Santa Monica College Course Outline For ACCOUNTING 2, Corporate Financial and Managerial Accounting Course Title: Corporate Financial and Managerial Accounting Units: 5.00 Total Instructional Hours (usually 18 per unit): 90 Hours per week (full semester equivalent) in 5.00 In-Class Lab: 0 Arranged: Lecture: Date Submitted: May 2011 Date Updated: August 2012 Transferability: Transfers to UC Transfers to CSU IGETC Area: Does NOT satisfy any area of IGETC: CSU GE Area: Does NOT satisfy any area of CSU GE: SMC GE Area: Does NOT satisfy any area of SMC GE: Degree Applicability: Credit - Degree Applicable Prerequisite(s): ACCTG 1 Pre/Corequisite(s): None Corequisite(s): None Skills Advisory(s): None I. Catalog Description This course continues the study of introductory financial accounting principles begun in Accounting 1 and also covers introductory managerial accounting. The financial accounting portion of the course covers the corporate form of business organization, bond financing, installment notes and other long-term liabilities, investments in debt and equity securities, international operations and the Statement of Cash Flows. Financial statement analysis and full-absorption costing for manufacturing businesses completes the financial accounting portion of the course and transitions the focus to managerial accounting and internal users rather than third party users of financial statements. Managerial accounting study includes cost accounting for special order and for mass produced goods, including just-in-time and total quality management approaches. Also studied are cost allocation among business divisions, performance measurement, cost-volume-profit analysis, budgeting, standard costing, and decision making processes. Examples of Appropriate Text or Other Required Reading: (include all publication II. dates; for transferable courses at least one text should have been published within the last five years) 1. Fundamental Accounting Principles, 18th, Wild, Larson & Chiappetta, McGraw-Hill/Irwin 2008, ISBN: 9780073266480
2. Fundamental Accounting Principles, 18th, Wild, Larson & Chiappetta, McGraw-Hill/Irwin 2008, ISBN: 9780073286658 III. Course Objectives Upon completion of this course, the student will be able to: 1. Identify the characteristics of a corporation, record the issuance of stock, account for cash and stock dividends, account for treasury stock, and prepare the stockholders? equity section of the balance sheet. 2. Prepare, understand and analyze a corporate income statement, including the disclosure issues relating to special items and the calculation and presentation of earnings per share. 3. Account for bonds payable transactions including issuance of bonds, payment of interest, accrual of interest at year-end, retirement and conversion of bonds. Account for other long term liabilities, including their financial statement presentation and required disclosures. 4. Account for corporate investments in debt and equity securities, including presentation of unrealized income and international transactions. 5. Identify the purposes of the statement of cash flows, and be able to determine cash flows from operating, investing and financing activities. Analyze statement results. 6. Analyze corporate financial statements by computing liquidity, long term solvency, profitability and market performance ratios, and prepare vertical and horizontal analyses of financial statements. 7. Account for a manufacturing business using full absorption GAAP accounting principles, and prepare financial and supporting statements related to manufacturing businesses. 8. Distinguish between financial accounting and managerial accounting and identify managerial cost classifications. 9. List and describe the basic characteristics of a job order cost accounting system; prepare the journal entries to account for custom products. 10. Record process costing transactions for mass-produced products, incorporating just-in-time and total quality management concepts as well as conventional practices. Use weighted-average assumptions to compute equivalent units and assign costs to units completed and to units in ending work in process inventory. 11. Utilizing activity-based accounting concepts, account for departmental and divisional operations. Prepare a responsibility accounting report for a cost center; prepare responsibility accounting reports for a profit center; compute and interpret the rate of return and other measures of performance for an investment center 12. Classify costs by their behavior as variable costs, fixed costs, or mixed costs; compute the contribution margin, the contribution margin ratio, and the unit contribution margin; determine the break-even point and the volume necessary to achieve a target profit; compute the margin of safety and the operating leverage.
13. Describe the basic elements of the budget process, various approaches to budgeting, and the use of computers in budgeting; describe the master budget for a manufacturing business and prepare the basic income statement budgets, and the cash and capital expenditure budgets. 14. Explain and illustrate how standards are used in budgeting, and prepare flexible budgets. Calculate and interpret direct materials price and quantity variances, direct labor rate and time variances and factory overhead controllable and volume variances. Journalize the entries for recording standards in the accounts. Explain how standards may be used for non-manufacturing expenses. 15. Evaluate capital investment proposals, using the following methods: differential analysis, average rate of return, cash payback, net present value, and internal rate of return. IV. Methods of Presentation: Other (Specify), Distance Education, Lecture and Discussion Other Methods: Demonstration, Problem Solving, Group Projects V. Course Content % of course 5% Topic Corporate form of business ownership; accounting for corporate stock transactions 5% Corporate financial statement preparation 5% Bonds payable, installment loans and other long term liabilities 5% Short and long term investments in debt and equity securities; comprehensive income 2% International operations 5% Statement of cash flows 8% Financial statement analysis 5% Manufacturing accounting 8% Managerial accounting principles 7% Cost accounting for custom products 7% Cost accounting for mass-produced goods 7% Cost allocation, divisional accounting and performance measurement 7% Cost-volume-profit analysis 8% Budgeting and planning 8% Flexible budgets and standard costing
8% Capital budgeting, differential analysis and decision making 100% Total VI. Methods of Evaluation: (Actual point distribution will vary from instructor to instructor but approximate values are shown.) Percentage Evaluation Method 30 % Quizzes - Class Activities 10 % Homework - 5 pts/chapter, lowest dropped 25 % Midterm exams - Corporate accounting through financial statement analysis 30 % Final exam 5 % 100 % Total Other - Managerial Decision Making Project, Financial Statement Project, or Ethics Paper Additional Assessment Information: (Actual percentage distribution will vary from instructor to instructor but approximate values are shown.) VII. Sample Assignments: Financial Statement Analysis Project [ 10 % of grade] Choose any company for which you can obtain the necessary financial information for 3 current years. Basic (minimum) requirements for project: Cover page with company name and name of students involved Essay, analyzing the company over the most recently available 2 year period, in 6 paragraphs (below) plus one introductory and one summary paragraph (minimum). The paragraphs should include: Introduction Horizontal analysis of balance sheet Vertical analysis of income statement Liquidity and efficiency Solvency Profitability Market prospects Analysis chart: Balance sheet horizontal analysis
Analysis chart: Income statement vertical analysis for two years Ratio Chart: three column chart showing name of each ratio on page 693 in column 1, and then the properly labeled, calculated ratio for the most recent year (column 2) and the previous year (column 3). As an appendix: Copies of the financial statements used to compute data, plus any supplementary data used must be linked or provided in a separate document. This should be posted to the thread with the title Source Material As an appendix: Handwritten & scanned, or typed calculations of all the ratios in the chart. This should be posted in the thread as Supporting calcs for ratios Other items are required for full credit: College-level or professional-level work is expected. Some additional items that have submitted in the past for full credit include pie charts, graphs, information from additional years, other information about the company s performance from articles, and/or extremely fabulous and clear presentation. Sample Assignment 2 VIII. Assignment: [ 5% of grade ]: Manufacturing Statement and income Statement: Using the alphabetical list of accounts on page 751 [ 27 accounts ], problem 18-8A, please prepare, in good form: a) a manufacturing statement calculating Cost of Goods Manufactured, and b) a multi-step Income Statement. Student Learning Outcomes 1. Student will be able to prepare a complete set of financial reports and record, classify and analyze financial data for corporations. 2. Student will be able to apply managerial accounting tools for decision-making in service, merchandising and manufacturing environments. 3. Demonstrate a level of engagement in the subject matter that reveals their understanding of the value of the course content beyond the task itself, specifically as it relates to linking the relevance of course content to careers in business and accounting and their personal lives.