Salem Community College Course Syllabus. Section I. Course Title: Principles Of Accounting I. Course Code: ACC121

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1 Salem Community College Course Syllabus Section I Course Title: Principles Of Accounting I Course Code: ACC121 Lecture Hours: 4 Lab Hours: 0 Credits: 4 Course Description: An introduction to accounting emphasizing how general purpose financial statements communicate information about the business corporation s performance and position for users external to management. Emphasis is placed on how the accountant processes and presents a business s financial information and includes exposure to recording transactions, adjusting account balances and preparing financial statements for service and merchandise firms according to GAAP (Generally Accepted Accounting Principles). The course further examines major elements of the statements such as cash, receivables, inventory, long lived assets, depreciation, long-term liability and as well as stockholder equity management. An Introduction to Microsoft Excel will be included and will be used primarily to provide the student with an introduction to spreadsheet software and reinforce key concepts while further developing decision-making abilities. Prerequisite: MAT093, ENG098 if required Co-requisite: None Place in College Curriculum: This course is required for the AS/AAS Business Administration program majors, the Administrative Assistant certificate program majors, and the AS Sports Management program majors. Date of Last Revisions: 12 / 2011

2 Section II Course Content Outline: Note, the following content may be organized to suit the instructor s preference. I. Accounting Information for Financial Decision Making. A. Need for Accounting Systems B. Differences between Financial and Managerial Accounting Information C. Necessity for Integrity in Accounting Information D. Careers In Accounting II. Introduction to Financial Statements A. Balance Sheet a. Assets b. Liabilities c. Owner s Equity d. The Accounting Equation e. The Effects of Business Transactions B. The Income Statement C. Statement of Cash Flows D. Relationship among Financial Statements E. Financial Analysis and Decision Making F. Forms of Business a. Sole Proprietorships b. Partnerships c. Corporations d. Owners Equity Reporting G. The Use of Financial Statements by External Stakeholders III. The Accounting Cycle A. The Ledger B. The Use of Accounts C. Debit and Credit Entries D. The Journal E. Ledger Accounts after Posting a. Retained Earnings b. The Income Statement c. Revenues d. Expenses e. The Accrual Basis of Accounting f. Debit and Credit rules for Revenue and Expenses F. Dividends G. The Trial Balance IV. Accruals and Deferrals A. Adjusting Entries a. Need b. Types c. Time Differences d. Characteristics e. Converting Assets to Expenses f. Accruing Unpaid Expenses g. Accruing Uncollected Revenue h. Accruing Income Taxes Expense B. Adjusting Entries and Accounting Principles

3 a. The Concept of Materiality b. Effects of the Adjusting Entries V. Reporting Financial Results A. Preparing Financial Statements a. The Income Statement b. The Statement of Retained Earnings c. The Balance Sheet B. Closing the Temporary Accounts C. The Closing Process a. Closing Entries for Revenue Accounts b. Closing Entries for Expense Accounts c. Closing the Income Summary Account d. Closing the Dividends Account D. After-Closing Trial Balance E. Financial Analysis a. Preparing Financial Statements Covering Different Periods of Time VI. Merchandising Companies A. The Operating Cycle B. The Income Statement C. Accounting System Requirements D. Perpetual Inventory Systems E. Periodic Inventory Systems F. Transactions Relating to Purchases G. Transactions Relating to Sales VII. Financial Assets A. Cash a. Reporting Cash in the Balance Sheet b. Cash Management c. Internal Control over Cash d. Bank Statements e. Reconciling the Bank Statement B. Short-Term Investments C. Accounting for Marketable Securities a. Purchase of Marketable Securities b. Recognition of Investment Revenue c. Sale of Investments d. Adjusting Marketable Securities to Market Value D. Accounts Receivable a. Uncollectible Accounts b. The Allowance for Doubtful Accounts c. Writing Off an Uncollectible Account Receivable d. Monthly Estimates of Credit Losses e. Recovery of an Account Receivable f. Previously Written Off AR g. Factoring Accounts Receivable h. Credit Card Sales E. Notes Receivable and Internal Revenue a. Nature of Interest b. Accounting for Notes Receivable VIII. Inventories and the Cost of Goods Sold A. The Flow of Inventory Costs a. Specific Identification b. Cost Flow Assumptions i. Average-Cost Method

4 ii. First-In, First-Out Method iii. Last-in, First-Out Method c. Evaluation of the Methods d. The GAAP: Principle of Consistency e. Just-in-Time Inventory Systems IX. Spreadsheets: EXCEL Introduction A. The Spreadsheet a. Formatting b. Entering Labels c. Entering Values d. Entering Formulas e. Charting Results f. Printing Reports and Formulas Section III Course Performance Objectives: Course Performance Objective 1 The student will describe the need for Accounting Systems, the differences between Financial and Managerial Accounting information, and how this information should be maintained according to Generally Accepted Accounting Principals (GAAP). A. Discuss and summarize accounting as the language of business and the role of accounting information in making economic decisions. B. Discuss and summarize the significance of accounting systems in generating reliable accounting information and understand the five components of internal control. C. Demonstrate the importance of financial accounting information for external parties primarily investors and creditors in terms of the objectives and the characteristics of that information. D. Demonstrate the importance of accounting information for internal parties, primarily management, in terms of the objectives and the characteristics of that information. E. Discuss and summarize elements of the system of external and internal financial reporting that create integrity in the reported information. F. Discuss and summarize several professional organizations that play important roles in preparing and communicating accounting information. G. Discuss and summarize the importance of personal competence, professional judgment, and ethical behavior on the part of accounting professionals. H. Describe various career opportunities in accounting. Course Performance Objective 2 The student will prepare the three primary financial statements of a business as well as understand how each relates to the others as well as note the differences that can be apparent depending on the form of business: Sole Proprietorship, Partnership, and Corporation.

5 A. Discuss and summarize the nature and general purpose of financial statements. B. Discuss and summarize certain accounting principles that are important for an understanding of financial statements and how professional judgment by accountants may affect the application of those principles. C. Demonstrate how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Owners Equity. D. Discuss and summarize how the statement of financial position, often referred to as the balance sheet, is an expansion of the basic accounting equation. E. Discuss and summarize how the income statement reports an enterprise s financial performance for a period of time in terms of the relationship of revenues and expenses. F. Discuss and summarize how the statement of cash flows presents the change in cash for a period of time in terms of the company s operating, investing, and financing activities. G. Discuss and summarize how the statement of financial position (balance sheet), income statement, and statement of cash flows relate to each other. H. List the common forms of business ownership: sole proprietorship, partnership, and corporation and describe how they differ in terms of their presentation in the statement of financial position. I. Discuss and summarize the importance of financial statements to a company and its investors and creditors and why/how management may take steps to improve the appearance of the company in its financial statements. Course Performance Objective 3 The student will demonstrate a full understanding of an organizations Accounting Cycle which begins with the initial recording of the business transactions in the Journal and concludes with the preparation of the complete set of formal financial statements. A. Identify the steps in the accounting cycle and discuss the role of accounting records in an organization. B. Describe a ledger account and a ledger. C. Demonstrate how balance sheet accounts are increased or decreased. D. Discuss and summarize the double-entry system of accounting. E. Discuss and summarize the purpose of a journal and its relationship to the ledger. F. Discuss and summarize the nature of net income, revenue, and expenses. G. Demonstrate the realization and matching principles in recording revenue and expenses. H. Demonstrate how revenue and expense transactions are recorded in an accounting system. I. Prepare a trial balance and explain its uses and limitations. J. Discuss and summarize the differences between accounting cycle procedures and the knowledge of accounting. Course Performance Objective 4 The student will discuss and demonstrate a full understanding of how to record and measure the appropriate amount of revenue and expenses in each accounting period.

6 A. Discuss and summarize the purpose of adjusting entries. B. Describe and prepare the four basic types of adjusting entries. C. Prepare adjusting entries to convert assets to expenses. D. Prepare adjusting entries to convert liabilities to revenue. E. Prepare adjusting entries to accrue unpaid expenses. F. Prepare adjusting entries to accrue uncollected revenue. G. Discuss and summarize how the GAAP of realization and matching relate to adjusting entries. H. Discuss and summarize how the GAAP of materiality is used to prepare adjusting entries. I. Prepare an adjusted trial balance and describe its purpose. Course Performance Objective 5 The student will finalize the accounting cycle by preparing the three financial statements from the adjusted trail balance, prepare the year-end closing entries necessary in the Ledger, and finally prepare the after-closing trial balance in preparation for the next accounting cycle or period. A. Prepare an income statement, a statement of retained earnings, and a balance sheet. B. Discuss and summarize how the income statement and the statement of retained earnings relate to the balance sheet. C. Discuss and summarize the concept of adequate disclosure. D. Discuss and summarize the purpose of closing entries and then prepare these entries. E. Prepare an after-closing trial balance. F. Use financial statement information to discuss and evaluate profitability and liquidity. G. Discuss and summarize how interim financial statements are prepared in a business that closes its accounts only at year-end. H. Prepare a worksheet and explain its uses. Course Performance Objective 6 The student will demonstrate a full understanding of the Merchandising Companies Operating Cycle from the purchase of inventory used in the Operating Cycle, to the sale of that inventory to the customer, and finally the collection of any accounts receivable due from those customers involved in the sale. A. Describe and summarize the operating cycle of a merchandising company. B. Demonstrate an understanding of the components of a merchandising company s income statement. C. Demonstrate an understanding of how to account for purchases and sales of merchandise in a perpetual inventory system. D. Demonstrate how a periodic inventory system operates. E. Discuss and summarize the factors to be considered in selecting an inventory system. F. Account for additional merchandising transactions related to purchases and sales by demonstrating how they are managed. G. Define special journals and discuss and summarize their usefulness. H. Measure the performance of a merchandising business through discussion and summarization.

7 Course Performance Objective 7 The student will examine how companies determine and report the current values of financial assets, and how effective companies quickly convert certain financial assets into cash. A. Define financial assets and explain their valuation in the balance sheet. B. Describe the objectives of cash management and internal controls over cash. C. Prepare a bank-reconciliation and explain its purpose. D. Describe how short-term investments are reported in the balance sheet and account for transactions involving marketable securities. E. Through discussion and summarization, account for uncollectible receivables using the allowance and direct write-off methods. F. Discuss and demonstrate how to account for notes receivable and interest revenue. G. Discuss and summarize the liquidity of a company s accounts receivables. Course Performance Objective 8 The student will demonstrate a full understanding of how to properly value a company s inventory using specific identification and the various cost flow methods available. A. Using a perpetual inventory system, determine the cost of goods sold using a specific identification, average cost, FIFO and LIFO method and discuss the advantages and disadvantages of each. B. Discuss and summarize the need for taking a physical inventory. C. Record shrinkage losses and other year-end adjustments to inventory. D. In a periodic inventory system, calculate the ending inventory and the cost of goods sold using specific identification, average cost, FIFO, and LIFO. E. Discuss and summarize the effects on the income statement of errors in inventory valuation. F. Estimate the cost of goods sold and ending inventory by the gross profit method and by the retail method. G. Compute the Inventory turnover and explain its uses. Course Performance Objective 9 The student will demonstrate an understanding of Microsoft Excel, an industry standard spreadsheet application. A. Prepare a personal budget using the Excel application that includes both personal and school related expenses. B. Use the personal budget information the student will prepare an Excel Workbook and accompanying chart and this file to their Instructor using their student account.

8 Section IV General Education Requirements: The general education goals covered in ACC121 are communication, critical thinking & problem solving. Section V A college-wide outcomes assessment program has been put into place to enhance the quality and effectiveness of the curriculum and programs at Salem Community College. As part of this assessment program, the learning outcomes for this course will be assessed. Assessment methods may include tests, quizzes, papers, reports, projects and other instruments. Copies of all outcomes assessments are available in an electronic assessment bank maintained by the Institutional Research and Planning Office. Section VI Course Activities: The course will consist of lecture, discussion, demonstration, the viewing of a variety of videos, and group activity that will allow the students to evaluate real-life case studies. Course Requirements and Means of Evaluation: Please refer to the instructor s syllabus addendum (to be distributed in class) for specific information regarding the course requirements and means of evaluation. Attendance Policy: Regular and prompt attendance in all classes is expected of students. Students absent from class for any reason are responsible for making up any missed work. Faculty members establish an attendance policy for each course and it is the student s responsibility to honor and comply with that policy. Academic Honesty Policy: Students found to have committed an act of academic dishonesty may be subject to failure of this course, academic probation, and / or suspension from the college. See the Student Handbook for additional details. ADA Statement: If you have a 504 Accommodation Plan, please discuss it with your instructor. If you have any disability but have not documented it with the Disability Support coordinator at Salem Community college, you must do so to be eligible for accommodations. To contact the Disability Support Coordinator, call , visit DON108, or disabilitysupport@salemcc.edu to set up an appointment. To find out more information about disability support services at Salem Community College, visit

9 Section VII Required Text(s): For textbook information, please see the Salem Community College Bookstore Website. Optional Text(s): None Materials / Supplies: None Additional Costs: None