Target Audience

Financial Accounting for Executives & MBAs is written specifically for the executive MBA and MBA markets. This concise text can be used in a wide variety of course formats, ranging from brief executive programs lasting only a few weekends to more traditional 15-week courses.

I’ve been teaching 10 years, and this is the BEST text I’ve seen for introducing financial accounting to a layperson. My major problem with texts has been that they are either too broad or too detailed. This book is the perfect mix of breadth and depth for a layperson, be they an executive who has had some exposure to accounting or a student who is just entering the study of accounting. This book is excellent.

Catherine Eason, Queens University of Charlotte

Book Organization

A succinct, flexible 12-chapter structure fits eMBA, full-time, part-time, and evening MBA programs. This book provides students with the tools and insights necessary to make informed business decisions ranging from performance evaluation to firm valuation. The chapters are organized around a decision focused structure.

The first four chapters introduce the basic financial statements and tools for financial analysis:

I. The Foundations of Accounting and Financial statement Analysis (Chapters 1–4)

The next seven chapters provide additional structure for this analysis, with each chapter including a section that discusses how the chapter’s content should be analyzed and how that analysis will impact firm value:

II. Operating resources and Decisions (Chapters 5–6)

III. investing resources and Decisions (Chapters 7–8)

IV. Financing resources and Decisions (Chapters 9–11)

The book concludes with an introduction to various methodologies to assess the value of a company:

V. equity Valuation (Chapter 12)

What is the Financial Statement Spreadsheet Approach to Illustrating Accounting Concepts?

The eMBA and MBA markets tend to be more analytical and decision-focused than the undergraduate market. Unlike undergraduate textbooks in accounting that use the classic debit and credit paradigm to explain key concepts, this textbook uses a financial statement spreadsheet approach to explain the fundamentals of financial accounting. Not only is this approach more user-friendly (because most managers routinely use spreadsheets in their daily professional lives), but it is also far less labor- and time-intensive than the classic debit/credit paradigm. The spreadsheet approach to recording transactions emphasizes user analysis and deemphasizes bookkeeping.

The financial statement spreadsheet approach builds upon the basic accounting equation to demonstrate how business events are processed and ultimately recorded. It will be appreciated by many executives and MBA students for its simplicity and intuitive appeal, as well as for its link back to how they likely see accounting information in their professional lives. That is, it presents a vertical format to the balance sheet equation, functionally following the form and presentation of the balance sheet most often observe in practice and annual reports. The format is also used to illustrate income statement accounts as inputs directly into the retained earnings account, reinforcing this important concept to students in a way that helps them more clearly understand the relation between the balance sheet and income statement. Below is an example of the financial statement spreadsheet approach used in the context of a long-term fixed asset acquisition and sale:

Decision-Relevant Focus

A key skill set for all investment professionals, lenders, managers, analysts, and shareholders is the ability to use accounting information for decision-making purposes. in this book, we link the discussion of topics to the following two business decisions:

1. Should I extend credit, and at what terms, to this company?
2. should I invest in this company, and if so, at what price?

Thus, the analysis of financial statements is a key organizational theme that extends throughout the book.

I believe that the concise and clear writing is a major strength of this book. The authors should also be complimented on being able to use a good number of examples while still keeping the chapters concise.

Charles Leflar, University of Arkansas

Grounded in the Context of Corporate Decisions

Accounting information is an integral part of decision making at every level in business. Consequently, the book’s discussion of important accounting concepts is grounded in the context of actual corporate decisions. To this end, the book contains an abundance of excerpts and illustrations from actual corporate financial reports and disclosures that highlight the role and impact of accounting information, and financial statements specifically, in business decision making. Following is one example in the context of accounting for leases:

Does the Book Reflect contemporary knowledge?

In our experience, eMBAs and MBAs frequently seem interested in exploring empirical questions such as: "How do the capital markets respond to accounting policy changes?" and "Which EPS measure -Basic PS or Diluted EPS- is used by the capital market to value a company's stock?" Where appropriate, we have made reference to, and discussion of, the existing research in accounting and finance to address some of these empirically-based questions. By doing so, we enable the interested reader to further her/his knowledge of these questions.

Important Pedadogical Elements

The book applies several pedagogical elements to help readers further understand the ramifications of accounting for business.

Global Perspective

Global Perspective boxed inserts emphasize the similarity of u.s. GAAP and iFrs, but they also identify key differences. exposure to similarities and differences is important as the pressure mounts to harmonize accounting standards globally.

Ethics Perspective

Ethics Perspective boxed inserts emphasize ethical decision making, as well as the importance of ethics in accounting. in today’s environment post-implementation of sarbanes-Oxley, this information is pertinent to business students and accounting students alike.

Business Perspective

Business Perspective boxed inserts illustrate key chapter topics using real-world examples and financial statements.

Tax Perspective

Tax Perspective boxed inserts highlight select aspects of U.S. tax law and how they differ from generally accepted accounting principles. Executives and MBAs very often are interested in understanding how their decisions affect both financial accounting earnings and the cash flows related to the tax treatment of those same decisions. While this text is clearly focused on the former, high-level overviews of some key tax reporting differences are offered throughout the text. Below is an example related to investments:

In Practice

In Practice boxed inserts help bridge the gap between the classroom and what students encounter in the real world. "In Practice" illustrations document situations a reader is likely to encounter and present the choices that companies make in reporting financial results.

Tools that Reinforce Reader Comprehension

Each chapter includes many tools that reinforce an understanding of the chapter contents. These tools include:

• Review Problem, with solution
• Executive Summary
• Key Concepts and Terms, with page references
• Discussion Questions
• Exercises
• Problems
• Corporate Analysis
• Check figures to accompany select exercises and problems, denoted by Check Figure

The discussion questions are great for an Executive MBA or MBA audience because they are targeted at a more sophisticated student than the typical introductory financial accounting text. They should help a professor stimulate interesting discussions in the classroom

Jeffrey Wong, University of Nevada, Reno

Changes in the Third Edition

This edition of Financial Accounting for Executives & MBAs includes a number of important new features. These include:

• Paul Simko of University of Virginia’s Darden School of Business has joined the author team.
• A (vertical) financial statement spreadsheet approach for analyzing transactions that reinforces the way in which students engage with financial statements in practice.
• extensive reference to recent accounting issues facing high profile companies such as Apple, Groupon, American Airlines, Bank of America, and Under Armour.
• Tax perspectives boxes provide high-level contrasts between financial accounting rules and those that govern u.s. tax law.
• Expanded discussion of relevant international accounting practices around the globe.
• Many of the assignments have been revised and updated.
• myBusinessCourse: This complete learning and assessment program is free with new copies of the textbook. myBusinessCourse includes a complete learning path for students. As the instructor, you can select assignments from the textbook or test bank and have students’ responses automatically graded. You also have access to a robust grade book that provides many course management and diagnostic tools. Whether you teach a complete online course or just want to provide your students with additional resources to master the content, myBusinessCourse will prove to be an invaluable resource for you and your students.
• The new edition features an exciting new full color design to engage students. The authors have used color as a pedagogical tool to highlight important points for students.
• Appendix D covers the basic mechanics of accounting for those instructors that want to expose their students to the fundamentals of the debit-credit paradigm.