Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
‫جامعة األمير سلطان‬
‫قسم العلوم املالية و احملاسبة‬
Dept. of Finance and Accounting
ACC 450 – Accounting Theory
Credit: 3(3,0,0)
1st Semester – Term (101): Academic Year 2010-2011
Instructor
:
Office
:
Phone
:
E-mail
:
Office Hours :
Dr. Abdullah Saghaier M. Al-Hussaini
A 244
4948538
ahussaini@psu.edu.sa
Please see the Working Schedule affixed on my office door.
Course Description and Objectives
This course is designed to enhance the students’ understanding of the theoretical foundations
of financial accounting.The course examines the development of accounting
thought,accounting theory formulation, and other theoretical arguments and foundations
related to different issues in financial accounting theory.
The main objectives of this course are:



To provde students with in-depth understanding of the development of the
accounting thought and accounting theory formulation.
To provide students with advanced background and theoretical argument related to
different issues in financial accounting theory and practice.
To enhance students’ analytical capabilities when dealing with accounting problems.
Prescribed Textbook
Richard G.Schoeder,Myrtle W.Clark and Jack M.Cathey Financial Accounting Theory
And Analysis (9th Edition) John Wiley & Sons
Additional Reading
Eldon S.Hendrikson and Michael F.Van Bredal Accounting Theory, (Latest edition)
Richard Irwin Inc.
Ahmed Belkaoui. Accounting Theory, (Latest edition). The Dryden Press.
Grading
Your grade will be based on the following:
First Major Examination
Second Major Examination
Final Exam
Assignments and Cases
Class-Participation
20%
20%
40%
10%
10%
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
‫جامعة األمير سلطان‬
‫قسم العلوم املالية و احملاسبة‬
Dept. of Finance and Accounting
Class participation means regular attendance, punctuality, making meaningful contributions
and showing evidence of preparation during the discussion of the issues. Considering the
very nature of the course, the instructor will explain accounting theory issues in the class.
Then, you will be given a number of assignments which along with class participation will
together count for 20% of your final grade. The assignments will be straightforward cases
where you play the role of an accountant. Make sure that you understand each assignment
completely before you work on it. You are encouraged to ask questions inside and outside
the classroom regarding your assignment.
Assignments must be completed by the due date. You should make the required effort to
answer every question, as well as to develop a good understanding of the issues involved.
Preparing yourself for the coming lectures and active class participation are essential to your
learning process. Case Studies given to you would be of the companies functioning in the
real marketplace. Solving them would require you to obtain information from various
sources including the internet and would help you to follow a research oriented approach to
your learning. You are encouraged to seek guidance from your course incharge regarding the
cases.
Exams will be structured to allow you to apply what you have learned to realistic settings.
The absence from class can be extremely costly as student will loose the thread of
discussions.
DN and attendance regulations
DN wil be given to the students who are absent for 13 hours or more including the first week
(whether excused or unexcused) during the semester.Attendance will be taken 5 minutes
after the start time of the class .Any student who joins the class later will be allowed to
attend the lecture but no attendence will be granted to him.
Please note the following instructions:
a.
b.
c.
d.
e.
Read the assigned material before class meetings.
Do not miss any class.
Pay attention to details.
Ask questions and participate in discussions.
Be regular in doing home-works and assignments because all your course is
interrelated.
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
‫جامعة األمير سلطان‬
‫قسم العلوم املالية و احملاسبة‬
Dept. of Finance and Accounting
Course Calendar
WEEK 1
THE DEVELOPMENT OF ACCOUNTING THEORY
Read Chapter 1
 Early history of Accounting.
 Financial Accounting Standards Board (FASB) - structure, mission and prouncements
WEEK 2
THE DEVELOPMENT OF ACCOUNTING THEORY (Continued)
Read Chapter 1
 Generally Accepted Accounting Principles
 Qualitative characteristics of Accounting information (hierarchy of accounting qualities)
WEEK 3
APPROACHES TO ACCOUNTING THEORY FORMULATION
Read Chapter 4
 The deductive approach, inductive approach and pragmatic approach
 Ethical approach, the behavioral approach
WEEK 4
THE THEORIES ON THE USE OF ACCOUNTING INFORMATION
Read Chapter 4
 The efficient market hypothesis
 The capital asset pricing model
 Normative and positive theory, agency thory
 Human information processing
WEEK 5
INCOME CONCEPTS
Read Chapter 5
 The nature of income, capital maintenance concepts
 Current Value Accounting - entry price, exit price, discounted present value
WEEK 6
INCOME CONCEPTS (Continued)
Read Chapter 5
 Income recognition - measurement
 Revenue recognition and realization
 Matching concept, conservatism, materiality
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
‫جامعة األمير سلطان‬
‫قسم العلوم املالية و احملاسبة‬
Dept. of Finance and Accounting
First Major Examination
WEEK 7
CONCEPTS UNDERLYING THE PREPARATION OF FINANCIAL STATEMENTS(THE INCOME STATEMENT)
Read Chapter 6
 Economic consequences of financial reporting
 Income statement elements, statement format
 The value of corporate earnings
WEEK 8
CONCEPTS UNDERLYING THE PREPARATION OF FINANCIAL STATEMENTS(BALANCE SHEET AND THE STATEMENT OF CASHFLOWS)
Read Chapter 7
 Balance sheet elements
 Purpose of staement of cash flows
 Format of the statement of cash flows
 Financial analysis of cashflow information
WEEK 9
THEORETICAL FOUNDATIONS: WORKING CAPITAL



Read Chapter 8
Development of the working capital concept
Current usage, components of working capital
Evaluation of a company’s working capital position
WEEK 10
THEORETICAL FOUNDATIONS: LONG TERM TANGIBLE ASSETS
Read Chapters 9
 Financial analysis of property plant and equipment
 Capital and revenue expenditures
 Recognition and measurement issues
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
‫جامعة األمير سلطان‬
‫قسم العلوم املالية و احملاسبة‬
Dept. of Finance and Accounting
WEEK 11
THEORETICAL FOUNDATIONS:LONG TERM INTANGIBLE ASSETS
Read Chapter 10
 Investment in equity and debt securities
 Permanent decline in fair value
 Investment in unsecuritised debts
Second Major Examination
WEEK 12
THEORETICAL FOUNDATIONS:LONG TERM LIABILITIES
Read Chapter 11
 Definition,recognition and measurement of libilities
 Debt restructuring
 Financial analysis of longterm debtstatement effects on alternative translation rates
WEEK 13
THEORETICAL FOUNDATIONS: LEASES
Read Chapter 13
 Criteria for classifying leases
 Accounting and reporting by lessees
 Theories of equity
 Financial analysis of equity
WEEK 14
THEORETICAL FOUNDATIONS: EQUITY
Read Chapter 15
 Theories of equity
 Financial analysis of equity
WEEK 15
ACCOUNTING FOR MULTIPLE ENTITIES & ETHICAL RESPONSIBILITIES IN
FINANCIAL REPORTING



Read Chapter 16 & 17
Theories of consolidation, Minority intersts, Drawbacks of consolidation
Segment reporting, Push down accounting
Disclosure requrements, Ethical responsibilities
WEEK 16
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
‫جامعة األمير سلطان‬
‫قسم العلوم املالية و احملاسبة‬
Dept. of Finance and Accounting
FINAL EXAMINATION
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317