ACCT 2302 Fundamentals of Accounting II Spring 2011 Lecture 1 Professor Jeff Yu

Welcome to ACCT 2302 ! Did you get the ? Get the syllabus? Get the textbook? Browse the class website? Bring your name tag?

Topics for Today Who am I? What are the class requirements? (website; syllabus) What is this course about? A brief introduction to managerial accounting

Introduction  About me: Born in China “Over-educated” (BA, MA, PhD) Was a professor at MIT Sloan School before joining SMU in 2008 Taught both financial and managerial accounting to students from MIT, Harvard, Wellesley college & The Ohio State University Research interest  The use of accounting information in financial contracts  How accounting information affects investment Married with one child  About you?

What to expect from me? Together, we can make learning fun & effective! I am committed to helping you…… Office: 334 Fincher Phone : Come to my office hours: MW 10:50-11:50 am Call me to make appointment for office visit. Only Yes/No type questions over , please. Additional office hours by my TA.

What do I expect from you?  Attend the class. Attendance is required. You should sit in the appropriate seat and display a legible name tag at all times. Do not arrive late or leave early.  Participate in class discussion.  Minimize disruptions. All cell phones should be turned off during class.  Focus on the class.  Respect. You should act respectfully toward all class participants.  Be prepared for class. Read assigned chapters and attempt practice problems.  Persistence and determination to learn. This course is very time-demanding, so be prepared to work hard and devote time out of the class to frequent reviews and practices. You are only going to get out of this course what you put into it.

What you will need for the class?  Textbook: Garrison, Noreen & Brewer: Managerial Accounting, 13 th Edition, McGraw-Hill Irwin, 2010  Class Website (important!) Updated class schedule Lecture notes (please print them out and bring to the class) Solutions to Quizzes and Exams Link to Blackboard to check grades, etc. Syllabus (read it very carefully!)

Course Overview - Objective Have a basic understanding of managerial accounting: Become familiar with what accounting information is typically used within the firm. Develop an understanding of how accounting information is used by managers in the decision making process. Consider how accounting information can be used to motivate members of the firm or as a mechanism to control their behavior.

Course Overview – Organizing Structure  Managerial accounting is concerned with the use of internal accounting system for planning, decision-making & control purposes. Accordingly: We first discuss how costs behave and how internal accounting system determine and allocate costs (lectures 2-11) We then talk about how to use the accounting information in profit planning (lectures 12-13), management control (lectures 15-19) and decision making (lectures 20-24).

Course Overview - Themes  Throughout the course we will develop an understanding of three basic concepts: 1.How costs behave? 2.How accounting systems report costs? 3.How to disentangle “economic” costs from reported “accounting” costs?  These building blocks will be used to gain insights on the role of accounting information in a variety of settings.

Introduction to managerial accounting  Why does Warren Buffet need accounting information?  External needs Annual report – shareholders, lenders, regulators, suppliers, customers.  Internal needs Check whether Dairy Queen was profitable Know how much it costs to provide car insurance so know how much to charge various people for various policies Know the cost of CEO compensation – figure out an incentive plan  Information that is provided by a managerial accounting system - this is what we are going to learn about this semester.

Managerial vs. Financial Accounting Accounting System (accumulates financial and managerial accounting data) Managerial Accounting Information for decision making and control of an organization’s operations Financial Accounting Published financial statements and other financial reports Internal Users External Users

Managerial vs. Financial Accounting

Quick Check Which of the following statement is True: A)Managerial Accounting provides report primarily for bondholders and shareholders. B)Financial Accounting has a future perspective. C)Managerial Accounting emphasize on relevance rather than verifiability. D)Managerial Accounting must follow GAAP.

What do managers do?  DECISION MAKING:  Planning Managers plan how to reach objectives  Directing and motivating Motivate people to carry out plans and run operations  Controlling Managers control processes so that objectives will conform to plans

MA provides info to help decision making Planning Directing & Motivating Controlling (Measuring Performance) Evaluating Performance vs. Plans Decision Making

Who should take this course Are you going to be a manager? Are you going to be a consultant? Are you going to be an entrepreneur? Are you going to work for a company?

Summary This course aims to helping you become a sophisticated user of accounting information. You need to understand how it is produced as well as how it could be used to make informed operational and strategic decisions. Accounting is extremely important for non- accountants as well. “To be good at your business, you have to know the numbers – cold.” Harold Geneen, former chairman of IT&T

Importance of Ethics Corporate Governance reform – Sarbanes Oxley Act of 2002  Clarifies management’s responsibilities  CEO and CFO must certify fairness of financial statements and adequacy of internal control  Board of Directors, especially the Audit Committee, must meet certain criteria  Penalties for misconduct are substantially increased  Codes of Ethics are now required

Surviving tips for this class  Get off to a fast start. The end of the semester is hectic. It is difficult to catch up once you fall behind.  Always come to class with some understanding of the topic assigned.  Ask questions and more questions.  Work problems and more problems.

For Next Monday  Get textbook  Get familiar with the class website  Read Chapter 2  Attempt the assigned practice problems  Bring completed information sheet to the class  Bring a name tag to the class