Last updated: December 29, 2014 (subject to change until the first class).

Financial Accounting - B30000

Winter 2015
Professor:
Office:
Office Hours:

Valeri Nikolaev
HPC 434
By appointment

valeri.nikolaev@chicagobooth.edu
(773) 834-4116

Teaching Assistant: Oleg Kiriukhin

Office Hours:
By appointment

kiriukhin@chicagobooth.edu

Admin Assistant:

Samantha Geloso

Classes:
Section 02:
Section 03:
Section 85:

Friday
Friday
Saturday

Optional review sessions:

Before midterm
Saturday, February 7
Wednesday, February 11
Before final exam
Saturday, March 14
Wednesday, March 18

8:30 AM - 11:30 AM
1:30 AM - 4:30 PM
1:30 AM - 4:30 PM

samantha.geloso@chicagobooth.edu

Harper Center, room C08

Harper Center, room C08
Gleacher Center, room 404

4:45 pm - 6:15 pm
4:45 pm - 6:15 pm

Gleacher, room TBA

Harper Center, room C25

4:45 pm - 6:15 pm
4:45 pm - 6:15 pm

Gleacher, room TBA

Harper Center, room C25

Course Description: The focus of the course is on fundamental accounting concepts and principles. The
objectives of the course are to provide basic skills necessary to understand and analyze financial
statements as well as to prepare students for more advanced financial statement analysis courses. The
objective is not to train you as an accountant but rather to help you become an informed user of financial
statements. Classes combine interactive lectures and discussions about financial accounting concepts and
practice. Short cases involving corporate financial statements are used to illustrate accounting concepts
and material covered in class. Students are expected to complete assigned problems and readings,
complete case-based homework (including in-class team presentation), and participate during the class.
Required course materials: You are required to purchase the textbook, which has been customized
specifically for this course. The textbook can be purchased directly from McGraw-Hill. There are two
options:
(1) Hardcopy: The hardcopy textbook can be purchased though the following link:
http://shop.mcgraw-hill.com/mhshop/productDetails?isbn=1259379663.
The hardcopy textbook package includes: both the customized hard and electronic versions
(eBook) of 8th Edition of Financial Accounting by Libby, Libby, Short (published by McGrawHill, ISBN# 1259379663); and Access to the McGraw-Hill Connect Assignment System
(Connect).
(2) Electronic: Includes an eBook copy of the text as well as access to Connect. You can purchase the
eBook directly from the Connect website accessed through Chalk.
After purchasing the text, you are required to register on the Connect website. To do so, access the

Last updated: December 29, 2014 (subject to change until the first class).

Connect system through Chalk (log in to chalk.uchicago.edu, click on Homework Assignments,

Week1, Graded Homework-Chapter 1, and Register; enter your email and the Access Code that
accompanied the textbook).
Note: If you are not sure whether you will ultimately enroll in the course, McGraw-Hill offers a threeweek free trial of the electronic version of the text, which is also available via the Connect registration
page.
Examinations: The mid-term exam will be held during the first half of the class in Week 6.
The final exam is three hours in length and will be comprehensive of all course topics and materials. The
final exam schedule is as follows:
Section 02:
Friday, March 20, 2015, 8:30 AM - 11:30 AM
Section 03:
Friday, March 20, 2015, 1:30 PM - 4:30 PM
Section 85:
Saturday, March 21, 2015, 1:30 PM - 4:30 PM
Both examinations will be "closed book/closed notes" you are not allowed to bring class material to the
exam. You will also find it useful to bring a calculator to the exams. I do not return final exams,
although students can arrange a time to come to my office and go over the exam. Please have your name
card displayed during the examinations.
Note: There will be no changes to the final exam schedule set by Booth. Check your schedules
carefully if you cannot attend the final exam at its scheduled time then do not enroll in this
section. Make-up exams are not possible.
Course Website: I will use two electronic resources for this course: (1) the Universitys Chalk system
(http://chalk.uchicago.edu) which contains course announcements, class handouts, slides, cases, and
articles; (2) the McGraw-Hill Connect website (accessible directly through Chalk), which contains
homework assignments and access to the eBook. Please ensure that you are able to access the system as
soon as possible.
Grading: The following weights will be used in calculating the final grade:
Graded Online Homework
In-Class Case Assignments (presentation/discussion)
Class Contribution and self-executed case study
Mid-quarter exam
Final exam

10%
10%
10%
20%
50%

If you cannot attend the midterm exam or if your final exam score is higher than your midterm score, the
midterm score will be updated by the score on the final exam. In such cases, the final exam is worth 70%
of your final grade. Requests to regrade the midterm exam must be made in writing within one week of
the return of the exam. Regrade requests for the midterm and the final will result in the entire exam being
regraded and may result in a higher or lower grade. Note: Students needing a provisional grade in order
to graduate must have a midterm score.
Homework Assignments: The two types of graded homework assignments are: (1) online assignments
(via Chalk on McGraw-Hill Connect); and (2) case-based homework. The case-based homework includes
(i) one in-class case assignment (a presentation & a discussion), (ii) weekly case homework submitted
before the start of class, and (iii) self-executed case study. You are expected to work on case assignments
in teams/groups. We will be forming teams after the first class. Additional instructions regarding the casebased homework will follow in a separate document.

Last updated: December 29, 2014 (subject to change until the first class).

Online Homework Assignments: Several online problems are assigned for each chapter. To complete the
assigned problems (on the Connect website), access them directly through Chalk by clicking on
Homework Assignments. You can check your work on Connect before you submit it (Connect will tell
you whether your answers are correct or incorrect as you work through each problem). Connect provides
an assignment score and a comprehensive correct solution immediately following the due date.
Assignment due dates are posted on the McGraw-Hill Connect website and on the Course Schedule below
(the first graded homework assignment is due in Week 2). If you experience technical difficulties with
the Connect website, try deleting temporary files and cookies in IE options, or try using a different
browser.
Online Homework Due: Online Homework is due by 11:00 p.m. on the Tuesday following class
discussion of the related textbook chapter. The due dates are stated under each assignment on Chalk.
Backup Homework Submission: Each McGraw-Hill Connect assignment is derived from related exercises
and problems in the Libby, Libby, Short textbook. The textbook version of those exercises and problems
are listed on the last page of the syllabus. If you are not able to access McGraw-Hill Connect for any
reason (e.g., traveling without internet connection), you can work the related problems from the textbook
and e-mail (or mail) your solution to the TA before the deadline.
LearnSmart on McGraw-Hill Connect: There is a short LearnSmart Study Module for each textbook
chapter. Each module is a game-like short quiz designed to test your understanding of material from the
assigned textbook chapter. It is optional whether you want to use LearnSmart.
Case-based Homework: I will assign/cover 8 cases throughout the quarter. They are intended to enhance
your understanding of real world companies financial statements and transactions and encourage you to
prepare for classes in advance. The cases will be available on the Chalk webpage several (at least two)
weeks prior to their corresponding due dates.
In keeping with the complexity of real world accounting issues, the material in the cases is relatively more
challenging. You are required to perform a self-study in teams when preparing the answers to cases. Make
one or two team members responsible for reading the textbook and explaining the basics necessary to
tackle the case to other team members. Such approach allows you to get most out of the classes and
enable you to participate during class discussions. Grading of the solutions to cases will be based on the
effort expended in understanding the situation presented and the attempt to provide a thoughtful response
to the questions posed. Rather than seeking to arrive at the correct answer, your goal for each case
should be to make a good faith attempt to understand and answer each question and to come to class
prepared to contribute to a discussion of the issues presented.
Requirements: You are expected to work in teams on all 8 cases and are required to fulfill the following:
1. In-Class Case Assignment (Presentation and Discussion): The class will be evenly divided in 8
Case Teams. Each team is required to make one presentation and, in a different week, one
discussion of a solution to one of eight cases. Presentations and discussions will take place in
Weeks 2 to 9. Presentations must be posted on Chalk prior to the class. You are to include the
following information on the front page: your section #, your group #, last, and first names of all
members that contributed.
2. Weekly Case Homework: Complete and submit a group solution to any 5 out of 8 cases. The
answers to the case questions are due at the beginning of the class where the case is discussed
(see the course schedule below); participate in class discussion of cases.

Last updated: December 29, 2014 (subject to change until the first class).

3. During the quarter, each team is to execute and write up a short case study (summary and a 15-20
min PowerPoint presentation) on Tesco Profit Scandal in 2014. This study is due on March 4. I
will ask one of the teams to present their study in the last class.
Additional instructions regarding case-based homework will be provided in a separate document on
Chalk.
Classroom performance/contribution: Display your name card in every class (make one if you do not
have it). Class performance is based on your participation and contribution to class discussions,
preparation for class (e.g., readings, cases), and class attendance (your score is based on your
contribution, not the amount of time you talk). It is taken into account that students with different
backgrounds contribute differently. Cold calls are not uncommon.
In the rare instance that an emergency precludes you from preparing for a particular class, you should
notify the instructor before the class begins. Tardiness and entering or leaving during class or lack of
attendance may have a negative effect on your classroom performance grade. If you come unprepared you
need to communicate this to the instructor.
Pre-Class Preparation: You are required to read the assigned chapters and cases before the class (it is
preferable that you begin work on the assigned homework prior to the class). Readings and cases are
listed in the schedule on the last page of the syllabus (problems and exercises are the same as on
McGraw-Hill Connect).
Help With Your Questions: E-mail is a convenient way to ask questions. Please direct your (content
related) questions to the teaching assistant (you can cc me) and allow for some time before he answers. If
you have organizational questions, please email me directly.
Instead of holding inflexible office hours, I am available by appointment to answer more detailed
questions or problems. I will also be available a few minutes before and after the class to answer brief
questions.
Honor Code: Students are required to adhere to the standards of conduct in the Booth Honor Code and
the Chicago Booth Standards of Scholarship. The Booth Honor Code requires students to sign the
following pledge on all work: I pledge my honor that I have not violated the Honor Code during this
assignment/examination. Any communication among students during the exam is strictly forbidden.
Students are not permitted to discuss any part of an exam (including both questions and answers) with
other students until the exam has been taken by all the sections of this course (including other instructors).
Class Courtesy: Please no cell-phone use during class. Students are expected to be in their seats prior to
the start of class. Please no walking around during the class (if you need to leave early, please notify the
instructor and take the seat near the exit). Laptop computers are allowed in class to make notes or read
class related materials. Note that browsing the internet and chatting during class is disrespectful to people
around you.
How to do well in this course:
Expect to spend between 5-8 hours per week on the course outside of class.
Come prepared to each class (have your name tag displayed).
Read the solutions to online homework and Cases (become available after the deadline
passes).
Prepare for In-Class Assignment/Presentation/Discussion in advance
Take the practice exams.
Talk to me or the TA if you have questions.

Last updated: December 29, 2014 (subject to change until the first class).

Course Schedule
Week 1:
Jan 9-10

Topic:
Reading:
Assignments:

Week 2:
Jan 16, 17

Topic:
Reading:
Assignments:

Week 3
Jan 23, 24

Week 4
Jan 30, 31

Week 5
Feb 6, 7

Week 6
Feb13, 14

Week 7
Feb 20, 21

Week 8
Feb 27, 28

Week 9
Mar 6, 7

Week 10
Mar 13, 14

Introduction to Accounting and the Statement of Financial Position

Chapter 1, Chapter 2, skim Chapter 5 (pages 227-238)
Homework #1 (due 1/14): M1-1, M1-2, E1-3, E1-4, E1-5 (part 2), E1-9

Understanding the Income Statement and Adjusting Entries

Chapter 2, Chapter 3, Chapter 4
Homework #2 (due 1/21): E2-5, P2-5, P3-4 (parts 1, 2, and 3), M4-12,
E4-6
Case 1 (due in Netflix: Fundamentals of the B/S and I/S
class):
Topic:
Cash Flow Statement
Chapter 12
Reading:
Assignment:
Homework #3 (due 1/28): E12-7, E12-16, E12-19
Case 2 (due in Groupon: Constructing Projected Financial Statements
class):
Topic:
Reporting and Interpreting Revenue and Accounts Receivable
Chapter 6
Reading:
Assignment:
Homework #4 (due 2/4): E6-2, E6-11, E6-5, E6-15, P6-4 (part 1), E6-12
Case 3 (due in Apple: Understanding the effects of revenue recognition
class):
Topic:
Interpreting Cost of Goods Sold and Inventories
Chapter 7
Reading:
Assignment:
Homework #5 (due 2/11): E7-2, P7-2, P7-10
Case 4 (due in Exxon vs. Shell: Understanding the effects of inventory valuation
class):
Exam:
Topic:
Reading:
Assignment:
Case 5 (due in
class):
Topic:
Reading:
Assignment:
Case 6 (due in
class):
Topic:
Reading:
Assignment:
Case 7 (due in
class):
Topic:
Reading:
Assignment:
Case 8 (due in
class):

Midterm examination (closed book, closed notes)

Long-lived assets
Chapter 8
Homework #6 (due 2/18): M8-7, M8-8, M8-9, E8-12, E8-15
Intel Corp: Accounting for R&D

Topic:
Reading:
Assignment:

Shareholders equity
Chapter 11
Optional Homework: M11-5, M11-6, M11-7, E11-9, E11-7

Liabilities, long-term debt, contingencies.

Chapter 9, Chapter 10
Homework #7 (due 2/25): E9-1, E9-4, P9-1, E10-8, E10-20, P10-12
BP: Accounting for the Gulf of Mexico Spill
Long-term debt (cont.), Leases, & Deferred Taxes
Chapter 10, Chapter 15
Optional Homework #8 (due 3/4): SE-5, SE-6, SE-7, SP-1, SP-2, SP-3
Kohls: The effect of Operating vs. Capital Leases
Investments
Appendix E (see end matter in eBook)
Homework #9 (due 3/11): E12-1, P12-5, 12-7 (parts 1, 2, and 3), P12-8
American Italian Pasta Company: Learning to recognize
accounting fraud

Last updated: December 29, 2014 (subject to change until the first class).

Self-executed case study on Tesco.