FINANCIAL ACCOUNTING (ACCT2200)

Understand the rationale for leasing and the distinction between operating and capital leases. „ Understand the Income Statement and Balance Sheet differences between operating and capital leases from the lessee’s perspective.

Discussion of Accounting An accountant’s functions include Classifying and summarizing, made easier by the repetitive nature of business transaction

What is financial statement analysis? ƒ What is ratio analysis? ƒ The mechanics of and inferences from: ƒ Profitability ratios ƒ Risk ratios

Inventory is defined as goods held for sale in the normal course of business or items used in the manufacture of products that will be sold in the normal course of business

Obligations that must be discharged in a short period of time (generally less than one year) „ Reported on balance sheet at nominal value examples: ƒ Accounts payable ƒ Short-term borrowings ƒ Current portion of long-term debt ƒ Deposits ƒ Warranties ƒ Deferred Revenues / Income

Receivables and Revenue Recognition Why do we care about revenue recognition? Criteria for revenue recognition Some Details of SAB 101

ALLOWANCE FOR RETURNS Receivables and Revenue Recognition A Quick Look at Intel’s Statements

Understand how differences in “book” vs. tax accounting for ,lead to deferred taxes Understand how the matching principle influences „ the capitalization of long-lived assets „ the expensing of capitalized costs to match revenues generated in the use of long-lived assets

Understand when accounting departs from the “transactions- based” model and towards market-driven valuations

Understand that the accounting method used for acquisitions depends on the extent to which the investor exerts influence over the investee.