Financial Accounting 3 [FA3]

Introduction to Financial Accounting 3

Course purpose
Financial Accounting 3 [FA3] is the third in a sequence of five courses in the financial accounting stream in the CGA program of professional studies. It is an intermediate financial accounting course that builds on the basic understanding of financial accounting that you have acquired in previous financial accounting courses. The primary aim of FA3 is to assist you in developing professional competence and skills that will enable you to prepare financial statements, focusing on the liabilities and owners equity elements of the balance sheet choose appropriate financial accounting and reporting policies in both specific and general circumstances determine the substance of a business transaction and critically assess the ability of the GAAP framework to reflect its substance analyze a financial accounting situation, identify issues and alternatives, then formulate recommendations using ethical, professional judgment This course integrates the use of computer software to solve accounting problems. There are two financial accounting courses subsequent to FA3 in the CGA program of professional studies. Financial Accounting 4 [FA4] deals with consolidations, foreign currency, income tax allocations, and nonprofit organizations. Accounting Theory 1 [AT1] deals with accounting issues related to specialized sectors of business, industry, and government, and with current issues in accounting policy and theory.

Course prerequisites
Foundation courses: The prerequisites for this course are the introductory course Financial Accounting 1 [FA1] or equivalent and Financial Accounting 2 [FA2] or equivalent. You will find a course description of FA1 and FA2 in the CGA-Canada Syllabus. Mathematics: You are expected to have a sound understanding of basic mathematics and its application in the business context; the expected level of knowledge can be gained from any standard business mathematics text. Ethics: An understanding of ethical principles and how the profession of accounting addresses ethical issues is an essential part of the CGA program of professional studies. The Ethics Readings Handbook [ERH] has been developed as a study resource in this area and is provided electronically through a link under the course Resources tab. In FA3 it will be assumed that you have become familiar with Section A of ERH. This section clarifies important concepts and terms used throughout the ERH and is necessary background knowledge for ERH readings referred to in this and other courses. Software skills: When working through FA3, you are expected to have acquired basic competence with Microsoft Windows, Microsoft Excel, and Sage Accpac. (If you need to build your Windows, Excel, or Accpac skills refer to the CGA Computer tutorials, CT1, CT2, and CT3.) For information on how to work with software in this course, refer to the How To tab.

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Financial Accounting 3 [FA3]

Structure and delivery

FA3 comprises 10 modules that can be studied over a 12-week period, one module per week followed by preparation for the final examination. Each module should take between 15 and 20 hours to complete. The modules are delivered online and can be saved to your hard drive and/or printed. For instructions on saving and printing, see "Print course material" under the How To tab.

Textbook and reference materials

The textbook and reference materials for this course are: Beechy and Conrod, Intermediate Accounting, Third Edition, Volume 2 (Toronto, Ont.: McGraw Hill, 2005) Hilton, Murray, "Accounting for Partnerships," Bonus Chapter 15 in Modern Advanced Accounting in Canada, Fourth edition (Toronto, Ontario: McGraw-Hill, 2005) Ethics Readings Handbook [ERH], Third Edition (Vancouver, BC: CGA-Canada, 2005) (Available under the Resources tab) Model Financial Statements, Thirteenth Edition (Vancouver, BC: CGA-Canada, 2006) (Available under the Resources tab) For a list of the required software for all CGA courses, see "Software requirements and downloads" on the User Desktop

Handbook amendments
The materials that follow make various references to the adoption of Sections 1530, Comprehensive income; 3855, Financial instruments recognition and measurement; and 3865, Hedges for fiscal years beginning on or after October 31, 2006. In May 2006 the AcSB announced that the effective date of these and related standards for non-publicly accountable enterprises was deferred until October 31, 2007, although early adoption is still permitted. From a practical perspective, non-publicly accountable enterprises are private, for profit, companies that are eligible to adopt differential reporting options. Related Handbook standards include: sections 1651, Foreign currency translation; 3051, Investments; 3251, Equity; and 3861, Financial instrumentsdisclosure and presentation. The scope of these changes is so material that the Canadian Institute of Chartered Accountants (CICA) have taken the unique step of maintaining two handbooks until the stipulated adoption date. The new standards are encompassed in the regular handbook while the standards in effect as at March 31, 2005 have been archived in their entirety. The CICA has taken this approach as many businesses will continue to apply the old standards during the intervening adoption period. These module notes are based on the old standards as these will continue to be in widespread use for the forseeable future. Supplemental commentary and cross referencing to the new standards has been provided when appropriate. For assignment and examination purposes, unless specifically directed otherwise, you are to assume that the new standards have been adopted in their entirety.

Modules

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The course modules serve several purposes: to provide guidance on and supplement the text readings to provide guidance with online work to provide practice and assessment tools to measure learning and achievement These purposes are achieved through some standard features that are common to all CGA courses, such as learning objectives and levels of competence. For a description of these features, see "Use the course features" under the How To tab.

Practice tools
In FA3, you are encouraged to make use of the "Test your knowledge" questions, accessible through a link on the module overview page. These multiple-choice questions give you an opportunity to gauge the depth of study required for the module. You will also find a set of self-test questions following the module topics to help you master the material.

Course assessments
The assessments in this course consist of the following: Five quizzes, one each in Modules 2, 4, 6, 8, and 10: These are in the form of multiple-choice questions that you complete online and submit for marking. For instructions on accessing and submitting quizzes, see "Submit assignments and quizzes" under the How To tab. A mid-term assignment due in Module 8: You prepare your assignment response in Word and submit it to your marker using an electronic drop box. Course examination: As with other foundation level CGA courses, the final examination is three hours long. Your final course mark will be the combined quiz/assignment mark and examination mark (30 for the quiz/assignment mark and 70 for the examination). Your final examination will be graded out of 100, and your raw examination mark will be scaled into a mark out of 70. Your quiz/assignment mark (with a maximum score of 30) will then be added to the scaled examination mark. Important reminder: For CGA-Canadas policy regarding original work on assignments and discussions, check out the "Academic integrity policy" link near the bottom of the course navigation pane.

Case analysis
You encounter case analysis throughout FA3. A marking key is provided in the solution to the first of these (Activity 1.10-1) to help you understand the expectations for case analysis. Your solutions to case analysis questions will be marked using such an approach. In FA3 and in many other courses in the CGA program of professional studies, case analysis is an important part of the learning process. Cases are often an integral part of the module material and case-related questions appear in many self-test questions. Make good use of your opportunities to practise case analysis and take notice of the feedback you receive from the markers.

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Remember, the ideas that cases illustrate are fully examinable. Even if the examination does not have a question presented in a case format, you may be asked questions on the ideas presented in the case analysis material of the course. For example, as part of a module in this course, you may have a case analysis scenario dealing with the various conceptual alternatives for accounting for income tax. A related examination question might ask you to discuss some technical aspect of one or two of those alternatives. How you handle the discussion of the subject is important. Objectives of case analysis Using case analysis to learn about accounting policy choice is an effective way for you to accomplish five general objectives: Increase your understanding of what accountants should and should not do when formulating accounting policy. Develop skills for identifying financial statement users and their interests, while analyzing issues in a variety of competitive environments and company circumstances. Gain valuable practice in choosing appropriate accounting policy and applying technical skills. Enhance your professional judgment, as opposed to uncritically accepting textbook solutions. Gain exposure to a variety of companies and industries. Case analysis approach In FA3 it is recommended that you use the approach outlined in Analyze a case, under the How To tab. Preparing a case analysis report When preparing a case analysis report, it is important to communicate your thought process. Your recommendation is not as important as the path you travelled in arriving at your recommendation. Remember to include key situational variables, issues, alternatives, and analysis. Be clear and concise. Avoid repetition. In this course, your written reports are limited to a certain number of words, depending on the complexity of the case. Use the outline notes you prepared in steps 3 to 6 in Analyze a case, and structure your report as follows: Overview Start your report with a brief (two to four sentences) review of the key situational variables. What factors are important in accounting policy choice? Some situational variables might be omitted to focus on key variables. Issues List the problems/issues and alternatives in their order of importance. Analysis and recommendations Each major alternative could be evaluated in terms of theory (Is it an acceptable policy according to accounting standards and concepts?); its numerical effect, if possible; and its effect on financial statement

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users. Numerical analysis should be included in an exhibit and referred to in the body of the report. Recommendations often flow directly from analysis and can be included as the last part of the analysis section. Alternatively, recommendations may be presented separately at the end of the case.

Note: For case analysis you must develop your own analytical and judgment skills. In a class environment, students have the benefit of class discussion; however, if classes are not available to you, you have to become an independent learner. Do not just read the cases provided in the self-test questions and then go on to the suggested solution. If you do this, you will lose much of the benefit that results from grappling with the details of analysis. To maximize your learning and properly prepare for the assignment cases and the course examination, you must invest the time and effort to work your way through the cases provided. Remember, case analysis skills must be practised to be learned!

Web links

Links to other study material on the World Wide Web may be indicated by a hyperlink like the words CGACanada Syllabus in the Course prerequisites section of this introduction. Another way that Web links have been shown is with the Link icon. Sooner or later, you may encounter a broken link, as many websites go through frequent structural changes. Also, websites may be temporarily down for maintenance, and the link may not actually be broken; if time allows, try revisiting it the next day. If you are sure a link is broken, please report it to Support and the edNET User Desktop. Meanwhile for your study purposes, if a site is inaccessible, you may have to use your own initiative and developing skills with the search engines on the Web to locate similar online sources of learning and adapt the online activity or study material accordingly. Extend your knowledge At various places in the module notes, you may encounter the extend your knowledge icon. Click this icon to read about international facts, background, exceptions, and emerging issues. This material is provided for your enrichment; it is not examinable.

Recommended study approach

Here is a recommended study approach for each module. You can develop variations on it to suit your own learning style. Check the Course Schedule for an overview of your required reading and assignment responsibilities. (Click the Course Schedule link below this introduction in the course navigation pane.) Try the test your knowledge questions and use the instant feedback to gauge the depth of study

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required for this module. Read the assigned pages from the text or reference materials and make your own notes. Do each of the activities and make notes. Do the self-test questions and check your responses against the solutions. Complete the online quiz, when there is one accompanying the module. Complete any part of the mid-term assignment that relates to the module.

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