Financial Accounting Using Excel for Success, 1e

Reeve, Warren, Duchac

Learning Objectives by Chapter

 

 

Chapter 1 – Introduction to Accounting and Business

 

1.      Describe the nature of a business, the role of accounting, and ethics in business.

2.      Summarize the development of accounting principles and relate them to practice.

3.      State the accounting equation and define each element of the equation.

4.      Describe and illustrate how business transactions can be recorded in terms of the resulting change in the elements of the accounting equation.

5.      Describe the financial statements of a corporation and explain how they interrelate.

6.      Describe and illustrate the use of the ratio of liabilities to stockholders’ equity in evaluating a company's financial condition. (optional)

 

Chapter 2 – Analyzing Transactions

 

1.      Describe the characteristics of an account and a chart of accounts.

2.      Describe and illustrate journalizing transactions using the double-entry accounting system.

3.      Describe and illustrate the journalizing and posting of transactions to accounts.

4.      Prepare an unadjusted trial balance and explain how it can be used to discover errors.

5.      Describe and illustrate the use of horizontal analysis in evaluating a company’s performance and financial condition. (optional)

 

Chapter 3 – The Adjusting Process

 

1.      Describe the nature of the adjusting process.

2.      Journalize entries for accounts requiring adjustment.

3.      Summarize the adjustment process.

4.      Prepare an adjusted trial balance.

5.      Describe and illustrate the use of vertical analysis in evaluating a company’s performance and financial condition. (optional)

 

Chapter 4 – Completing the Accounting Cycle

 

1.      Describe the flow of accounting information from the unadjusted trial balance into the adjusted trial balance and financial statements.

2.      Prepare financial statements from adjusted account balances.

3.      Prepare closing entries.

4.      Describe the accounting cycle.

5.      Illustrate the accounting cycle for one period.

6.      Explain what is meant by the fiscal year and the natural business year.

7.      Describe and illustrate the use of working capital and the current ratio in evaluating a company’s financial condition. (optional)

 

Chapter 5 – Accounting for Merchandising Businesses

 

1.      Distinguish between the activities and financial statements of service and merchandising businesses.

2.      Describe and illustrate the financial statements of a merchandising business.

3.      Describe and illustrate the accounting for merchandise transactions including:

·         sale of merchandise

·         purchase of merchandise

·         freight

·         sales taxes and trade discounts

·         dual nature of merchandising transactions

4.      Describe the adjusting and closing process for a merchandising business. (optional)

5.      Describe and illustrate the use of the ratio of net sales to assets in evaluating a company’s operating performance. (optional)

 

Chapter 6 – Inventories

 

1.      Describe the importance of control over inventory.

2.      Describe three inventory cost flow assumptions and how they impact the income statement and balance sheet.

3.      Determine the cost of inventory under the perpetual inventory system, using the FIFO, LIFO, and average cost methods.

4.      Determine the cost of inventory under the periodic inventory system, using the FIFO, LIFO, and average cost methods. (optional)

5.      Compare and contrast the use of the three inventory costing methods.

6.      Describe and illustrate the reporting of merchandise inventory in the financial statements.

7.      Describe and illustrate the inventory turnover and the number of days’ sales in inventory in analyzing the efficiency and effectiveness of inventory management. (optional)

 

Chapter 7 – Sarbanes-Oxley, Internal Control, and Cash

 

1.      Describe the Sarbanes-Oxley Act of 2002 and its impact on internal controls and financial reporting.

2.      Describe and illustrate the objectives and elements of internal control.

3.      Describe and illustrate the application of internal controls to cash. (optional)

4.      Describe the nature of a bank account and its use in controlling cash.

5.      Describe and illustrate the use of a bank reconciliation in controlling cash.

6.      Describe the accounting for special-purpose cash funds. (optional)

7.      Describe and illustrate the reporting of cash and cash equivalents in the financial statements.

8.      Describe and illustrate the use of the ratio of cash to monthly cash expenses to assess the ability of a company to continue in business. (optional)

 

Chapter 8 - Receivables

 

1.      Describe the common classes of receivables.

2.      Describe the accounting for uncollectible receivables.

3.      Describe the direct write-off method of accounting for uncollectible receivables. (optional)

4.      Describe the allowance method of accounting for uncollectible receivables. (percent of sales method optional)

5.      Compare the direct write-off and allowance methods of accounting for uncollectible accounts. (optional)

6.      Describe the accounting for notes receivable.

7.      Describe the reporting of receivables on the balance sheet.

8.      Describe and illustrate the use of accounts receivable turnover and number of days’ sales in receivables to evaluate a company’s efficiency in collecting its receivables. (optional)

 

Chapter 9 – Fixed Assets and Intangible Assets

 

1.      Define, classify, and account for the cost of fixed assets.

2.      Compute depreciation, using the following methods: straight-line method, units-of production method, and double-declining-balance method.

3.      Journalize entries for the disposal of fixed assets.

4.      Compute depletion and journalize the entry for depletion.

5.      Describe the accounting for intangible assets, such as patents, copyrights, and goodwill.

6.      Describe how depreciation expense is reported in an income statement and prepare a balance sheet that includes fixed assets and intangible assets.

7.      Describe and illustrate the fixed asset turnover ratio to assess the efficiency of a company’s use of its fixed assets. (optional)

 

Chapter 10 – Current Liabilities and Payroll

 

1.      Describe and illustrate current liabilities related to accounts payable, current portion of long-term debt, and notes payable.

2.      Determine employer liabilities for payroll, including liabilities arising from employee earnings and deductions from earnings.

3.      Describe payroll accounting systems that use a payroll register, employee earnings records, and a general journal.

4.      Journalize entries for employee fringe benefits, including vacation pay and pensions. (optional)

5.      Describe the accounting treatment for contingent liabilities and journalize entries for product warranties.

6.      Describe and illustrate the use of the quick ratio in analyzing a company’s ability to pay its current liabilities. (optional)

Chapter 11 – Corporations: Organization, Stock Transactions, and Dividends

 

1.      Describe the nature of the corporate form of organization.

2.      Describe and illustrate the characteristics of stock, classes of stock, and entries for issuing stock.

3.      Describe and illustrate the accounting for cash dividends and stock dividends.

4.      Describe and illustrate the accounting for treasury stock transactions.

5.      Describe and illustrate the reporting of stockholders’ equity.

6.      Describe the effect of stock splits on corporate financial statements.

7.      Describe and illustrate the use of earnings per share in evaluating a company’s profitability. (optional)

 

Chapter 12 – Long-Term Liabilities: Bonds and Notes

 

1.      Compute the potential impact of long-term borrowing on earnings per share.

2.      Describe the characteristics and terminology of bonds payable.

3.      Journalize entries for bonds payable.

4.      Describe and illustrate the accounting for installment notes.

5.      Describe and illustrate the reporting of long-term liabilities including bonds and notes payable. (optional)

6.      Describe and illustrate how the number of times interest charges are earned is used to evaluate a company’s financial condition. (optional)

Note: Appendix 1 Required

 

Chapter 13 – Investments and Fair Value Accounting

 

Omit entire chapter.

 

Chapter 14 – Statement of Cash Flows

 

1.      Describe the cash flow activities reported in the statement of cash flows.

2.      Prepare a statement of cash flows, using the indirect method.

3.      Prepare a statement of cash flows, using the direct method. (optional)

4.      Describe and illustrate the use of free cash flow in evaluating a company’s cash flow. (optional)

 

Chapter 15 – Financial Statement Analysis

 

1.      Describe basic financial statement analytical methods.

2.      Use financial statement analysis to assess the liquidity and solvency of a business.*

3.      Use financial statement analysis to assess the profitability of a business.*

4.      Describe the contents of corporate annual reports.

* Ratios must be covered either in Chapter 15 or in each specific chapter for chapters 1 – 14.