TITLE : FINANCIAL ACCOUNTING AND REPORTING: TEXT AND CASES *

We have written a text with cases and problems which is specifically designed to meet what we consider to be the basic objectives of a core course in financial accounting.

1. Users of financial statements should be generally familiar with business practices, the technical language of accounting, and the nature of the information reported in the financial statements. One of the basic objectives of the core course is to make sure students are intelligent users of financial statements within the context of this definition.

2. Financial statements are prepared by management, not independent public accountants. Management's decisions about which generally accepted accounting procedure to use can have a major impact on reported net income, cash flow, and financial position of the enterprise. Analysis of these managerial decisions can be a useful tool in evaluating the quality of management. Our objective is to make the student aware of the implications of accounting decisions.

3. Accounting as a discipline does not exist in a vacuum. Our objective is to point out the relationship of accounting to economics, finance, politics, law, and other disciplines.

We feel the mass of detail, the repetition, and the lack of clarity of most accounting texts are the reasons many students find accounting intellectually stifling and educationally unexciting.

In our text this mass of accounting detail is synthesized into important techniques and concepts which can be used in analyzing the problems related to the preparation and understanding of financial statements. We do not use repetition as a means of leaming, nor do we attempt to cover the analysis of every possible type of transaction. Rather, techniques of analysis and measurement are explained, and the student leams by applying these techniques to the cases.

The first part of this text (Chapters 1 to 3) is different from most texts in that it takes the student from a simple problem case in balance sheet construction to a more complex problem case in the preparation of an income statement and balance sheet without in-depth coverage of specialized areas such as fixed assets, depreciation, or inventory valuation. This approach makes it possible for students to understand the entire accounting framework before they have to deal with more intricate accounting problems.

The second part of the text covers the more specialized areas of financial accounting and reporting that we feel should be studied in greater depth. Many cases in this part of the text are based on excerpts from actual financial statements. The attempt in these cases is to make the material real but not so complex that it cannot be taught in a simple fashion.

An unusual feature of this text is a chapter on manufacturing - costing issues which covers absorption costing, direct costing, and the cost-volume-profit model. We have included this material, which is usually included in a managerial accounting course, because we feel that the student of financial accounting should understand how costs are allocated to products and also get an insight into the type of financial information that is useful for decision making and how it differs from the infommation generated for financial statements.

This text is appropriate for the first and/or second course in accounting for both nonaccounting and accounting majors. The teacher's guide contains a number of different course configurations as well as detailed solutions and notes prepared by the authors.

Paul R. Berney William P. Lyons Stanley J. Garstka