original thinking and creative ideas and sound action planning abilities
o Generated new thinking in the class and added new dimension in the class
discussion about the case
o Very high level of synthesis of ideas and application
o Extension of the case / class contents / objectives
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o Demonstrates very high level of intellectual rigor in the class
Summary of Sessions
Session
Topic
1
Introduction to Accounting Concepts:
Accounting Definition, Accounting Equation, Financial versus Managerial Accounting, Users and
their objectives, Financial Accounting Objective
Introduction to Accounting Concepts:
3
Financial Statements (BS, IS and SCF)
Recording Process Concept (Debit/Credit, General Journal, General Ledger and Trial Balance)
Accounting Principles:
4-5
Accrual Basis of Accounting (Timing, types, recognition and classification of revenues and
expenses)
Main Principles (Matching, Materiality, Consistency and Conservatism)
Accounting Policies, estimates and errors
Accounting Cycle: Recording
Identify, Analyze Transactions, Journal Entries
Posting to Ledger, Trial Balance, Financial Statements
Closing Entries (closing income statement items), After-Closing Trial Balance
6-8
Accounting Cycle: Adjusting entries concept
Trial balance phase adjusting entries, Balance Sheet items adjusting entries
Income statement items adjusting entries, Error items adjusting entries
Accounting Cycle: Closing
Closing of Temporary Accounts, Generation of Financial Statements
Property, Plant and Equipment & Depreciation:
Acquisition, disposal and depreciation of assets
9
Gains or losses on sale of assets
Impairment Testing
Accounts Receivable:
Estimating Bad Debt Expenses under different methods
10
Quality of A/R
Accounts Receivable turnover and average collection period
Inventory Management: (Part 1)
Valuation of Inventories
11
Measurement of Cost of Goods Sold, Issues in inventory Management
Inventory Management: (Part 2)
Periodic and Perpetual inventory systems
Sole Proprietorships, Partnerships & Corporations
Introduction to Partnerships
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12
14
Business Organizations:
Topic
Session
14
Case 1
15
Case 2
16
Case 3
17
Case 4
18
Case 5
19
Case 6
20
Case 7
21
Case 8
22
Case 9
23
Case 10
24
Case 11
Course Review
15
27-28
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Partnerships:
Current & Capital Accounts
Profit & Loss Appropriation Exercises
Dissolution
Change in partnerships and its effects on the composition of a firm
Concepts of Goodwill