Lahore University of Management Sciences

ACCT 100 – Principles of Financial Accounting

Fall Semester 2017
Instructor Syed Zain Ul Abidin/Ayesha Bhatti/Salman Mian
Room No. 442
Office Hours by appointment
Email [email protected]; [email protected]; [email protected]
Telephone Ext: Z: 5326, A: 8087, S: 8469
Secretary/TA Sec: Z, S: Malik Imran Abbas, A: Kashif Saeed
TA Office Hours TBA
Course URL (if any) suraj.lums.edu.pk/~ro/

COURSE BASICS
Credit Hours 3 Credits
Lecture(s) Nbr of Lec(s) Per Week 2 Duration 75 mins
Recitation/Lab (per week) Nbr of Lec(s) Per Week None Duration N/A
Tutorial (per week) Nbr of Lec(s) Per Week 1 Duration 60 mins

COURSE DISTRIBUTION
Core Core Course for ACF Freshmen
Elective
Open for Student Category Freshmen (ACF majors only), Open for All in phase II
Close for Student Category

COURSE DESCRIPTION

The course is designed to provide an understanding of financial accounting fundamentals for prospective users of corporate
financial information, such as investors, creditors, employees, and other stakeholders (e.g., suppliers, customers). The course
focuses on understanding how economic events such as operating activities, corporate investments, and financing transactions are
recorded in the three main financial statements (i.e., the income statement, balance sheet, and statement of cash flows). The main
emphasis of this course is placed on the basic framework of accounting so as to provide the student with an understanding of the
fundamental accounting principles and concepts. A heavy reliance will be placed on problem solving and practical analyses to
achieve the aforementioned level of understanding. Students will develop the technical skills needed to analyze financial
statements and disclosures for use in financial analysis. Students will also learn how accounting standards and managerial
incentives affect the financial reporting process. The tools and skills you learn in this course will help you throughout your
professional career and your life.

COURSE PREREQUISITE(S)

The course is recommended for students with little or no prior background in financial accounting that want to improve their
financial literacy. There are no academic prerequisites for the course. Although we will work with numbers in the course, the only
required math knowledge is addition, subtraction, multiplication, and division.
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COURSE LEARNING OBJECTIVES (CLO)
This course will introduce you to the key concepts of Accounting. You will learn to prepare financial statements
and will also be equipped to analyze them. After taking this course, you will be able to:

1. Describe the nature, uses and purposes of financial accounting, and outline both the conceptual and regulatory
frameworks that govern the preparation and reporting of financial information
2. Explain the accounting equation and its link with financial statements, and illustrate the impact of economic
transactions on the accounting equation
3. Describe the key concepts and conventions that underlie financial accounting
4. Describe and apply the transactions recording process from source documents to financial statements via the
books of prime entry, ledgers and trial balance
5. Explain the nature and purposes of control accounts and apply appropriate correcting techniques for errors and
omissions
6. Explain and apply the recognition and measurement principles relating to: non-current liabilities and equity, non-
current assets (including depreciation and amortization), inventories (and cost of sales) and other current assets
and liabilities (including receivables and bad debts, prepayments and accruals, etc.)
7. Explain the characteristics of a sole proprietor vis-à-vis a company; and prepare financial statements for both
forms of entities
8. Explain the characteristics of a partnership, prepare financial information for a partnership including the
admission of a partner and the dissolution of a partnership
9. Apply accounting principles, concepts and conventions in practical situations
10. Demonstrate basic problem solving skills
11. Demonstrate an ability to undertake independent study and to manage time
12. Demonstrate basic numerical skills

UNDERGRADUATE PROGRAM LEARNING GOALS & OBJECTIVES

General Learning Goals & Objectives
Goal 1 –Effective Written and Oral Communication
Objective: Students will demonstrate effective writing and oral communication skills
Goal 2 –Ethical Understanding and Reasoning
Objective: Students will demonstrate that they are able to identify and address ethical issues in an organizational context.
Goal 3 – Analytical Thinking and Problem Solving Skills
Objective: Students will demonstrate that they are able to identify key problems and generate viable solutions.
Goal 4 – Application of Information Technology
Objective: Students will demonstrate that they are able to use current technologies in business and management context.
Goal 5 – Teamwork in Diverse and Multicultural Environments
Objective: Students will demonstrate that they are able to work effectively in diverse environments.
Goal 6 – Understanding Organizational Ecosystems
Objective: Students will demonstrate that they have an understanding of Economic, Political, Regulatory, Legal, Technological,
and Social environment of organizations.

Major Specific Learning Goals & Objectives

Goal 7 (a) – Discipline Specific Knowledge and Understanding
Objective: Students will demonstrate knowledge of key business disciplines and how they interact including application to real
world situations (including subject knowledge).
Goal 7 (b) – Understanding the “science” behind the decision-making process (for MGS Majors)
Objective: Students will demonstrate ability to analyze a business problem, design and apply appropriate decision-support
tools, interpret results and make meaningful recommendations to support the decision-maker
 Lahore University of Management Sciences
Indicate below how the course learning objectives specifically relate to any program learning goals and objectives.

PROGRAM LEARNING GOALS AND COURSE LEARNING OBJECTIVES COURSE ASSESSMENT ITEM
OBJECTIVES
Goal 1 –Effective Written and Oral Students will have an opportunity to Classroom discussions
Communication demonstrate their communication skills
by interacting in classroom discussion
Goal 2 –Ethical Understanding and Ethical understanding is embedded in the Classroom discussions, Quizzes,
Reasoning content of this course through the use of Assignments, and Exams
the International Financial Reporting
Standards (IFRSs).
Goal 3 – Analytical Thinking and Problem Analytical thinking and problem solving Classroom discussions, Quizzes,
Solving Skills skills are embedded in the content of this Assignments, and Exams
course and are essential for completing
this course successfully
Goal 4 – Application of Information
Technology
Goal 5 – Teamwork in Diverse and Internationalization is embedded in the Classroom discussions, Quizzes,
Multicultural Environments content of this course through the use of Assignments, and Exams
the International Financial Reporting
Standards (IFRSs). Moreover, the
principles of introductory financial
accounting are common across most
countries.
Goal 6 – Understanding Organizational Understanding organizational ecosystems Classroom discussions, Quizzes,
Ecosystems is embedded in the content of this course Assignments, and Exams
through the use of the International
Financial Reporting Standards
(IFRSs). Moreover, the principles of
introductory financial accounting are
common across most countries and
companies.
Goal 7 (a) – Discipline Specific Knowledge The course content meets the standards The textbook used for this course is
and Understanding of the professional accountancy bodies based on International Financial
(e.g. ICAP, ICAEW, ACCA and CIMA). Accounting Standards (IFRSs)
Goal 7 (b) – Understanding the “science” The course explain the financial and Classroom discussions, Quizzes, and
behind the decision-making process ethical effects of choosing one Generally Assignments
Accepted Accounting Principle (GAAP)
over another GAAP

GRADING BREAKUP AND POLICY

Assignment(s): 10%
Quiz(s): 30%
Attendance: 10%
Midterm Examination: 20%
Final Examination: 30%

Please note that no quiz will be dropped. Under extenuating circumstances, for a missed quiz, the mean of the class in the missed
quiz or the mean of the students’ other quizzes, whichever is lower will be posted for only one missed quiz. Quizzes are normally
 Lahore University of Management Sciences
given at the beginning of a session, you are expected to be in your seats 5 minutes before each class session, late walk-ins on a quiz
day disturb the whole class and will not be allowed to take the quiz.

Students with less than 50% marks overall, will receive an F grade. However, this will not affect grades of other students. The
remaining students will be awarded grades they would be otherwise entitled to.

If you miss more than seven (7) classes, you will automatically get an F grade in the course. I expect you to be punctual and be
in your seat before the class starts. Late walk-in will be counted as a nonattendance and will lower your attendance grade.

EXAMINATION DETAIL
Yes/No: Yes
Combine/Separate: Combine
Midterm Duration: 2 hours
Exam Preferred Date: Midterm Week
Exam Specifications: MCQ Format. Closed books, closed notes, you may bring calculator. You will not be allowed
to use your cell phone as a calculator or borrow calculator from someone in class
Yes/No: Yes
Combine/Separate: Combine
Duration: 2 hours
Final Exam Preferred Date: Final Exam week
Exam Specifications: MCQ Format. Closed books, closed notes, you may bring calculator. You will not be allowed
to use your cell phone as a calculator or borrow calculator from someone in class

COURSE OVERVIEW
Reading Session Outcome(s)
Session Topic
Session Material (After completing this session, you should be able to…)
Accounting in Action Chapter 1 1. Explain what accounting is.
2. Identify the users and uses of accounting.
3. Understand why ethics is a fundamental business concept.
4. Explain accounting standards and the measurement principles.
5. Explain the monetary unit assumption and the economic entity
1 assumption.
6. State the accounting equation, and define its components.
7. Analyze the effects of business transactions on the accounting equation.
8. Understand the four financial statements and how they are prepared.
(CLO 1 – 7)

The Recording Process Chapter 2 1. Explain what an account is and how it helps in the recording process.
2. Define debits and credits and explain their use in recording business
transactions.
3. Identify the basic steps in the recording process.
4. Explain what a journal is and how it helps in the recording process.
2
5. Explain what a ledger is and how it helps in the recording process.
6. Explain what posting is and how it helps in the recording process.
7. Prepare a trial balance and explain its purposes.
(CLO 1 – 7)

The Recording Process Chapter 2 Same as above

3
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Adjusting the Accounts Chapter 3 1. Explain the time period assumption.
2. Explain the accrual basis of accounting.
3. Explain the reasons for adjusting entries.
4. Identify the major types of adjusting entries.
4 5. Prepare adjusting entries for deferrals.
6. Prepare adjusting entries for accruals.
7. Describe the nature and purpose of an adjusted trial balance.
(CLO 1 – 12)

5 Adjusting the Accounts Chapter 3 Same as above

Completing the Chapter 4 1. Prepare a worksheet.
Accounting Cycle 2. Explain the process of closing the books.
3. Describe the content and purpose of a post-closing trial balance.
4. State the required steps in the accounting cycle.
6
5. Explain the approaches to preparing correcting entries.
6. Identify the sections of a classified statement of financial position.
(CLO 1 – 12)

Accounting for Chapter 5 1. Identify the differences between service and merchandising companies.
Merchandising 2. Explain the recording of purchases under a perpetual inventory system.
Operations 3. Explain the recording of sales revenues under a perpetual inventory
system.
7
4. Explain the steps in the accounting cycle for a merchandising company.
5. Prepare an income statement for a merchandiser.
(CLO 1 – 7)

Accounting for Chapter 5 Same as above

8 Merchandising
Operations
Inventories Chapter 6 1. Describe the steps in determining inventory quantities.
2. Explain the accounting for inventories and apply the inventory cost flow
methods.
3. Explain the financial effects of the inventory cost flow assumptions.
4. Explain the lower-of-cost-or-net realizable value basis of accounting for
9
inventories.
5. Indicate the effects of inventory errors on the financial statements.
6. Compute and interpret the inventory turnover ratio.
(CLO 1 – 7)

10 Inventories Chapter 6 Same as above

Fraud, Internal Control, Chapter 7 1. Define fraud and internal control.
and Cash 2. Identify the principles of internal control activities.
3. Explain the applications of internal control principles to cash receipts.
4. Explain the applications of internal control principles to cash
disbursements.
11
5. Describe the operation of a petty cash fund.
6. Indicate the control features of a bank account.
7. Prepare a bank reconciliation.
8. Explain the reporting of cash
(CLO 1 – 7)
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Accounting for Chapter 8 1. Identify the different types of receivables.
Receivables 2. Explain how companies recognize accounts receivable.
3. Distinguish between the methods and bases companies use to value
accounts receivable.
4. Describe the entries to record the disposition of accounts receivable.
5. Compute the maturity date of and interest on notes receivable.
12
6. Explain how companies recognize notes receivable.
7. Describe how company’s value notes receivable.
8. Describe the entries to record the disposition of notes receivable.
9. Explain the statement presentation and analysis of receivables.
(CLO 1 – 12)

Accounting for Chapter 8 Same as above

13
Receivables
Plant Assets, Natural Chapter 9 1. Describe how the historical cost principle applies to plant assets.
Resources and Intangible 2. Explain the concept of depreciation and how to compute it.
Assets 3. Distinguish between revenue and capital expenditures, and explain the
entries for each.
4. Explain how to account for the disposal of a plant asset.
14 5. Compute periodic depletion of extractable natural resources.
6. Explain the basic issues related to accounting for intangible assets.
7. Indicate how plant assets, natural resources, and intangible assets are
reported.
(CLO 1 – 12)

Plant Assets, Natural Chapter 9 Same as above

15 Resources and Intangible
Assets
16 Mid-Term
Liabilities Chapter 10 1. Explain a current liability, and identify the major types of current
liabilities.
2. Describe the accounting for notes payable.
3. Explain the accounting for other current liabilities.
4. Explain why bonds are issued, and identify the types of bonds.
5. Prepare the entries for the issuance of bonds and interest expense.
17
6. Describe the entries when bonds are redeemed.
7. Describe the accounting for long-term notes payable.
8. Identify the methods for the presentation and analysis of non-current
liabilities.
(CLO 1 – 12)

18 Liabilities Chapter 10 Same as above

Accounting for Sole Chapter 12 1. Identify the characteristics of the partnership form of business
Proprietors and organization.
Partnerships 2. Explain the accounting entries for the formation of a partnership.
(Retirement, death, 3. Identify the bases for dividing net income or net loss.
19 dissolution, liquidation.) 4. Describe the form and content of partnership financial statements.
5. Explain the effects of the entries to record the liquidation of a
partnership.
(CLO 8)
 Lahore University of Management Sciences
Corporations: Chapter 11 1. Identify the major characteristics of a corporation.
Organization, Share 2. Record the issuance of ordinary shares.
Transactions, Dividend 3. Explain the accounting for treasury shares.
and Retained Earnings 4. Differentiate preference shares from ordinary shares.
20
(including branch 5. Prepare the entries for cash dividends and share dividends.
accounting) 6. Identify the items reported in a retained earnings statement.
7. Prepare and analyze a comprehensive equity section.
(CLO 1 – 9)
Corporations: Chapter 11 Same as above
Organization, Share
Transactions, Dividend
21
and Retained Earnings
(including branch
accounting)
Statement of Cash Flows Chapter 13 1. Indicate the usefulness of the statement of cash flows.
2. Distinguish among operating, investing, and financing activities.
22 3. Prepare a statement of cash flows using the indirect method.
4. Analyze the statement of cash flows.
(CLO 1 – 12)
23 Statement of Cash Flows Chapter 13 1. Prepare a statement of cash flows using the direct method.
24 Statement of Cash Flows Chapter 13 Same as above
Financial Statement Chapter 14 1. Discuss the need for comparative analysis.
Analysis 2. Identify the tools of financial statement analysis.
3. Explain and apply horizontal analysis.
4. Describe and apply vertical analysis.
5. Identify and compute ratios used in analyzing a firm’s liquidity,
25
profitability, and solvency.
6. Understand the concept of earning power, and how discontinued
operations are presented.
7. Understand the concept of quality of earnings.
(CLO 1 – 12)
Financial Statement Chapter 14 Same as above
26
Analysis
Financial Statement Chapter 14 Same as above
27
Analysis
Preparation of Financial To be
28 Statements from provided
Incomplete Record

TEXTBOOK(S)/SUPPLEMENTARY READINGS
Financial Accounting, IFRS Edition: 1st Edition
by Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso