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Cover cash flows right after balance sheet discussion

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Cover cash flows right after balance sheet discussion

     New York University

     Stern School of Business

     Undergraduate College

C10.0001.005 Professor F. Choi

    Principles of Financial Accounting Office: KMC 10-75

    Spring 2008 Hours: T R 12:15 1:00 p.m

    TR 2:00 -3:15 p.m. W 11:00 12:00 noon

     Course Outline

Course Objectives:

Accounting is a discipline that concerns itself with the provision of financial information for a

    variety of decision-makers, both internal and external to the firm. This course focuses on external

    users and introduces students to the important role that accounting plays in a free enterprise society.

     Students are introduced to the conceptual content of accounting, the overall scope of the

    accounting function in society, and the uses and limitations of conventional accounting data.

    Emphasis is placed on understanding how numbers appearing in a firm’s published financial

    statements are derived, what they mean and how measurement choices affect the analysis and

    interpretation of reported accounting information.

Owing to the globalization of business and finance, accounting also serves decisions that are

    international in scope. Accordingly, domestic accounting treatments will also be examined from an

    international perspective.

Required References:

     thHorngren, et.al., (HSEP) Introduction to Financial Accounting, 9 ed. (Prentice-Hall, Inc., 2005 ).

    ALEKS, an online learning tool.

Class Format:

Class sessions will comprise a formal lecture in which you will be introduced to new concepts and

    measurement issues. You are required to attempt the homework assignments after reading the

    chapter before each class dealing with the topic and should subsequently meet with your graduate

    teaching assistant who will maintain office hours to clarify concepts that have been introduced in

    the lectures and to go over assigned homework problems that you may have trouble completing.

     C10.0001 1 Professor F. Choi

Grading Policy:

A letter grade will be assigned to you on the basis of your score out of 500 possible points in the

    course. The sources of points are:

     Two mid-term exams (100 points each) 200 points

     Final exam 150 points

     Cases and participation 50 points

     Written assignment 100 points

     Total 500 points

Written Assignment (100 points):

    You are to critique a feature article dealing with the international dimensions of accounting appearing in any of the following journals during the last five years:

Abacus Contemporary Accounting Research

    Accounting and Business Research Columbia Journal of World Bus.

    Accounting Horizons Financial Analysts Journal

    Accounting Review Financial Executive

    Journal of Accountancy Journal of Accounting & Economics

    Journal of Accounting Research Journal of Accounting, Auditing

    Financial Executive & Finance

    Financial Management Harvard Business Review

    Journal of Finance International Journal of Accounting

    Journal of International Financial Management International Review

     Management and Accounting Journal of Taxation

    Strategic Finance International Journal of Accounting Research

In a nutshell, your critique should tell the reader:

     1. What point the author is trying to make.

     2. What method the author uses to make her case(i.e., describe the author's

     research method).

     3. How well the author accomplishes his objective(i.e., Has the author convinced you?

    Why or why not?) In critically evaluating the author's work, be sure to objectively

     support your appraisal with an example or two from the article.

     C10.0001 2 Professor F. Choi

The length of your critique must be limited to one double-spaced, typewritten page with 1-inch

    margins and using type 12 font or larger. This is a difficult task but a rewarding and useful one.

    Critiques are due on April 15. Late papers will not be accepted without a signed medical excuse.

Assignment Policy:

All homework assignments are expected to be completed at the beginning of the class for which

    they are assigned. This pedagogy is designed to get you focused on the “meat” of the assigned

    reading. Thus, you are to read the assignments and attempt the homework before I lecture on the

    subject.

General Information:

This is a demanding course that will require at least three hours of preparation for each hour of class

    on average. However, if you make the effort you will learn a lot and reap large dividends during

    your professional career. If you encounter difficulties completing the assignment, stop, isolate your

    problem and bring your questions to class.

Code of Conduct:

As a student at Stern, you are expected to conduct yourself as a young business professional. The

    Stern School does not tolerate cheating, nor does Wall Street. Please know that the penalty for

    cheating is an automatic grade of F for the course and appearance before the Student Disciplinary

    Committee. I am very strict on this issue. I will “bend over backwards” to help you learn the material in this course. All I ask is that you do not cheat yourself, your fellow classmates or the

    Stern School.

     C10.0001 3 Professor F. Choi

     COURSE TOPICS AND ASSIGNMENTS

Lecture

    Dates Topics

1/22 T Accounting in a global economy; economic scarcity; resource allocation decisions;

    steps in the decision-making process; role of accounting in industrialized and less-

    industrialized economies.

     Read

     HSEP, Ch. 1(pp. 2-8)

1/24 Th Nature of investment decisions; time preference for money; compound interest

     concepts; decision-making under conditions of certainty - the NPV model of

     investment choice.

     Read

     HSEP, Ch. 9 (pp. 418-424)

     Prepare

     E9-41, E9-42, E9-47

1/29 T Present value model continued; consistency; sensitivity; present value and wealth;

     present value and income.

1/31 Th Decision-making under conditions of uncertainty; feasibility of present value data;

     cash flow and management forecasts; enterprise performance; cash flow

     vs. conventional accounting income.

     Read

     HSEP, Ch. 2 (pp. 46-61)

     Prepare:

     E2-36, P2-44, P2-55 (question 1.a. only)

2/7 Th Conventional accounting-some elaboration; disposable wealth; gains and losses

     and performance measurement.

     Read

     HSEP, Ch. 12 (pp. 565-569)

     Prepare

     Class Handout, P1-38, P2-53, E12-41.

     C10.0001 4 Professor F. Choi

2/12 T Conventional accounting and changing prices; price-level adjusted operating

     income; price level adjusted net income; monetary gains and losses.

     Read

    Supplemental Reading: “Accounting for Changing Prices: The General Price Level

    Model,” the Replacement Cost Model and the Market Value Model (pp. 1-10)

     Prepare

     Exercises 1-4 (at end of reading material)

2/14 Th Current exchange valuation framework; money vs. physical capital; current

     cost-based rating income; current cost-based net income, market-value-based

    accounting

     Read

    Supplemental Reading: “Accounting for Changing Prices: The General Price Level

    Model, The Current Cost Model and the Market value Model,” (pp. 11-12).

     Prepare

     Exercises 5, 6, 7 (at end of reading material).

2/19 T Market-Value Based Reporting and Wrap-Up

     Read

    Supplemental Reading: “Accounting for Changing Prices: The General Price Level

    Model, The Current Cost Model and the Market value Model,” (pp. 13-20).

     Prepare

     Exercises 10, 11

    2/21 Th First Mid-term Exam

2/26 T Accounting policy-making in a historical and institutional context; globalization

     of business and capital markets; international accounting standards and

     organizations. Conventional accounting re-visited; the accounting cycle as an

     information system; aggregation of accounting data.

     Read

     HSEP, Ch. 1, (pp. 27-34); Ch. 3, (pp. 90-111)

     Prepare

     P3-34, P3-36

     C10.0001 5 Professor F. Choi

2/28 Th Aggregation of accounting data--continued; adjusting entries.

     Read

     HSEP, Ch. 4 (pp. 138-151).

     Prepare

     P4-35, P 4-38

3/4 T Correcting and closing entries; accounting cycle illustrated.

     Read

     HSEP, Ch. 3 (pp. 111-120); HSEP, Ch. 4(pp. 154-162)

     Prepare

     P3-37, P3-40, P4-30, P4-54

3/6 Th Revenue recognition refinements; sales adjustments; long-term

     contracts; collection uncertainties.

     Read

     HSEP, Ch. 6(pp. 231-251)

     Prepare

     E6-35, E6-45, P6-55

3/11 T Accounting for inventories; costing methods; financial statement effects; inventory

     estimation; treatment of manufacturing costs.

     First case due!

     Read

     HSEP, Ch. 7

     Prepare

     P7-56, P7-71, P7-75

3/13 Th There will be no class on this date. The purpose is to afford you the time to use

    the library or to search the web to find an article on the subject of international

    accounting for your critique. Titles of your article (the article must deal with an

    international accounting topic) and the journal source are due on Tuesday, March

    25.

     C10.0001 6 Professor F. Choi

3/17-21 Spring Recess

3/25 T Accounting for fixed assets-acquisition and use.

     Read

     HSEP, Ch. 8

     Prepare

     E8-43, E8-53, E8-59

    3/27 Th Accounting for corporate investments; marketable securities; long-term

     investments

     Read

     HSEP, Ch. 11 (pp. 488-503)

     Prepare

     E11-29, E11-36, P11-39

4/1 T Wrap-Up (Titles of articles for your critique are due)

     nd4/3 Th 2 Mid-Term Exam

    4/8 T Accounting for a firm's liabilities; short-term debt; long-term debt; extinguishment

    of debt.

     Read

     HSEP, Ch. 9 (pp. 382-404)

     Prepare

     P9-56, P9-58, P9-61

4/10 Th Liabilities-continued; deferred taxes, leases, pensions.

     Read

    HSEP, Ch. 9 (pp. 405-415)

     Prepare

     P9-66, P9-69, P9-70

     C10.0001 7 Professor F. Choi

4/15 T Accounting for owners' equity; proprietorships; partnerships; corporations;

     treasury stock; stock dividends; stock splits; stock options.

     Read

     HSEP, Ch. 1 (pp. 18-23; 29-32), Ch. 10(pp. 440-469)

     Prepare

     E10-42, P10-45, P10-56

     Written critiques due!

4/17 Th The Attest Function. Economics of the audit function; the audit report; auditor

    independence; professional ethics.

     Read

     HSEP, Ch. 1 (pp. 24-27).

     Prepare

     P1-45

4/22 T The Statement of Cash Flows

     Read

     HSEP, Ch. 5

     Prepare

     P5-47, P5-63

4/24 Th Financial Statement Analysis; horizontal analysis; vertical analysis; ratio analysis

    including eps and P/E multiples.

     Read

    HSEP, Ch. 12 (pp. 534-565), Section entitled, “The Portfolio” between pp. 76 and

    77

     Prepare

     E12-32, E12-39, P12-43

    4/29 T Statement analysis-continued. nd 2 case due!

5/1 Th Wrap-up.

5/7-14 Final Examinations

     C10.0001 8 Professor F. Choi

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