*Eligible for an automatic waiver*
This course provides an introduction to the principles of financial accounting. The course objective is to help the student develop into an informed user of financial statements information. The textbook and materials provided will be used to present the concepts and mechanics associated with the accounting topics of interest. The theoretical material will be supplemented by demonstrating the effects and implications of the topics we studied in real-world settings. This is accomplished through study cases and analyses of financial statements of actual publicly-held corporations. The course topics include the Balance Sheet and Double Entry Accounting, the Income Statement, the Cash Flow Statement, Revenue Recognition, Receivables, Inventories and Cost of Goods Sold, Introduction to Financial Statement Analysis, Fair Value Accounting, Long Lived Assets and Intangible Assets, Liabilities, Marketable Securities and Investments, and Owners’ Equity.
Waiver Exam Overview
If you have a solid foundation in the basics of financial accounting, including at least one course at the intermediate level, you may consider taking the waiver exam. The exam is a set of basic questions and problems that you must complete in three hours. You may bring a basic financial calculator. You may not use any books or notes. You may also view a syllabus from last year here (weekend). Please note that this is meant to serve only as a reference.
A Note from Professor Konchitchki
As you consider whether or not to waive this class, I encourage you to consider a few things. First, most importantly, this course covers topics well beyond basic accounting rules. Indeed, this course provides big-picture insights on the intersection between financial reporting, capital markets, financial decision making, and the macroeconomy. These topics are strongly tied to your role as a manger. They also provide you with high return on your MBA investment and with strong foundations for other classes at Haas. In the past, even CPAs who waived it expressed their dissatisfaction with their decision to waive this course because of its richness and importance as part of the MBA studies.
Overall, this course provides financial literacy along a number of dimensions, enabling success in future student careers and in real life situations. It covers the language of the business world — how events in the life of a company map into financial data and how to read balance sheets, income statements, statements of cash flows, and other financial reports of primary importance for investors, suppliers, analysts, banks, regulators and other users of financial data.
The course also shows from where financial amounts are coming, as well as it introduces key topics in financial statement analysis and fair value accounting – topics at the heart of the business world nowadays.
The course also demonstrates how the U.S. Securities and Exchange Commission (SEC) and the U.S. Financial Accounting Standards Board (FASB) play a key role in financial reporting in general, and in the recent financial crisis and the Great Recession that followed in particular.
Throughout the course, it also emphasizes how financial data is tied to the stock prices of corporations and to the macroeconomy. It also refers to real life examples using financial data such as Alphabet (Google), Walmart, Tesla, Bank of America, Salesforce, PG&E, Uber, WeWork, the 2007-2008 financial crisis, the recent recession, etc.
In addition, the course shows how managers’ decisions can be enhanced using the covered financial reporting topics, such as:
– predicting bankruptcies of companies years before the events;
– conducting event study analyses that are centered on various economic signals such as earnings announcements, analyst forecasts, and stock options awards.
The course also covers the bond market and how bonds work, from the perspectives of investors making investment decisions as well as how bonds are recognized in financial statements.
Other topics include forecasting macroeconomic activity (using GDP growth), identifying turning points in the macroeconomic business cycles, forecasting operating and stock return performance, and introducing cutting-edge insights from capital markets research in finance, accounting, and economics.
Please talk with me if you have any questions about course content and learning outcomes.