GSBA 510 Lecture Deck Class 1 F24 V1 (1)

Class Introduction and Overview

  • The course GSBA 510 focuses on financial accounting and business decisions.

  • Primary text: "Financial Accounting for Decision Makers, 3rd Edition" by Mark DeFond.

  • The syllabus covers key aspects including course objectives, assessments, and supplementary resources.

Class Recording Notice

  • Sessions will be recorded via Zoom and Panopto.

  • Anything stated in class will be recorded, so be mindful during discussions.

Course Structure

Session Topics

  1. Class Introduction

  2. Syllabus Overview

  3. Financial Accounting Concepts (DeFond, Chapter 1)

Syllabus Overview

Course Objectives

  • Understand external financial reporting goals.

  • Gain knowledge on accrual-based accounting principles.

  • Evaluate performance using financial accounting.

  • Analyze financial accounting information critically.

Required Resources

  • Direct purchasing link for eBook and print version of the course text.

  • Online resources include various financial and accounting websites (e.g., FASB, SEC, PCAOB).

Grading Breakdown

  • Quizzes: 4 best scores from 5 (400 points; 40% of final grade).

  • Case Assignments (group projects): 200 points (20%).

  • Final Exam: 300 points (30%).

  • Participation: 100 points (10%).

Important Policies

  • No AI usage permitted to ensure development of analytical and critical thinking skills.

  • Accommodations must be communicated within the first week to support diverse learning needs.

Class Schedule Note

  • On November 25, 2024, class will be held virtually due to expected travel schedules during Thanksgiving week.

  • Topic: Analysis and Interpretation of Financial Statements.

Business Organization Forms

Types of Business Organization

  1. Sole Proprietorship

    • Owned by one person.

    • Easy to form; limited liability issues.

  2. Partnership

    • Association between two or more people.

    • Similar tax advantages but potential for unlimited liability.

  3. Corporation

    • A separate legal entity owned by stockholders.

    • Limited liability, easier transfer of ownership.

Advantages and Disadvantages

Sole Proprietorship

  • Advantages: Easy formation, tax benefits, full control.

  • Disadvantages: Unlimited liability, challenging ownership transfer.

Partnership

  • Advantages: Easy setup, shared skills, tax breaks.

  • Disadvantages: Unlimited liability, ownership transfer issues.

Corporation

  • Advantages: Capital acquisition ease, ownership transfer, limited liability protection.

  • Disadvantages: Double taxation on earnings.

Business Activities

Types of Activities

  1. Operating Activities

    • Day-to-day operations for product/service delivery.

  2. Investing Activities

    • Acquisition/disposition of resources (land, buildings, equipment).

  3. Financing Activities

    • Acquiring capital through debt or equity transactions.

  4. Planning Activities

    • Not generally categorized but crucial for overall strategy.

Accounting Information Users

Definitions

  • Accounting: Measurement of business economic activities in monetary terms, communication to users.

Types of Users

  • External Users: Investors, creditors, labor unions needing financial information.

  • Internal Users: Management and departments requiring specific financial data for decision-making.

Ethics in Accounting

  • Importance of ethical standards in maintaining integrity and transparency.

  • Impact of Sarbanes-Oxley Act of 2002 to deter unethical practices.

Accounting Process and GAAP

Accounting Process Steps

  1. Identify economic activities.

  2. Quantify activities in monetary terms.

  3. Record and communicate results.

GAAP Overview

  • Standards for financial reporting.

  • Ensures comparability across firms.

Financial Statements Overview

  • Balance Sheet: Snapshot of assets, liabilities, and stockholder equity; reflects the accounting equation.

  • Income Statement: Reports operating results over a period; highlights revenues and expenses.

  • Statement of Stockholders’ Equity: Changes in equity over a period.

  • Statement of Cash Flows: Outlines cash inflows/outflows over a period.

Additional Disclosures

  • Annual Report / Form 10-K: Required by the SEC for public companies; includes financial statements and auditor’s report.

Technology in Accounting

  • Business Intelligence and Data Analytics to support decision-making.

  • Blockchain technology for secure transaction tracking.

Environmental, Social, and Governance (ESG)

  • Focus on sustainability and social responsibility within financial performance metrics, aligned with SEC regulations on climate risk disclosures.