Cambridge Business Publishers

Approach

THE ‘CPA’ APPROACH—CONCEPTS, PROCESS, AND ANALYSIS

As in prior editions, the questions are organized in “C.P.A.” order.

Concepts The typical case begins with a set of conceptual questions. As we introduce each topic area, we want to ensure that you are familiar with the vocabulary and the broader concepts before moving into the specific application to the case-corporation. These general questions focus each case on its topic area. For example, the Continental case on leases begins with the conceptual question, “what is a lease?” Several cases make explicit reference to the Concept Statements of the Financial Accounting Standards Board (available at www.fasb.org) or to International Financial Reporting (available at www.iasb.org/Home.htm).

Process Before you become a sophisticated consumer of accounting information you need an understanding of the accounting process and the basics of financial statement preparation. Thus, the second set of questions in each case focuses on the process. Process questions require you to retrieve specific information from the financial statements and to manipulate the information via calculations, journal entries, and T-accounts. It is at this point that many textbook exercises end. However, we believe that the accounting process is not the end but the means by which you will build a firm understanding of how financial accounting works the way it does.

Analysis With a strong understanding of the concepts and a solid knowledge of the accounting cycle, you are ready for higher level analytical questions. These questions have you synthesize, analyze, interpret information and formulate and defend your opinion on accounting policies, standards, and corporate behavior. Thus, analysis questions sharpen your higher-order thinking skills. In the 6th edition, there is increased use of the DuPont model of ROE analysis across cases. A number of cases encourage you to delve deeper by accessing original reports or finding current data on the internet.

By grouping the case questions into the C.P.A. categories, the text has broad audience. Taken alone, the Concept and Process questions are perfectly aimed at undergraduate introductory financial accounting classes. Because many M.B.A. students have taken some accounting and most have had some business experience, they are better prepared to handle the Analysis questions even at the introductory level. Several topics (e.g. pensions, leases, marketable securities, deferred taxes) included in this casebook are not typically covered in an introductory course. These can be used at the intermediate level for undergraduate and M.B.A. classes. For intermediate and financial statement analysis courses, the Concept questions can be used by your instructor to start class discussion. Taking up these questions first ensures that you are on firm ground before you tackle the more challenging Analysis questions. The full set of financial statements included with each case affords you and your class instructor the opportunity to explore issues the Analysis questions do not touch upon.