GSBA 510 USC Marshall School

University of Southern California Marshall School of Business GSBA 510 Accounting Concepts and Financial Reporting Fall 2014

Fundamentals of Financial Accounting Randy Beatty 117 Accounting Building email: [email protected] 213-761-9186 (cell) 213-740-4828 (O) 310-546-9363 (H)

Class Meetings: Saturday 1:40 – 5:20 pm – JKP 202 Monday 6:00 – 9:40 pm – JKP 210

Office Hours: Saturday (1:00 – 1:40 pm) - 202 JKP; Monday (4:30 – 5:30 pm) - 117 ACCT Building; & by appointment.

Virtual office hours on Go to Meeting.

COURSE DESCRIPTION AND OUTLINE

1. Course Objectives

This course is designed to provide a working knowledge of the fundamentals of financial accounting. We will pursue this objective by:

i. covering rules, conventions, and approaches used in preparation of financial statements, ii. understanding the core concepts of financial reporting, iii. developing the skills to analyze financial statements, iv. investigating various public sources of financial information used in capital markets, and v. considering the usefulness and limitations of financial statement analysis in specific decision contexts.

With these objectives, we investigate the following topics:

i. concepts, principles, and methods (GAAP & IFRS) ii. financial statements (balance sheet, income statement, & cash flow statement), iii. assets (current assets, PP&EQ, & Intangible assets), iv. equities – liabilities (current & long-term) and stockholders’ equity, v. analysis of financial statements.

1 Learning Objectives

The successful student will be able to construct, compare and contrast accounting measures of operating returns and risks from publicly available financial reports. Students will be able to construct and interpret accounting based measures of financial risks facing equity and debtholders from financial statements. Additionally, students will be able to articulate the usefulness and limitations of accounting disclosures.

All students will be proficient in applying GAAP rules and conventions in the preparation of financial statements. All students will be able to construct the primary financial statements for a publicly traded firm from trial balances and they will be able to describe the typical structure, organization, and information contained in publicly available sources of accounting information (for example, annual reports, 10-Ks, and 10Qs). All students will be able to list and explain at least three major differences between GAAP and IFRS.

All students will be able to construct an analysis of financial statements and draw meaningful inferences concerning profitability, liquidity, and solvency for a medium size firm publicly traded firm. A significant proportion of students will be able to select accounting principles, conventions, implementation decisions, and estimates that would maximize reported net income or minimize financial risk measures (for example, Long-term Debt/Total Assets) for a particular year. All students will be able to describe management’s financial reporting choices and likely motivations.

2. Course Materials

a. Background Material

Internet Supplemental Undergraduate Class Principles of Accounting Larry M. Walther Professor at Utah State University http://www.principlesofaccounting.com/ (WALTHER)

b. Required Text

Financial Accounting: An Introduction to Concepts, Methods, and Uses, 14th Edition by Weil, Schipper & Francis. (WSF)

c. USC Blackboard Course Pages

All information for this course, including announcements, assignments, solutions and other resources will be posted on the USC Blackboard Course Pages under https://blackboard.usc.edu/. If you have any questions or need assistance with the Blackboard Course Pages, please contact the Marshall Help Desk (Hoffman Hall Room 300, 213-740-3000 or [email protected].

2 Course Grade

The course grade is based on the following: i. Mid-Term - September (20th) 25% ii. Group Business Applications

a. September 6/ 8 – Financial Statement Disclosures (10%) b. Oct. 4/ Sept. 29 – Financial Statement Analysis (10%) c. October 18/20 - Operating and Financing Decisions (10%)

Subtotal 30% iii. Comprehensive Final Exam - (November 8th/3rd) 45%

Total 100%

Academic Integrity

Giving or receiving assistance from another person to advantage a student is considered academic dishonesty. Group work by its very nature requires the interchange of ideas, materials, and other forms of help to others. Thus, it is expected in group activities that you will be helping each other. However, individual assignments and examinations should be exclusively the work product of the MBA candidate with NO assistance from any other source. Any occurrence of academic dishonesty will be handled according to University policy.

Retention of Graded Work

Retained paperwork, unclaimed by students, will be discarded after December 31, 2015.

3 Course Plan:

WS&F Session Date Topic ASSIGNMENTS1 Chapter(s) WSF Self-study: 1.33, & 1.35 1 Overview of Financial Statements Primary HW: 1.38 & 1.42

The Basics of Record Keeping & WSF Self-study: 2.15 & 2.17 Aug 23 2 Statement Preparation: Balance 1 Primary HW: 2.18 Aug 25 Sheet

The Basics of Record Keeping & WSF Self-Study 3.13, 3.15 ,3.21 3 Statement Preparation: Income & 3.32 Statement Primary HW: 3.28

WSF: Self-Study 4.13, 4.21, 4.23, 4 Balance Sheet 4.27, & 4.31 Primary HW: 4.18, 4.26, &4.32

Sept 6 2 WSF: Self-Study 5.11, 5.19, 5.27, Sept 8 & 5.29 Primary HW: 5.12, & 5.28 5 Income Statement Bus. App. #1: Financial Statement Disclosures

WSF: Self-Study 6.23, 6.24, 6.29, 6.33 & 6.35 Sept 13 Primary HW: 6.26, 6.30, 6.34 & 3 6 Cashflow Statement Sept 15 6.44

Maleus Corp. – Construct Financial Statements & Analysis

Mid-Term – Chapters 1-6 Edison Auditorium HOH

Sep 20 4 7 Introduction to Financial WSF: Self-Study 7.15, Statement Analysis Primary HW: 7.30

1 WS&F refers to the Weil, Schipper, & Francis texts. Bold numbers refer to primary homework problems that all students should attempt. Italicized numbers refer to supplemental homework problems that may be attempted by students that wish some extra practice. Self-Study Problem answers with commentary will be available on Blackboard. While the student should attempt all of the primary problems in bold, not all of these problems will be explicitly covered in class. Solutions to all problems primary homework problems will be available electronically once the materials have been covered in class.

4 WS&F Session Date Topic ASSIGNMENTS1 Chapter(s)

WSF: Self-Study 7.23 Introduction to Financial Primary HW: 7.31 7 Statement Analysis Bus. App. #2: Financial Statement Oct 4 Analysis 5 Sept 29

WSF: Self-Study 8.19, 8.23, 8.35, Revenue Recognition, & 8.49 8 Receivables, and Advances from Primary HW: 8.30, 8.48, & Customers 8.50

WSF: Self-Study 9.15, 9.23,9.27, & 9.44 9 Working Capital Primary HW: 9.22, 9.33, & 9.46 Oct 11 6 Oct 13 WSF: Self-Study 10.15, 10.17,10.20, Long-Lived Tangible and & 10.21 10 Intangible Assets Primary HW: 10.22, 10.24, & 10.32

WSF: Self-Study 11.17 , 11.21, 11.23, &11.29 Oct 18 Primary HW 11.22, 11.24, 11.28, 7 11 Notes, Bonds and Leases Oct 20 11.30, & 11.34 Bus. App. #3: Operating & Financing Decisions

Shareholders’ Equity: Capital WSF: Self-Study 15.11 & 15.17 Nov 1 8 15 Contributions, Distributions, and Primary HW: 15.26, Oct 27 Earnings 15.28, & 15.34

Nov 8 9 Final – Comprehensive Nov 3