Competencies for Financial Accounting (1A and 1B)
After completing the financial accounting courses, (Acct 1A and 1B), you should be able to answer questions similar to the following:
You will also be able to demonstrate your active learning skills, oral and written communication skills, ability to work effectively in groups, and ability to reason creatively and critically.
Click the following link to view the complete Accounting 1A competency model, including an explanation of its development and sample discussion questions, problems, case studies, ratios and vocabulary and click this link to view the Accounting 1B document. You will need Adobe Acrobat Reader to view the file. If you need to download Adobe Acrobat, click the button below.
Development of these competencies and converting them to the Web was partially funded by:
Partnership for Excellence (California)
Workforce Silicon Valley
How does accounting meet the information needs of investors and creditors?
- Identify the types of decisions investors and creditors make and describe what information in the financial statements and/or related disclosures meets the information needs of each group.
- Discuss what role ethics play in the preparation of financial statements
- Identify and discuss examples of how U.S. accounting measurement techniques and financial statements differ from the measurement techniques and financial statements of other countries
How does accounting meet the information needs of regulatory agencies and taxing authorities?
- Describe how information sources other than the annual report (e.g., SEC Form 10-K) can be used to learn more about the nature of an entity's business
How do businesses operate and how does accounting serve them?
- Explain the meanings of key business terms (e.g., assets, budget, collateral, financing, limited liability, and lease)
- Distinguish between profit, governmental and other nonprofit entities by identifying their respective goals and by looking at the content of their financial reports
- Identify the characteristics of the corporate, partnership, and sole proprietorship forms of entity and discuss the advantages and disadvantages of each form
- Describe the key differences in the financial statements of merchandisers, manufacturers, non-financial service companies (e.g. United Airlines), and financial service companies; and explain how these differences reflect the operating, investing, and financing activities of each type of entity
What are the elements of, the relationships among, and the accounting concepts underlying the primary financial statements?
- Discuss what information is typically found in the balance sheet, income statement, statement of owners' equity and statement of cash flows.
- Apply the fundamental accounting equation to analyze the effects of accounting transactions on the elements of the balance sheet and to prepare a balance sheet that reports the financial condition of the entity.
- Apply the income statement equation to discuss the criteria used to determine when revenue and expenses should be recognized and to prepare an income statement that reports the results of operations for any entity.
- Distinguish between the accrual and cash basis of income measurement by preparing income statements using both methods.
- Classify accounts into asset, liability, owners' equity, and non-balance sheet accounts.
- Describe how the amounts reported on the income statement and balance sheet are determined by citing several valuation methods.
- Link the following related financial statements: balance sheet, income statement, statement of cash flows, and statement of owners' equity.
- Classify cash receipt and cash payment transactions as well as significant non-cash transactions into appropriate statement of cash flow activity.
What are the uses and limitations of financial statements and related information in making both business and personal financial decisions?
- Identify several ways in which financial accounting information is used to make business and personal decisions
- Calculate at least one financial statement ratio within the following categories and discuss its usefulness and limitations in making decisions: Liquidity, Activity or turnover, Financial leverage, Profitability, and Valuation.
- Explain how inventories and accounts receivable can be mismanaged and describe how a manager can use financial statement analysis to monitor and control them.
- Explain the relationship between net income and cash flows and discuss how a highly profitable, fast-growing business might face liquidity problems that could force it into bankruptcy.
- Identify several limitations of the financial statements found in annual reports.
How is the usefulness of information produced by an accounting system directly related to that system's design?
- Discuss how the need for relevance and reliability affect the design of an accounting information system
- Discuss the basic principles of internal control and describe the attributes of an effective and efficient internal control system
- Identify the strengths and weaknesses of an internal control system and, if appropriate, suggest improvements to this system
How are business transactions input, processed by an accounting information system, and output by that same system to produce financial statements?
- Identify essential conditions for a business event to qualify as an accounting transaction to be recorded in the system
- Distinguish between the recording phase and the reporting phase of the accounting process or cycle
- Explain the significance of debits and credits as they are used in an accounting information system
- Use one or more of the following tools: spreadsheet, accounting software package, database, or other technology.
How will I demonstrate active learning?
- Summarize an accounting related newspaper article
- Listen to someone speak, summarize what they say, and ask them for feedback about your summary
- Accumulate a written record of the concepts and terminology learned in the course
- Participate in a group to discuss readings from the financial press
- Act as a facilitator in a collaborative learning group and keep the group on task
- Identify the problem, alternative ways of solving the problem, alternative positions, and position arguments for a controversial issue
- Identify the assumptions and possible positions underlying an ethical issue
- Evaluate a speaker's or writer's content for the appearance underlying assumptions and of facts versus opinions
- Analyze an unstructured problem that has no single correct answer