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The University of Texas at Dallas

Global Leadership Executive MBA Program

Financial Accounting: AIM 6201


Section: MIM
Spring 2008: February 18 – April 13, 2008

Professor Contact Information


Ashiq Ali, Ph. D. Phone: (972) 883.6360 Fax: (972) 883.6811

Kenny Zheng Phone: (972) 883.4457


(Teaching Assistant) Office hours: Thursday 7:30 – 8:30 pm

Carolyn Reichert, Ph.D. Phone: (972) 883.2726 (W) Fax: (972) 883.6164
Course Manager (972) 867.7088 (H)

E-Mail: Use Blackboard e-mail


Office Location: SM 1.506
Office Hours: By appointment

Note: Send all queries related to the course material to Kenny Zheng (email:
kenny.zheng@student.utdallas.edu). He will get back to you within 24 hours. If he does
not do so, then send me an email. Kenny will try to address your questions and, if
need be, discuss your questions with me and will get back to you with answers.

Course Pre-requisites, Co-requisites, and/or Other Restrictions


There are no pre-requisites for this class.

Course Description

This course provides an introduction to the concepts of financial accounting with an


emphasis on the interpretation of financial statements. Specifically it covers how to
prepare financial statements (income statement, balance sheet, and statement of
cash flows) and how to utilize the information contained in financial statements. The
course also covers in detail how financial statements report the financial effects of
certain important types of transactions that firms commonly undertake.

Student Learning Objectives/Outcomes

♦ Summarize the information provided by the balance sheet, income statement


and statement of cash flows and interpret individual amounts
♦ Compute financial ratios and use financial ratios and other information to
compare companies competing in an industry in terms of profitability and liquidity
♦ Recognize ethical issues in reporting financial results and assess the impact of
those issues on shareholders and other external users of the information

Workbook: Essentials of Accounting and Post Test Booklet, 9th ed.


R. Anthony and L. Breitner, Prentice Hall, 2006

Text: Introduction to Financial Accounting, 9th ed.


C. Horngren, G. Sundem, J. Elliott and D. Philbrick, Prentice Hall, 2006

Cases: Cases in Financial Reporting, Revised Edition, 5th ed.


D. Hirst and Mary McAnally, Prentice Hall, 2006
(I will use several cases from the earlier editions of Hirst and McAnally.
Purchasing this edition permits us to use the cases in the earlier
editions.)

Other: Articles from business publications, solutions manual for the text,
sample true/false exam questions, sample reports for the financial
statement analysis project, and team member evaluation form for the
project (these items are posted on Blackboard).

The Wall Street Journal (optional, but highly recommended)

The Cases in Financial Reporting text provides you with exposure to financial
disclosures of actual companies. Articles from business publications such as The
Wall Street Journal and Fortune are posted on Blackboard. The purpose of these
articles is to relate the concepts we discuss to the real world. I strongly encourage
you to do additional reading of this nature. It will not only improve your understanding
of the role of financial accounting but will also broaden your knowledge of business.

Schedule of Assignments
________________________________________________________________

Note: Read “Strategy for Studying for the Course” one page 9 to understand the
meaning of each of the items in the schedule and how to prioritize them.
________________________________________________________________

Pre-retreat
Assignment: Complete Chapters 1 to 5 of “Essentials of Accounting”
(Turn it in during the retreat for grading)

Retreat: Financial Accounting Basics


January 12: Morning
________________________________________________________________

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Week 1: Financial Accounting Basics
Dates: Feb 18 – Feb 24

Lecture: Financial Accounting Basics I (60 Minutes)


Financial Accounting Basics II (30 Minutes)
Comprehensive Review Problem (60 Minutes)

Readings: Chapters 1, 2, 3 and 4


Practice: Ch. 1: 36, 43; Ch. 2: 46, 47; Ch 3: 38; Ch 4: 39

Web conference I: Web conference topic: Overview of the Syllabus and


Financial Accounting Basics
Web conference date: Sunday, Feb 17, 7 to 9 pm, CST.

Web conference II: Web conference topic: Comprehensive Review Problem


(Listen to the lecture on this topic beforehand. Come
prepared with your questions. It is very important that you
understand this problem well.)
Web conference date: Sunday, Feb 24, 7 to 9 pm, CST.
________________________________________________________________

Week 2: Statement of Cash Flows; Financial Statement Analysis I;


Dates: Feb 25 – March 2

Lecture: Statement of Cash Flows (60 Minutes)


Financial Statement Analysis I (30 Minutes)

Readings: Chapters 5 & 12 (Horngren)

Practice: Ch. 5: 57, 58, 59; Ch. 12: 47, 48, 50-54
Problem 5-59 (Horngren) (discussed in the lecture)

Articles: Burning Up (Bb)


Once Hot Now Toast (Bb)
Return on Equity Example (Bb)
Managing Working Capital (Horngren, p. 157)
Warren Buffet: Nothing to Hide (Horngren p. 555)

Assignment: Individual Homework:


Reebok and LA Gear - Financial Statement Analysis (Bb)
(Maximum time: 3 Hours)
(Stock price charts of Reebok & L.A. Gear are on Bb)
Due date: Homework posted to the Digital Drop Box by Mar. 2 at 6 pm CST

Web conference: Web conference topic: Reebok and LA Gear


Web conference date: Sunday, March 2, 7 to 8:30 pm, CST.
_______________________________________________________________

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Week 3: Financial Statement Analysis II
Dates: March 3 – March 9

Lecture: Reebok and LA Gear (available after 9:00 pm on March 2) (20


Minutes)

Exam date: Mid-term Exam, Saturday, March 8: 9:00 am – 12:30 pm CST


(Based on material from Weeks 1 to 3)
________________________________________________________________

Week 4: Inventory; Property, Plant & Equipment


Dates: March 10 – March 16

Lecture: Inventory (40 Minutes)


Property, Plant & Equipment & Frederick’s PPE (45 Minutes)
(For this lecture refer to the case Frederick’s PPE posted on the
Blackboard)

Readings: Chap. 7 and 8 (pages 335-357)

Practice: Ch. 7: 56, 67, 70; Ch. 8: 31, 39, 61, 70, 71

Articles: Inventory Chicanery Tempts More Firms, Fools More Auditors


(Bb)
Paying FIFO Taxes: Your Favorite Charity (Bb)
Earnings Helper (Bb)

Assignment: Individual Homework:


• Keysor Roth Corp. Senior Debenture (Bb)
(Answer the questions accompanying the above article, refer to
page 390-393 of Horngren for background material)
(Maximum Time: 45 Minutes)
• Chrysler Corp. (Problem 7-71 of Horngren, p.326)
(Maximum Time: 45 Minutes)
Due date: Homework posted to the Digital Drop Box by March 16 by 6pm
CST

Web conference: Web conference topic: Keysor Roth & Chrysler


Web conference date: Sunday, March 16, 7 pm to 8:30 pm, CST.
_____________________________________________________________

Week 5: Inventory; Intangible Assets


Dates: March 17 – March 23

Lecture: Chrysler and Keysor Roth (35 Minutes)


(Available after 9:00 PM on March 16)
Intangible Assets & Merck (20 Minutes)
(For this lecture refer to the case Merck on the Blackboard)
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Readings: Chap. 8 (pages 357-362);
Practice: Ch. 8: 54

Articles: Real Assets, Unreal Reporting (Bb)

Assignment: Individual Homework:


(Optional) (Use this as a makeup for a missed or incomplete assignment)
• Miniscribe (Bb) (Answer the questions accompanying the
articles) (Maximum time: 2 Hours)
Read the following material before doing the assignment:
• Horngren pp. 251-256
• The Crackdown is Here (Bb)
• In Corporate America It Is Cleanup Time (Bb)
Due date: Homework posted to Digital Drop Box by March 23 midnight CST

Web conference: Web conference topic: Miniscribe


Web conference date: Sunday, March 23, 7 to 8:30 pm, CST
_______________________________________________________________

Week 6: Investors’ Reliance on Financial Statements


Bonds; Stockholders’ Equity
Dates: March 24 – March 30

Lecture: Investors’ Reliance on Financial St. & Miniscribe (35 Minutes)


(Available after 9 pm on March 23)
(If you have opted not to do the Miniscribe assignment, read the
Miniscribe assignment material of Week 5 before listening to this
lecture)
Bonds (70 Minutes)
Stockholders’ Equity & Dow Chemical (50 Minutes)
(for this lecture refer to the case Dow Chemical in Hirst)

Readings: Chap. 9 (pages 390-404, 418-425); Chap. 10 (pages 441-465)


Practice: Ch. 9: 52, 53, 57;
Problem 9-53 (Horngren) (discussed in the lecture);
Ch. 10: 30, 32, 44, 61;
Problem 10-61 (Horngren) (discussed in the lecture)

Articles: Chrysler Bonds (Bb)


Accounting Analysis (Bb)

Assignment: Team Assignment: Financial Statement Analysis Project Part I


Due date: Posted to Digital Drop Box by March 30 midnight CST

Web conference: Web conference topic: Bonds


Web conference date: Sunday, March 30, 7 to 8:30 pm
_________________________________________________________________

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Week 7: Intercorporate Investments; Global Accounting Standards
Dates: March 31– April 6

Lecture: Intercorporate Investments (90 Minutes)


Global Accounting Standards (30 Minutes)

Readings: Chap. 11 (pages 489-498, 500-520)

Practice: Problem 11-31, 11-43 (parts 1&2), 11-45 (Horngren)


(these problems are discussed in the lecture)

Articles: U.S. GAAP versus Swedish GAAP (Bb)


FASB’s Impact on Cost of Capital (Bb)
Share and Share Unalike (Bb)
Murky Waters: A Primer on Enron Partnership (Bb)

Web conference: Web conference topic: Intercorporate Investments and


Information about the Final Exam
Web conference date: Sunday, April 6, 7 to 8:30 pm, CST
________________________________________________________________

Week 8: Course Conclusion


Dates: April 7 – April 13

Lecture: None

Exam Date: Final Exam, Saturday, April 12, 9 am – 1 pm CST


(Comprehensive)

Assignment: Team Assignment: Financial Statement Analysis Project Part II


Due Date: Posted to Digital Drop Box by April 13 midnight CST

Peer Evaluation: Due by April 13


Course Evaluation: Due by April 13
________________________________________________________________

Grading Policy and Evaluation


Grading Formula
• Individual Preparatory Homework Submissions 25%
• Team Financial Statement Analysis Project 25%
• Examinations 50%
Midterm 20%
Final 30%

Individual Preparatory Homework Assignments 25%

I've adopted an active learning approach. For most class sessions, you are expected
to read some background material and do the required preparatory homework
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assignment. For most students, this will be the first time you've covered the area and
so you may not be able to do the assignments correctly. However, I would like you to
give it a good try and make note of your difficulties. These are preparatory
assignments, so they address the material covered in the following week. The idea is
to make a good effort on the assignment in order to prepare you for the discussion of
the material in the next session. I expect that my discussion of the assignment in the
next session should address most of your difficulties. I find that this approach is very
effective in understanding and retaining new concepts. I will grade your homework
based largely on effort and not accuracy.

Homework assignments are due by the date and time indicated in the Schedule of
Assignments below. NO EXTENSIONS WILL BE GIVEN FOR ANY REASON. Late
work will not be accepted. Late assignments are not accepted because a discussion
of the assignments will be available immediately after the due date (See note below).
Your work will be graded as follows:

• 1.0 –There is evidence that you made a serious attempt on all parts of the
assignment.
• 0.5 – The work is incomplete.
• 0 – No work (or less than a quarter of the work) is turned in.

Homework assignments are to be turned in individually. Although I would encourage


that you work on these assignments in groups, you should write-up your submissions
individually. That is, you should not have one group member type the solution and
share the document, electronic or otherwise, with the other members. Doing so is not
only an act of academic dishonesty, but significantly reduces the learning experience.
If such cases come to my attention, all parties involved will receive grades of zero for
that assignment. Repeat offenses will be dealt with more harshly.

Note: Release of Audios and Homework Deadlines

This class uses an active learning approach. After a homework assignment is


completed, it is discussed in the next class session. As a result, there will be audios
and slides released immediately after each homework deadline. Homework
deadlines cannot be changed and no extensions can be given.

Individually Written Examinations 50%

Midterm (20%) and Final (30%)

There are two exams for this course. Anyone missing an exam will automatically
receive a grade of zero for that test. Exceptions for documented medical or family
reasons may be permitted. Where possible, either the course manager or I should be
contacted prior to the time of the exam. At my discretion, either a make-up exam will
be scheduled or a reallocation of the weight to remaining examinations will be made.
Exams will be based on the assigned material in the textbook, casebook and class
readings.

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The timed examinations will be downloaded from Blackboard. You will have
prespecified time to complete each one and post your solutions to the Digital Drop
Box. Examinations are to be done individually. Evaluation is based on the
correctness and quality of the response. It is important to pace yourself on the
exams. Content is far more important than appearance, so don’t waste time on
formatting, fonts and other similar items.

Assignment:

Format for Written Assignments


Written assignments should be Word documents or Excel files (no html formats).
• Each assignment can have a maximum of one document and one workbook.
• Problems and questions should be answered in order.
• Assignments should comply with any page limits.
• Charts and exhibits should be numbered and appropriately referenced in the
body of the document.
• Word documents:
o Double-spaced, 12 pt. Arial or Times New Roman font
o Citations properly formatted in MLA style
• Clearly identified by author or team
o For an individual assignment, the student name needs to be on the first
page of the document AND as part of the document name.i.e.
SmithMidterm.doc when it is submitted.
o For a team assignment, the team number and names of team
participants on the first page AND the team number as part of the
document name i.e. Team2JCPFinal.doc when it is posted
o There is no need for a separate cover pages

Submission
Assignments should be posted on Blackboard (Bb) within the course area by the due
date. Assignments are submitted to the Digital Drop Box under Tools tab. Be sure to
use the SEND command to submit to the Drop Box. Do not use ADD command to
post.

Late Assignments
THERE ARE NO EXTENSIONS FOR HOMEWORKS. Assignments are of varying
lengths. Plan well ahead so that you are not surprised by the time needed to
complete the assignment.

Retreats: Attendance at the retreat is a course requirement. Missing the retreat


may be grade affecting at the discretion of the instructor.

Peer Evaluation
Students need to complete a peer evaluation for the Team Financial Statement
Analysis Project. The peer evaluation is an electronic document whose link is located
on Blackboard (Bb) in the course area under the Information button.

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Course Evaluation
The completion of a course evaluation is a course requirement. Students need to
complete a course evaluation form which is an electronic document whose link is
located on Blackboard (Bb) in the course area under the Information button. Students
who do not submit a course evaluation by the due date will receive an incomplete
grade for the course.

UTD Policy on Cheating:

Students in this class will be held to the standards established by Regents’ Rules and
Regulations (Part One, Chapter VI, Section 3, Subsection 3.2, Subdivision 3.22)
which states: Candidates are expected to be above reproach in scholastic activities.
Candidates who engage in scholastic dishonesty are subject to disciplinary penalties,
including the possibility of failure in the course and dismissal from the University.
“Scholastic dishonesty includes, but is not limited to cheating, plagiarism, collusion,
the submission for credit of any work or materials that are attributable in whole or in
part to another person, taking an examination for another person, any act designed to
give unfair advantage to a student or the attempt to commit such acts.” Professors
randomly use “Turnitin.com” to screen papers against other published works on the
web to insure against plagiarism.

Strategy for Studying for the Course:

Listen to the Lectures carefully and try to understand the material covered. To
check whether you have understood the material try to do the lecture problems once
again on your own. Use the Readings in the Horngren text to clarify any difficulty
that you have with the material in the lectures. Otherwise, just glance through the
Readings material, time permitting; you will not be tested on the material beyond that
covered in the lectures. The Practice problems may be used if you need additional
practice in doing problems. Once again, if you are very comfortable with the lecture
material, practice problems may not be necessary. However, if this is the first time
you are taking an accounting course, I recommend that you try out the practice
problems. The solutions to these problems are available in Horngren’s solutions
manual (on Blackboard). When doing an Assignment, give it a good try but do not
spend too much time on it. I have indicated the amount of time that is reasonable to
spend for each of the assignments. Note that I will grade your homework based
largely on effort and not accuracy. When preparing for the Exams make sure that
you understand well the material in the lectures and assignments. About 85% of the
exam will be made up of problems and about 15% will be True/False type questions
covering some of the descriptive material in lectures, assignments, and Articles. I
will not test you on the details in the articles but rather on the major points, which for
each article you should be able to summarize in two to three sentences. Sample
True/False questions are available on Blackboard.

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PRELIMINARY ASSIGNMENT SCHEDULE
(NO EXTENSIONS ON HOMEWORK; SOME AUDIO/SLIDES RELEASED WEEKLY)
AIM 6201, Spring 2008, Professor Ali

Week Topic Readings/Practice Due


Retreat: · Financial Workbook: Chapter 1-5 Individual Homework:
Jan 12 Accounting Workbook: Ch 1-5
Basics Due 1/12

Week 1: · Financial Readings: Horngren Ch. 1-4 Web conference I:


2/18-2/24 Accounting Problems: Ch. 1:36, 43; Ch. 2:46, 47; Ch. 2/17, 7 to 9 pm CST
Basics 3:38; Ch 4:39; Comprehensive Web conference II:
Review 2/24, 7 to 9 pm CST
Week 2: · Statement of Readings: Horngren Ch. 5 & 12 Individual Homework:
2/25-3/2 Cash Flows Problems: Ch. 5:57, 58, 59; Ch. 12:47, 48, Reebok & LA Gear
· Financial 50-54 Due 3/2 by 6 pm CST
Statement Articles: Burning Up; Once Hot; Return on
Analysis I Equity; Managing Working Web conference:
Capital; Warren Buffet 3/2, 7 to 8:30 pm CST
Week 3: · Financial Individual: MIDTERM
3/3-3/9 Statement 3/8, 9 am to 12:30 pm
Analysis II
Week 4: · Inventory Readings: Ch. 7 & 8 (pp. 335-357) Individual Homework:
3/10-3/16 · Property, Plant, Problems: Ch. 7:56, 67, 70; Ch. 8:31, 39, Keysor Roth; Chrysler Corp
and Equipment 61, 70, 71 Due 3/16 by 6 pm CST
Articles: Inventory Chicanery; Paying FIFO Web conference:
Taxes; Earnings Helper 3/16, 7 to 8:30 pm CST

Week 5: · Inventory Readings: Ch. 8 (pp. 357-362) Individual Homework:


3/17-3/23 · Intangible Problems: Ch. 8:54 Miniscribe (Optional)
Assets Article: Real Assets Due 3/23 by midnight CST
Web conference:
3/23, 7 to 8:30 pm CST
Week 6: · Investor Readings: Ch. 9 (pp. 418-425, 390-404); Team Project Part I:
3/24-3/30 Reliance on Ch. 10 (pp. 441-465) Due 3/30 by midnight CST
Financial Problems: Ch. 9:52, 53, 57; Ch. 10:30, 32,
Statements 44, 61 Web conference:
· Bonds Articles: Chrysler Bonds; Accounting 3/30, 7 to 8:30 pm CST
· Stockholders’ Analysis
Equity
Week 7: · Intercorporate Readings: Ch. 11 (pp. 489-498, 500-520) Web conference:
3/31-4/6 Investments Problems: Ch. 11:31, 43 (parts 1&2), 45 4/6, 7 to 8:30 pm CST
· Global Articles: US GAAP; FASB Impact; Share;
Accounting Murky Waters
Standards
Week 8: · Course Individual: FINAL
4/7-4/13 Conclusion 4/12, 9 am to 1 pm CST
Team Project Part II:
Due 4/13 by midnight CST