Financial Accounting

The purpose of this course is to provide a comprehensive, graduate-level introduction to accounting. It is designed to provide managerially oriented users of accounting products with the foundations of accounting concepts, the underlying mechanics, and the overall perspective required to become intelligent users of accounting information. The course will focus on the typical financial statements (e.g., balance sheet, income statement, and cash flow statement) along with the environment in which they are produced and used. The overarching perspective is that accounting reports provide information that is useful for a variety of purposes. The course design emphasizes that the information content of accounting reports is jointly determined by the accounting methods used to generate the reports and the environment in which the reports are produced and used. Thus, the course integrates the study of accounting methods and the study of the accounting environment. Accounting concerns, in turn, vary with market opportunities, instruments, and organizational arrangements at hand. The course is organized into two interrelated modules. First, we review accounting-related institutional details, the nature of financial reports, audits, and disclosure. This includes the examination of the three main financial statements, the nature of accrual measurement, and the information perspective that is central to the course. Second, we explore accounting methods in detail, focusing on revenue recognition, assets, liabilities, and equity. We explicitly consider accounting issues related to global organizations. Throughout the course, we explore a variety of settings in which these products are used, emphasizing ethics, data integrity, auditing regulations, financial statements analysis and valuation. We emphasize the connection between accounting concepts, methods, and institutions and current debates related to climate change and broader environmental and societal concerns. To this end, we briefly discuss recent developments and news articles related to environmental, social, and governance (ESG) issues after each topic, exploring how those issues are connected to the respective concepts and insights from financial accounting covered in class.