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15.501

Corporate Financial Accounting

3-0-9 units · Undergraduate

Preparation and analysis of financial statements. Focuses on why financial statements take the form they do, and how they can be used in evaluating corporate performance and solvency and in valuation of corporate securities. Introduces concepts from finance and economics (e.g., cash flow discounting and valuation) and explains their relation to, and use in, accounting. Students taking the graduate version complete additional assignments.

Spring 2004 · Introduction to Financial and Managerial Accounting

Topics

  • Overview of the course, Administrative matters, Discussion of Accounting Framework
  • The Balance Sheet and the Recording of Transactions
  • The Income Statement and Principles of Accrual Accounting
  • The Income Statement and Principles of Accrual Accounting (cont.)
  • The Accounting Process
  • Revenue Recognition
  • Revenue Recognition (cont.)
  • Inventory/Cost of Goods Sold
  • Statement of Cash Flow
  • Long-term Assets/Depreciation (Deferred Taxes)
  • Matching Principle for PP&E
  • Marketable Securities (Deferred Taxes)
  • Marketable Securities, Time Value of Money
  • Long Term Debt
  • Leases and Off-Balance Sheet Financing
  • Current Liabilities and Contingencies
  • Midterm 2 Review
  • Intangibles and Business Combinations
  • Introduction to Cost Concepts
  • Indirect Allocation of Costs, Destin Brass
  • ABC, Destin Brass
  • Managerial Accounting Wrap-up, Seligram Discussion
  • Course Review/Wrap-up

Readings

  • Pratt, J. Financial Accounting in an Economic Context. 5th ed. Cincinnati, Ohio: John Wiley & Sons, 2003. ISBN: 0470000465. (Hereafter cited as “Pratt”)
    Required
  • Wilson, David A. “Chemalite, Inc.” Boston, MA: Harvard Business School, 1976. Case No. 9-177-078.
    Required
  • Bruns, William J., Jr. and Susan S. Harmeling. “Circuit City Stores, Inc. (A).” Boston, MA: Harvard Business School, 1990. Case No. 9-191-086, 1-11.
    Required
  • Bruns, William J., Jr. and Eric J. Petro. “Depreciation at Delta and Pan Am.” Boston, MA: Harvard Business School, 1989. Case No. 9-190-035.
    Required
  • Bruns, William J., Jr. and Susan S. Harmeling. “Accounting for Frequent Fliers.” Boston, MA: Harvard Business School, 1991. Case No. 9-192-040.
    Required
  • Bruns, William J., Jr. “Brief Introduction to Cost Accounting.” Boston, MA: Harvard Business School, 1991. Case No. 9-192-068.
    Required
  • Bruns, William J., Jr. “Activity Accounting - Another Way to Measure Costs.” Boston, MA: Harvard Business School, 1992. Case No. 9-193-044.
    Required
  • Cooper, Robin, Peter B. B. Turney, and Christopher D. Ittner. “Seligram, Inc. Electronic Testing Operations.” Boston, MA: Harvard Business School, 1988. Case No. 9-189-084.
    Required
  • Merchant, Kenneth A. and Lourdes Ferreira. “Scovill, Inc. NuTone Housing Group.” Boston, MA: Harvard Business School, 1985. Case No. 9-186-136.
    Required
  • Kerr, Steven. “An Academy Classic: On the Folly of Rewarding A, While Hoping for B. (1992)” Academy of Management Executive 9, no. 1 (1995).
    Required
  • Bruns, William J., Jr. “Destin Brass.” Boston, MA: Harvard Business School, 1989. Case No. 9-190-089.
    Required
  • Stickney, C., and R. Weil. Financial Accounting: An Introduction to Concepts, Methods, and Uses. 8th ed. Fort Worth: The Dryden Press, 1997. ISBN: 9780030182686.
    Listed reading
  • Bazley, J. S., L. A. Nikolai, and H. B. Grove. Financial Accounting: Concepts and Uses. 3rd ed. Cincinnati, Ohio: South-Western College Publishers, 1995. ISBN: 0538839228.
    Listed reading
  • Hoskin, R. Financial Accounting: A User Perspective. 2nd ed. Toronto: John Wiley & Sons, 1997. ISBN: 0471172359.
    Listed reading
  • Kieso, D., and J. Weygandt. Intermediate Accounting. 9th ed. New York: John Wiley & Sons, 1998. ISBN: 0471641839.
    Listed reading
  • LEC #: 1 · TOPICS: Overview of the course, Administrative matters, Discussion of Accounting Framework · READINGS: Pratt: skim Ch. 1, incl. Appendix 1A
    Reading assignment
  • LEC #: 2 · TOPICS: The Balance Sheet and the Recording of Transactions · READINGS: Pratt: Ch. 2 and 3, skim Ch. 5 Do: P2-1, E3-3 Opt: P2-3, P2-4, P2-9
    Reading assignment
  • LEC #: 3 · TOPICS: The Income Statement and Principles of Accrual Accounting · READINGS: Pratt: Ch. 2 and 3, skim Ch. 3 Do: P2-2, E2-4
    Reading assignment
  • LEC #: 4 · TOPICS: The Income Statement and Principles of Accrual Accounting (cont.) · READINGS: Pratt: Ch. 3 and 4, skim Appendix 4A Do: P3-7, E4-19, E4-2
    Reading assignment
  • LEC #: 5 · TOPICS: The Accounting Process · READINGS: Case: Chemalite, Inc.
    Reading assignment
  • LEC #: 6 · TOPICS: Revenue Recognition · READINGS: Pratt: Ch. 3 (pp. 83-85) and Ch. 6 Do: E6-6, E6-8
    Reading assignment
  • LEC #: 7 · TOPICS: Revenue Recognition (cont.) · READINGS: Case: Circuit City Pratt: Ch. 6
    Reading assignment
  • LEC #: 8 · TOPICS: Inventory/Cost of Goods Sold · READINGS: Pratt: Ch. 7 Do: P7-4, P7-9
    Reading assignment
  • LEC #: 9 · TOPICS: Statement of Cash Flow · READINGS: Pratt: Ch. 14 Do: P14-2, E14-8
    Reading assignment
  • LEC #: 12 · TOPICS: Long-term Assets/Depreciation (Deferred Taxes) · READINGS: Pratt: Ch. 9, incl. App. 9A and 10B, pp. 439-442 Do: E9-5, E9-18, E10-11
    Reading assignment
  • LEC #: 13 · TOPICS: Matching Principle for PP&E · READINGS: Case: Depreciation at Delta and Pan Am
    Reading assignment
  • LEC #: 14 · TOPICS: Marketable Securities (Deferred Taxes) · READINGS: Pratt: Ch. 8 (through p. 332) Do: E8-2, E8-5, P8-6
    Reading assignment
  • LEC #: 15 · TOPICS: Marketable Securities, Time Value of Money · READINGS: Pratt: Appendix B Do: EB-11, EB-14
    Reading assignment
  • LEC #: 16 · TOPICS: Long Term Debt · READINGS: Pratt: Ch. 11 through p. 476 Appendix 11A Do: E11-5, E11-9
    Reading assignment
  • LEC #: 17 · TOPICS: Leases and Off-Balance Sheet Financing · READINGS: Pratt: Ch. 11 (p. 483 to end) Do: P11-13, P11-14
    Reading assignment
  • LEC #: 18 · TOPICS: Current Liabilities and Contingencies · READINGS: Case: Accounting for Frequent Fliers Pratt: Ch. 10
    Reading assignment
  • LEC #: 21 · TOPICS: Intangibles and Business Combinations · READINGS: Pratt: Ch. 8, pp. 332-339 Do: P8-10, P8-14
    Reading assignment
  • LEC #: 22 · TOPICS: Introduction to Cost Concepts · READINGS: CP: A Brief Introduction to Cost Accounting; Activity Accounting: Another Way to Measure Costs; On the Folly of Rewarding A, While Hoping for B
    Reading assignment
  • LEC #: 23 · TOPICS: Indirect Allocation of Costs, Destin Brass · READINGS: Case: Destin Brass Products
    Reading assignment
  • LEC #: 24 · TOPICS: ABC, Destin Brass · READINGS: Case: Destin Brass Products
    Reading assignment
  • LEC #: 25 · TOPICS: Managerial Accounting Wrap-up, Seligram Discussion · READINGS: Case: Seligram Inc. Electronic Testing Operations
    Reading assignment
  • Pratt, J. Financial Accounting in an Economic Context . 5th ed. John Wiley & Sons, 2003. ISBN: 0470000465. (Hereafter cited as “ Pratt ”)
    Required
  • Stickney, C., and R. Weil. Financial Accounting: An Introduction to Concepts, Methods, and Uses. 10th ed. Fort Worth: The Dryden Press, 1997. ISBN: 0030182727.
    Listed reading

Prerequisites & course information

Prereq: None U (Fall, Spring) 3-0-9 units Credit cannot also be received for 15.516

Sources