Financial Accounting Courses for MBA Students
- Sequence
- ACC 380D (intermediate and advanced)
- ACC 380K.7 (financial statement analysis)
- ACC 380K.1 (intermediate)
- ACC 380K.2 (advanced)
After BA 384T (introductory financial), you are eligible to take ACC 380D (intermediate and advanced) and ACC 380K.7 (financial statement analysis). However, in the best of all worlds, you would want to take ACC 380D before ACC 380 K.7.
ACC 380D (intermediate and advanced) covers a lot of material that is essential to understanding a set of financial statements. This material may seem somewhat familiar/similar to BA 384T, however ACC 380D goes into these topics in much greater depth. After taking ACC 380D, you will be able to read and understand 80% of the material in a financial statement.
ACC 380K.7 (financial statement analysis) devotes about 30-40 percent of the semester to covering many of the topics from ACC 380D, but in less depth. The remainder of the course is devoted to using this information to evaluate a company’s financial position and performance and to forecast and conduct valuation analysis. For those of you going into finance-related positions, your employer will expect you to be familiar with the material in both ACC 380D and ACC 380K.7.
For those MBA students who wish to take more in-depth accounting, they can elect to take ACC 380K.1 and ACC 380K.2 which are separate courses in intermediate and advanced accounting, respectively. These courses are offered primarily to students enrolled in the PPA and MPA programs but can be taken by MBA’s with permission of the PPA/MPA office advisors.
Accounting 380D
Advanced Financial Reporting Topics for MBA’s
(Intermediate and Advanced Financial Accounting in one course designed for MBA’s)
If you are intending to concentrate in finance in the MBA program, this course is VERY strongly recommended. In fact, most employers hiring finance concentration MBAs require that they take this class, or its equivalent. A very significant portion of the CFA exam (Level I in particular) pertains to topics covered in this class.
The course is new, beginning in the Fall of 2005, and will cover a number of topics typically covered in intermediate and advanced accounting (i.e., ACC 380K.1 and ACC 380K.2). The course is specifically designed for MBA students. Students in the PPA and MPA programs will not be allowed to enroll; they will take ACC 380K.1 and ACC 380K.2 which are described below.
This course will be organized around how companies run their businesses. Particular attention is paid to the incentives of company management in terms of financial reporting. We also will concentrate on how financial analysts use financial statement information. This class stops short of financial statement analysis, which is a separate course in the Accounting Department (ACC 380K.7). Many students report that financial statement analysis is much easier and more enlightening if they have already had the content of ACC 380D before taking financial statement analysis.
- Articulation of balance sheet, income statement and cash flow statement
- Revenue recognition (long-term construction contracts, installment sales)
- Effects of accounting changes, restatements, discontinued operations, and extraordinary items
- Financial instruments (investments in debt instruments, equities, and derivatives; cash flow, fair value, and foreign currency hedges; outstanding debt, equity, hybrids)
- Deferred taxes (reconciliation of taxes paid with tax expense)
- Leases (off-balance-sheet financing)
- Stock-based compensation
- Earnings per share (basic and diluted)
- Accounting implications of differences between mergers and acquisitions
- Consolidated financial reporting
- Accounting for foreign subsidiaries
- Importing, exporting, and financial instruments used to manage foreign exchange risk
Accounting 380K.7
Financial Statement Analysis
Course goal: To understand a company's history, current position, and future prospects by analyzing and interpreting the information in publicly-issued financial statements and their related footnotes. The analyses are performed in the context of the company's industry and strategic environment, and have a variety of potential uses, including business valuation, credit risk analysis, and management performance evaluation.
Primary emphasis: The course typically focuses on business valuation as an application of the techniques and methods we discuss.
Who would benefit from this class: This class is likely to be most useful for prospective financial analysts or for other professionals who might use accounting information to judge a company's prospects.
Topics: Specific topics in the class include (a) analyzing the firm's industry and economic environment; (b) analyzing the firm's recent financial performance; (c) analyzing the firm's accounting methods and evaluating the quality of financial reporting; (d) forecasting the firm's future financial performance, and (e) independently estimating the value of the firm.
Assignments: There are two major types of assignments in this class, and both reflect the real-world focus of the class. The first type consists of small assignments that use excerpts from firms' financial statements to illustrate specific accounting topics covered in the class. The second type consists of comprehensive analysis of existing companies, and is typically done in groups. Examples are cases on General Electric and Home Depot. Another example is a comprehensive financial statement analysis and valuation of selected companies.
Relation to other courses: The only pre-requisite for this class is Introductory Financial Accounting, BA 384T. Advanced Financial Reporting Topics for MBAs (ACC 380D) will familiarize you with the topics in this class, and it is strongly recommended (but not necessary) to take that class before Financial Statement Analysis. In the past, students have successfully taken either of these classes alone or in either order. ACC 380D examines financial accounting from the perspective of decision makers within the company. Those decision makers are privy to the raw information that is summarized in financial statements and can shape their companies' financial reports. In contrast, Financial Statement Analysis examines financial reporting from the perspective of external users who are typically limited to the company's reports and other publicly available information on the company and its industry.
Accounting 380K.1
Financial Accounting Standards and Analysis I
(Intermediate Financial Accounting)
This course is a requirement for those enrolled in the MPA program and can be taken, with special permission by the PPA/MPA office, by those in the MBA program (although most MBAs will take ACC 380D, described above).
This course covers many of the same topics dealt with in BA 384T, but we tackle them on a more in-depth basis. Specifically, we discuss how companies actually do their financial reporting as prescribed by the Financial Accounting Standards Board (FASB). To illustrate, consider the topic of leases. In BA 384T, you discuss the distinction between an operating and capital lease, as well as other related, relatively high-level issues. In ACC 380K.1 (intermediate), we tackle this issue in more depth by discussing how companies calculate the lease liability number that appears on their balance sheet; how companies deal with leases that have bargain-purchase provisions; how companies handle leases where the leased asset has a guaranteed residual value; strategies that companies use to avoid showing a lease liability on their balance sheets, etc.
Topics covered in ACC 380K.1
- Articulation of balance sheet, income statement and cash flow statement
- Revenue recognition (long-term construction contracts, installment sales)
- Effects of accounting changes, restatements, discontinued operations, and extraordinary items
- Financial instruments (investments in debt instruments, equities, and derivatives; cash flow versus fair value hedges; securitizing receivables; outstanding debt, equity, hybrids)
- Fixed assets (impairments, restructurings, and interest capitalization)
- Deferred taxes (reconciliation of taxes paid with tax expense)
- Leases (off-balance-sheet financing)
- Pensions (effects of changes in interest rates and actuarial assumptions)
- Stock-based compensation
- Earnings per share (basic and diluted)
Accounting 380K.2
Financial Accounting Standards and Analysis II
(Advanced Financial Accounting)
This course is a requirement for those enrolled in the MPA program (in the financial accounting/auditing track) and can be taken by those in the MBA program (although most MBAs will take ACC 380D, described above).
The overall theme of ACC 380K.2 (advanced) is to generalize the U.S. single-corporation focus of ACC 380K.1 (intermediate) to different and broader entities. Primary examples are partnerships, consolidated operations of affiliated companies, and international operations.
Topics covered in ACC 380K.2
- Partnership accounting and corresponding valuation issues
- Accounting implications of differences between mergers and acquisitions
- Consolidated financial reporting
- Special-purpose / variable-interest entities
- Disclosures of segmented information
- International accounting standards and global capital markets
- Accounting for foreign subsidiaries
- Importing, exporting, and financial instruments used to manage foreign exchange risk
