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 ACCT101 – Financial Accounting AY2014/2015 Term 2 – Jae Bum KIM (G10 – G12) Page 1

 ACCT101Financial Account ing G10, G11, G12

Course Outline 2014/2015 Term 2

 A. General Information Assistant Professor Jae Bum KIMLevel 4 Room 4010School of Accountancy

Tel: (65) 6808-5233Email:  jbkim@smu.edu.sg 

Course website: https://elearn.smu.edu.sg (the combined section: ACCT 101-Financial Accounting-G10-11-12)

Consultation times: Thursday 10:00AM ~ 1:00PM, or by appointment

Teaching Assistants

G10 (Tuesday 3:30PM ~ 6:45PM) Heviyanti Christina NG(heviyanting.2013@business.smu.edu.sg) 

G11 (Wednesday 8:15AM ~ 11:30AM) Heviyanti Christina NG(heviyanting.2013@business.smu.edu.sg) 

G12 (Wednesday 3:30PM ~ 6:45PM) Heviyanti Christina NG(heviyanting.2013@business.smu.edu.sg) 

B. Course Prerequisites: None 

C. Course Description

This course provides students with a basic understanding of accounting as “the language of business”. Itintroduces students to the basic concepts, principles, procedures and approaches underlying theaccounting process. In addition, coverage of accounting cycle will show how business transactions impactfinancial statements, and ultimately the analysis of financial information for decision-making.

D. Learning Goals, Course Objectives and Skill Developments

 All School of Accountancy courses are designed to meet certain learning goals and objectives. Somelearning goals are addressed at course level, some at overall program level. This course specificallycontributes to the development of the following course level learning goals:

LG1.1  Our students can recognize, develop, measure, record, validate and communicate financial andother related information.

LG1.2  Our students can analyze, synthesize and evaluate financial and other related information fordecision making in a management context.

Students are expected to demonstrate the following technical accounting competencies upon successful

completion of this course:

  Understand  the role of accounting and the framework for financial reporting, including thefundamental principles, qualitative characteristics and assumptions underlying financial accounting.

  Demonstrate familiarity with the typical contents of an “Annual Report” and basic financialreporting/disclosure requirements.

  Transform   transactional data into useful accounting information, including adjusting entries andclosing entries, leading to the preparation and presentation of financial statements.

   Account for cash, receivables, inventory and non-current assets, liabilities and changes in equity.  Make  inferences based on reasonable examination of financial statements, notes to the accounts

and other disclosures, of the financial position, financial performance and changes in financialposition of an entity.

   Analyse and communicate financial information to users.

  Develop  an ability to independently learn, unlearn and re-learn relevant updates on accountingstandards, corporate regulations and other financial reporting and disclosure requirements.

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In addition, students will also develop their versatility   [LG2], individual competencies  [LG3] andawareness of ethics and responsibil ities [LG4] through the various class and assessment activities:

   Analyt ical Ski lls: Analytical skills will be developed through various problem solving, casediscussions and analysis. The course will provide the tools for students to use and analyseaccounting data and financial reports to make informed decisions.

  Communication Skills: Students will be required to actively participate in the class discussions and

through written report and discussion of the company analysis project. The written report andpresentation (in Session 12) will be assessed on clarity of communication appropriate for a businesscontext.

  Team work: Team projects, discussions and presentations will be important elements of the course. All students will be required to work in teams, which will be randomly assigned by Week 3 of theterm. They are expected to work as partners and share the work load.

   Active learning : Students will be expected to venture beyond prescribed readings and text. Thecompany analysis project will allow students to take an active role in their understanding of how theend products of an accounting system serve information need of users.

  Professional ethics: Ethical issues are discussed and cases will be reviewed. This introductorycourse provides the opportunity to emphasize the needs for the highest ethical behaviour forcorporate executives and corporations.

E. Learning Approach

The pedagogical approach to this course consists of three interlocking elements:  Instructor-facilitated Learning: Facilitation, Clarification, Synthesis  Individual Learning: Preparation, Analysis, Action  Collaborative Learning: Teamwork, Discussion, Sharing

Learning activities are planned to take into account these three elements of learning. Both the technicallearning and skills objectives will be developed through a blend of theory and practice. Anunderstanding of basic accounting knowledge on major elements of financial statements is a prerequisitefor any future studies of accounting. Thus, each topic will start with a session on basic technicalknowledge, followed by a practical session, using exercises, discussions, case analysis, and other class

materials to enforce students’ understanding of the topic.

  Theories  are what you learn in textbooks, the methodological, structured and systematic study of adiscipline. The Harrison and Horngren textbook helps you learn, understand and practice conceptsand theories in financial accounting. You also have access to various e-learning materials (“Financial Accounting Learning Objects”, FALO for short) in your learning management system (called “e-learn”at https://elearn.smu.edu.sg/).

  Cases are examples that we bring in to class to introduce the relevance of theories and concepts inactual accounting practices. The casebook (see below) is a collection of case materials (typicallyextracts of various annual reports and other readings) to help us appreciate the real-world importanceof the theories and concepts you read. It also highlights that textbook only covers so little you reallyneed to know about the world.

The role of the instructor is to facilitate, provide clarification of critical concepts, not to read out pages ofthe textbook to you. Often, it is important to be able to see the “trees from the forests” and synthesise onwhy certain things matters are just as important as how specific processes/procedures are performed.

Students are reminded that their individual contribution to learning starts before class. Students shouldprepare by pre-reading, analysing the materials/tasks/cases to be covered before coming to class andactively participate in class discussions. Preparation is the prerequisite for  analysis which will allow youto take action in your individual learning.

Collaborative learning elements are developed through your contribution to your classmates learningexperiences, either through teamwork  in tackling your project or other assigned tasks, and being willingto contribute to class discussions and share your findings and work so others will benefit. Naturally, yourindividual preparation, analysis and action will determine how much you are able to contribute to

collaborative learning.

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F. Textbook and Other Resources

Primary Text:  Harrison, Horngren, Thomas and Suwardy(2013), Financial Accounting: International FinancialReporting Standards, 9

th edition, Pearson

Case Book:  Suwardy (2010), Understanding FinancialStatements: A Case-Based Approach, Pearson Prentice-Hall

FA Learning Objects:  Suwardy (2006), numerous e-learning resources is available in D2L

There are numerous basic financial accounting books in the library that you can further consult foradditional references.  You may require access to www.asc.gov.sg  or www.ifrs.org  for selected insights into applicable

accounting standards.  In addition, a good summary of accounting standards (“IFRS in Your Pocket 2010”) is available from

IASPLUS http://www.iasplus.com/dttpubs/pocket2010.pdf . Whilst you will not be expected to know allaccounting standards in any great detail in your first financial accounting course, you should have an

appreciation of the relevant accounting standards covered in this course.  Due to the nature of the coverage on emerging issues, students will be expected to ready widely from

professional, business publications and newspapers.

G. Abridged Lesson Plan

Class sessions are of 3-hour duration and will include a review of study materials, class discussions andother learning activities. All course materials will be published in e-learn.

 A brief outline of course schedule is provided below. A detailed course work plan is available in Annex 1.  Accounting Framework & Financial Statements  Recording Business Transactions  Processing Accounting Information  Completing Accounting Cycle  Cash and Receivables  Merchandising Operations and Inventory

  PPE (Property, Plant and Equipment) andIntangibles

  Liabilities  Owners’ Equity and Income Statement  Cash Flow Statement  Financial Statement Analysis

H. Assessment and Evaluation

To pass the course, students are required to obtain a TOTAL mark of 50% or better. The assessmentcomponents are listed below:

Components Weight  A+ >=86 %

1. Class Activities: 10% A 83-85%

1-1) Homework (5%) A- 80-82%

1-2) Participation (5%) B+ 77-79%

2. Progress Assessment 25% B 74-76%

2-1) Five quizzes (25%) B- 70-73%

3. Assignments 15% C+ 66-69%

3-1) Group Project Report (10%) C 63-65%

3-2) Group Case Work (5%) C- 60-62%

4. Final Exam 50% D+ 53-59%

D 50-52%

Sum 100% F <=49%

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1. Class Activi ties

  Homework (5%) 

•  Assigned homework must be submitted before class starts  and must be hand-written. Anyprinted copy will not be accepted. 

•  The purpose of the homework problem solving is to motivate your self-study before  the class.Thus, relatively easy homework questions are assigned. However, you are expected to study

class materials before the class and try to solve these homework problems for yourself. •  To answer all the questions correctly will be challenging. Therefore, grading homework is

based on your efforts, not on correctness . When reasonable amount of efforts are thought tobe exerted, two points will be given. One point will be given to the homework which showsobviously minimal efforts (jotting down several lines). Zero point for no submission. 

•  There are suggested problems in each class as well. Solving both homework problems and thesuggested problems is essential for the students to perform well in the examination and the quiz.The solutions to homework and suggested problems will be ready on course website after thecollection of homework. 

  Participation (5%) and Class Behavior  

•  A part of the course grade would be allocated to class participation and discipline. You will getparticipation points by providing constructive feedbacks. 

•  Maintain proper discipline and conduct yourself in a responsible manner. •  Students are encouraged to raise questions and to participate in the class (e.g., suggestions,

comments, etc). 

•  There are several specific behavioural codes for this class: 1)  Abso lu tely NO CELLPHONE(including SMS), 2) Prudent use of notebook computer (you may use notebook computer onlyfor class related purpose), 3) Obtain permission from the professor for absence of the class inadvance. 

2. Progress Assessment

  Quizzes (25%): Regular quizzes will be given in class. There will be a total of 5 quizzes. Each quiztypically takes 30 minutes and has 30 maximum points. Your lowest score from the 5 quizzes will be

dropped in the final grade.

3. Assignments

  Group Case Work (5%) 

•  Students will be assigned into groups (of 4-5 members) and asked to discuss, solve cases, andsubmit a group report. There are 5 cases in total. 

•  The purpose of the group exercise is not just to test your knowledge, but to improve your abilityto discuss accounting subjects, deliver your opinions, and work together in a group.

•  You are required to read the assigned article before coming to class, analyze problems,synthesize and properly structure arguments. In class, we will have a short group discussion andan open discussion in which you are expected to actively participate. For each case, I will alsoprovide you with a list of questions that you should examine before coming to class.

•  Each group (not individual students) has to write a two-page report of each case based on thegroup discussion and class discussion.  A g roup repor t shou ld be typed, 1.5 l ine spaced, andbased on 12 point font size. Your report should not be just a “bullet point” list of answers. Itmust show a coherent flow and exhibit a cohesive examination of the case.

•  Students are expected to work in a group and it is important to participate in the group worksequally. To prevent free-riders, the scores will be adjusted based on peer evaluation within eachgroup.

•  The due time for submission of the case report is one week after a case is discussed in class.Refer to the  Annex 1  for the deadline of each case work. Late submission will not beaccepted.

  Group project (10%):  There is a term group project report. Please see  Annex 2  for moreinformation.

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4. Final exam (50%) 

 The final examination is on Saturday, 18 Apri l 2015 from 1:00PM to 4:00PM. The exam covers topics from the entire course and is closed-book.  Further information will be provided as the term progresses. No Alternative Final Exam: Requests by students to take the final exam on other than the officially

scheduled date/time will not be approved except under extremely extenuating circumstances entirely

beyond the student’s control. Students who believe they may be unable to take the final examon the scheduled date and time should not enrol fo r this course this term.

I. Other Course Policies

1. Academic Integrit y 

 All acts of academic dishonesty (including, but not limited to, plagiarism, cheating, fabrication,facilitation of acts of academic dishonesty by others, unauthorized possession of exam questions, ortampering with the academic work of other students) are serious offences.

 All work (whether oral or written) submitted for purposes of assessment must be the student’s ownwork. Penalties for violation of the policy range from zero marks for the component assessment to

expulsion, depending on the nature of the offense. When in doubt, students should consult the instructors of the course. Details on the SMU Code of Academic Integrity may be accessed at http://www.smuscd.org/resources.html. 

2. Quiz / Exam Policy  

 Students should not share the exam contents with others (including students in other sessions) untilexam grading has been fully completed.

 There will be no make-up for quizzes unless a well-written medical document for true emergency isprovided.

3. Copyrigh t 

 Any copy-righted materials posted on the course website or distributed in class are for studentslearning purpose only.

 The copyrights belong to the respective authors/publishers. Students’ usage of the material isgoverned by the law.

4. Other comments 

 The general approach of this course is lecture, problem-solving, and discussion of cases relevant tothe topic. Students who read the chapter ahead of attending class will benefit most from the classpresentation. As an alternative, students may study the lecture notes ahead of the class.

 Please check the course website regularly in order not to miss important announcements. Althoughmajor announcements will be made both in classroom and course website, it is the sole responsibility

of the students to find out what has been announced during their absence from class. I strongly encourage you to let me know any problems related to this course as soon as they

arise. Please do not allow problems to accumulate because it will be more difficult to solve themlater. In this course, each chapter builds on the previous chapters. It is like constructing a building –the foundation first, then the ground floor, then the first floor so on. If you have problems in theearlier parts, you will not be able to understand the later parts. Moreover, the level of difficultyincreases as lectures progress. It is much easier to get high marks in the earlier quizzes, but it wouldbe difficult to get even a decent grade in the final exam. Hence, it is very important to be serious withyour studies right from the beginning.

Prepared by Jae Bum KIM, 10 December 2014Vetted by: SEOW Poh Sun, 23 December 2014

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 Annex 1: Detailed Course Work Plan

(The following schedule is tentative. It may change depending on the pace of the class)

Week TopicHomework

 Assignments

(to be handed up)

Suggested Problems(for your own practice)

11/51/11

Introduction andCh.1. Conceptual Framework and FinancialStatementsCh.2. Recording Business Transactions

E1-17A, 18A, 24A,25A, 26A,P1-58A, 59A, 61A

2

1/121/18

Ch.2. Recording Business Transactions(Remainder)

Ch.3. Accrual Accounting & Income

S2-3, 5, 7, 9,12 E2-15A, 20A, 21A,P2-61A, 62A, 64A

3

1/191/25

Quiz 1

Ch.3. Accrual Accounting & Income(Remainder)

S3-1, 3, 10, 11 E3-18A, 26A, 29A,P3-62A, 63A, 67A

4

1/262/1

Ch.4. Presentation of Financial Statements

Ch5. Internal Control, Cash, and ReceivablesGroup Case #1 (Revenue Recognition)

S4-7, 8, 12 E4-13A, 17A, 18A, 20A

P4-40A, 41A, 42AE5-23A, P5-64A

5

2/12/8

Quiz 2

Ch5. Internal Control, Cash, and ReceivablesCh.6. Inventory and Merchandizing Operations

S5- 6, 7, 10, 12

Case write-up(Case #1)

E5-27A, 28A, P5-67A

E6-17A, 19A, 27A,

6

2/92/15

Ch.6. Inventory and Merchandizing Operations(Remainder)Ch.7. PPE and IntangiblesGroup Case #2 (Working Capital)

S6-4, 5, 7, 12 P6-61A, 64A

7

2/162/22

Quiz 3

Ch.7. PPE and Intangibles (Remainder)Ch.9 Liabilities (including Appendix B andexcluding Lease and Pensions)

S7-4, 5, 6

Case write-up(Case #2)

E7-15A, 22A,P7-62A, 64A, 67A

2/23 – 3/1. Recession Week, No Class. Have a nice break. 

9

3/23/8

Ch.9 Liabilities ((Remainder)Group Case #3 (Capitalizing Expenses) 

S9- 1, 2, 6, 8 E9-21A, 24A, 25A,26A, 27AP9-73A, 75A, 78A

10

3/93/15

Quiz 4 Ch.10. Shareholders’ Equity

S10- 5, 6, 10

Case write-up(Case#3)

E10-24A, 25A, 34AP10-76A, 77A, 78A

113/163/22

Ch.11. The Statement of Cash FlowsGroup Case #4 (Share Repurchase &Dividend) 

S11- 6, 7, 8 E11-16A, 20A, 21A,P11-60A, 63A

123/233/29

Ch.11. The Statement of Cash Flows(Remainder)Group Case #5 (Earnings Management) 

S11- 9, 10, 11Case write-up(Case#4)

E11-22A, 23A, 26AP11- 61A, 65A, 66A

13

3/304/5

Quiz 5

Ch.12. Financial Statement AnalysisS12- 6, 7, 8Case write-up(Case#5)

E12-18A, 21A,P12- 52A, 53A,55A

14

4/64/12

Self-review of the course and preparation forthe final exam, No class

N.A. N.A.

Final Exam

Saturday, 18 November 2015 from 1:00PM to 4:00PMVenues will be announced later.

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 Annex 2: Guideline for Term Group Project

1. PurposeThe purpose of the group project is to provide you with an understanding of the preparation of annualreports. You should be able to critically analyze and evaluate various aspects of the financialstatements, with emphasis on (but not limited to) the topics discussed in the course.

Your group will assume the role of a financial analyst and conduct research for a client  (e.g., anindividual investor). Alternatively you could assume the role of a product manager evaluatingcompetitors. Your client has asked you to analyze the financial statements of one company and its twocompetitors – you may choose its two major competitors from the same industry. Your analysis shouldfocus on the chosen company. However, you need to compare its performance with those of other twocompanies in the same industry.

2. Assessment and SubmissionThe group project report carries 10% of the total marks  of the course. It will be graded on content andlevel of analysis. Students are expected to work in a group and members of a group would peer-

evaluate the contribution of group members. The due time for submission of the project report is 5:00PMon Apr il 9, 2015 (Thursday). Late submission will no t be accepted.

3. Company SelectionEach group must select a company from the list which will be provided later.

4. Format•  Ten pages maximum – Your report should include supporting analyses as appendices to the ten

pages. The cover page is not counted in the page number. The latest available Annual Report usedin the analysis must be appended. Your data should cover at least  two years of latest annualreports.

•  Typed, 1.5 line spaced, 12 point font size.

5. ContentThe final report must include  (i) a cover page, (ii) executive summary, (iii) analysis, and (iv)conclusion.

You are required to address all questions with (*) listed below . Feel free to address other listedquestions in your report. Workings, if any, must be shown. You may use other sources of information(e.g. company’s website, press release, newspaper clippings, etc) but they must be properly sourced andnoted.

Your report should not be just a “bullet point” list of answers. It must show a coherent flow and exhibit

a cohesive examination of the company. You must discuss the subject firms’ profitability (includingquality and persistence of earnings), effectiveness of asset utilization, debt servicing (liquidity,risk assessment), cash flows management, and overall performance where they are applicable.

(1) Company and Industry Overview•  (*) What are the principal activities of the company?

•  What is the geographical coverage of the company?

•  (*) What are the major trends in the industry?

•  Who are the companies’ major competitors?

• Have any significant events happened at your companies that will be important to consider as youanalyze their results?

(2) Financial Statements Overview•  (*) Define and compute major financial ratios. Your definition of ratios should be consistent with

those in the textbook.

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(3) Income Statement Discussions•  (*) What were the company’s total revenues for the year under review?

• State the composition of the revenues of the company, allocate according to products, locations,activities, etc where possible.

•  (*) What are the bases of revenue recognition adopted by the company? Are they appropriate?

•  (*) Looking at the revenue and profit before tax in the three years presented in the annual report,

would you say the company have had a good year? Provide evidence to justify your conclusion.•  (*)Draw up a common-sized statement for the year under review. Comment on the result.

(4) Current Assets and Current Liabiliti es•  (*) If your company has inventory, state which inventory cost flow assumption is used.

•  (*) What is the working capital of the company for the year under review and that of the previousyear?

•  State the composition of current assets and current liabilities for each year.

•  (*) If your company has allowance for doubtful accounts, show how this allowance is determined.

(5) Long-Term Assets•  List by types and amounts the property, plant and equipment of the company.

•

  (*) What depreciation method does the company use for financial reporting?• What would have been the journal entry the company made to account for the depreciation for the

year?

(6) Long Term Debt and Equity Financing•  State the nature and amount of each liability in the long-term liabilities section of the balance sheet.

•  (*) Considering your company’s operating circumstances, which do you think is the best way tofinance its purchase of long-term assets; through internally generated funds, shareholders’contributions, or through long-term borrowings? Why?

(7) Statement of Cash Flows• (*) Compare the company’s cash position for the year under review with that of the previous year.

Comment on the improvement or deterioration of the company’s cash position.• Which method (direct or indirect or both) did the company use in the preparation of its statement of

cash flows?

•  (*) State the main sources of cash inflow during the year and the main uses to which cash has beenused.

(8) Miscellaneous•  (*) What non-financial information disclosed in the annual report that you find most useful and

relevant?

6. Useful references•  Accounting Standards Council (ASC) : http://www.asc.gov.sg/ 

• Singapore Exchange (SGX): http://www.sgx.com/ (annual reports are available)

•  U.S. Securities and Exchange Commission (SEC): http://www.sec.gov/ 

•  U.S. Financial Accounting Standards Board (FASB): http://www.fasb.org/ 

•  New York Stock Exchange (NYSE): http://www.nyse.com/ 

• NASDAQ: http://www.nasdaq.com/ 

• MSN Money: http://moneycentral.msn.com/investor/sec/filing.asp?Symbol 

• Yahoo Finance: http://finance.yahoo.com/ 

• WSJ Free Annual Reports: http://wsjie.ar.wilink.com/asp/WSJ3_search_eng.asp 

•  Thomson ONE Banker and OneSource: Databases from SMU Library website