Understanding Accounting
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Course reading · Unit 1

Unit 1. Financial reporting, its institutions, and the accounting cycle

Follow Beacon Design, a corporation that provides design and support services, through its first reporting year.

Chapters

Read Chapters 1 and 2 in order. Each chapter identifies the course objective it supports.

  1. Chapter 1 · course objective 1.1 From the event to the trial balance
    • Follow a transaction from the event through the journal and the ledger to the trial balance, and explain what equal trial balance totals test and which recording errors can remain hidden.
  2. Chapter 2 · course objective 1.2 Adjusting the records at period end
    • Sort a period-end economic event into its adjustment type, compute the adjustment, and state how omitting the entry affects net income, assets, liabilities, and equity.
  3. Chapter 3 · course objective 1.3 Financial statements and closing entries
    • Build the financial statements and the closing entries from an adjusted trial balance, and explain how net income and ending equity connect the statements and why the repeated amounts must agree.
  4. Chapter 4 · course objectives 1.4a, 1.4b, 1.4c Which accounting source governs, and how do you apply it?
    • Distinguish US GAAP from other standards by source and authority.
    • Determine the authoritative US GAAP that governs a reporting question.
    • Evaluate financial information for decision usefulness.
  5. Chapter 5 · course objective 1.5 Interpret financial information in public filings
    • Interpret reported financial information using relevant context from the company's public filings.