Overview

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Week 1

Introducing Accounting in Business

Welcome to ACTG 210: Introduction to Financial Accounting. In this first week you will get an overview of the role of accounting in business including how to interpret financial statements and how to access financial statements from companies across the nation using the SEC Edgar Database.

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Time

It should take 20-22 hours of dedicated time to complete the readings, view the power points, do the homework exercises, complete the required part of the project.

Overview

Accounting is an information and measurement system that identifies, records and communicates relevant, reliable, and comparable information about an organizations business activities. Recordkeeping, or bookkeeping, which includes just one function of accounting, is the recording of transactions and events, either manually or electronically. Accounting is the language of business because all organizations set up an accounting information system to communicate data to help people make better decisions. There are external and internal users. Both internal and external users rely on internal controls to monitor and control company activities. The four broad areas of opportunities in accounting include financial accounting, managerial accounting, taxation, and accounting-related careers. Ethics are beliefs that distinguish right from wrong; they are accepted standards of good and bad behavior. Financial accounting is governed by rules known as generally accepted accounting principles, GAAP. GAAP aims to make accounting information relevant, reliable and comparable. The Securities and Exchange Commission (SEC) has legal authority to set GAAP. Accounting principles (and assumptions) are both general (basic assumptions, concepts and guidelines for preparing financial statements) and specific (detailed rules used in reporting transactions). The accounting system reflects two basic aspects of a company: what it owns and what it owes. Together, liabilities and equity are the source of funds to acquire assets. The relation of assets,

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liabilities and equity is reflected in the balance sheet (accounting) equation: Assets = Liabilities + Owners Equity (A = L +OE)

Business activities can be described in terms of transactions and events. External transactions are exchanges of value between two entities, which yield changes in the accounting equation. Internal transactions are exchanges within an entity; they can also affect the accounting equation. Events refer to those happenings that affect an entitys accounting equation and can be reliably measured. The following section uses the accounting equation to analyze eleven selected transactions and events. Remember that each transaction leaves the accounting equation in balance and assets always equal the sum of liabilities and equity. General purpose financial statements are prepared to communicate financial information about an entity. The four financial statements which are discussed here are: Income Statement, Statement of retained earnings, Balance Sheet, and Statement of Cash Flows. Return on assets, also called return on investment (ROI), is a profitability measure; useful in evaluating management, analyzing and forecasting profits, and planning activities.

Objectives

By the end of this week, students will be able to Explain the purpose and importance of accounting in the information age. Identify users and uses of accounting. Explain why ethics are crucial to accounting. Explain generally accepted accounting principles and define and apply some of them. Define and interpret the accounting equation and each of its components. Analyze business transactions using the accounting equation. Compute and interpret return on assets. Identify and prepare basic financial statements and explain how they interrelate.

Readings and Resources

Readings
Read Chapter 1, Page 2 top of 26.

http://www.uic.edu/depts/accc/itl/uiconline/270_2656/ACTG210/master/platinum/module0...

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Presentations
Review How to find Financial Statements for Publicly Traded Companies View Chapter 1 Power Point Presentation (There is no audio)

The Project
Complete Part 1

Homework
Optional: Do Chapter 1 exercises 1-1, 1-2, 1-7, 1-8 On Connect website http://connect.mcgraw-hill.com (opens in a new window). Required: Do Chapter 1 exercises 1-4, 1-8, 1-13, 1-14, 1-15 and P1-8A, P1-10A on Connect website http://connect.mcgraw-hill.com (opens in a new window).

Quiz
This quiz covers Chapter 1. Make sure you have completed this weeks homework before you take the quiz. The quiz will take place at the end of the week. You will be allowed 30 minutes to complete the quiz. The quiz will be on Connect website http://connect.mcgraw-hill.com (opens in a new window).

Graded Assignments

Homework: 13 points Quiz: 20 points Project (part 1): 12.5 points

Tips for Success

Below are tips that will help you be successful. Be sure to read the chapter early and try your hand at the homework to see whether or not you have questions or need help. Look ahead at all of the weeks requirements so that you know what is coming. We suggest that you preview the workload for the week so that you can plan your time accordingly.

http://www.uic.edu/depts/accc/itl/uiconline/270_2656/ACTG210/master/platinum/module0...

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Graded homework must be completed at the Connect website. Be sure to purchase your instant access code and register right away. All assignments are due on Sunday at midnight. This includes homework, quiz and a part of the project.

http://www.uic.edu/depts/accc/itl/uiconline/270_2656/ACTG210/master/platinum/module0...

1/7/2013