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BM 99.2 Fundamental Accounting Theory and Practice 2 Course Outline Second Semester, SY 2013-2014 (Ma. Emilia P.

Kwong) Course Description: This course deals with the fundamental concepts, principles and techniques applicable to the identification, measurement and communication of accounting information. It is a continuation of BM 99.1 (Fundamental Accounting Theory and Practice 1). Course Goals: Understand the basic concepts, principles and terminologies used in accounting. Use financial reporting rules to identify, record, classify, summarize and communicate accounting information through financial statements. Prerequisite: BM 99.1 Textbook: Weygandt, Kimmel and Kieso (2012), Accounting Principles, Tenth Edition (John Wiley & Sons, Inc. (Asia) Pte Ltd) References: Financial and Managerial Accounting: The Basis for Business Decisions, latest or previous editions, by Williams, et al. Principles of Financial and Managerial Accounting, revised edition, by Edwards, et al. Introduction to Financial Accounting, latest edition, by Horngren and Sundem. Articles 1767 to 1867 of the Civil Code of the Philippines (Partnerships), see www.chanrobles.com The Corporation Code of the Philippines, see www.chanrobles.com Reading Assignment Chapter 11

Week/s 1 (Nov 9)

Topic Current Liabilities and Payroll Accounting Accounting for Current Liabilities Notes Payable Sales Taxes Payable Unearned Revenues Current Maturities of Long-Term Debt Statement Presentation and Analysis Contingent Liabilities Recording a Contingent Liability Disclosure of Contingent Liabilities Payroll Accounting Determining the Payroll Recording the Payroll Employer Payroll Taxes Filing and Remitting Payroll Taxes Internal Control for Payroll Accounting for Partnerships Partnership Form of Organization Characteristics of Partnerships Organizations with Partnership Characteristics Advantages and Disadvantages of Partnerships The Partnership Agreement Basic Partnership Accounting Forming a Partnership Dividing Net Income or Net Loss Partnership Financial Statements Liquidation of a Partnership No Capital Deficiency Capital Deficiency Corporations: Organization and Capital Stock Transactions The Corporate Form of Organization Characteristics of a Corporation Forming a Corporation

Objectives [1] Explain a current liability, and identify the major types of current liabilities. [2] Describe the accounting for notes payable. [3] Explain the accounting for other current liabilities. [4] Explain the financial statement presentation and analysis of current liabilities. [5] Describe the accounting and disclosure requirements for contingent liabilities. [6] Compute and record the payroll for a pay period. [7] Describe and record employer payroll taxes. [8] Discuss the objectives of internal control for payroll.

2 (Nov 16)

[1] Identify the characteristics of the partnership form of business organization. [2] Explain the accounting entries for the formation of a partnership. [3] Identify the bases for dividing net income or net loss. [4] Describe the form and content of partnership financial statements. [5] Explain the effects of the entries to record the liquidation of a partnership.

Chapter 12

3 (Nov 23)

[1] Identify the major characteristics of a corporation. [2] Differentiate between paid-in capital and retained earnings. [3] Record the issuance of common stock. [4] Explain the accounting for treasury stock.

Chapter 13


Topic Ownership Rights of Stockholders Stock Issue Considerations Corporate Capital Accounting for Issues of Common Stock Issuing Par Value Common Stock for Cash Issuing No-Par Common Stock for Cash Issuing Common Stock for Services or Noncash Assets Accounting for Treasury Stock Purchase of Treasury Stock Disposal of Treasury Stock Preferred Stock Dividend Preferences Liquidation Preference Statement Presentation Corporations: Dividends, Retained Earnings, and Income Reporting Dividends Cash Dividends Stock Dividends Stock Splits Retained Earnings Retained Earnings Restrictions Prior Period Adjustments Retained Earnings Statement Statement Presentation and Analysis Stockholders Equity Presentation Stockholders Equity Analysis Income Statement Presentation Income Statement Analysis

Objectives [5] Differentiate preferred stock from common stock. [6] Prepare a stockholders equity section.

Reading Assignment

4 (Dec 7)

[1] Prepare the entries for cash dividends and stock dividends. [2] Identify the items reported in a retained earnings statement. [3] Prepare and analyze a comprehensive stockholders equity section. [4] Describe the form and content of corporation income statements. [5] Compute earnings per share.

Chapter 14

5 6&7 (Jan 11, 18)

First Examination (December 14, 2013) Long-Term Liabilities [1] Explain why bonds are issued. [2] Prepare the entries for the issuance of Bond Basics Types of Bonds bonds and interest expense. [3] Describe the entries when bonds are Issuing Procedures Determining the Market Value of redeemed or converted. [4] Describe the accounting for long-term Bonds Accounting for Bond Issues notes payable. [5] Contrast the accounting for operating and Issuing Bonds at Face Value Discount or Premium on Bonds capital leases. [6] Identify the methods for the presentation Issuing Bonds at a Discount Issuing Bonds at a Premium and analysis of long-term liabilities. Accounting for Bond Retirements Redeeming Bonds at Maturity Redeeming Bonds before Maturity Converting Bonds into Common Stock Accounting for Other Long-Term Liabilities Long-Term Notes Payable Lease Liabilities Statement Presentation and Analysis Investments Why Corporations Invest Accounting for Debt Investments Recording Acquisition of Bonds Recording Bond Interest Recording Sale of Bonds Accounting for Stock Investments Holdings of Less than 20% Holdings Between 20% and 50% [1] Discuss why corporations invest in debt and stock securities. [2] Explain the accounting for debt investments. [3] Explain the accounting for stock investments. [4] Describe the use of consolidated financial statements. [5] Indicate how debt and stock investments

Chapter 15

8 (Jan 25)

Chapter 16


Topic Holdings of More than 50% Valuing and Reporting Investments Categories of Securities Balance Sheet Presentation Presentation of Realized and Unrealized Gain or Loss Classified Balance Managerial Accounting Managerial Accounting Basics Comparing Managerial and Financial Accounting Management Functions Organizational Structure Business Ethics Managerial Cost Concepts Manufacturing Costs Product versus Period Costs Manufacturing Costs in Financial Statements Income Statement Cost of Goods Manufactured Balance Sheet Cost ConceptsA Review Managerial Accounting Today The Value Chain Technological Change Just-in-Time Inventory Methods Quality Activity-Based Costing Theory of Constraints Balanced Scorecard

Objectives are reported in financial statements. [6] Distinguish between short-term and longterm investments.

Reading Assignment

9 (Feb 1)

[1] Explain the distinguishing features of managerial accounting. [2] Identify the three broad functions of management. [3] Define the three classes of manufacturing costs. [4] Distinguish between product and period costs. [5] Explain the difference between a merchandising and a manufacturing income statement. [6] Indicate how cost of goods manufactured is determined. [7] Explain the difference between a merchandising and a manufacturing balance sheet. [8] Identify trends in managerial accounting.

Chapter 19

10 11 (Feb 15)

Second Examination (February 8, 2014) Job Order Costing [1] Explain the characteristics and purposes Cost Accounting Systems of cost accounting. [2] Describe the flow of costs in a job order Job Order Cost System Process Cost System costing system. [3] Explain the nature and importance of a Job Order Cost Flow Accumulating Manufacturing Costs job cost sheet. [4] Indicate how the predetermined overhead Assigning Manufacturing Costs to Work in Process rate is determined and used. [5] Prepare entries for jobs completed and Assigning Costs to Finished Goods Assigning Costs to Cost of Goods sold. [6] Distinguish between under- and Sold Job Order Costing for Service overapplied manufacturing overhead. Companies Summary of Job Order Cost Flows Advantages and Disadvantages of Job Order Costing Reporting Job Cost Data Under- or Overapplied Manufacturing Overhead Process Costing The Nature of Process Cost Systems Uses of Process Cost Systems Process Costing for Service Companies Similarities and Differences between Job Order Cost and Process Cost Systems Process Cost Flow Assignment of Manufacturing CostsJournal Entries Equivalent Units Weighted-Average Method [1] Understand who uses process cost systems. [2] Explain the similarities and differences between job order cost and process cost systems. [3] Explain the flow of costs in a process cost system. [4] Make the journal entries to assign manufacturing costs in a process cost system. [5] Compute equivalent units. [6] Explain the four steps necessary to prepare a production cost report. [7] Prepare a production cost report.

Chapter 20

12 (Feb 22)

Chapter 21


Topic Refinements on the WeightedAverage Method Production Cost Report Comprehensive Example of Process Costing Compute the Physical Unit Flow (Step 1) Compute Equivalent Units of Production (Step 2) Compute Unit Production Costs (Step 3) Prepare a Cost Reconciliation Schedule (Step 4) Preparing the Production Cost Report Costing SystemsFinal Comments Contemporary Developments Just-in-Time Processing Activity-Based Costing

Objectives [8] Explain just-in-time (JIT) processing. [9] Explain activity-based costing (ABC).

Reading Assignment

13 14 15 (Mar 15)

Company Tour/Group Output Third Examination (March 8, 2014) Statement of Cash Flows [1] Indicate the usefulness of the statement The Statement of Cash Flows: of cash flows. [2] Distinguish among operating, investing, Usefulness and Format Usefulness of the Statement of and financing activities. [3] Prepare a statement of cash flows using Cash Flows Classification of Cash Flows the indirect method. [4] Analyze the statement of cash flows. Significant Noncash Activities Format of the Statement of Cash Flows Preparing the Statement of Cash Flows Indirect and Direct Methods Preparing the Statement of Cash FlowsIndirect Method Step 1: Operating Activities Summary of Conversion to Net Cash Provided by Operating ActivitiesIndirect Method Step 2: Investing and Financing Activities Step 3: Net Change in Cash Using Cash Flows to Evaluate a Company Financial Statement Analysis Basics of Financial Statement Analysis Need for Comparative Analysis Tools of Analysis Horizontal Analysis Balance Sheet Income Statement Retained Earnings Statement Vertical Analysis Balance Sheet Income Statement Ratio Analysis Liquidity Ratios Profitability Ratios Solvency Ratios Summary of Ratios Earning Power and Irregular Items Discontinued Operations Extraordinary Items Changes in Accounting Principle [1] Discuss the need for comparative analysis. [2] Identify the tools of financial statement analysis. [3] Explain and apply horizontal analysis. [4] Describe and apply vertical analysis. [5] Identify and compute ratios used in analyzing a firms liquidity, profitability, and solvency. [6] Understand the concept of earning power, and how irregular items are presented. [7] Understand the concept of quality of earnings.

Chapter 17

16 (Mar 22)

Chapter 18


Topic Comprehensive Income Quality of Earnings Alternative Accounting Methods Pro Forma Income Improper Recognition


Reading Assignment

17 (Mar 29)

Final Examination Comprehensive (March 29, 2014)

Deadline for Dropping Subjects: Deadline for Filing Leave of Absence: Last Day of Classes for the Semester:

Thurs, Feb. 20, 2014 Fri, March 07, 2014 Sat, March 22, 2014

GRADING SCHEME: Exams Group output Problem sets, class participation Attendance TOTAL

70.0% 12.5% 12.5% 5.0% 100.0%

GRADING SCALE: 97 100 1.00 93 - 96 1.25 89 - 92 1.50 85 - 88 1.75 80 - 84 2.00 75 - 79 2.25 70 - 74 2.50 64 - 69 2.75 60 - 63 3.00 55 - 59 4.00 Below 55 5.00