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This course will explain financial accounting from a new angle so that you have some of the background necessary for intermediate courses in financial reporting, analysis, and modeling. The course presents a framework for analysis and provides spreadsheets to implement the framework.


Help and Office



Exams and Grading


There will be five class sessions of three hours each. The last session will be the final exam.

Class Topic
  • Accounting terms, transactions, and systems
  • The logic of the double-entry bookkeeping systems
  • How the separation of duties is used to reduce fraud
  • Performance measures: Cash flows versus income flows
    • Accrued revenues or receivables
    • Deferred revenues or advances
    • Accrued expenses or payables
    • Deferred expenses or prepayments
  • Design of incentive systems
  • The core set of business transactions and how they affect the following statements:
    • Balance sheets
    • Income statements
    • Indirect cash flow statements
    • Direct cash flow statements
  • Costs versus expenses versus payments
  • Period costs versus inventoriable costs versus separately capitalized costs
  • Inventories: Raw materials, work in process, and finished goods
  • Cost flow assumptions: LIFO versus FIFO
  • Property, plant, and equipment: Gross PP&E, Accumulated depreciation, and Net PP&E
  • Which costs are capitalized
  • Useful life versus economic life versus physical life; Salvage values; Depreciation patterns
  • How depreciation of manufacturing equipment is inventoried
  • Gains and losses on the sale of PP&E
  • PP&E impairments