financial accounting online course

financial accounting online course

The Fundamentals of Financial Accounting: An Online Course

1. Introduction to Financial Accounting

The main goal of financial accounting is to provide useful information to investors, lenders, and other creditors in making decisions as to where they should allocate their scarce resources. The goal is to be as useful as possible to those who will provide resources to a company in anticipation of obtaining an economic benefit. This information helps decision makers judge how much risk is involved in lending or investing in a particular company. The riskier the venture, the higher the return a decision maker will expect to receive. Companies typically track some of this financial information by means of internal accounting systems. Each company will likely tailor the information it desires from the internal accounting systems based on the unique needs of its managers. However, the company’s obligations in preparing and distributing information to decision makers are prescribed by a set of rules which the company must follow. These rules are called generally accepted accounting principles or GAAP. The information presented in a company’s financial statements is considered to be “general purpose” in nature in accordance with GAAP. These financial reports are directed towards the common information needs of a wide range of decision makers outside the company.

Welcome to the Fundamentals of Financial Accounting course! This course will teach you the fundamentals of financial accounting from the ground up. Previous accounting knowledge is not necessary to take this course. In fact, this course assumes you have no accounting background. Each concept covered in this course will build on the concepts presented in earlier lessons. When the course is complete, you will have learned the basics to set you down the path of a career in financial accounting.

2. Key Concepts and Principles

The concepts and principles underpin the techniques and procedures are the essential tools utilized by accountants or by accounting software to prepare information that will be helpful to users. Therefore, this approach keeps the focus firmly on the need to learn and understand the concepts required to prepare and interpret financial accounting information. Such an approach is essential not only to comprehend accounting and financial reporting issues but also to judge and criticize the kinds of reports prepared by accountants.

Focus on Highlighting the Concepts and Principles that Underpin the Preparation of Financial Reports for External Purposes

Even small companies have large volumes of transactions, involving thousands of employees, numerous customers and suppliers, and a multitude of products and services. Financial accounting serves to record and summarize this information in a fashion prepared for external users. The process of summarizing such large volumes of transactions means outlining the data that is considered important for decision-making, and then aggregating the data into manageable subtotals and final totals. The importance of recording and processing this information to ensure accuracy is addressed later. This chapter concentrates on elucidating the principles, concepts, and ideas of financial accounting.

2. Key Concepts and Principles

3. Financial Statements and Reporting

Prerequisites for Financial Reporting Accounting information is useful only if it is relevant and reliable. Accounting information is relevant when it is capable of influencing decisions by helping users predict the outcomes of past, present, and future events. Information is reliable when users can depend on the information being presented faithfully, free from bias and error. Transparency is another important feature of relevant and reliable financial reporting. Transparent financial reporting results when firms disclose all relevant facts affecting business decisions and financial reporting. The firm illustrates this and other accounting terms in its financial statements and notes to the financial statements. Transparent reporting reduces the likelihood of information overload and information clutter; it allows users to gain the full picture. Transparency also reduces the chances that incidental information will be overlooked or misconstrued. No matter the appropriateness of the financial statements, numbers alone are not enough to meet financial reporting standards.

Introduction Let’s begin by reflecting on this question: What kind of reports do investors, creditors, and other external users find helpful? The company also produces several reports for internal users. The primary purpose of financial accounting is to prepare financial reports that provide information about a firm. These reports help external users, including investors, creditors, and others, make sound financial decisions. In a related manner, managers inside the firm use these reports in their decision-making. Financial accounting is a language understood by a consistently large audience.

As a new business owner and accounting and bookkeeping novice, you’ll soon discover that a cash flow statement covers the short term forecasts, sales, and the like, but where’s the big picture? Enter the financial statements of a business. In this lesson, we are going to overview financial reporting, cover requirements, discuss principles, introduce the financial accounting foundation, and introduce financial statements and financial statement presentations.

4. Analyzing Financial Data

The assets of Coca Cola, Hewlett-Packard, General Motors, or your favorite company are made up of assets such as buildings, machinery, and master computer systems. These are tangible assets or, in other words, physical assets that you can put your hands on. Nike’s assets are equally impressive but very different from those of the others. Its inventory consists of shoes, not electronic products. It also has a lot of physical assets like machinery and buildings, and a great deal of financial resources. But one big difference among these various companies is the way they go about putting these tangible assets together. The tangibles are only one part of the story. They also have to coordinate a vast amount of human capital, and this is referred to as the management of human resources. These human resources must decide what the company should be making, for how much it should produce, and the quantities it should purchase. They have to make sure the company is producing high-quality products at an acceptable cost.

One of the key purposes of the financial manager within any company is to manage or oversee the financial resources of the company. But what are the specific resources that must be managed? They are the assets of the company, or, using another term, the company’s investment. There are many different types of investments that fall under the purview of the financial manager. These can range from human resources, raw materials, work in process, finished goods, financial investments, and many others. In the case of business enterprises, typically the word “asset” is meant to represent the machinery, buildings, or factories owned by the company. In the case of a bank, one of the major assets being managed would be the loans made by the bank. In the case of a financial institution, such as an insurance company, large financial assets such as stocks, bonds, and mortgages are the major components of the asset listing. Please note, however, that in this course we will be focusing on companies that make and sell things, and not service companies, financial institutions, or not-for-profit organizations.

5. Case Studies and Practical Applications

A Case Study on How Accounting Creates Value: Warner Bros. Entertainment Inc. Our first case study was developed by Kimberly Moreno, a student who enrolled in the summer session of this class and also works at the Bureau of Economic, Business, and International Affairs where I teach. Companies in the entertainment industry earn their revenues through a variety of sources. In this case study, we will examine how Warner Bros. Entertainment Inc. earned their revenues in the fiscal year ending December 31, 2015, and we will learn about what makes their company unique from others in the industry.

It’s beneficial for students to see practical examples of what they’re learning. That’s why we’ve included numerous real-world examples of accounting issues and how they’re addressed. Seeing how financial accounting principles are actually applied makes this course applicable and more fun. Finally, be prepared for an abundance of quizzes! They are dispersed throughout each chapter to aid in the retention of the material and to ensure comprehension before the next topic is discussed.