COMM 457 - Fundamentals of Financial Accounting
Everyone should be able to read and understand basic financial statements. Financial information is used in all walks of life. In order to gain a meaningful appreciation of financial statements you must understand the various components and be familiar with the fundamental principles used in preparing the information. Accounting is not an exact science – accountants continually exercise professional judgment when recording transactions and preparing financial statements. This course will take you through the various stages of preparing financial accounting information with emphasis placed on analysis and interpretation of the results. Unlike an accounting course taught to Commerce students, this course will concentrate on fundamental principles and concepts which will allow you to acquire a general understanding of accountancy rather than an in-depth review of the technical rules.
Upon successful completion of this course, students will have the knowledge and skills to:
- identify the numerous users of the financial statements and understand how each uses various components of the financial statements in their decision making process.
understand financial accounting frameworks and standards in Canada.
- understand the role of professional ethics in business and accounting decisions.
- analyze and record transactions under both a cash and accrual basis.
- prepare and explain the purpose of adjusting and closing journal entries.
- prepare financial statements – Classified Balance Sheet, Multi-step Income Statement, Statement of Equity and Cash Flow Statement (indirect method).
- explain the importance and components of good internal control.
- prepare a bank reconciliation.
- record revenue and related accounts receivables in accordance with generally accepted accounting policies and determine an appropriate allowance for doubtful accounts under both the % of sales and aging methods.
- explain the difference between perpetual and periodic inventory systems.
- account for the initial purchase of inventory and the subsequent allocation between inventory (Balance Sheet) and cost of goods sold (Income Statement) under First-in, First-out (FIFO), Moving-weighted-average and specific identification cost flow methods.
- calculate the gross profit margin and explain its significance in managing a business.
- quantify and explain the effect of inventory errors on the financial statements.
- determine the cost of tangible long-lived (property, plant and equipment) and intangible assets.
- explain the difference between a betterment and an expense.
- understand the purpose of amortization (depreciation) expense and how it differs from Capital Cost Allowance used for Income tax purposes.
- calculate the amortization (depreciation) expense under the straight-line, units-of-production and diminishing-balance methods.
- account for the disposal of and impairment of assets.
- account for and explain current, long-term and contingent liabilities.
- explain the advantages and disadvantages of incorporation.
- account for the issuance and retirement of common and preferred shares.
- account for and explain cash and stock dividends and stock splits.
- perform analytical procedures (including financial statement ratios) on a set of financial statements in order to identify and assess areas of strength/concern.
Note: This course is part of the Minor in Commerce program for students attending Faculties outside of the UBC Sauder School of Business. See your home faculty for admission requirements and program details.