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MGMT 120 - Financial Accounting
Course Details

Course Code:
MGMT 120

Credits:
3

Calendar Description:
A first level course in accounting designed to provide skill and knowledge to students enabling them to understand the fundamental accounting reports of business. The course introduces accounting theory and its applications to proprietorships and corporate entities. All of the statements recommended by the Canadian Institute of Chartered Accountants are discussed.

Hours:
Total Hours: 45
Lecture Hours: 3


Pre-Requisites:
None, but prior exposure to bookkeeping is strongly recommended.

Co-Requisites:
None

Course Content:
Introduction To Accounting Concepts
- acquaint students with different types of business organizations, generally accepted accounting principles, the accounting equation, and the difference types of financial statements; mechanics of recording financial transaction

The Accounting Cycle
- introduce students to the need for adjustments at the end of an accounting period, the adjustment process, the closing of the accounts and the preparation and format of the Statement of Financial Position and the Income Statement
- merchandising concerns
- introduce students to the periodic inventory system, will learn how to develop an Income Statement for merchandising concern including multiple step (internal use) income statements and single step (external presentation) income statements; special journals and their application

Cash, Receivables and Temporary Investments
- internal control of cash and the use of a petty cash fund will be discussed; students will learn the accounting procedures for temporary investments and methods for recognizing bad debts on accounts receivables

Inventories and Cost of Good Sold
- methods of valuation of inventories (FIFO, LIFO and average cost) under different inventory systems (perpetual and periodic) will be presented; the lower of cost or market rule will be discussed and the retail method and gross profit method of estimating inventories will also be presented

Property, Plant and Equipment and Intangible Assets
- students will learn to calculate the cost of plant and equipment assets and the nature of depreciation; allocation of property, plant and equipment cost to expense through the use of accelerated, straight line and units of production amortization methods; the disposal of assets as well as repairs and betterments to assets

Long-term Investments and Liabilities
- definition and classification of liabilities; accounting for property taxes payable, product warranties and contingent liabilities; concept of present value is introduced and accounting for notes with a length of less than one year; students will also learn how to account for the exchange of notes for assets and the accounting procedures for notes with unrealistic interest rates; payroll accounting is introduced and the accounting for payroll deductions and employer's tax expense

Proprietorship and Partnership
- characteristics of a partnership and forms of partnerships; methods of allocation of earnings and withdrawals of partners and the addition of new partners

The Nature of Corporations
- advantages and disadvantages of the corporate form of entity; students will learn about the rights of shareholders, stock certificates, the different types of stock; the change from Owner's equity to Shareholder's equity and the relevant changes in the equity section of the Statement of Financial Position; statement of Retained Earnings

Bonds as Liabilities and Investments
- differences between bonds and stock and the process of issuing bonds; calculation of accrued interest receivable, or payable, on bonds issued between interest dates; bond premiums and bond discounts and the reason for their existence; methods for amortization of premiums and discounts by both the straight line method and effective interest method; redemption and/or conversion of bonds and the accounting procedures involved

Statement of Changes in Financial Position
- this statement is recommended by the CICA handbook and converts an accrual income statement to a cash basis; various sources of cash will be discussed; cash provided or used by operating activities, cash provided or used by financing activities and cash provided or used by investing activities; presentation of why cash is important and a case discussion

Review Text

- review of Accounting Principles and Conceptual Framework; objectives of financial reporting, the elements of financial statements and the recognition and measurement of transactions; the thirteen accounting principles and assumptions and the conflict between them.

 

Learning Outcomes:
The student should be able to apply basic accounting concepts to identify, analyze, record and report financial transactions according to generally accepted accounting principles. Upon successful completion students will be able to:
- complete all stages of the accounting cycle
- account for merchandising activities
- effectively use special journals
- maintain and reconcile subsidiary ledgers
- explain basic internal control principles
- record petty cash transactions
- accurately prepare a bank reconciliation
- apply inventory valuation methods
- account for property, plant and equipment at acquisition and disposal
- calculate and record the amortization of property, plant and equipment
- account for receivables according to GAAP
- record short-term notes receivable
- identify and account for current liabilities
- determine and record withholdings from employee wages using CRA tables
- account for payment of payroll withholdings
- calculate and account for employer payroll costs
- complete entries for a partnership
- describe the components of corporate financial statements
- account for corporate shares
- record cash dividends
- prepare closing entries for a corporation
- complete a comprehensive corporate income statement
- account for share dividends, share splits and the retirement of shares
- calculate earnings per share
- prepare a statement of retained earnings
- explain the guidelines for the treatment of accounting changes
- account for bonds and long-term notes payable
- identify and account for temporary investments, long-term debt investments and share investments
- record foreign exchange transactions
- prepare a cash flow statement applying the direct and indirect methods
- analyze financial statements using horizontal analysis, vertical analysis and ratio analysis methods


Grading System:
Letters

Grading Weight:
Final Exam: 40 %
Midterm Exam: 40 %
Assignments: 20 %


Other Programs:
Business Management Certificate/Diploma

Additional Comments:
Assignments are mandatory and must be handed in on the specified due date. Work handed in late may lose marks for each day delayed. Exceptions may be made for documented medical reasons or extenuating circumstances. Cheating and plagiarism policy as outlined in the current College Calendar will be enforced.

Classroom Etiquette: To foster a positive learning environment for yourself and your fellow students please avoid the following:
- Absences: Classes missed will have a significant negative effect on your overall performance in this course. Please remember that you are responsible to collect any classroom handouts that you missed due to your absence.

- Distractions: late arrival to class, talking during lecture or while other students are talking, operation of cell phone during class time.

Keys to Success:
Please read the relevant chapter sections and complete assignments as per deadlines. Also, attendance and class participation are critical. Take advantage of instructor office hours for additional assistance.
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