Data Analytics & Excel Skill Development For Career Readiness

The basics of accounting haven’t changed much in hundreds of years, but businesses have experienced significant change in the last decade due to the increased use of new technologies ranging from data analytics and Blockchain to machine learning and artificial intelligence. Technology is rapidly altering how accounting is performed and what can be done with the data once they are collected. In response to the changing demands of the business world, the AACSB has incorporated data analytics requirements within its educational framework. More recently, the AICPA and NASBA have underscored the importance of data analytics by making it a significant element in the CPA Evolution Model Curriculum. The consensus suggests that today’s business students need an understanding and working knowledge of data analytics and data visualization to compete for the best jobs.

In addition to data analytics skills, employers expect prospective employees to be proficient with Excel. In recognition of the increasing importance of data analytics and the need for Excel proficiency, the Seventh Edition includes several new features to enhance students’ career readiness

• In each chapter, we use data visualizations to depict financial information. It is important for students to become comfortable interpreting visual depictions of data.

• Each chapter includes assignments that require students to use Excel and Tableau to hone data analysis and data visualization skills.

• Appendix B at the end of the book provides an overview of data analytics, data visualization, and best practices for the effective display of data.

• MBC now contains a series of short videos that demonstrate the basic functions of Excel. These videos can be accessed within MBC as part of your MBC course.

Welcome to the Seventh Edition of Financial Accounting!

We wrote this book to equip students with the accounting techniques and insights necessary to succeed in today’s business environment. It reflects our combined experience in teaching financial accounting to college students at all levels. For anyone who pursues a career in business, the ability to read, analyze, and interpret published financial reports is an essential skill. Financial Accounting is written for future business leaders who want to understand how financial statements are prepared and how the information in published financial reports is used by investors, creditors, financial analysts, and managers. Our goal is to provide the most engaging, relevant, and accessible textbook available.

Target Audience

Financial Accounting is intended for use in the first financial accounting course at either the under- graduate or graduate level; one that balances the preparation of financial statements with their analysis and interpretation. This book accommodates mini-courses lasting only a few days as well as extended courses lasting a full semester.

Financial Accounting is real-world oriented and focuses on the most salient aspects of accounting. It teaches students how to read, analyze, and interpret financial accounting data to make informed business decisions. To that end, it consistently incorporates real company data, both in the body of each chapter and throughout the assignment material.

Real Data Incorporated Throughout

Today's business students must be skilled in using real financial statements to make business decisions. We feel strongly that the more exposure students get to real financial statements, the more comfortable they become with the variety in financial statements that exists across companies and industries. Through their exposure to various financial statements, students will learn that, while financial statements do not all look the same, they can readily understand and interpret them to make business decisions. Because we update all of the examples throughout the chapters with the most recently available information, students will see the impact of recent events on financial statements, such as the impact of the COVID-19 pandemic. Furthermore, today’s students must have the skills to go beyond basic financial statements to interpret and apply nonfinancial disclosures, such as note disclosures and supplementary reports. We expose students to the analysis and interpretation of real company data and nonfinancial disclosures through the use of focus companies in each chapter, the generous incorporation of note disclosures, financial analysis discussions in nearly every chapter, and an abundance of assignments that draw on real company data and disclosure.

Focus Companies for Each Chapter

Each chapter’s content is explained through the accounting and reporting activities of real companies. Each chapter incorporates a “focus company” for special emphasis and demonstration. The enhanced instructional value of focus companies comes from the way they engage students in real analysis and interpretation. Focus companies were selected based on student appeal and the diversity of industries.

Road Maps

Each chapter opens with an Action Plan that identifies each learning objective for the chapter, the related page numbers, the reviews, and the assignments. This table allows students and faculty to quickly grasp the chapter contents and to efficiently navigate the desired topic.

Note Disclosures and Management Disclosures

We incorporate note disclosure and other management disclosures, where appropriate, throughout the book. We explain the significance of the note disclosure and then demonstrate how to use the disclosed information to make managerial inferences and decisions. A representative sample follows:

Financial Analysis Discussions

Each chapter includes a financial analysis discussion that introduces key ratios and applies them to the financial statements of the chapter’s focus company. By weaving some analysis into each chapter, we try to instill in students a deeper appreciation for the significance of the accounting methods being discussed. One such analysis discussion follows:

Assignments that Draw on Real Data

It is essential for students to be able to apply what they have learned to real financial statements. There- fore, we have included an abundance of assignments in each chapter that draw on recent, real data and disclosures. These assignments are readily identified by an icon in the margin that includes the company’s ticker symbol and the exchange on which the company’s stock trades. A representative example follows:

Balanced Approach

As instructors of introductory financial accounting, we recognize that the first financial accounting course serves the general business students as well as potential accounting majors. Financial Accounting embraces this reality. This book balances financial reporting, analysis, interpretation, and decision making with the more standard aspects of accounting such as journal entries, T-accounts, and the preparation of financial statements.

3-Step Process: Analyze, Journal, Post

One technique we use throughout the book to maintain a balanced approach is the incorporation of a 3-step process to analyze and record transactions. Step 1 analyzes the impact of various transactions on the financial statements using the financial statement effects template (FSET). Step 2 records the transaction using journal entries, and Step 3 requires students to post the journal entries to T-accounts.

The FSET captures each transaction’s effects on the four financial statements: the balance sheet, income statement, statement of stockholders’ equity, and statement of cash f lows. For the balance sheet, we differentiate between cash and noncash assets to identify the cash effects of transactions. Likewise, equity is separated into the contributed and earned capital components (the latter includes retained earnings as its major element). Finally, income statement effects are separated into revenues, expenses, and net income (the updating of retained earnings is denoted with an arrow line running from net income to earned capital). The FSET provides a convenient means to represent financial accounting transactions and events in a simple, concise manner for assessing their effects on financial statements. To provide faculty flexibility to tailor instruction, all relevant end of chapter materials can be assigned using the journal entry approach or the FSET approach.

Innovative Pedagogy

Business Insights

Students appreciate and become more engaged when they can see the real-world relevance of what they are learning in the classroom. We have included a generous number of current, real-world examples throughout each chapter in Business Insight boxes. The following is a representative example:

Decision Making Orientation

One primary goal of a financial accounting course is to teach students the skills needed to apply their accounting knowledge to solving real business problems. With that goal in mind, You Make the Call boxes in each chapter encourage students to apply the material presented to solving actual business scenarios.

Learning Objective Reviews

Financial accounting can be challenging—especially for students lacking business experience or previous exposure to business courses. To reinforce concepts presented in each chapter and to ensure student comprehension, we include a review problem at the conclusion of each learning objective. Answers to the review problems are included at the end of the chapter. Each review has a corresponding Guided Example video, available to students in myBusinessCourse (MBC), our online learning and homework system. In addition, each Review is assignable in MBC.

Research Insights for Business Students

Academic research plays an important role in the way business is conducted, accounting is performed, and students are taught. It is important for students to recognize how modern research and modern business practice interact. Therefore, we periodically incorporate relevant research to help students understand the important relation between research and modern business.

Flexibility For Courses Of Varying Lengths

Many instructors have approached us to ask about suggested chapter coverage based on courses of varying length. To that end, we provide the following table of possible course designs:

New to the Seventh Edition

• We have expanded the coverage, resources, and assignments related to data analytics and Excel skill development in an effort to enhance career readiness.
• Chapter Updates: As appropriate, the text and assignments have been updated to ref lect the latest FASB standards and other current information:
• Chapter 4 incorporates restricted cash as part of total cash presented on the statement of cash flows.
• Chapter 5 includes updated information on industry ratios that is referenced in real life examples not only in this chapter, but throughout the text.
• Chapter 8 includes a discussion on digital assets with a supporting end of chapter assignment.
• Chapter 10 discusses the election in lease accounting to not separate lease and non-lease components.
• Chapter 11 ref lects the new guidance on accounting for convertible instruments (including the impact on diluted EPS).
• Chapter 12 brief ly discusses the recording of credit losses on available-for-sale debt securities and new guidance on the amortization of goodwill for private companies.
• Expanded the FSET presentation in Chapter 4 (transactions that impact the statement of cash flows) and in Chapter 10 (accounting for operating leases by the lessee).
• Deere & Co. replaced Delta Air Lines as the focus company of Chapter 10.
• In addition to the chapter-specific changes, there have been several changes that span the entire book. Some of these global changes include:
• Added a Road Map to each chapter that summarizes the reviews and assignments for each learning objective in the chapter.
• Added review problems to the end of each learning objective, replacing the mid-chapter and end of chapter reviews.
• Expanded all end of chapter materials to allow for the assigning of either the journal entry approach or the FSET approach.
• Updated numbers for examples, illustrations, and assignments that use real data.
• Updated note disclosures and other nonfinancial disclosures.
• Updated excerpts from the business and popular press.
• Nearly all of the assignments in each chapter have been revised with updated data or replaced with a new company focus.

Teaching Supplements

• myBusinessCourse:  An online learning and assessment program intended to complement your textbook and classroom instruction. Access to myBusinessCourse is FREE with the purchase of a new textbook and can also be purchased separately.
• Solutions Manual: Created by the authors, the Solutions Manual contains complete solutions to all the assignment material in the text.
• PowerPoint: The PowerPoint slides outline key elements of each chapter.
• Test Bank: The Test Bank includes multiple-choice items, short essay questions, and problems.

Additional Resources

Financial Accounting Bootcamp

This interactive tutorial is intended for use in programs that either require or would like to offer a tutorial that can be used as a refresher of topics introduced in the first financial accounting course. It is designed as an asynchronous, interactive, self-paced experience for students. Available Learning Modules (You Select) follow.

1. Introducing Financial Accounting (approximate completion time 2 hours)
2. Constructing Financial Statements (approximate completion time 4 hours)
3. Adjusting Entries and Completing the Accounting Cycle (approximate completion time 4 hours)
4. Reporting and Analyzing Cash Flows (approximate completion time 3.5 hours)
5. Analyzing and Interpreting Financial Statements (approximate completion time 3.5 hours)
6. Excel and Time-Value of Money Basics (approximate completion time 2 hours)

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