Completion of Accounting Chapter Summaries

Accounting is a set of activities that translates day to day business transactions into quantifiable information useful for decision makers. Financial accounting focuses on outside decision makers such as investors, creditors, customers, suppliers and produces financial statements in the form of balance sheet, income statement and cash-flow statement. In contrast, managerial accounting focuses on inside decision makers, namely managers, and provides concepts beyond the financial statements to enhance managerial decisions.

An entrepreneur is both an outsider (investor) and insider (manager). As such, an entrepreneurial context is a good platform to learn both financial and managerial accounting. Accordingly, in this course, you will be required to form your own organization to meet a need in the market place that is in line with your personal desires and assets. The financial and managerial accounting principles you learn in this course will help you make better decisions and prepare a sound business plan of your entrepreneurial idea.

Accounting is also the language of business. In this role, it provides the entrepreneur the language to communicate between the branches of business be it finance, marketing, operations or management. This is why I have sub-titled this course as: Accounting for Entrepreneurs.

Learning Objectives:

1. To identify a business idea in line with your ‘DNA’

2. To estimate and enhance the net cash flow of your organization

3. To learn accounting concepts that facilitate managerial decisions: IV, BEP, NPV, IRR, Tax Analysis and Optimal Financing

4. To understand the nature of balance sheet, income statement and cash flow statement

5. To prepare financial statements through the double entry process

6. To calculate and interpret ROI and the three DuPont Ratios

7. To prepare a business plan

8. To develop Excel skills

Text Book / Clicker:

There is no required textbook for this course. All course-relevant materials will be posted on the blackboard

For those who like to be able to refer a book, I recommend: Financial and Managerial Accounting, Information for Decisions, by Wild, Larson and Chiappetta. McGraw Hill Irwin; the latest is the fifth edition but any earlier edition would be sufficient and cheaper.

You are required however to purchase any basic clicker which is available in the University Bookstore. Example: Response Card NXT

Course Grade:

Lecture Notes	10
Clicker Questions	10
Homework	10
Graded Lecture Notes	10
Graded Homework	10
Quizzes	20
Business Plan	30
Total	100
Extra Credits / Debits	?

Course Structure:

Each Tuesday’s class will introduce an accounting concept required to answer an entrepreneur’s question. Given that there is no required text for this course, it is very important that you come to this class with your laptop and take good notes. At the end of each Tuesday’s class, you will be asked to submit your class notes on blackboard, each of which will earn you 1 point. As long as you submit 10 such in-class notes, you will earn the full 10% of the grade allocated for lecture notes.

Each Thursday’s class will begin with four clicker questions to test your understanding of the accounting concepts taught in the previous class and the requirements of the homework assigned for that week. Each right answer to a clicker question will earn you ½ a point. Accordingly, as long as you get 20 clicker questions right, you will earn the full 10% of the grade allocated for clicker questions.

In the second part of each Thursday’s class, we will begin solving the homework problem which is due by Saturday midnight (11:59 pm). In case, we could not adequately cover the homework in class, a video tutorial will be posted by Friday 11 am. If you pay attention in Thursday’s class (and the video when necessary), you should easily be able to complete the homework. For those who may still lack confidence, a half an hour group help- session will be conducted at Friday at 1 pm in Whitman 203 by the TA, who will go over once more the homework problem. As a last resort, the TA will offer 1-1 help in the same room for another hour. Each homework will earn you 1 point and, as long as you submit 10 such homework problems, you will earn the full 10% grade allocated for the homework questions. The homework questions will require that you keep trach with the business plan we will develop as a class and the one you will develop with your partner. One of you have to submit the former and the second one the latter. This arrangement is to encourage that both of you cooperate with each other while working together.

Note that the above structure allows you to score the full 30% points even if you had to miss a couple of classes due to unexpected circumstances such as sickness, religious observances, athletic events, academic trips, family emergencies etc. Accordingly, You DO NOT need to email me to get you excused for these misses.

In order to enhance the quality of your note taking, two in-class notes will be picked at random for grading, each accounting for 5 points. You will receive only 3 points if all you had done is just completed the blanks, and 4 points if you had taken at least some extra notes (written in red ink), and the full 5 points only if you had taken sufficient extra notes. Similarly, to enhance the accuracy of your homework, two homework will be picked at random for grading, the full 5 points will be awarded only to those who have submitted a perfect answer.

There will also be two quizzes following important chapters (Quiz 1 following CH 7: Incremental Value Analysis, and Quiz 2 following CH 12 & 13::Transaction and ROI Analysis. Each quiz will account for 10 points, and therefore, together will account for 20% of the grade.

The Business Plan (30%)

Finally note that there is no final exam in this course. Instead, the final business plan essentially serves as a comprehensive take-home final exam. This business plan should have two parts, each part accounting for 15% of the grade.

The first part (about 8-12 pages with 1.5 spacing) is a formal business plan written with external audience such as banks, potential investors and employers in mind. This should include:

· An executive summary

· Product or service description

· A marketing plan and revenue forecasts

· A production plan and cost estimates

· A financial plan that includes

· Net cash flow

· Breakeven analysis

· IRR analysis before and after taxes

· Optimal financing and the weighted average cost of capital

· The three Financial Statements along with

· An ROI Analysis (including the DuPont Ratios)

· Estimated Value of the firm at the end of five years

The second part (about 8-12 pages long to be completed separately is a chapter by chapter report with an internal audience (professor and TA) in mind. Here you list:

· What you think are the main accounting concepts under each chapter

· How did they come into play in your business plan

· The challenges you faced and lessons learnt under each chapter

· Any other interesting observations under each chapter

Finally, you should also include your final Excel Worksheet which is essentially a collection of your weekly homework submissions. Similar to the homework you and your partner are encouraged to work together and even submit identical first part; the second part must be your own work. More importantly, you must make individual submissions under your particular team. If your partner is not an equal contributor, you need not share your work with him or her.

Extra Credits / Debits (±? %)

Given this is a hard course, students look for ways to earn extra credits. One way to earn these extra credits is to help me improve the learning environment in class. Examples: asking or answering questions in-class and discussion board, highlighting problems and offering potential solutions and going the extra mile to meet the needs of fellow students, professor or the TA. You can also earn extra credits by learning from your own mistakes. Examples: re-submitting a perfect quiz whenever you get a very low score on it.

Professors are sometimes troubled by behaviors that damage the learning environment in class. Accordingly, you will receive an extra debit, if your behavior is deemed as distracting the learning environment in class. Examples: coming late to class or leaving early (without being excused), forgetting to bring the laptop or switch off the cell phone, not reading the syllabus carefully, violating the VIP (Very Important Practices) etc.

Whitman Grading Policy

The faculty at the Whitman School of Management developed and approved a uniform grading policy for our undergraduate program. The policy has three goals: - To ensure that grading is fair and consistent across courses; - To encourage excellence in student scholarship; and - To ensure faculty deliver a challenging academic experience.

All instructors who teach undergraduate courses with 15 or more students enrolled are required to follow this grading policy. For all such courses taken at the Whitman School of Management, the mean grade shall be no higher than 3.30 and the maximum percentage of A/A-s is 33%.

Academic Integrity: