Foundations of Financial Accounting

This unit introduces students to the core concepts, reports, and practices of financial accounting, including the accounting equation, external financial statements (income statement, balance sheet, statement of cash flows), and owners’ equity. Students will learn bookkeeping fundamentals, the roles of bookkeepers and accountants, legal forms of business, basic financial analysis (ratios and breakeven), and hands-on use of accounting technology to prepare and interpret financial information for decision making.

Learning Objectives

• Analyze income statements, balance sheets, statements of cash flows, and owners’ equity statements and apply common financial ratios to evaluate liquidity, profitability, and solvency
• Apply the expanded accounting equation to record and classify routine transactions through the bookkeeping cycle and reconcile differences between net income and cash flow
• Demonstrate separation of duties between bookkeepers and accountants and use cloud-based and desktop accounting software to generate accurate financial reports and maintain records
• Evaluate legal business entity types and their effects on owners’ equity and financial reporting, and compute breakeven and basic short-term forecasts to inform managerial decisions