ACCT 1090 - Principles of Accounting 2

Credit Hours: 4.00

Objectives:

1. Identify how depreciation expense would be used in a cash flow statement under the indirect method.
2. Identify the relevant information for a special business decision.
3. Identify how changes in volume affect costs.
4. Distinguish financial accounting from management accounting.
5. Distinguish among operating, investing, and financing cash flows.

Outcome 2: Upon completion of this course, students will be able to apply accounting techniques at an introductory level.

Objectives:

1. Using financial ratios, compute the acid-test ratio for a given year.
2. Compute the ending balance in the work in process inventory account.
3. Compute the number of units that must be sold to earn a targeted operating income.
4. Compute the budgeted cash collections from customers for a given month
5. Compute the accounting rate of return on an investment.

• Communication: The graduate can communicate effectively for the intended purpose and audience.
• Critical Thinking: The graduate can make informed decisions after analyzing information or evidence related to the issue.
• Global Literacy: The graduate can analyze human behavior or experiences through cultural, social, political, or economic perspectives.
• Information Literacy: The graduate can responsibly use information gathered from a variety of formats in order to complete a task.
• Quantitative Reasoning: The graduate can apply quantitative methods or evidence to solve problems or make judgments.
• Scientific Literacy: The graduate can produce or interpret scientific information presented in a variety of formats.

1. Identify the purposes of the Statement.
2. Distinguish among operating, investing, and financing flows.
3. Prepare the statement by the direct method. (Appendix 1A)
4. Prepare the statement by the indirect method.

Financial Statement Analysis

1. Explain how financial statements are used to analyze a business.
2. Perform a horizontal analysis of financial statements.
3. Perform a vertical analysis of financial statements.
4. Compute and evaluate the standard financial ratios.
5. Complete a corporate income statement including earnings per share (Appendix 2A).

Introduction to Managerial Accounting

1. Define managerial accounting and understand how it is used.
2. Classify costs for service, merchandising, and manufacturing companies.
3. Prepare an income statement and schedule of goods manufactured for a manufacturing company and calculate cost per item.
4. Calculate cost per service for a service company and cost per item for a merchandising company.

Job Order Costing

1. Distinguish between job order costing and process costing.
2. Record materials and labor costs in a job order costing system.
3. Calculate the predetermined overhead allocation rate and allocate overhead costs.
4. Record the completion and sales of finished goods.
5. Adjust for over allocated and under allocated overhead.
6. Calculate job costs for a service company.

Process Costing

1. Calculate equivalent units of production for direct materials and conversion costs.
2. Prepare a production cost report using the weighted-average method.
3. Prepare journal entries for a process costing system.
4. Use a production cost report to make decisions.

Cost-Volume-Profit Analysis

1. Determine how changes in volume affect costs.
2. Calculate operating income using contribution margin and contribution margin ratio.
3. Use cost-volume-profit (CVP) analysis for profit planning.
4. Use CVP analysis to perform sensitivity analysis.
5. Use CVP analysis to calculate margin of safety, operating leverage, and multiproduct breakeven points.

Master Budgets

1. Describe budgeting objectives, benefits, and procedures and how human behavior influences budgeting.
2. Define budget types and the components of the master budget.
3. Prepare an operating budget for a manufacturing company.
4. Prepare a financial budget for a manufacturing company.

Flexible Budgets and Standard Costs Systems

1. Prepare flexible budgets and performance reports using static and flexible budgets.
2. Identify the benefits of a standard cost system and understand how standards are set.
3. Compute the standard cost variances for direct materials and direct labor.
4. Compute the standard cost variances for manufacturing overhead.
5. Describe the relationship among and responsibility for the product cost variances.
6. Record transactions in a standard cost system and prepare a standard cost income statement.

Cost Allocation and Responsibility Accounting

1. Assign direct costs and allocate indirect costs using predetermined overhead allocation rates with single and multiple allocation bases.
2. Explain why companies decentralize and use responsibility accounting.
3. Describe the purpose of performance evaluation systems and how the balanced scorecard helps companies evaluate performance.
4. Use responsibility reports to evaluate cost, revenue, and profit centers.
5. Use return on investment (ROI) and residual income (RI) to evaluate investment centers.

Short-Term Business Decisions

1. Identify information that is relevant for making short-term decisions.
2. Make regular and special pricing decisions.
3. Make decisions about dropping a product, product mix, and sales mix.
4. Make outsourcing and processing further decisions.

Chapter 11. Capital Investment Decisions

1. Describe the importance of capital investments and the capital budgeting process.
2. Use the payback and the accounting rate of return methods to make capital investment decisions.
3. Use the time value of money to compute the present values of lump sums and annuities.
4. Use discounted cash flow methods to make capital investment decisions