Cash, revenue and types of receivables in the normal operating cycle of a business are presented. Sales, related discounts and bad debt expense (allowance method and direct write-off) are covered. The criteria for revenue recognition are identified for numerous examples including long term contracts. Recording journal entries are discussed. Types of Inventory and various flow assumptions (FIFO, LIFO & Average Cost) plus cost of goods sold are explained and analyzed. In addition, the time value of money mechanics and accounting uses are covered.
Students will Learn:
- The factors that motivate earnings management and the common techniques to manage earnings.
- The normal operating cycle of a business including cash and receivables.
- The criteria for revenue recognition.
- The advantages and disadvantages of periodic and perpetual inventory systems.
- Various methods of calculating inventory costs.
Module 1 – Time Value of Money
Time Value of Money – Interest
- Learning Objective: Assess the relationship between time and money, understand the nature of interest, demonstrate computational skills for present value and future value variables, compute present and future value of single-sum variables, and prove ability to solve for unknowns.
Time Value of Money – Annuities
- Learning Objective: Develop knowledge on the types of annuities along with its implications, demonstrate ability to compute amount due for present annuity, analyze deferred annuities, assess long-term bonds and show ability to calculate long-term bond valuation over time.
Module 2 – Cash & Receivables
Cash & Receivables
- Learning Objective: Understand the operating cycle of a business, demonstrate ability to account for sales revenue and bad debts, analyze uncollectible accounts receivable using the direct write-off and allowance methods, and measure the amount of uncollectibles using the aging-of-receivables method.
Cash & Receivables (continued)
- Learning Objective: Develop knowledge on warranties for service or replacement, analyze the accounts receivable turnover ratio, understand the management and control of cash aspects, and demonstrate ability to compute sales of receivables with and without recourse.
Module 3 – Revenue Recognition
- Learning Objective: Understand the various elements of revenue recognition, demonstrate knowledge and skills when accounting for consignments, assess accounting for a layaway sale, analyze the implications of bill-and-hold arrangements, and calculate gross and net income using income statement.
Revenue Recognition (continued)
- Learning Objective: Understand the focus of the Financial Accounting Standards Board’s codification Subtopic 605-25, analyze the contract approach to revenue recognition, assess accounting for long-term construction-type contracts, calculate gross profit using percentage of completion and completed contract methods, and account for long-term construction-type contracts using cost-to-cost and efforts expended methods.
Module 4 – Revenue Recognition & Inventory/Cost of Goods Sold
- Learning Objective: IDemonstrate knowledge for reporting anticipated contract losses, compute various expenses using the percentage-of-completion method, analyze the installment of sales and cost recovery methods, and solve review problems regarding revenue recognition.
Inventory and Cost of Goods Sold
- Learning Objective: Analyze the implications of the periodic and perpetual inventory systems, account for goods in transit and goods on consignment, assess discounts and reductions in costs, and compute for purchases reported using the net method.
Module 5 – Inventory and Cost of Goods Sold
Inventory and Cost of Goods Sold
- Learning Objective: Develop knowledge on the four basic Generally Accepted Accounting Principles, identify costs using the specific identification, average cost, weighted average, first-in, first out, and last-in, first-out methods, and assess international accounting and inventory valuation.
Inventory and Cost of Goods Sold (continued)
- Learning Objective: Understand and apply the lower-of-cost and market methods in accounting practices, demonstrate ability to calculate cost of goods sold and ending inventory using the gross profit method, analyze the typical inventory errors, calculate inventory sized and position using the inventory turnover ratio.
- Business undergraduates or MBA students with an accounting or finance focus.