Chapter 1 Overview of Corporate Financial Reporting
Learning Outcomes:
- define financial accounting and understand its relationship to economic decision-making
- identify the main users of financial accounting information and explain how they use this information
- describe the major forms of business organization and explain the key distinctions between them
- explain the three categories of business activities and identify examples of transactions related to each category
- identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements
Chapter 2 Analyzing Transactions and Their Effects on Financial Statements
Learning Outcomes:
- identify the accounting standards used by Canadian companies
- identify and explain the qualitative characteristics of useful financial information and how the cost constraint affects these
- explain the difference between the cash basis of accounting and the accrual basis of accounting
- analyze basic transactions and record their effects on the accounting equation
- explain the limitations of using the accounting equation template approach to record transactions
- summarize the effects of transactions on the accounting equation and prepare and interpret a simple set of financial statements
Chapter 3 Double-Entry Accounting and the Accounting Cycle
Learning Outcomes:
- explain how the double-entry accounting system works, including how it overcomes the limitations of the template approach
- explain the normal balance concept and how it is used within the double-entry accounting system
- identify and explain the steps in the accounting cycle
- explain the significance of a company’s decisions regarding its chart of accounts and the implications of subsequent changes
- explain the difference between permanent and temporary accounts
- identify and record transactions in the general journal and general ledger
- explain why adjusting entries are necessary and prepare them
- explain why closing entries are necessary and prepare them
Chapter 4 Revenue Recognition and the Statement of Income
Learning Outcomes:
- explain the nature of revenue and why revenue is of significance to users
- identify and explain the general criteria for revenue recognition and the specific revenue recognition
- criteria related to the sale of goods, the provision of services, and the receipt of interest, royalties, and dividends
- explain how revenues are measured
- understand the difference between a single-step statement of income and a multi-step statement of income
- understand the difference between comprehensive income and net income
- understand the difference between presenting expenses by function or by nature of the item on the statement of income
- calculate and interpret a company’s basic earnings per share
Chapter 6 Cash and Accounts Receivable
Learning Outcomes:
- explain why cash and accounts receivable are of significance to users
- describe the valuation methods for cash
- explain the main principles of internal control
- explain the purpose of bank reconciliations, including their preparation and the treatment of related adjustments
- explain why companies sell on account and identify the additional costs that result from this decision
- describe the valuation methods for accounts receivable
- explain the allowance method of accounting for bad debts
- identify the two methods of estimating bad debts under the allowance method and describe the circumstances for using each method
- explain the direct write-off method of accounting for bad debts and when it is acceptable to use it
- explain alternative ways in which companies shorten their cash-to-cash cycle
- explain the concept of liquidity, and calculate the current ratio, quick ratio, accounts receivable turnover ratio, and average collection period ratio and assess the results
Chapter 7 Inventory (include appendix at the end of the chapter)
Learning Outcomes:
- discuss the importance of inventory to a company’s overall success
- distinguish between the different inventory classifications and determine which goods should be included in a company’s inventory
- explain the difference between perpetual inventory systems and periodic inventory systems
- explain why cost formulas are necessary and calculate the cost of goods sold and ending inventory under the specific identification, weighted-average, and FIFO cost formulas
- explain the value at which inventory is carried on the statement of financial position
- explain how a company’s gross margin is determined and why it is an important measure
- describe management’s responsibility for internal control measures related to inventory
- calculate the inventory turnover ratio and the days to sell inventory and explain how they can be interpreted by user
Chapter 8 Long-Term Assets
Learning Outcomes:
- identify and distinguish between the various types of long-term assets
- describe the valuation methods for property, plant, and equipment, including the identification of costs that are usually capitalized
- explain why property, plant, and equipment assets are depreciated
- identify the factors that influence the choice of depreciation method and implement the most common methods of depreciation
- describe and implement changes in depreciation estimates and methods
- explain what it means if property, plant, and equipment assets are impaired
- account for the disposal of property, plant, and equipment
- explain the effect of depreciation on income taxes
Chapter 9 Current Liabilities
Learning Outcomes:
- explain why current liabilities are of significance to users
- describe the valuation methods for current liabilities
- identify the current liabilities that arise from transactions with lenders, suppliers, customers and employees, and explain how they are accounted for
Chapter 10 Long-Term Liabilities
Learning Outcomes:
- explain why long-term liabilities are of significance to users
- identify the long-term liabilities that arise from transactions with lenders, other creditors, and employees and explain how they are accounted for
- identify the long-term liabilities that arise from differences between accounting standards and income tax regulations or law
- explain what commitments and guarantees are and how they are treated
- explain contingencies and how they are accounted for
- calculate leverage and coverage ratios and use the information from these ratios to assess a company’s financial health
Chapter 11 Shareholders’ Equity (to end of stock splits)
Learning Outcomes:
- explain why the shareholders’ equity section is significant to users
- explain the components of the shareholders’ equity section of the statement of financial position
- describe the different types of dividends, explain why one type of dividend may be used rather than another, and describe how dividends are recorded
- describe what a stock split is and explain how it is accounted for