B6001–Financial Accounting

FALL 2022, 3 Credits

Professor Matthias Breuer TEACHING ASSISTANTS

Professor Office Location: Kravis 1162 Anthony Le, [email protected]
E-mail: [email protected] Pablo Cavelier, [email protected]
Office Hours: Wednesdays, 5:00 pm-6:00 pm, Kravis Arjun Shah, [email protected]
1162, and by appointment Office Hours: Fridays, 2:00 pm-3:00 pm, Kravis 1173,
and by appointment

Communications from the instructor and teaching assistants about the course will take place through Canvas.
Students should make sure they regularly check for announcements and messaging notifications.

COURSE DESCRIPTION
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 the fact 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 three interrelated modules. First, we review accounting-related institutional details, the
nature of financial reports, audits, and disclosure. This includes 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. Last, we briefly explore a variety of settings, in which these products
are used, emphasizing ethics, data integrity, auditing regulations, financial statements analysis and valuation settings.

This Fall, we put special emphasis on 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.

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STUDENT LEARNING OUTCOMES
Knowledge of financial accounting is an essential skill necessary for understanding companies’ communication with their
various stakeholders (e.g., investors) and for making sound business decisions (e.g., investment decisions). After taking
this course, you will be able to:
• Understand the role, objectives, and institutions of financial reporting
• Know the main financial statements, their relation to each other, and their construction and preparation
• Identify the most important considerations in the preparation and the interpretation of financial statements,
and analyze the financial performance and position of companies
• Evaluate the credibility of financial statements
• Grasp current issues of non-financial reporting and sustainability (e.g., ESG)

CLASSROOM NORMS AND EXPECTATIONS

Core Culture
Students are expected to adhere to CBS Core Culture in this class by being Present, Prepared, Participating.

Inclusion, Accommodation, and Support for Students

At Columbia Business School we believe diversity strengthens any community or business model and brings it greater
success. The School is committed to providing all students with equal opportunity to thrive in the classroom by providing
a learning, living, and working environment free from discrimination, harassment, and bias on the basis of gender,
sexual orientation, race, ethnicity, socioeconomic status, or ability.

Students with documented disabilities may receive reasonable accommodations. Students are encouraged to contact
the Columbia University’s Office of Disability Services for information about registration.

Columbia Business School adheres to all community, state, and federal regulations as relate to Title IX and student
safety. Read more about CBS’ policies to support Inclusion, Accommodations and Support for Students here.

Honor Code and Academic Integrity

The Columbia Business School Honor Code calls on all members of the School community to adhere to and uphold the
notions of truth, integrity, and respect both during their time in school, and throughout their careers as productive,
moral, and caring participants in their companies and communities around the world. All students are subject to the
Honor Code for all of their academic work. Failure to comply with the Honor Code may result in Dean’s Discipline. Here
you can review examples of Academic Misconduct which may result in discipline.

Course materials (videos, assignments, problem sets, etc.) are for your use in this course only. You may not upload them
to external sites or post them for public commentary without the instructor’s permission. Sharing of course materials
with anyone who is not currently enrolled in the course, or someone who is not in your section, is not allowed (both
giving and receiving). It would be considered a violation of the honor code (and potentially of the copyrights).

Course Attendance Policies

Students from all programs should review and be familiar with the MBA Core Attendance Policy and the Exam Policy.

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Finally, a word of encouragement: The course requires constant attention and consistent effort. Batch processing will
almost surely be inefficient, frustrating, and unproductive. I urge you to keep up with the assignment schedule. I hope
you enjoy the course. Please feel free to give me feedback along the way. I am happy to try to incorporate useful ideas
and (feasible) constructive suggestions.

METHOD OF EVALUATION
Grades will be assessed based on two examinations, a series of required problem sets, and class participation:
1. Exams
There will be a mid-term (Monday, October 17, 2022) and a final (Monday, December 12, 2022). Both exams
are defined as Type C assignments and are computer based.
2. Problem Sets
9 problem sets are assigned during the semester. The best 8 submitted answers count toward the course grade.
You are allowed to work on these assignments with your learning team (as well as consult with anyone else in
the class). However, each individual is to submit their own written version of the assignment. That is, the
problem sets and required problems are defined as Type B1 assignments. Please see the Assignment Type
Definitions link in the Course Roadmap section for details about the different assignment types. The problem set
should be uploaded to Canvas by the required date before the beginning of class. Your grade on each
assignment will incorporate your effort in attempting the questions. Solutions to the problems sets will be
posted on Canvas.
3. Class Participation
10% of your grade will be based on class participation. That includes attendance, on-time arrival, and
professional behavior during class (including but not limited to: not leaving while class is in session, not having
private conversations, not using unauthorized electronics like computers, tablets, and phones), responding to
questions (cold calls or voluntary), asking questions that inform our discussion, sharing your relevant
professional experience, and a general demonstration of positive engagement. Please note that I cold-call
during class. If you are unprepared, you risk losing participation points.

Your final grade will be determined as follows based on the option which results in a higher overall course grade:

Option 1 Option 2
Problem Sets (best 8 out of 9 submissions 20% 20%
Midterm Examination 30% 20%
Final Examination 40% 50%
Participation 10% 10%

However, I reserve the right to improve any student’s course grade, based on my subjective assessment of a student’s
class participation and contribution to the course. On the other hand, demonstration of unprofessional behavior might
negatively impact a student’s course grade. The final grades for my sections will be based on the school’s mandated
grade distribution.

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COURSE ROADMAP/SCHEDULE
This schedule is tentative and I will adjust it as we progress. Please refer to Canvas for the most up-to-date schedule.

Recommended Practice Assignments Due

Session Topic(s)
Pre-Readings Exercises (Type)
1 Introduction and Overview (I)
08/30/2022
(T)
2 Introduction and Overview (II) Easton, Wild, Halsey
08/31/2022 & McAnally (EWHM)
(W) Module (M) 1

3 The Balance Sheet EWHM M2 (1-12) EWHM: M1-25, M1-28, E1-

09/06/2022 33, E1-35, P1-45
(T)

4 The Income Statement EWHM: M2-19, M2-20, M2-

EWHM M2 (12-26);
09/08/2022 23, E2-28
Case: Shemer
(R)

5 Basic Procedures (I) EWHM: M3-28, E3-42, E3- Problem Set 1

EWHM M3
09/13/2022 43, E3-44; Ralph’s Life (Type: B1)
(T)

6 Basic Procedures (II) EWHM:P3-45, P3-46, P3-56,

EWHM M3
09/15/2022 P3-57, P3-58, P3-59, P3-60;
(R) Case: Luca’s Hall of ABC Company (part I)
Mirrors

7 The Cash Flow Statement (I) EWHM: E11-32, E11-35, P11- Problem Set 2
EWHM M11
09/20/2022 51, MA3-64 (Type: B1)
(T)

8 The Cash Flow Statement (II) EWHM: E2-37, P2-42, P11-

EWHM M11
09/22/2022 48, P11-49; ABC Company
(R) Case: Dickerson (part II)
Manufacture

9 Revenue Recognition (I) EWHM: E5-23, P5-50 Problem Set 3

EWHM M5 (1-16);
09/27/2022 (Type: B1)
(T) Case: How, When,
What, Why (GM
Case)
10 Revenue Recognition (II) EWHM: M5-13, E5-34, P5-52
EWHM M5 (1-16)
09/29/2022
(R) Case: Priceline

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 11 Revenue Recognition (III) Case: Frequent Flyer
Problem Set 4
10/04/2022 (Type: B1)
(T)

12 Current Assets – Accounts EWHM: E5-41, E5-42, E5-43,

EWHM M5 (16-33)
10/06/2022 Receivable E5-45, P5-53, P5-54;
(R) Yehudit; Ram Oren

13 Current Assets – Inventory EWHM: E6-23, E6-25, E6-26,

EWHM M6 (1-16)
10/11/2022 and Cost Accounting (I)
(T)

14 Catch-up and Review Problem Set 5

10/13/2022 (Type: B1)
(R)

Mid-Term Exam – Monday, Oct 17

15 Current Assets – Inventory Electro-Catheter, Pumpkin
10/25/2022 and Cost Accounting (II) bags
(T)

16 Long Lived Assets (PP&E) EWHM: E6-27, E6-28, E6-30,

EWHM M6 (16-29)
10/27/2022 E6-33, P6-37, P6-38;
(R) VCompany; BatyaGoor

17 Liabilities – Bonds EWHM: E7-35, E7-37, I7-50;

EWHM M7
11/01/2022 Mara
(T)

18 Liabilities – Leases EWHM: E10-29, E10-38, P10- Problem Set 6

EWHM M10 (1-11)
11/03/2022 41; Maher; Safwan (Type: B1)
(R)

19 Taxes EWHM: E10-36, I10-47;

EWHM M10 (24-37)
11/10/2022 Dominiak; Pete’s Growing
(R) Case: IBM Deferred Taxes

20 Investments in Corporate EWHM: E9-30; Rochester Problem Set 7

EWHM M9
11/15/2022 Securities (I) (Type: B1)
(T)

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 21 Investments in Corporate EWHM: E9-32, E9-38, E9-41,
EWHM M9
11/17/2022 Securities (II) P9-48, P9-49, I9-50;
(R) Orphan’s Goodwill

22 Introduction to Financial EWHM: M4-22, M4-23, M4-

EWHM M4
11/22/2022 Statements Analysis (Ratio 24, M4-25, E4-31, E4-32, P4-
(T) Analysis) 41

23 Financial Statement Analysis Problem Set 8

11/29/2022 and Valuation Settings; (Type: B1)
(R) Sherlock Holmes

24 Summary, Catch-up and

12/01/2022 Review
(R)

No class Problem Set 9

12/06/2022 (Type: B1)
(T)

Review Sessions: Fridays, 12:00-1:30pm, Kravis 440

Final Exam (Monday, 12/12/2022, Location & Time TBD)

TEXT AND MATERIALS

The recommended text is “Financial Accounting for MBAs,” by Easton, Wild, Halsey & McAnally (EWHM), 8th edition,
Cambridge Business Publishing, 2021. In addition, we created an online resource for you as part of the Pre-MBA
content. This additional resource is a joint effort by Columbia’s Accounting Division and Cambridge Business Publishers.
This optional content is designed to help familiarize you with the basic construction of balance sheets and income
statements from the transactions and events that organizations engage in. Our class will begin without assuming any
prior knowledge in Accounting. Therefore, the topics covered in the online resource will also be covered in class. This
content enables you to preview the material ahead of time, making the transition into class easier for students that have
limited exposure to the material. This resource can also be used later on, when reviewing the material covered in class.

As I want to ensure that we cover the material in a way that is most beneficial for the class, I will provide a digit handout
(without solutions for in-class exercises) for each topic’s presentation before class and the full presentation slides (with
solutions for in-class exercises) after each class. These presentation files as well as required and additional cases and
readings will be online on Canvas by topic or session. A tentative class schedule is provided above. The assigned
readings and (optional) “practice exercises” are designed to help you learn the material covered in class. (Solutions to
the exercises can be found on Canvas.) The assigned readings should be read ahead of the lectures to obtain a broad
understanding of the topic. However, I do not intend for you to fully grasp the various issues and intricacies of the topic
until we cover the topic in class. The practice exercises should be attempted after we have completed the topic in class.
The named practice exercises, e.g., Ralph’s Life, and related solutions are posted on Canvas. “Cases” are intended for

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class discussion and solutions will be posted following the discussion. I expect you to be prepared to discuss cases in
class.

REVIEW SESSIONS AND TUTORS

Review sessions, led by the teaching assistants, will be held on a regular basis on Fridays, beginning on September 16,
2022. You are not required to attend these sessions, but attendance is encouraged for students having difficulty
following the class material or solving the assigned problems. The sessions are offered in hybrid format. For the Zoom
link, see our Canvas page.

For additional support, the Office of Student Affairs provides the option of using certain current MBA students as tutors.

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