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Department of Banking & Finance

Government College University, Faisalabad

Degree Program BBA (Banking & Finance)

Course Title Financial Accounting II

Course Code BBF-308

Credit Hour 3(3-0)

Instructors Name Muhammad Salman Rasheed

Instructors E-mail muhammadsalmanrasheed@gmail.com

COURSE DESCRIPTION/OBJECTIVE

The primary aim of Financial Accounting is to provide students with an introduction to the

process and function of financial reporting. Whilst a large proportion of the course is aimed

at understanding accounting as a process, taking a preparers perspective, we will also

seek to develop an understanding of the importance of the role of accounting in today s

society.

LEARNING OUTCOMES

After studying this course student will be able to understand:

1. Accounting for merchandising activities.2. Accounting for Financial assets.3. Accounting for Plant Assets and Depreciation.4. Accounting for Liabilities.5. Accounting for stockholders Equity (Paid in Capital)6. Accounting for income and changes in retained earnings.7. Construction of Cash Flow Statement.8. Financial Statement Analysis.

COURSE CONTENT

Accountingfor

Merchandising

Activities

Describe the operating cycle of a merchandising company. Define subsidiary ledgers and explain their usefulness. Account for purchases and sales of merchandise in a perpetual inventory system. Explain how a periodic inventory system operates. Discuss the factors to be considered in selecting an inventory system. Define special journals and explain their usefulness. Account for additional merchandising transactions related to purchases and sales. Measure the Performance of a Merchandising Business.

FinancialAssets

Define financial assets and explain their valuation in the balance sheet. Describe the objectives of cash management. Explain means of achieving internal control over cash transactions. Prepare bank reconciliation and explain its purpose. Account for uncollectible receivables using the allowance and direct write-off methods. Evaluate the liquidity of various financial assets. Explain how transactions discussed in this chapter affect net income and cash flows. Account for transactions involving marketable securities. Explain, compute, and account for the accrual of interest revenue.

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PlantAssetsand

Depreciation

Determine the cost of plant assets. Distinguish between capital expenditures and revenue expenditures. Compute depreciation by the straight-line and declining-balance methods Account for disposals of plant assets. Explain the nature of intangible assets, including goodwill. Account for the depletion of natural resources. Explain the cash effects of transactions involving plant assets. Account for depreciation using methods other than straight-line or declining-balance.

Liabilities

Define liabilities and distinguish between current and long-term liabilities. Account for notes payable and interest expense Describe the costs relating to payrolls. Prepare an amortization table allocating payments between interest and principal. Describe corporate bonds and explain the tax advantage of debt financing. Explain the concept of present value. Account for postretirement costs. Describe and account for deferred income taxes. Evaluate the safety of creditors' claims. Define loss contingencies and explain their presentation in financial statements. Account for bonds issued at a discount or premium.

Stockholders'Equity:

Paid-inCapital

Discuss the advantages and disadvantages of organizing a business as a corporation. Distinguish between publicly owned and closely held corporations. Explain the rights of stockholders and the roles of corporate directors and officers. Account for paid-in capital and prepare the equity section of a corporate balance sheet. Contrast the features of common stock with those of preferred stock. Discuss the factors affecting the market price of preferred stock and common stock. Explain the significance of par value, book value, and market value of capital stock. Explain the purpose and the effects of a stock split. Account for treasury stock transactions.

IncomeandChangesin

RetainedEarnings

Describe how discontinued operations, extraordinary items, and accounting changes arepresented in the income statement.

Compute earnings per share.

Distinguish between basic and diluted earnings per share. Account for cash dividends and stock dividends, and explain the effects of these transactions

on a company's financial statements.

Describe and prepare a statement of retained earnings. Define prior period adjustments, and explain how they are presented in financial statements Define comprehensive income, and explain how it differs from net income. Describe and prepare a statement of stockholders' equity.

Statemento

fCash

Flows

Explain the purpose and usefulness of a statement of cash flows. Describe how cash transactions are classified within a statement of cash flows. Compute the major cash flows relating to operating activities. Explain why net income differs from net cash flows from operating activities. Distinguish between the direct and indirect methods of reporting operating cash flows. Compute the cash flows relating to investing and financing activities. Discuss the likely effects of various business strategies on cash flows. Compute net cash flows from operating activities using the indirect method. Explain the role of a worksheet in preparing a statement of cash flows.

FinancialStatemen

tAnalysis

Explain the uses of dollar and percentage changes, trend percentages, componentpercentages, and ratios.

Discuss the quality of a company's earnings, assets, and working capital. Explain the nature and purpose of classifications in financial statements. Prepare a classified balance sheet and compute widely used measures of liquidity and credit

risk.

Prepare a multiple-step and a single-step income statement and compute widely usedmeasures of profitability.

Put a company's net income into perspective by relating it to sales, assets, and stockholders'equity.

Compute the ratios widely used in financial statement analysis and explain the significanceof each.

Analyze financial statements from the viewpoints of common stockholders, creditors, andothers.

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Textbook(s)/Supplementary Readings

Core Readings:

Williams, Haka, Bettner: Financial & Managerial Accounting, Latest Edition, PrenticeHall

Supplementary Readings:

Professor Muhammad Ammanullah Khan: Financial Accounting, Latest Edition Frank Woods: Business Accounting 1, Eleventh Edition Meigs and Meigs, Accounting for Business Decision, 9th Edition/Latest Edition