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Introduction to Financial Accounting

Purpose of Course  showclose

Accounting can be considered the language of business. If you are learning accounting for the first time, embracing its foundational concepts may be a challenging process. Mastery of accounting primarily rests in your ability to critically think through and synthesize the information as it applies to a given situation. You should approach the learning of accounting the same way you would approach learning a foreign language; It will take time and practice to ensure you remember the concepts. There are a number of sub-disciplines that fall under the umbrella of “accounting,” but in this course, we will be focused on financial accounting. Accounting as a business discipline can be viewed as a system of compiled data. The word data should not be confused with “information.” In terms of accounting, “data” should be viewed as the raw transactions or business activity that happens within any business entity. For example: Someone uses $30,000 of their savings to start a business. The use of these funds within the start of this new business is in fact data. Now that you have this data, what are you going to do with it? The answer to this question can be summed up in one word – accounting! Taking this data and transforming it into useful information is what happens when accounting is implemented within a business. The word information should be viewed as the communicated results of the data as it has happened in the business within a specified period of time. This information is used by decision makers to support how they determine specific courses of action within the business. This course introduces you to financial accounting in preparation for more advanced business topics within the business major. Recording financial information in a standard format allows managers, investors, lenders, stakeholders, and regulators to make appropriate decisions regarding their respective interests. In this course, the formats of focus will be identified as the Income Statement, the Balance Sheet, Statement of Cash Flows, and Statement of Shareholders’ Equity. In this course, you will learn how to compile and analyze these financial statements, determine the value of a firm, and compare the firm to its competitors.

Course Information  showclose

Welcome to BUS103 – Introduction to Financial Accounting. Below, please find some general information on the course and its requirements.

Course Designer: Johnny Jackson MBA, MHRM

Primary Resources: This course comprises of a range of a variety of free online materials. However, the course makes primary use of the materials listed below. Please note that the structure of this course is closely aligned with the progression of topics in the following main resources:
Requirements for Completion: In order to complete this course, you will need to work through each unit and any of its assigned materials and assessments. In each unit of this course, there is strategic information provided to support your understanding of Introduction to Financial Accounting. It is very important that you take notes as you work through this course. Use these notes to support your critical analysis of the content you are reading or viewing from a Web media source or lecture. Note that you will only receive an official grade on your Final Exam and not on the assessments. In order to “pass” this course, you will need to earn a 70% or higher on the Final Exam. Your score on the exam will be tabulated as soon as you complete it. If you do not pass the exam, you may take it again.

Time Commitment: This course should take you a total of 93 hours. The time advisory does not include the amount of time it may take you to write out your notes or prepare for the Final Exam. The time advisory also does not take into consideration that you may have to watch a lecture more than once to obtain what is needed for a particular section of the course. To help you plan your time, each unit includes a subunit time advisory that estimates the time you are expected to spend on each subunit. For example, Unit 1 should take you 13 hours. Also, please note there are three subunits in Unit 1. To make the process of completing Unit 1 more manageable, you are greatly encourage to block out time over the course of a specified period, i.e., a calendar week, and schedule yourself to work through a specific subunit on each day. For example, you may decide to complete subunit 1.1 (a total of 4 hours) on Monday; half of subunit 1.2 (about 2.25 hours) on Tuesday; the rest of subunit 1.2 (about 2.25 hours) on Wednesday; etc.

Tips/Suggestions: As you are working through the course, you are strongly encouraged to take well-organized notes and build a glossary of accounting terms. Pay careful attention when watching the videos in this course, as this material not only reinforces the concepts being presented but also presents information that is referred to in your Final Exam. Finally, to master the material in this course it is important that you develop a solid comfort level with each section of the course prior to moving on to the next section. 

Learning Outcomes  showclose

Upon successful completion of this course, you will be able to:
  • demonstrate an understanding of the foundational principles and objectives of accounting;
  • apply the accounting equation to illustrate the impact of business transactions and to transform business transactions (data) into usable information;
  • describe the accounting cycle and identify specific debits and credits, journals, t-accounts, a trial balance, and resulting financial statements;
  • explain why adjusting entries are necessary and distinguish between various types of adjusting entries;
  • discuss and demonstrate the use of the accounting worksheet as a means of preparing financial statements;
  • explain and execute the closing process for a specified accounting cycle;
  • identify the foundational accounting concepts, assumptions, and principles through the analysis of specific business situations;
  • locate public company financial statements, and read and interpret financial statements;
  • identify and analyze accounting transactions of a merchandising company;
  • define and solve for specific business events involving various inventory methods;
  • define and apply the accounting elements associated with receivables and payables;
  • identify, record, and depreciate property, plant, and equipment;
  • distinguish between tangible and intangible assets;
  • describe the difference between bonds and capital stock; Account for bonds and capital stock;
  • account for paid-in capital, cash dividends, stock dividends, stock splits, and retained earnings appropriations; and
  • describe the types of business transactions that are included in operating, investing, and financing activities on the statement of cash flows; prepare a statement of cash flows.

Course Requirements  showclose

In order to take this course, you must:

√    have access to a computer;

√    have continuous broadband Internet access;

√    have the ability/permission to install plug-ins or software (e.g., Adobe Reader or Flash);

√    have the ability to download and save files and documents to a computer;

√    have the ability to open Microsoft files and documents (.doc, .ppt, .xls, etc.);

√    be competent in the English language; and

√    have read the Saylor Student Handbook.

Unit Outline show close


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  • Unit 1: Accounting Environment, Decision Making, and Theory  

    In this introductory unit of the course, you will learn about a variety of the foundational elements of accounting that are crucial to the understanding of the material in this course.  

    To understand financial accounting, you will need an in-depth understanding of the four basic financial statements and the purpose they each serve. You will also need to understand how data is captured and transformed into information and how the accounting equation seeks to ensure that you are properly recording the data.

    Throughout the course you will be introduced to various career fields and employment positions associated with the concepts of this course. Consider this information an exploration of the viability of accounting as an employment option and as a means of reinforcing how significant these concepts are to the success of business operations. 

    Unit 1 Time Advisory   show close
    Unit 1 Learning Outcomes   show close
  • 1.1 The Accounting Environment  
  • 1.1.1 Chapter Learning Objectives Identified  

    Note: This topic is identified in the primary text as Section 1.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. Some history of accounting is provided in this section of the course, so take thorough notes. 

  • 1.1.2 Accounting Can Be Defined  

    Note: This topic is identified in the primary text as Section 1.2. There will be a discussion on how to define accounting and what the end result (information) will suggest. This is a generalized overview; more detail will be provided as you progress through the course. 

  • 1.1.3 Employment Opportunities in Accounting  

    Note: This topic is identified in the primary text as Section 1.3. This section of the course will be your first look at some potential employment opportunities associated with the business discipline of accounting. Please ponder and place exhibit 1 on page 18 in your notes, as this illustration provides detailed and grouped information on the functions performed by accountants. 

  • 1.1.4 Financial Accounting Versus Managerial Accounting  

    Note: This topic is identified in the primary text as Section 1.4. There will be a discussion on the difference between financial and managerial accounting in this section of the course. There will also be a discussion on who will use the information provided by going through the accounting process; potential questions that may be posed will be presented as well. 

  • 1.1.4.1 Comparison and Contrast of Management vs. Financial Accounting  
  • 1.1.4.2 Financial and Management Accounting Study Notes  
  • 1.1.5 Development of Financial Accounting Standards  

    Note: This topic is identified in the primary text as Section 1.5. In this section of the course, you will be introduced to the foundational understanding of Generally Accepted Accounting Principles or GAAP. You will also be provided insight into the various organizations that have a major impact on how GAAP is administered, including but not limited to the Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB), and the American Accounting Association (AAA).

  • 1.1.5.1 Generally Accepted Accounting Principles Cheat Sheet  
    • Reading: Cliff Notes’s “Generally Accepted Accounting Principles”

      Link: Cliff Notes’s “Generally Accepted Accounting Principles” (HTML)
       
      Instructions: In this section of the course, you will be provided with some specific information regarding some standards that should be considered when implementing accounting within a business. These standards guide the transformation of data into useable information to ensure consistency among those who implement the accounting functions.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.1.5.2 Learning and Identifying Accounting Rules – Part 1  
    • Assessment: Bean Counter: David W. Marshall’s “Underlying Accounting Rules – Part 1”

      Link: Bean Counter: David W. Marshall’s “Underlying Accounting Rules – Part 1” (Flash)
       
      Instructions: In this section of the course, you will find a matching quiz to help you understand some of the foundational rules associated with accounting. To complete the quiz, you will need to drag one piece on the right side of the screen and connect it to the piece on the left side of the screen that you feel is the correct identification of the rule. When you complete this assessment, you should make note of the final correct results.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above

  • 1.1.5.3 Learning and Identifying Accounting Rules – Part 2  
    • Assessment: Bean Counter: David W. Marshall’s “Underlying Accounting Rules – Part 2”

      Link: Bean Counter: David W. Marshall’s “Underlying Accounting Rules – Part 2” (Flash)
       
      Instructions: In this section of the course, you will find a matching quiz to help you understand some of the foundational rules associated with accounting. To complete the quiz, you will need to drag one piece on the right side of the screen and connect it to the piece on the left side of the screen that you feel is the correct identification of the rule. When you complete this assessment, you should make note of the final correct results.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.1.6 Ethical Behavior of Accountants  

    Note: This topic is identified in the primary text as Section 1.6. This section of the course will provide insight on how important it is to be ethical in your application of accounting principles. It provides specific insight into the importance of managing and being aware of your reputation. Please be mindful of this information, especially if you are considering a career in accounting. 

  • 1.2 Foundational Business and Accounting Concepts and Transaction Analysis  
  • 1.2.1 Basic Accounting Concepts  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Basic Accounting Concepts”

      Link: YouTube: Johnson County Community College: David Krug’s “Basic Accounting Concepts” (YouTube)
       
      Instructions: This 52-minute lecture provides foundational insight into understanding business concepts and how the discipline of accounting seeks to translate business data into useful information. The information in this lecture will also bridge the concepts from subunit 1.1 through subunit 1.3. As you watch these videos, keep in mind that some of the discussion is specific to Professor Krug’s own class, such as chapter references, quizzes, and tests, and will therefore do not apply to you in this course. If he provides his students with a demonstration of a particular problem, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Applicable assessments to this course will have been identified within the body of the course. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.2.2 Analyzing Business Transactions  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Transaction Analysis”

      Link: YouTube: Johnson County Community College: David Krug’s “Transaction Analysis” (YouTube)
       
      Instructions: This 48-minute lecture introduces you to a series of hypothetical business situations. It explains how each of these situations illustrates the event, as told from an accounting perspective. While there are countless basic transactions to consider when operating a business, the conceptualization in this video provides the necessary tools to help you perform an upper level analysis and processing of accounting concepts and principles. As you watch this video, keep in mind that references to chapters, quizzes, and tests will not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.2.3 Introducing the Financial Statements  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Intro to the Financial Statements”

      Link: YouTube: Johnson County Community College: David Krug’s “Intro to the Financial Statements” (YouTube)
       
      Instructions: In this 50-minute lecture, you will see how transactions impact the accounting equation. You will also find insight into how this data gets transformed into the useable information in financial statements. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to your Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.3 Accounting and Its Use in Business Decisions  
  • 1.3.1 Chapter Learning Objectives Identified  

    Note: This topic is identified in the primary text as Section 2.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 1.3.2 A Career as an Entrepeneur  

    Note: This topic is identified in the primary text as Section 2.2. Here is another look at a potential employment opportunity for someone interested in the business discipline of accounting. 

  • 1.3.2.1 Entrepreneurship – Is It Right for You?  
  • 1.3.2.2 Understanding Your Creative Side  
  • 1.3.3 Forms of Business Organizations  

    Note: This topic is identified in the primary text as Section 2.3. There is some discussion of the concept identified as “the entity concept.” Please ensure you understand the meaning of this concept. Additionally, this section explains the differences between a single (sole) proprietorship, a partnership, and a corporation. 

  • 1.3.3.1 Identifying the "Forms of Business Ownership"  
  • 1.3.3.2 Can You Identify the “Forms of Business Ownership”?  
    • Assessment: Bean Counter: David W. Marshall’s “Accounting Terms – 5”

      Link: Bean Counter: David W. Marshall’s “Accounting Terms – 5” (Flash)
       
      Instructions: In this section of the course, you will find a matching quiz to help you understand some of the foundational rules associated with accounting. To complete the quiz, you will need to drag one piece on the right side of the screen and connect it to the piece on the left side of the screen that you feel is the correct identification of the rule. When you complete this assessment, you should make note of the final correct results.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.3.4 Types of Activities Performed by Business Organizations  

    Note: This topic is identified in the primary text as 2.4. This section of the course explains that a business entity can be distinguished by the type of activity it performs – i.e., service company, merchandising company, or manufacturing company – as opposed to being identified by the type of business ownership. 

  • 1.3.5 Financial Statements of Business Organizations  

    Note: This topic is is identified in the primary text as Section 2.5. This reading discusses the four financial statements and provides illustrations to support the discussion. There is also a discussion on revenues and expenses, as they impact net income or net loss. Pay particular attention to this discussion and be sure the listed equation is in your notes. 

  • 1.3.5.1 Beginners’ Guide to Financial Statements  
  • 1.3.5.2 Financial Statements for First Timers  
    • Lecture: The City University of New York/Baruch College: Professor Ping Zhou, et al.’s “Guide to Financial Statements”

      Link: The City University of New York/Baruch College: Professor Ping Zhou, et al.’s “Guide to Financial Statements” (Flash)
       
      Instructions: This 45-minute lecture will introduce you to why accounting is important, as well as provide specific insight on how to understand and identify the elements of the income statement, the balance sheet, and the statement of cash flows. In this lecture, there are interactive activities and self-quizzes (non-graded) to support and reinforce the concepts presented. You are encouraged to save or bookmark this lecture and refer to it as often as necessary, as it provides foundational concepts necessary for you to engage in the rest of this course. Be sure to take careful notes during this lecture, as they will serve as preparation for the Final Exam. 
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.3.5.3 Financial Statements Unloaded  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Financial Statements”

      Link: YouTube: Johnson County Community College: David Krug’s “Financial Statements (YouTube)
       
      Instructions: In this 50-minute lecture, you will see that when communicating business transactions as defined by accounting principles, the information will always be conveyed in a manner that suggests that you have balanced. To “balance” means that the left and the right sides of your accounting equation equal each other. When analyzing the activity of a business, there should always be an outcome where you have illustrated that which you expect to have some kind of useable future value (the asset) equating to whom you owe (liabilities) plus your potential claims on the items that you expect to have some kind of useable value (the equity, also known as shareholder or stakeholders equity). This is another way to look at the accounting equation, which you will be introduced to in subunit 1.3: ASSETS = LIABILITIES + OWNERS’ EQUITY. As you are watching the video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.3.5.4 Test Your Knowledge of Basic Financial Statement Information  
    • Assessment: Bean Counter: David W. Marshall’s “Financial Statements”

      Link: Bean Counter: David W. Marshall’s “Financial Statements (Flash)
       
      Instructions: In this section of the course, you will find a quiz that assesses your understanding of financial statements. There are 14 multiple-choice and true/false questions to gauge your understanding of the basic concepts of financial statements. 
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.3.6 The Financial Accounting Process  

    Note: This topic is identified in the primary text as Section 2.6. The framework of the entire accounting process, which may also be identified as the accounting equation, is discussed. The fundamental accounting equation is the basic equation that accountants use to record business transactions. The equation states “assets = liabilities + owners’ equity.” There are a number of elements within the accounting equation, and this section of the course will provide you with the direct and alternative identifications of these elements so you can begin to speak the language of accounting.

    While you will hear these three elements of the accounting equation discussed and illustrated in multiple ways throughout this course, here is an introduction:
    Assets are things that expect to have future value to the company. For example, if the company buys a new car, this car has future value to the company. Liabilities are promises to pay. Some companies may not have all of the money to pay cash for the car, so they will typically finance, or obtain credit for, and borrow the difference between the down payment and the final price of the car. If approved, the company now promises to pay back the bank or business entity who gave the company money. Owners’ Equity is the owners’ claims on assets. This basically means that, as an owner of the company, you have a claim on the asset that is now identified as the new car the company owns. 

  • 1.3.6.1 Understanding the Accounting Equation  
    • Web Media: Bean Counter: David W. Marshall’s “Accounting Equation”

      Link: Bean Counter: David W. Marshall’s “Accounting Equation” (HTML and Flash Audio)
       
      Instructions: Upon clicking on the above link, the seven-minute media will automatically begin. Be advised that the material contained in this media is presented in both an electronic voice and written, so you may choose to listen to it or read it. This media addresses the accounting equation and expands the analysis and understanding of how you should be looking at this foundational framework of accounting.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.3.6.2 Recognize the Impact of a Transaction on the Accounting Equation  
  • 1.3.7 Underlying Assumptions or Concepts of Accounting Applied in Decision Making  

    Note: This topic is identified in the primary text as Section 2.7. The reading will introduce you to a number of concepts on business transactions. This is the beginning analysis of how business transactions impact the accounting equation. Later in Subunit 1.3.9, you will have an opportunity to complete an assessment that will further assist you with understanding how basic business transactions impact the accounting equation.

  • 1.3.7.1 How Do You Record Transactions?  
  • 1.3.7.2 Principles of Accounting Transactions  
  • 1.3.8 Transactions Only Affecting the Balance Sheet  

    Note: This topic is identified in the primary text as Section 2.8. This reading seeks to illustrate how some business transactions will impact the balance sheet. It is recommended that you write out the examples in this section of the course, identified on pages 41 through 44. As you are reading through the content, follow along with these examples. Feel free to take any additional notes on the examples you copy. 

  • 1.3.9 Transactions Affecting the Income Statement and/or Balance Sheet  

    Note: This topic is identified in the primary text as Section 2.9. This reading illustrates how some business transactions will impact the income statement and/or balance sheet. It is recommended that you write out within your notes the examples in this section of the course, identified on pages 46 through 48. As you read through the content, following along with these examples. Feel free to take any additional notes on the copied examples.

  • 1.3.9.1 Business Transactions and Financial Statements  
  • 1.3.9.2 Detail on the Types of Accounts  
    • Web Media: Bean Counter: David W. Marshall’s “Detail Accounts and the Types of Accounts”

      Link: Bean Counter: David W. Marshall’s “Detail Accounts and the Types of Accounts” (Java)
       
      Instructions: In this section of the course, you will find a chart that outlines how different types of accounts connect with a specific category or group as identified in the accounting equation. Additionally, you will learn to recognize whether the account name is a balance sheet account or an income statement account. There are 66 account names listed. It is in your interest to print, identify, and label each account, and then keep this information in your notes.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.3.9.3 Balance Sheet Accounts Skills Test  
  • 1.3.10 Summary of Balance Sheet and Income Statement Transactions  

    Note: This topic is identified in the primary text as Section 2.10.

  • 1.3.11 Dividends Paid to Owners (Stockholders)  

    Note: This topic is identified in the primary text as Section 2.11. This reading explains what happens when a stockholder receives a dividend (a return on their investment in a company). 

  • 1.3.12 Analyzing and Using the Financial Results: The Equity Ratio  

    Note: This topic is identified in the primary text as Section 2.12. This section of the course explains the significance of creditors and stockholders as the basic sources of a company’s equity. The equity ratio is introduced and examples are provided to support your understanding of this information. 

  • 1.4 Accounting Theory  
  • 1.4.1 Chapter Learning Objectives Identified  

    Note: This topic is identified in the primary text as Section 6.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 1.4.2 A Career as an Accounting Professor  

    Note: This topic is identified in the primary text as Section 6.2. Here is another look at a potential employment opportunity for someone interested in the business discipline of accounting.

  • 1.4.3 Traditional Accounting Theory  

    Note: This topic is identified in the primary text as Section 6.3. This section of the course is an introduction for the content that directly follows. 

  • 1.4.4 Underlying Assumptions or Concepts Applied within Accounting Theory  

    Note: This topic is identified in the primary text as Section 6.4. This section of the course introduces you to the foundational assumptions and concepts associated with accounting, providing a detailed definition of each. 

  • 1.4.4.1 Accounting Concepts, Assumptions and Principles  
  • 1.4.4.2 Now Can You Apply the Principles  
    • Assessment: AccountingCoach: Harold Averkamp’s “Accounting Principles”

      Link: AccountingCoach: Harold Averkamp’s “Accounting Principles” (Java)
       
      Instructions: In this assessment, you will be provided a series of questions that seeks to test your understanding of what you have read. Upon reading each question, you will see a couple of potential responses. You do not have to answer the questions in the traditional sense. Instead, you will move your cursor over the answer you believe is correct and the screen will show a red box with either “right” or “wrong” as the answer. It will also provide you with a brief explanation of why that particular answer is right or wrong. 
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 1.4.5 Other Basic Accounting Concepts  

    Note: This topic is identified in the primary text as Section 6.5. This reading will introduce you to other key elements of accounting: double entry, substance over form, and general-purpose financial statements. Be sure to take many thorough notes on this information. 

  • 1.4.6 The Measurement Process in Accounting  

    Note: This topic is identified in the primary text as Section 6.6. This section of the course will expound on assigning the effects of business activity (the transactions) within a specified time frame (accounting period). 

  • 1.4.7 The Major Principles of Accounting  

    Note: This topic is identified in the primary text as Section 6.7. This reading will expound on the major principles supporting the field of accounting, such as the matching principle or the revenue recognition principle. The major principles are explained and their impact on the overall application of GAAP (Generally Accepted Accounting Principles) is discussed. 

  • 1.4.8 Modifying Conventions (or Constraints) Associated with Accounting  

    Note: This topic is identified in the primary text as Section 6.8. This reading will provide knowledge of specific instances of why a business entity would not be applying the principles of accounting within the business. These instances are identified as cost-benefit, materiality, and conservatism. Pay careful attention to Exhibit 29 in Chapter 6. 

  • 1.4.9 The FASB Conceptual Framework Project  

    Note: This topic is identified in the primary text as Section 6.9. The basic concepts and underlying principles of accounting have been debated over the years. This section of the course provides an overview of the dispute and some key points to consider. 

  • 1.4.10 Objectives of Financial Reporting  

    Note: This topic is identified in the primary text as Section 6.10. This section of the course will introduce the objectives of financial reporting. The details of each objective are provided, and you should be sure to include these in your own notes. 

  • 1.4.11 Qualitative Characteristics of Accounting  

    Note: This topic is identified in the primary text as Section 6.11. The underlying intent behind the creation of financial reports is for the information in the reports to be reliable enough to support sound business decision-making. This section of the course addresses the characteristics that should be present so that the information can be relevant. Pay attention to the hierarchy of accounting quality as illustrated in Exhibit 31 on page 273. 

  • 1.4.12 The Basic Elements of Financial Statements  

    Note: This topic is identified in the primary text as Section 6.12. This section of the course will assist you in developing a conceptual framework for understanding accounting. 

  • 1.4.13 Recognition and Measurement in Financial Statements  

    Note: This topic is identified in the primary text as Section 6.13. This section of the course is pretty straightforward and is more of a transitional area to assist you in moving between concepts. 

  • 1.4.14 Summary of Significant Accounting Policies  

    Note: This topic is identified in the primary text as Section 6.14. In this reading, you will learn that most companies will include a copy of their accounting policies when they submit their annual report. This section of the course briefly talks about this summary. 

  • 1.4.15 Significant Accounting Policies Identified  

    Note: This topic is identified in the primary text as Section 6.15. This section of the course will cover significant policies associated with accounting and will be specifically identified in subunits 1.4.15.1 through 1.4.15.10, as identified in the textbook as Sections 6.15.1 through 6.15.10. This section of the course briefly introduces you to these terms and guides you to the chapter where you will get more detail on each topic. 

  • 1.4.15.1 Principles of Consolidation  
  • 1.4.15.2 Accounting Charges  
  • 1.4.15.3 Revenue Recognition  
  • 1.4.15.4 Cash, Cash Equivalents, and Investments  
  • 1.4.15.5 Merchandise Inventories  
  • 1.4.15.6 Film and Television Costs  
  • 1.4.15.7 Theme Parks, Resorts, and Other Property  
  • 1.4.15.8 Other Assets: Intangible– like the right to a name  
  • 1.4.15.9 Risk Management Contracts  
  • 1.4.15.10 Earnings Per Share  
  • 1.4.16 Understanding the Chapter 6 Learning Objectives  

    Note: This topic is identified in the primary text as Section 6.16. This section of the course will review what you have learned as you progressed through this chapter. It will also review and list the key terms from this chapter and provide you with a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The respective subunits will be identified as Subunits 1.4.16.1 through 1.4.16.3, as directly connected to Sections 6.16.1 through 6.16.3 of the textbook. The answers to the self-test are on pages 300 and 301.

  • 1.4.16.1 Chapter 6 Demonstration Problem & Solution  
  • 1.4.16.2 Chapter 6 Key Terms  
  • 1.4.16.3 Chapter 6 Self-Test  
  • Unit 2: Recording Business Transactions  

    This unit of the course correlates with Chapter 3 of the primary text. There is a specific way that data is recorded, so a foundational understanding of this process is necessary. Understanding the meaning and use of concepts like journal, journal entries, ledger, trial balance, debits and credits, and vertical/horizontal analysis is an intricate part of your financial accounting study. 

    Unit 2 Time Advisory   show close
    Unit 2 Learning Outcomes   show close
  • 2.1 Debits and Credits the Accounting Way  
  • 2.1.1 Understanding Debits and Credits  
  • 2.1.1.1 Introducing Debits and Credits  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Intro to Debits and Credits”

      Link: YouTube: Johnson County Community College: David Krug’s “Intro to Debits and Credits” (YouTube)
       
      Instructions: This 51-minute lecture provides a discussion of how business transactions are recorded as debits and credits. The concept of debits and credits will increase or decrease a specific account, depending on which account the transaction is impacting. Pay close attention to the part of the discussion that illustrates a normal balance of accounts. As you watch this video, keep in mind that references to chapters, quizzes and tests do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
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  • 2.1.1.2 Knowing Your Debits from Your Credits  
  • 2.1.2 Debits and Credits Expanded  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Debits and Credits”

      Link: YouTube: Johnson County Community College: David Krug’s “Debits and Credits” (YouTube)
       
      Instructions: This 50-minute lecture discusses how to properly record debits and credits, ensuring you are communicating the information correctly. It takes you through the recording of business transactions from the concept of a journal entry to posting to a ledger, while ensuring that the integrity of debits and credits is maintained. Journal entries will be more fully discussed later in the course. To help you understand the concept of debits and credits, the instructor in the video will provide you with a compound business transaction and ask that the problem be translated into accounting language, ensuring the integrity of debits and credits. You should work through this problem along with the class so that you can get some hands-on practice. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 2.1.3 Journal Entries and the Trial Balance  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Journal Entries and the Trial Balance”

      Link: YouTube: Johnson County Community College: David Krug’s “Journal Entries and the Trial Balance” (YouTube)
       
      Instructions: This 47-minute lecture discusses the normal balance of specific accounts. You now should have the understanding that within every business transaction, there will be at least one debit and one credit, hence the identification of double-entry bookkeeping or accounting. In this video, the instructor gives a quiz that you can do as additional practice. Keep in mind this is not a requirement for the completion of this course, but practice and repetition will help you more fully understand the concepts of accounting. Professor Krug gives specific direction, so follow his directions as presented in the video. As you watch this video, keep in mind that references to other quizzes, tests, or chapters do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 2.2 The Accounting Process  
  • 2.2.1 Chapter Learning Objectives Identified  

    Note: This topic is identified in the primary text as Section 3.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 2.2.2 Salary Potential of Accountants  

    Note: This topic is identified in the primary text as Section 3.2. Here is another look at a potential employment opportunity for someone interested in the business of accounting. This section provides a graphic illustration of the potential income of various positions involving the regular use of the principles and concepts you will learn in this course. 

  • 2.2.3 The Account and Rules of Debit and Credit  

    Note: This topic is identified in the primary text as Section 3.3. This reading will introduce you to the idea of what, exactly, is an account. There will also be an illustration (identified as Exhibit 5) that shows the steps in recording and posting the effects of business transactions. The identification of an account impacting the business will be further addressed as a T-account, so pay careful attention to this information. The section ends with a discussion of the double-entry procedure, or duality. This means that anytime there is a transaction in the business, two or more accounts will be impacted as a result of properly identifying and recording the transaction according to the foundational concepts of accounting. 

  • 2.2.3.1 Understanding Debits and Credits  
  • 2.2.3.2 Debits and Credits Simplified  
  • 2.2.3.3 Debits and Credits Reloaded (Double-Entry Accounting)  
    • Web Media: Bean Counter: David W. Marshall’s “Bean Counter Debits and Credits”

      Link: Bean Counter: David W. Marshall’s “Bean Counter Debits and Credits (HTML and Flash Audio)
       
      Instructions: In this section of the course, you will find reinforcement of the concepts of debits and credits. You may begin to get the impression that this information is repetitive; this is actually intentional. It is very important that you fully understand the concepts of debits and credits, and repetition is a great way to reinforce your understanding of this foundational concept. The lecture is spoken in an electronic voice, but the content is also written out. If you find it difficult to follow the lecture by listening, you should reduce your volume and read the lecture’s content on the webpage.
       
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  • 2.2.3.4 Understanding Debits and Credits  
  • 2.2.4 Recording Changes in Assets, Liabilities, and Stockholders’ Equity  

    Note: This topic is identified in the primary text as Section 3.4. In this section of the course, you will learn that the accounting equation, Assets = Liabilities+ Owners’ Equity, can be looked at as having a left side and a right side. On the left side of the equation, will be all of the assets as identified by the business. On the right side of the equation will be the liabilities + owners’ equity. Ensure you take great notes on the material in this section of the course. There are a number of examples provided in the textbook as well. Finally, note that within the accounting equation, the identification of equity can be identified by a variety of names, depending on the type of business formation and ownership; these names include owners’ equity (if the business is a sole proprietorship and in some cases a partnership), as well as stockholders’ equity (if the business is a corporation). 

  • 2.2.5 The Accounting Cycle  

    Note: This topic is identified in the primary text as Section 3.5. In this reading, there is an expanded analysis provided of the accounting cycle. It provides you with insight into how to process the data and transform it into useful information identified as the financial reports. You will also be provided with a list of eight steps that are included in the accounting cycle, and the chapters where the steps will be covered will be identified. It is suggested that you place these steps on a page by themselves in your notes and refer to them as often as necessary until you begin to get more comfortable with all of the accounting language. 

  • 2.2.5.1 Introducing the Accounting Cycle  
  • 2.2.5.2 Elements of the Accounting Cycle  
    • Reading: Accounting Basics for Students: Michael Celender’s “The Accounting Cycle”

      Link: Accounting Basics for Students: Michael Celender’s “The Accounting Cycle” (HTML)
       
      Instructions: Read the webpage for Lesson 1, and then click on the hyperlinks of the lesson titles at the top of each webpage to continue with Lessons 2-8. In this subsection of the course, you will be provided eight short individual lessons on the various elements of the accounting cycle. These individual lessons are designed to deconstruct the various pieces of the accounting cycle into smaller, more manageable sections. This section of the course will also provide you with a foundation on which to build your learning as you move into the subsequent sections of this subunit. This reading covers the topics outlined in sections 2.2.5.2.1 through 2.2.5.2.8. 
       
      Terms of Use: Please respect the copyright and terms of use for the webpages displayed above.

  • 2.2.5.2.1 Lesson One: Accounting Cycle  
  • 2.2.5.2.2 Basic Accounting Journal Entries  
  • 2.2.5.2.3 Accounting Journals  
  • 2.2.5.2.4 T-Accounts  
  • 2.2.5.2.5 Balancing T-Accounts  
  • 2.2.5.2.6 Posting Journals  
  • 2.2.5.2.7 Control Accounts  
  • 2.2.5.2.8 Trial Balance  
  • 2.2.6 The Journal Used in Accounting  

    Note: This topic is identified in the primary text as Section 3.6. This reading will provide you with a specific definition of the term journal, as well as state the functions and advantages of using a journal. 

  • 2.2.7 The Ledger Used in Accounting  

    Note: This topic is identified in the primary text as Section 3.7. This reading elevates your understanding of the transactions or accounts within a business and provides a detailed explanation that all accounts will either be a balance sheet account or an income statement account. Some key terms will be identified in this section: real accounts, permanent accounts, nominal accounts, temporary accounts, and chart of accounts. Being able to distinguish between each of these terms is critical to your success in this course as you proceed.

  • 2.2.7.1 Recording Accounting Journal Entries  
    • Reading: Basic Accounting Help’s “How to Record Accounting Journal Entries”

      Link: Basic Accounting Help’s “How to Record Accounting Journal Entries” (HTML)
       
      Instructions: This section provides another opportunity to conceptualize journal entries. The double-entry accounting system can be overwhelming at first, but practice helps make it more accessible. This reading walks through a series of transactions and shows the journalizing of these transactions. This reading will provide an introduction to recording accounting journal entries and working with ledgers that will continue in the next subunit 2.2.7.2. 
       
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  • 2.2.7.2 Accounting Ledger Tips  
    • Reading: Basic Accounting Help’s “How to Post to Your Accounting Ledger”

      Link: Basic Accounting Help’s “How to Post to Your Accounting Ledger” (HTML)
       
      Instructions: This reading provides an additional illustrative example to support your understanding and analysis of accounting ledgers. There is identification of the various section headings on the ledger. This section of the course picks up where 2.2.7.1 left off. It is important to your understanding of the connective elements of accounting that you follow the information from 2.2.7.1 to 2.2.7.2. 
       
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  • 2.2.8 The Accounting Process in Operation  

    Note: This topic is identified in the primary text as Section 3.8. This part of the course provides a detailed illustration of accounting as it is happening within a business identified in the textbook as the MicroTrain Company. Carefully take notes as you review this section.

  • 2.2.9 The Use of Ledger Accounts  

    Note: This topic is identified in the primary text as Section 3.9. This section of the course will provide detailed insight on how to post to ledger accounts. The textbook will provide two detailed examples, one involving a company identified as the Jenks Company and one involving the transactions from the MicroTrain Company – as identified in the previous section of this course. There is an explanation provided on simple and compounded journal entries, as well as an identification of the trial balance and why it is used. There are reasons stated in this section that identify why you may have a problem finding any errors. Connect and properly document these points in your notes. 

  • 2.2.10 Analyzing and Using the Financial Results – Horizontal and Vertical Analysis  

    Note: This topic is identified in the primary text as 3.10. In this reading, you will be introduced to the concepts of horizontal and vertical analysis. If you have not already done so, begin to create a glossary of terms. To practice the concepts that have been introduced in this section of the course, there are a couple of demonstration problem sets provided in the textbook. The solutions to these problem sets are also in this section. You are encouraged to work on the problems prior to accessing the solutions, working through any issues as you view the solution. 

  • 2.2.11 Key Terms Introduced in Chapter 3  

    Note: This topic is identified in the primary text as Section 3.11. This section revisits and lists all of the major terms listed in this chapter. If you have not yet begun to build a glossary of key terms, it is greatly suggested that you do so at this time. 

  • 2.2.12 Chapter 3 Self-Test  

    Note: This topic is identified in the primary text as Section 3.12. This reading includes a self-test. There are a number of assessment categories (i.e., multiple-choice, true/false, short answer questions) but the text only provides answers to the true/false and multiple-choice questions. Work through these questions and use this self-test as reinforcement of the information presented in a given chapter of the text. The answers to these questions can be found on pages 142 and 143.

  • 2.3 Accounting: Analyzing and Recording Transactions  
  • 2.3.1 Analyzing and Recording Transactions  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Analyzing and Recording Transactions”

      Link: YouTube: Johnson County Community College: David Krug’s “Analyzing and Recording Transactions” (YouTube)
       
      Instructions: In this 50-minute lecture, you will be provided with an explanation of the critical analysis that should be applied when analyzing business transactions. The instructor provides a number of examples to assist with your analysis and understanding of this concept. As you watch this video, keep in mind that the references to chapters, quizzes, and tests do not apply to you in this course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 2.3.2 Let's Wrap Up the Previous Content  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Wrapping Up Chapters 1 and 2”

      Link: YouTube: Johnson County Community College: David Krug’s “Wrapping Up Chapters 1 and 2” (YouTube)
       
      Instructions: In this 44-minute lecture, the instructor will review the previous concepts he has presented in this video series. You should use this review to ensure you have a solid understanding of the information presented in this part of the course. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • Unit 3: Adjustments for Financial Reporting  

    By now, you should have a foundational understanding of accounting and its guiding principles and concepts. You will now need to learn how to synthesize this information, which often requires an adjusting journal entry. Before you can learn about adjusting entries, you will need to be able to distinguish between cash- and accrual-based accounting. There is some distinction between the two methods, and while some smaller business may be able to effectively use a cash basis of accounting, most organizations use an accrual basis of accounting. Subsequently, the accrual basis is the foundation on which you are learning the concepts presented in this course. 

    Unit 3 Time Advisory   show close
    Unit 3 Learning Outcomes   show close
  • 3.1 Adjustments for Financial Reporting  
  • 3.1.1 Chapter 4 Learning Objectives Identified  

    Note: This topic is identified in the primary text as Section 4.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 3.1.2 A Career as a Tax Specialist  

    Note: This topic is identified in the primary text as Section 4.2. Here is another look at a potential employment opportunity for someone interested in the business of accounting. 

  • 3.1.3 Cash versus Accrual Basis Accounting  

    Note: This topic is identified in the primary text as Section 4.3. In this reading, you will learn the difference between cash- and accrual-based accounting. The foundational impact rests on the identification of revenues and expenses. There is a figure identified as Exhibit 14, ensure this information is properly detailed in your notes.

  • 3.1.3.1 Illustrating Cash versus Accrual  
  • 3.1.3.1.1 Accrual and Cash Basis Accounting 101  
    • Web Media: YouTube: Matt Fisher’s “Accrual and Cash Basis Accounting”

      Link: YouTube: Matt Fisher’s “Accrual and Cash Basis Accounting” (YouTube)
       
      Instructions: In this four-minute lecture you will find a visual demonstration to help you understand the distinctions between accrual- and cash-based accounting. Make sure you pay close attention to the explanation of the distinctions between the recording of revenues and expenses when using a cash- or an accrual-based accounting process.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 3.1.3.1.2 Do You Really Know the Difference Between Cash & Accrual?  
    • Web Media: YouTube: Nerd Enterprises, Inc.’s Video Channel: Seth David’s “Cash vs. Accrual”

      Link: YouTube: Nerd Enterprises, Inc.’s Video Channel: Seth David’s “Cash vs. Accrual” (YouTube)
       
      Instructions: In this ten-minute lecture, you will find a visual demonstration to help you understand the distinctions between accrual and cash basis accounting. Make sure you pay close attention to the explanation on the distinctions between the recording of revenues and expenses when using a cash- or an accrual-based accounting process. While it may seem like the information is repetitive, it is important that you understand these earlier concepts before moving on to more technically advanced accounting processes.
       
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  • 3.1.3.2 Add This to Your Toolkit  
  • 3.1.4 The Need for Adjusting Entries  

    Note: This topic is identified in the primary text as Section 4.4. Because the ultimate goal is to obtain useful information, it becomes necessary to take snapshots. What do we mean by a snapshot? Specifically, accounting is typically done within a specified period so that end users can assess the performance of a business entity. The identification of the terms accounting period, fiscal year, calendar year, adjusting entries, and the matching principle will be discussed in this area of the course as well. There will be distinction placed on the two classes and four types of adjusting entries. Ensure exhibit 16 from chapter 4 is properly identified in your notes. 

  • 3.1.5 Classes and Types of Adjusting Entries  

    Note: This topic is identified in the primary text as 4.5. This section of the course will provide a more detailed understanding of the classes of adjusting entries as identified in the previous section of the course. A specific example is provided to assist with your analysis of this information.

  • 3.1.6 Adjustments for Deferred Items  

    Note: This topic is identified in the primary text as 4.6. The focus in this section of the course will be on developing an understanding of how prepaid expenses and depreciation impact the accounting equation and the overall processing of these transactions. 

  • 3.1.7 Adjustments for Accrued Items  

    Note: This topic is identified in the primary text as 4.7. In a business there will be transactions that will have not been recorded by the end of a specified accounting cycle. These items can be identified as accrued assets or interest revenue, to name a couple. This section of the course seeks to help you identify and understand how to process these transactions. There is a great deal of visual support to assist in processing this information, so pace yourself accordingly. 

  • 3.1.8 Effects of Failing to Prepare Adjusting Entries  

    Note: This topic is identified in the primary text as 4.8. This section will refer you to Exhibit 18 to guide your understanding of this information. 

  • 3.1.9 Analyzing and Using the Financial Results – Trend Percentages  

    Note: This topic is identified in the primary text as 4.9. This section of the course will introduce you to the concept of trend percentages and provide you with a formula to use when calculating trend percentages. 

  • 3.1.10 Understanding the Chapter 4 Learning Objectives  

    Note: This topic is identified in the primary text as Section 4.10. There are a number of review elements presented in this reading, which should reinforce the concepts learned in this unit of the course. The solutions to the self-test are located on pages 188 and189. This section covers subunits 3.1.10.1 through 3.1.10.4. 

  • 3.1.10.1 Chapter 4 Demonstration Problem  

    Note: This topic is identified in the primary text as Section 4.10. 

  • 3.1.10.2 Solution to Demonstration Problem  

    Note: This topic is identified in the primary text as Section 4.10. 

  • 3.1.10.3 Key Terms from Chapter 4  

    Note: This topic is identified in the primary text as Section 4.10. 

  • 3.1.10.4 Chapter 4 Self-Test  

    Note: This topic is identified in the primary text as Section 4.10. 

  • 3.2 Visualizing the Adjusting Journalizing Process  
  • 3.2.1 The Adjusting Process – Part 1  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Adjusting Journal Entries – Part 1”

      Link: YouTube: Johnson County Community College: David Krug’s “Adjusting Journal Entries – Part 1” (YouTube)
       
      Instructions: In this 49-minute lecture, the instructor will provide you with an overview of the adjusting process in accounting – helping you to understand what exactly an adjustment does to the accounting equation and the financial accuracy of a business. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course. 
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 3.2.2 Explaining Adjusting Journal Entries  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Adjusting Journal Entries”

      Link: YouTube: Johnson County Community College: David Krug’s “Adjusting Journal Entries” (YouTube)
       
      Instructions: In this 49-minute lecture, the instructor will revisit the accrual versus cash basis of accounting in order to establish why adjusting journal entries are necessary. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 3.2.2.1 Adjusting Journal Entries Study Guide  
  • 3.2.2.2 Driving Home the Concept of Adjusting Journal Entries  
    • Reading: AccountingCoach’s “Adjusting Entries”

      Link: AccountingCoach’s “Adjusting Entries” (HTML)
       
      Instructions: This reading breaks adjusting entries down into four distinct parts: a foundational understanding of adjusting entries, adjusting entries for asset accounts, adjusting entries for liability accounts, and accruals and deferrals. Once you click on the link above, each of the four parts will be identified at the top of the reading. Once you have read the first webpage, scroll back up to the top and click on the link for Part 2. Continue in this way until you have read the webpage for each of the four parts.
       
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  • 3.2.2.3 Adjusting Journal Entries – Can You Do Them  
    • Assessment: AccountingCoach’s “Adjusting Entries Quiz”

      Link: AccountingCoach’s “Adjusting Entries Quiz” (Java)
       
      Instructions: This assessment tests your comprehension of the concept of adjusting entries. You will not be answering the questions per se; you will simply have to place your mouse cursor over the correct answer and you will be provided with a detailed explanation regarding each of the problems presented in the assessment.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • Unit 4: Completing the Accounting Cycle  

    Up until this point in the course, you have been learning how to take the transactions that happen within a business entity and process this raw data into useable information. As mentioned earlier in the course, this useable information comes in the form of the financial statements. This section of the course will explain how to review and summarize the accounting cycle, as well as prepare the income statement, the statement of retained earnings, and the balance sheet. Additionally, you will be provided with insight on how to use an accounting worksheet to organize your work, prepare adjusting entries, and complete a post- closing trial balance.

    Unit 4 Time Advisory   show close
    Unit 4 Learning Outcomes   show close
  • 4.1 Completing the Accounting Cycle  
  • 4.1.1 Chapter 5 Learning Objectives Identified  

    Note: This topic is identified in the primary text as Section 5.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 4.1.2 A Career in Information Systems  

    Note: This topic is identified in the primary text as Section 5.2. Here is another look at a potential employment opportunity for someone interested in the business of accounting.

  • 4.1.3 The Accounting Cycle Summarized  

    Note: This topic is identified in the primary text as Section 5.3. This section provides a brief summary of what you have learned from previous chapters and begins the introduction to the use of the accounting worksheet. 

  • 4.1.4 The Accounting Work Sheet  

    Note: This topic is identified in the primary text as Section 5.4. This section of the course provides more specific information on the use of the accounting worksheet. There are a series of steps provides to support your foundational understanding of how the worksheet should be established. You will be taken step by step through the functions that you have learned and how the worksheet can aid you in bringing it all together. This is accomplished by revisiting the MicroTrain company introduced earlier in the textbook. Illustrations are provided to support your connection to the previous information you have in the course up to this point. 

  • 4.1.4.1 How to Prepare an Accounting Worksheet  
  • 4.1.4.2 Worksheet Example  
    • Web Media: YouTube: Amy Cesario’s “Worksheet Example”

      Link: YouTube: Amy Cesario’s “Worksheet Example” (YouTube)
       
      Instructions: In this 13-minute lecture you will be provided a step-by-step guide to understanding the implementation of the accounting worksheet.  It is very important that you take thorough notes to aid your understanding of this accounting element.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 4.1.5 Preparing Financial Statements from the Worksheets  

    Note: This topic is identified in the primary text as Section 5.5. If the worksheet is completed properly, the details of the worksheet can be used to create your financial statements. 

  • 4.1.6 Journalizing Adjusting Entries  

    Note: This topic is identified in the primary text as Section 5.6. This reading explains how the accounting worksheet can be your source for making the adjusting entries. Be mindful of the fact that the worksheet is an informal document used to support your analysis of the accounting information; this document is not a part of the formal accounting process. Some people prefer to use the worksheet to prepare for the transferring of data into useful information. You are highly encouraged to learn the basics of using this worksheet. As you become more comfortable with the practices of accounting, you will then be in a position to decide whether or not you would use the accounting worksheet. 

  • 4.1.7 The Closing Process  

    Note: This topic is identified in the primary text as Section 5.7. Earlier in the course you were introduced to the term nominal account, which describes a temporary account. When you take your snapshot of a specific accounting period, it becomes necessary to address the nominal accounts. This section of the course explains this information. 

  • 4.1.7.1 Connecting the Dots – The Closing Process  
    • Reading: YouTube: Johnson County Community College: David Krug’s “Intro to Closing Journal Entries”

      Link: YouTube: Johnson County Community College: David Krug’s “Intro to Closing Journal Entries” (YouTube)
       
      Instructions: In this 51-minute lecture the instructor will introduce closing entries. The closing entries close the nominal accounts and dividends account to prepare for the next accounting period. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 4.1.8 Accounting Systems: From Manual to Computerized  

    Note: This topic is identified in the primary text as Section 5.8. This section provides an analysis of how the recording and analyzing of financial accounting information has transitioned and broadened as a result of technology. 

  • 4.1.8.2 The Reporting Cycle  
    • Reading: Principles of Accounting’s “Chapter 4: The Reporting Cycle”

      Link: Principles of Accounting’s “Chapter 4: The Reporting Cycle” (HTML)
       
      Instructions: In this reading, you will learn about a series of steps to support the closing process. Insight will be provided on the preparation of the financial statements, the complete accounting cycle, and the closing process. The reading will conclude with an analysis of the importance of knowing how a business has performed within a particular operating cycle. 
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 4.1.9 A Classified Balance Sheet  

    Note: This topic is identified in the primary text as Section 5.9. In this section of the course, there is a distinction made between a balance sheet and a classified balance sheet. This will be your first introduction to the classified balance sheet. 

  • 4.1.10 Analyzing and Using the Financial Results – The Current Ratio  

    Note: This topic is identified in the primary text as Section 5.10. This section of the course discusses and defines the current ratio as a firm’s ability to pay off its current liabilities with its current assets. A basic standard suggests that a business should maintain a 2-to-1 ratio with regards to meeting its financial obligations. However, as you will learn in this section of the course, there are many variables that support what is best within a given business situation. 

  • 4.1.11 Understanding the Chapter 5 Learning Objectives  

    Note: This topic is identified in the primary text as Section 5.11. There are a number of review elements presented in this reading to help reinforce your understanding of accounting concepts. This section covers subunits 4.1.11.1 through 4.1.11.4. The solutions to the self-test are located on pages 250 and 251.

  • 4.1.11.1 Chapter 5 Demonstration Problem  
  • 4.1.11.2 Solution to Chapter 5 Demonstration Problem  
  • 4.1.11.3 Chapter 5 Key Terms  
  • 4.1.11.4 Chapter 5 Self-Test  
  • 4.2 Accounting: Closing Entries Defined  
  • 4.2.1 Illustration of the Closing Process  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Closing Journal Entries”

      Link: YouTube: Johnson County Community College: David Krug’s “Closing Journal Entries” (YouTube)
       
      Instructions: In this 50-minute lecture, the instructor will discuss the concept of an income summary and what it really means to close the accounting process or cycle. As you are watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 4.2.2 Concluding Closing Process  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Closing Journal Entries: Conclusion”

      Link: YouTube: Johnson County Community College: David Krug’s “Closing Journal Entries: Conclusion” (YouTube)
       
      Instructions: In this 50-minute lecture the instructor discusses the process of journal entries holistically from analyzing transactions and events to closing journal entries. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course. 
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 4.2.3 It's Time to Review  
  • 4.2.3.1 Basic Bookkeeping and Accounting Concepts 3  
  • 4.2.3.2 Basic Bookkeeping and Accounting Concepts 4  
  • 4.2.3.3 Basic Bookkeeping and Accounting Concepts 5  
  • 4.2.3.4 Understanding the Financial Statements  
  • Unit 5: Financial Reporting and Financial Statement Analysis  

    In this unit, you will learn about financial reporting and examine the financial statements of a public company. Public companies are required to file their financial statements with the SEC on a quarterly and annual basis. Fortunately for us, the SEC has a standard format for presenting financial information. This assists us in reading and interpreting financial information.

    Unit 5 Time Advisory   show close
    Unit 5 Learning Outcomes   show close
  • 5.1 Financial Reporting  
  • 5.1.1 The Framework for Financial Reporting  
  • 5.1.2 Locate Financial Reporting Materials  
  • 5.1.3 Public Company Financial Reporting  
  • 5.2 Financial Statement Analysis  
  • Unit 6: Unit 6: Accounting for Inventory – Measuring and Reporting  

    In order for many businesses to conduct daily activity, they will have to buy merchandise for their end users. There are a number of ways to account for the purchasing and integration of this merchandise within a business, and the decision on how a business entity will account for this from an accounting perspective rests on a number of factors. In this section of the course, you will be introduced to the inventory valuation concepts of FIFO – First in First Out and LIFO – Last in First Out, as well as the concept of weighted-average. Choosing an inventory valuation method is a major decision a merchandising business entity will have to make even before the merchandise is purchased; it is also a decision that dictates the valuation of the merchandise on hand within the business entity. 

    Unit 6 Time Advisory   show close
    Unit 6 Learning Outcomes   show close
  • 6.1 Introduction to Inventories and the Classified Income Statement  
  • 6.1.1 Chapter 7 Learning Objectives  

    Note: This topic  is identified in the primary text as Section 7.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 6.1.2 A Career as a CEO  

    Note: This topic is identified in the primary text as Section 7.2. Here is another look at a potential employment opportunity for someone interested in the business of accounting.

  • 6.1.3 Two Income Statements Compared – Service and Merchandising Company  

    Note: This topic is identified in the primary text as Section 7.3. This reading will provide you with insight regarding the distinctions between an income statement of a service company and the income statement of a merchandising company. You will be introduced to three distinct parts of the income statement for a merchandising company, so please be sure you properly place this information in your notes. At the end of this subunit, there is information provided on how you should approach the following two subunits. Keep this information in mind as you proceed through this chapter of the course text and prepare for the final exam.

  • 6.1.3.1 The Cycle for Service Companies vs. Merchandising Companies  
  • 6.1.3.2 Accounting for Merchandisers – Is There a Difference?  
    • Lecture: YouTube: Johnson County Community College: David Krug’s “Accounting Basics for Merchandisers"

      Link: YouTube: Johnson County Community College: David Krug’s “Accounting Basics for Merchandisers” (YouTube)
       
      Instructions: In this 39-minute lecture, the instructor will provide you with a great example of a merchandising business and its distinctions within the accounting function. He uses an activity you are probably familiar with – going to the grocery store. In this discussion, Professor Krug compares how we get groceries today with how it was done when people had to go to individual shops to get their items. This is a great way to help you distinguish between a merchandiser and a service-based business. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If Professor Krug provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 6.1.4 Sales Revenues  

    Note: This topic is identified in the primary text as Section 7.4. In this reading, you will learn how to account for sales revenue. You will learn the distinction between accounting for receiving cash and accounts receivables. An equation is given for how to calculate net sales, the reasons a company would record revenue at the time of a sale, information on trade discounts, sales discounts, and returns and allowances. In addition, this reading examines how these transactions look from an accounting perspective. This reading will also help you gain an understanding of how specific business and accounting language is conveyed. 

  • 6.1.5 Cost of Goods Sold, or COGS  

    Note: This topic is identified in the primary text as Section 7.5. In this reading, you will learn about COGS and the difference between a perpetual inventory and a periodic inventory. Additional insight will explain how to account for transportation costs, which are in fact a part of the COGS. 

  • 6.1.6 Classified Income Statement  

    Note: This topic is identified in the primary text as Section 7.6. A detailed explanation of the classified income statement is provided. An important distinction identifies revenues and expenses into balances that impact operation of a business, separating them from the revenues and expenses that are non-operating. Pay careful attention to the summary that discusses the relationships occurring within the completion of an income statement of a company that sells merchandise. 

  • 6.1.7 Analyzing and Using the Financial Results – Gross Margin Percentage  

    Note: This topic is identified in the primary text as Section 7.7. This section of the course checks your understanding of the material being presented and your ability to process the calculation of the gross margin percentage.

  • 6.1.8 Understanding the Learning Objective  

    Note: This topic is identified in the primary text as Section 7.8. This section reviews the learning objectives based on the material in this chapter. 

  • 6.1.9 Appendix: The Worksheet for a Merchandising Company  

    Note: This topic is identified in the primary text as Section 7.9. This section of the course will provide you with various examples of financial statements and the worksheet as applied to a merchandising company. There is also a demonstration problem and solution provided in subunits 6.1.9.1 through 6.1.9.2, identified in the textbook as 7.9.1 through 7.9.2. You should try completing the demonstration problem prior to viewing the solution. 

  • 6.1.9.1 Demonstration Problem  
  • 6.1.9.2 Solution to Demonstration Problem  
  • 6.1.10 Chapter 7 Key Terms  

    Note: This topic is identified in the primary text as Section 7.10. This reading provides a comprehensive list of the key terms that were identified in the readings for Chapter 7.

  • 6.1.11 Chapter 7 Self-Test  

    Note: This topic is identified in the primary text as Section 7.11. This section of the course will provide you with a self-test of true/false and multiple-choice questions that reviews concepts learned in Chapter 7. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The respective subunits will be identified as subunits 6.1.11.1 through 6.1.11.2, as directly connected to subsections 7.11.1 through 7.11.2 of the textbook. The solutions to the self-test questions are located on pages 356 and357.

  • 6.1.11.1 True/False Self-Test  
  • 6.1.11.2 Multiple-choice Self-Test  
  • 6.2 Measuring and Reporting Inventories  
  • 6.2.1 Chapter 8 Learning Objectives  

    Note: This topic is  identified in the primary text as Section 8.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 6.2.2 Choosing an Accounting Career  

    Note: This topic is identified in the primary text as Section 8.2. Here is another look at a potential employment opportunity for someone interested in the business of accounting.

  • 6.2.3 Inventories and Cost of Goods Sold  

    Note: This topic is identified in the primary text as Section 8.3. In most cases, the inventory of a merchandising business will cost more than other assets the entity owns. The identification and tracking of inventory has a direct impact on how a business entity reports its profitability to end users of this information. This section introduces you to this concept. 

  • 6.2.4 Importance of Proper Inventory Valuation  

    Note: This topic is identified in the primary text as Section 8.4. In this reading, you are provided with a more detailed understanding of the significance of inventory valuation and the impact on both the income statement and the statement of retained earnings. You will also be provided with a summary of the effects of any errors as they impact beginning and ending inventories. 

  • 6.2.5 Determining Inventory Costs  

    Note: This topic is identified in the primary text as Section 8.5. This reading will provide you with some detailed answers to some specific questions associated with determining the cost of inventory and how to identify those costs strategically. You will be directed on how to identify ending inventory balances using LIFO, FIFO, and Weighted-averages; please ensure to take good notes on these concepts.

  • 6.2.5.1 Accounting for Inventory Purchases  
    • Web Media: YouTube: Accounting Tutor’s “Accounting for Inventory Purchases”

      Link: YouTube: Accounting Tutor’s “Accounting for Inventory Purchases” (YouTube)
       
      Instructions: This 11-minute lecture provides insight into how important it is to understand the impact of buying and selling inventory within a merchandising business and how this understanding transforms into useful accounting information. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If the instructor provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 6.2.5.2 Sales Transactions and the Income Statement  
    • Web Media: YouTube: Accounting Tutor’s “Inventory Sales and the Income Statement”

      Link: YouTube: Accounting Tutor’s “Inventory Sales and the Income Statement” (YouTube)
       
      Instructions: In this 15-minute lecture, you will be provided insight into how important it is to understand the income statement of a merchant. Pay careful attention to the explanation about how revenue is earned and expenses are incurred when a sale is made. As you watch this video, keep in mind that the references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If the instructor provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 6.2.5.3 Inventory Methods Explained  
    • Web Media: YouTube: Accounting Tutor’s LIFO, FIFO, and Average Cost Inventory Costing Methods: “Part 1” and “Part 2”

      Link: YouTube: Accounting Tutor’s LIFO, FIFO, and Average Cost Inventory Costing Methods“Part 1” and “Part 2” (YouTube)
       
      Instructions: In this 23-minute lecture, you will be provided with in-depth explanations on the distinctions within various inventory methods. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If the instructor provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 6.2.6 Departures from Cost Basis of Inventory Measurement  

    Note: This topic is identified in the primary text as Section 8.6. This section points out with a great example how inventory that is valued greater than its realized value should not be carried by the business entity. There are several processing methods introduced in this section, including lower-of-cost-or-market method, gross margin method, and retail inventory method; make sure you know how to distinguish between them.

  • 6.2.7 Analyzing and Using Financial Results – Inventory Turnover Ratio  

    Note: This topic is identified in the primary text as Section 8.7. This section of the course explains how to tell whether a business has good control, efficiency, and management of its inventory. This can be readily calculated through the determination of the inventory turnover ratio. 

  • 6.2.8 Understanding the Chapter 8 Learning Objectives  

    Note: This topic is identified in the primary text as Section 8.8. This section of the course will review what you have learned as you progressed through this chapter. It provides demonstration problems that you should work through, as well as the solutions so you can check your work. It also reviews and lists the key terms from this chapter and provides you with a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The respective subunits will be identified as subunits 6.2.8.1 through 6.2.8.4 as directly connected to subsections 8.8.1 through 8.8.4 of the textbook. The solutions to the self-test are located on pages 424–425.

  • 6.2.8.1 Chapter 8 Demonstration Problem  
  • 6.2.8.2 Solution to Chapter 8 Demonstration Problem  
  • 6.2.8.3 Chapter 8 Key Terms  
  • 6.2.8.4 Chapter 8 Self-Test  
  • 6.3 Inventory and Merchandising Assessments  
  • 6.3.1 Inventory Methods Assessment  
    • Assessment: Bean Counter: David W. Marshall’s “Inventory Methods”

      Link: Bean Counter: David W. Marshall’s “Inventory Methods” (Flash)
       
      Instructions: This quiz will help you understand some of the foundational rules associated with accounting. As you complete the quiz, you should include the final correct results in your notes. You are not graded on your final outcome, but should instead use this to gauge your comprehension of the material presented.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 6.3.2 Inventory Costing Methods Assessment  
    • Assessment: Bean Counter: David W. Marshall’s “Costing Methods”

      Link: Bean Counter: David W. Marshall’s “Costing Methods” (Flash)
       
      Instructions: This quiz will help you understand some of the foundational rules associated with accounting. As you complete the quiz, you should include the final correct results in your notes. You are not graded on your final outcome, but should instead use this to gauge your comprehension of the material presented.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 6.3.3 Estimating Inventories Assessment  
    • Assessment: Bean Counter: David W. Marshall’s “Estimating Inventories”

      Link: Bean Counter: David W. Marshall’s “Estimating Inventories” (Flash)
       
      Instructions: This quiz will help you understand some of the foundational rules associated with accounting. As you complete the quiz, you should include the final correct results in your notes. You are not graded on your final outcome, but should instead use this to gauge your comprehension of the material presented.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 6.3.4 Inventory Review Assessment  
    • Assessment: Bean Counter: David W. Marshall’s “Inventory Review”

      Link: Bean Counter: David W. Marshall’s “Inventory Review” (Flash)
       
      Instructions: This quiz will help you understand some of the foundational rules associated with accounting. As you complete the quiz, you should include the final correct results in your notes. You are not graded on your final outcome, but should instead use this to gauge your comprehension of the material presented.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 6.3.5 Now Walk the Plank if You Know About Inventory  
    • Assessment: Bean Counter: David W. Marshall’s “Walk the Plank – Merchandise Inventory”

      Link: Bean Counter: David W. Marshall’s “Walk the Plank – Merchandise Inventory” (Flash)
       
      Instructions: This quiz is more of a game. Begin the game by clicking on “start game.” Once you start, you will be able to choose some specific characteristics of the person you want to ‘walk the plank.’ For every correct step taken, you push this person one step closer to being eaten by sharks. An incorrect answer will allow that person to take some steps back to safety. As you respond to the questions, the person you are trying to make walk the plank will have some pretty interesting comments – they are said in humor and meant to be encouraging. As you complete this quiz, you should include the final correct results in your notes. You are not graded on your final outcome, but should instead use this to gauge your comprehension of the material presented.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • Unit 7: Receivables and Payables Identified  

    During the course of regular business, it is not uncommon to provide credit to some customers. Once a business provides an extension of credit, it now owns a promise that it will be paid back. As part of this agreement, the business entity will charge interest at varying rates, which are typically imposed based on the credit worthiness of the customer. It is also not uncommon that the business will not be able to collect some of these credit extensions. In accounting, we identify these promises someone makes to a business entity as an accounts receivable. This section of the course will provide analysis and insight on accounts receivables and highlight specific information on what to do when a business extends credit to its customers.

    Also, during the regular course of business, there may come times where the business entity needs to make specific purchases to support the regular business activity, but they do not have enough cash on hand to meet these demands from a current asset perspective. In these types of situations, it is viable for a business entity to possess lines of credit. In this type of situation, the business entity has created a promise to pay someone else as a result of being extended a particular line of credit or goods on credit. These types of transactions would be considered payables and would in fact create liabilities for the organization. Please remember that earlier in the course, you were introduced to the fact that a liability can also be considered a promise to pay. 

    Unit 7 Time Advisory   show close
    Unit 7 Learning Outcomes   show close
  • 7.1 Receivables and Payables  
  • 7.1.1 Chapter 9 Learning Objectives  

    Note: This topic is identified in the primary text as Section 9.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 7.1.2 A Career in Litigation Support  

    Note: This topic is identified in the primary text as Section 9.2. Here is another look at a potential employment opportunity for someone interested in the business of accounting.

  • 7.1.3 Accounts Receivables  

    Note: This topic is identified in the primary text as Section 9.3. This section builds from what you have learned through your completion of the material in Chapter 3. The focus in this section of the course is on what should be happening when a receivable is uncollectable. You will be introduced to methods and should pay specific attention to the concept of an aging schedule and how to write off receivables. There is also insight provided on how credit card transactions should be identified and recorded from the business entity’s perspective. 

  • 7.1.3.1 Receivables and Uncollectible Accounts  
    • Web Media: YouTube: Accounting Tutor’s “Accounting for Receivables and Uncollectible Accounts”

      Link: YouTube: Accounting Tutor’s “Accounting for Receivables and Uncollectible Accounts” (YouTube)
       
      Instructions: In this 15-minute lecture, you will be provided with insight on how to account for uncollectable accounts. As you watch this video, keep in mind that references to chapters, quizzes, and tests do not apply to you in this Saylor Foundation course. If the instructor provides a demonstration of a particular problem to the students in his class, you should indeed jump in and do the problems with the class and use his explanations to support your comprehension of the material being presented. Be sure you take detailed notes on this section of the course.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 7.1.3.2 How Does Credit Abuse Differ From Substance Abuse?  
  • 7.1.4 Current Liabilities  

    Note: This topic is identified in the primary text as Section 9.4. In this reading, you will be provided explanations associated with liabilities. Discussion in this section of the course will also distinguish among clearly determined liabilities, estimated liabilities, and contingent liabilities. 

  • 7.1.5 Notes Receivable and Notes Payable  

    Note: This topic is identified in the primary text as Section 9.5. This reading will provide you with the specific language to understand notes (also identified as promissory notes), and how to account for them within the accounting system. As you go through this section of the course, make sure you pay attention to the discussion on interest receivable, interest revenue, interest expense, and interest payable. 

  • 7.1.6 Short-Term Financing through Notes Payable  

    Note: This topic is identified in the primary text as Section 9.6. There are situations when a business may need short-term financial assistance to support strategic business activity. In this section of the course, you will be provided with an explanation of what some businesses can do to remedy this short-term cash flow situation. 

  • 7.1.7 Analyzing and Using the Financial Results – Accounts Receivables Turnover  

    Note: This topic is identified in the primary text as Section 9.7. This reading provides a review of the learning objectives, as well as demonstration problems and the solutions in subunits 7.1.7.1 through 7.1.7.3, as identified in the textbook as 9.7.1 through 9.7.3. 

  • 7.1.7.1 Understanding the Chapter 9 Learning Objectives  
  • 7.1.7.2 Chapter 9 Demonstration Problem  
  • 7.1.7.3 Solution to Chapter 9 Demonstration Problem  
  • 7.1.8 Chapter 9 Key Terms  

    Note: This topic is identified in the primary text as Section 9.8. This section of the course revisits the terms from this chapter that you have connected with during your studies. 

  • 7.1.9 Chapter 9 Self-Test  

    Note: This topic is identified in the primary text as Section 9.9. This section of the course will provide you with a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The respective subunits will be identified as subunits 7.1.9.1 through 7.1.9.2 as directly connected to subsections 9.9.1 through 9.9.2 of the textbook. The solution to self-test is located on pages 66 and 67 in Chapter 9. 

  • 7.1.9.1 Chapter 9 True/False  
  • 7.1.9.2 Chapter 9 Multiple-choice  
  • 7.2 Understanding Bad Debt and the Relationship to Receivables  
  • 7.2.1 Bad Debt Defined  
    • Web Media: YouTube: College of Southern Maryland: Bruce Fried’s “Bad Debt Part 1” (YouTube) and “Bad Debt Part 2”

      Link: YouTube: College of Southern Maryland: Bruce Fried’s “Bad Debt Part 1” (YouTube) and “Bad Debt Part 2”  (YouTube)
       
      Instructions: These lectures discuss bad debt. Professor Bruce Fried takes an interesting approach to explaining bad debt. Bad debt has to be accounted for if a business is doing any kind of business on account. Doing business on account means the entity allows its customers access to its goods or services in exchange for a promise to pay the business back. This relationship creates a receivable for the business and a liability for the customer. Professor Bruce Fried provides an example on what should be done within the accounting process to ensure proper allocations of bad debt. In the video, Professor Fried also provides two ways of identifying what he refers to as bad debt allocations or “guesstimate,” as he comically calls it.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • 7.2.2 Accounts Receivable and Bad Debts Expense  
  • Unit 8: Accounting for Property, Plant, and Equipment  

    Property, plant, and equipment require the largest amount of investment for a company. This unit introduces you to the life cycle of tangible long-term assets: acquisition, depreciation, and disposal.

    This unit also includes other long-term assets such as natural resources and intangible assets. Companies such as mines and lumber companies account for the resources that are extracted from the environment. The most common intangible asset is goodwill, which is recorded when acquiring a company.

    Unit 8 Time Advisory   show close
    Unit 8 Learning Outcomes   show close
  • 8.1 Property, Plant, and Equipment  
  • 8.1.1 Chapter 10 Learning Objectives  

    Note: This topic is identified in the primary text as Section 10.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 8.1.2 A Company Accountant's Role in Managing Plant Assets  

    Note: This topic is identified in the primary text as Section 10.2. 

  • 8.1.3 The Nature of Plant Assets  

    Note: This topic is identified in the primary text as Section 10.3. In this reading, you will learn how to classify assets through the identification of three key elements that must be in place. You will also be introduced to the four steps associated with accounting for plant assets. 

  • 8.1.4 Initial Recording of Plant Assets  

    Note: This topic is covered beneath subunit 8.1 and is identified in the primary text as Section 10.4. After working through this section of the course, you should be able to identify the terms fair market value, acquisition costs, and historical costs. You will also develop an understanding of which costs are capitalized. There will be some illustration and discussion on how to record the life history of a depreciable asset to ensure the proper account and true financial picture of an organization’s assets. Pay careful attention to the discussion on the difference in the cost and accounting for the construction of a new building versus buying land and assets for a specific lumped price. You will also be introduced to the difference between book value and appraised value; be sure you know the difference. 

  • 8.1.5 Depreciation of Plant Assets  

    Note: This topic is identified in the primary text as Section 10.5. This reading will discuss the reality that all assets, with the exception of land, have a useful life. Basically, a business should expect some wear and tear on the asset as a direct result of using it to support its business activity. Depreciation is an allocations process that ensures the useful life of an asset is properly identified from an accounting and company valuation. You will be introduced to the three major causes of depreciation; please ensure you take good notes on this area of the course. Finally, an emphasis will be placed on the identification and synthesis of the four methods of depreciation. 

  • 8.1.6 Subsequent Expenditures (Capital and Revenue) on Assets  

    Note: This topic is identified in the primary text as Section 10.6. In this reading, you should pay special attention to the information distinguishing capital expenditures, revenue expenditures, and betterments. Each of them has a unique impact on the assets value, its useful life, and on the financial statements. This section explains the difficulty in determining the accounting for additional costs incurred related to long-term assets. 

  • 8.1.7 Subsidiary Records Used to Control Plant Assets  

    Note: This topic is identified in the primary text as Section 10.7. This reading discusses the use of subsidy ledgers for plant assets. You will also be provided with a visual illustration of what happens to the accounting structure when a revenue expenditure is treated as a capital expenditure; it is important for you to know the difference. 

  • 8.1.8 Analyzing and Using the Financial Results – Rate of Return on Operating Assets  

    Note: This topic is identified in the primary text as Section 10.8. This reading will review the intended chapter learning objectives. It will also work through demonstration problems to reinforce the concepts presented and then show the answers to the demonstration problems. You complete the demonstration problems prior to reviewing the answers. This subunit covers subsections 8.1.8.1 through 8.1.8.3, as identified in the textbook as 10.8.1 through 10.8.3. 

  • 8.1.8.1 Understanding the Chapter 10 Learning Objectives  
  • 8.1.8.2 Chapter 10 Demonstration Problems  
  • 8.1.8.3 Solution to Chapter 10 Demonstration Problems  
  • 8.1.9 Chapter 10 Key Terms  

    Note: This topic is identified in the primary text as Section 10.9. This reading revisits the terms from this chapter that you have connected with during your studies.

  • 8.1.10 Chapter 10 Self-Test  

    Note: This topic is identified in the primary text as Section 10.10. This section of the course will provide you with a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The solution to self-test is located on pages 118 and 119 in Chapter 10. 

  • 8.2 Plant Asset Disposal, Natural Resources, and Intangible Assets  
  • 8.2.1 Chapter 11 Learning Objectives  

    Note: This topic is identified in the primary text as Section 11.1. The beginning of every chapter in the primary textbook will provide chapter-specific learning objectives. Please do not confuse the chapter learning objectives with the course learning outcomes. The chapter learning objectives are what you should be using to guide your understanding of the information presented in a given chapter of the book. The learning outcomes are the overall outcomes that should be expected as a result of completing this course. 

  • 8.2.2 A Company Accountant's Role in Measuring Intangibles  

    Note: This topic is identified in the primary text as Section 11.2. Here is another look at a potential employment opportunity for someone interested in the business of accounting. 

  • 8.2.3 Disposal of Plant Assets  

    Note: This topic is identified in the primary text as Section 11.3. In this reading, you will learn that with the exception of land, all assets become of little to no use and a company will have to make the decision to trade the asset for a newer version, retire the asset altogether, or just simply sell the asset. How is this decision made? This section of the course provides some insight on responding to this question. 

  • 8.2.4 Sale of Plant Assets  

    Note: This topic is identified in the primary text as Section 11.4. There will come a time when many business entities will have to dispose of a plant asset. When this happens, the company will either have a loss or show a gain, depending on the difference between the asset’s sale price and its book value. This section shows how the journal entries look in a variety of situations, including a gain on the sale of an asset, a loss on the sale of an asset, how to realize loss, and even what to do in the event of a fire or flood that destroys an asset. 

  • 8.2.5 Accounting for Natural Resources  

    Note: This topic is identified in the primary text as Section 11.5. This section of the course will provide you with insight on the concept of depletion of a natural resource and how you would journalize such entries. 

  • 8.2.6 Accounting of Intangible Assets  

    Note: This topic is identified in the primary text as Section 11.6. This reading begins by identifying the sources of an intangible asset. Pay careful attention to the identification of concepts like trademarks, amortization, patents, copyrights, trademarks, goodwill, and franchises. 

  • 8.2.7 Analyzing and Using the Financial Results – Total Assets Turnover  

    Note: This topic is identified in the primary text as Section 11.7. This reading will provide an explanation of the total assets turnover ratio, which illustrates the relationship between monetary volume and the average of the total asset. You will also be provided with an explanation of the learning objectives as they have been identified in this chapter. Finally, you will be provided with some demonstration problems and the solutions to those problems. The information in this part of the course covers subunits 8.2.7.1 through 8.2.7.3, as identified in the textbook as 11.7.1 through 11.7.3. 

  • 8.2.7.1 Understanding the Chapter 11 Learning Objectives  
  • 8.2.7.2 Chapter 11 Demonstration Problems  
  • 8.2.7.3 Solution to Chapter 11 Demonstration Problems  
  • 8.2.8 Chapter 11 Key Terms  

    Note: This topic is identified in the primary text as Section 11.8. This section of the course revisits the terms from this chapter that you have connected with during your studies.

  • 8.2.9 Chapter 11 Self-Test  

    Note: This topic is identified in the primary text as Section 11.9. This section of the course will provide you with a self-test of true/false and multiple-choice questions. There are other self-test questions, but the answers are only provided for the true/false and multiple-choice questions within the chapter. The respective subunits will be identified as subunits 8.2.9.1 and 8.2.9.2 as directly connected to subsections 11.9.1 and 11.14 of the textbook. The solutions to self-test are located on pages 173­ and174 in Chapter 11.

  • 8.2.9.1 Chapter 11 True/False & Multiple Choice Self-Test  
  • 8.2.9.2 Answers to Chapter 11 Self-Test  
  • Unit 9: Long-Term Liabilities and Stockholders’ Equity  

    This unit addresses the two ways in which a company can raise funds: debt and equity. In order to finance long-term assets, companies issue long-term debt in the form of bonds. Equity is most often issued when companies begin operations to raise start-up capital. In BUS 202: Principles of Finance, you will learn more about the balance between debt and equity in a company.

    Unit 9 Time Advisory   show close
    Unit 9 Learning Outcomes   show close
  • 9.1 Long-Term Liabilities: Bonds  
  • 9.1.1 Bond Financing  

    Note: This topic is identified in the textbook as Sections 15.2 through 15.5. This topic is also covered by the lectures in subunit 9.1. As mentioned in the introduction to this unit, bonds are a common way for companies to finance long-term assets. This subunit reviews different types of bonds.

  • 9.1.2 Accounting for Bonds  

    Note: This topic is identified in the textbook as Sections 15.6 through 15.8. This topic is also covered by the lectures in subunit 9.1. This subunit addresses how to account for bonds identified in subunit 9.1.1.

  • 9.2 Stockholders’ Equity: Capital Stock  
  • 9.2.1 Preferred Stock  

    Note: This topic is identified in the textbook as Sections 12.3.6 through 12.3.7. This topic is also covered by the lectures in subunit 9.2. Preferred stock is a type of capital stock that gives holders benefits above common shareholders.

  • 9.2.2 Common Stock  

    Note: This topic is identified in the textbook as Sections 12.1 through 12.3. This topic is also covered by the lectures in subunit 9.2. Common stock are shares of capital stock issued to the general public. If you were to buy shares of Coca-Cola, you would be a common shareholder.

  • 9.3 Stockholders’ Equity: Corporations  
  • 9.3.1 Paid-in Capital  

    Note: This topic is identified in the textbook as Section 13.3. This topic is also covered by the lectures in subunit 9.3. Paid-in capital refers to the amount of contributed capital made by shareholders. Paid-in capital is often split between par value and additional paid-in capital.

  • 9.3.2 Dividends and Stock Splits  

    Note: This topic is identified in the textbook as Sections 13.4 and 13.8. This topic is also covered by the lectures in subunit 9.3. Dividends and stock splits return value to shareholders in the form of cash or shares, respectively.

  • 9.3.3 Treasury Stock  

    Note: This topic is identified in the textbook as Sections 13.5 and 13.12. This topic is also covered by the lectures in subunit 9.3. Treasury stock is created when a company repurchases its own shares on the stock market. 

  • 9.3.4 Retained Earnings  

    Note: This topic is identified in the textbook as Sections 13.7 and 13.9. This topic is also covered by the lectures in subunit 9.3. 

  • 9.3.5 Statement of Shareholders' Equity  

    Note: This topic is identified in the textbook as Section 13.11. This topic is also covered by the lectures in subunit 9.3. 

  • 9.3.6 Income Statement Items  

    Note: This topic is identified in the textbook as Section 13.13. This topic is also covered by the lectures in subunit 9.3.

    • Assessment: AccountingCoach’s “Stockholders’ Equity Quiz”

      Link: AccountingCoach’s “Stockholders’ Equity Quiz” (HTML)
       
      Instructions: Take the quiz above to test your understanding of stockholders’ equity. For ease of use, print the quiz before checking your answers. Use the print function in your browser; do not use the “Print PDF” link.

      Completing this quiz should take you approximately 1 hour.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • Unit 10: Statement of Cash Flows  

    Remember that the balance sheet and income statement are prepared using the accrual basis of accounting. The statement of cash flows is prepared using information from the accrual basis statements to tell what cash was received for and how cash was spent. The statement of cash flows classifies business transactions in to operating activities, investing activities, and financing activities.

    Unit 10 Time Advisory   show close
    Unit 10 Learning Outcomes   show close
  • 10.1 Operating Activities  

    Operating activities on the statement of cash flows stem from a company’s day-to-day operations. These activities include making sales to customers and paying vendors and employees. The operating activities section of the statement of cash flows can be prepared using the direct or indirect method.

  • 10.1.1 Direct Method  

    Note: This topic is identified in the textbook as Sections 16.6 and 16.7. This topic is also covered by the lectures in subunit 10.1. 

  • 10.1.2 Indirect Method  

    Note: This topic is identified in the textbook as Sections 16.6 and 16.7. This topic is also covered by the lectures in subunit 10.1. 

  • 10.2 Investing Activities  

    Note: This topic is identified in the textbook as Section 16.7. This topic is also covered by the lectures in subunit 10.1. Investing activities primarily relate to investments in marketable securities and long-term assets.

  • 10.3 Financing Activites  

    Note: This topic is identified in the textbook as Section16.7. This topic is also covered by the lectures in subunit 10.1. Financing activities primarily relate to debt and equity transactions.

    • Assessment: AccountingCoach’s “Cash Flow Statement Quiz”

      Link: AccountingCoach’s “Cash Flow Statement Quiz” (HTML)
       
      Instructions: Take the quiz above to test your understanding of the statement of cash flows. For ease of use, print the quiz before checking your answers. Use the print function in your browser; do not use the “Print PDF” link.

      Completing this quiz should take you approximately 1 hour.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

  • Final Exam  

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