Econ260F06.syl

Econ260F06.syl - NORTHWESTERN UNIVERSITY Economics 260...

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NORTHWESTERN UNIVERSITY Economics 260 Fall, 2006 Professor Allan Drebin Jacobs Center 6252 847-491-2668 ard@northwestern.edu This course is an introduction to the reporting system used by businesses to convey financial information to users external to the enterprise. Primary emphasis will be placed on understanding the financial reports that are the end product of this system--what they tell us and what they do not tell us about a business enterprise. The accounting principles, conventions and concepts underlying financial reporting will be examined with the objective of developing your ability to interpret and analyze financial statements. The course covers basics of the financial accounting language and some introductory analysis of financial statements. We study the construction of basic financial statements from information on transactions. The emphasis is on how the accounting system reflects (or sometimes does not reflect) the activities and events that affect an organization. That is, when you look at a financial statement, there are some things it does tell you and some things it does not. Therefore, one has to be very careful in using financial information for evaluation of firms or managers. After introducing the basic structure of financial reporting, we will look at the ways in which accounting decisions affect the reported financial statements. “Real life” transactions are complex enough that managers can affect the "look" of the financial statements by (a) choosing alternative accounting methods (LIFO versus FIFO), (b) making estimates (uncollectible accounts), and (c) structuring transactions (off-balance-sheet financing). We cover examples of
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Econ260F06.syl - NORTHWESTERN UNIVERSITY Economics 260...

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