Computing Cash Flows from Operating Activities—Indirect Method

Alene G. Helling
Stark Technical College

Past issues of Accounting Instructors’ Report included discussions and demonstrations of a “Journal Entry Approach for Calculating Cash Flows from Operating Activities—Direct Method. “Here is a “mock” journal entry for “Computing Cash Flows from Operating Activities—Indirect Method.” First, a very simple situation: Net Income of $20,000. Assume the only current account is Accounts Receivable, which increased $5,000.
Continue reading

A Journal Entry Based Approach for Calculating Cash Flows from Operating Activities (Direct Method)

Angela H. Bell
Jacksonville State University

Adjusting income statement items from the accrual basis to the cash basis is a difficult subject for Principles of Accounting students to grasp. Students tend to learn new material more readily when they are able to incorporate it into material they have already mastered. This was the objective behind a new approach of determining Cash Flows from Operating Activities (Direct Method) for the Statement of Cash Flows.
Continue reading

A Journal Entry Approach for Calculating Cash Flows from Operating Activities (Direct Method): A Comment

Nicholas A. Genovese, Jr.
Tulane University

I read, with considerable interest, in the Accounting Instructors’ Report, the article entitled “A Journal Entry Approach for Calculating Cash Flows from Operating Activities (Direct Method)” by Angela H. Bell, Jacksonville State University.

I, too, have found that the Statement of Cash Flows causes much confusion for accounting students. It has been my experience that many students cannot prepare a SCF and resort to memorizing the mechanics long enough to take a test. I have traced this inability to prepare a SCF to a lack of a good, solid understanding of the concept of
the statement and have attempted to avoid this failure by painstakingly explaining its concept before discussing the mechanics.
Continue reading

Critical Thinking in the Accounting Curriculum

Jack Parham
David Lipscomb University

Many people see the stereotypical accountant as a numbers-cruncher who can organize, classify, and report details in a manner so illogical that only fellow accountants can understand them. The accountant does not, they claim, possess the more important reasoning skills that are necessary for real-life problem solving and business leadership.

Though stereotypes are rarely founded in fact, this one may hold a grain of truth. Even the Big Eight seem to agree that accountants have failed to “focus on the broader skills that will support a lifetime of professional success’.’ In their Perspectives on Education: Capabilities for Success in the Accounting Profession (April 1989), representatives of the Big Eight considered the often narrow focus of accounting education and concluded: “Passing the CPA examination should not be the goal of accounting education. The focus should be on developing analytical and conceptual thinking—versus memorizing rapidly expanding professional standards”

The Big Eight expressed a familiar concern: accounting students are taught to memorize correct answers rather than to apply thinking processes to the problem at hand.
Continue reading

Between Classes

Belverd E. Needles, Jr.
DePaul University

Most accounting instructors focus on planning activities that take place in the classroom. This is natural because, in recent years, accomplishing objectives during class time has become more and more of a challenge. One reason is that the amount of material that we must cover seems to be increasing. For example, many schools are trying to integrate topics such as ethics and international accounting into the curriculum. And with the trend toward more extensive coverage of managerial accounting in the principles course, the content of financial accounting has been compressed into a shorter period of time. Second, the effort to broaden students’ capabilities has led, in some schools, to an increase in objectives that focus on communication and analytical skills. Integrating activities that require more open-ended problem solving and more oral and written communication can take up large amounts of class time. Third, the extent of what can be accomplished in class is restricted by the preparation and attitude the students bring to class. Even well-motivated students have difficulty preparing for class because of the pressures of jobs, family, commuting, and the other classes they take.

Continue reading

Change and the Ordinary Accounting Educator

Change has become a constant topic of conversation in accounting education. It is dealt with daily by many prestigious bodies such as the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). It is also discussed at every meeting of ordinary accounting educators. And it’s on everyone’s mind. The last two columns appearing in this space have addressed the nature of the changes under discussion, providing some thoughts about their consequences and how they can be addressed. But what would be the effects of these changes for the average accounting instructor? For the changes to be implemented effectively, the needs of the ordinary faculty member must be addressed.
Continue reading

Thirty Years Serving Accounting Educators

Thirty years ago this year, I wrote “Welcome to the first issue of Accounting Instructors’ Report.”  Our purpose is to serve college accounting educators by providing a medium for sharing information about the teaching of accounting.  Over that time, we published 75 issues of Accounting Instructors’ Report, which included 75 Trends editorials in which I have tried address changes that affected the environment of our teaching, the way we teach, and the nature of our students.  In those issues, we published almost 400 articles that included “essays, studies, and research about the content, philosophy, teaching techniques, and administration of accounting courses.”

Continue reading

Five Things You Should Know About Integrating IFRS in Your Beginning Accounting Course

International Financial Reporting Standards (IFRS) are set by the International Accounting Standards Board (IASB) in London.  They are now being used in more than 120 nations in the world. The U.S. neighboring countries Canada and Mexico adopted IFRS in 2011 and 2012 respectively. The U.S. Securities and Exchange Commission (SEC) has not yet committed U.S. listed companies to using IFRS and continues to deliberate this question.  The Group of Twenty repeatedly supported IFRS and views IFRS as an important factor to overcome the current financial crisis. A single set of high quality global accounting standards is viewed as having the capacity to improve information for investors, resulting in a more efficient worldwide capital allocation. AIR (Fall 2012)

–Belverd E. Needles, Jr.

© Accounting Instructors’ Report

Great Teaching Ideas from AIR: Annual Reports: A Supplement to the Text for Teaching Accounting

A recent study commissioned by the Education Director of the American Accounting Association (Cherry & Reckers, 1982) suggests that both auditors and accounting students feel that academicians need to incorporate more real- world cases, problems, and examples into the classroom. Although we do not condone teaching “practice” neither do we feel that a purely theoretical approach prepares students for what awaits them in the accounting field. There is a need to be able to apply accounting concepts and theories. One approach that might be used to integrate real-world examples with current text approaches (whether theoretical or practice-oriented) is the integration of annual reports into classroom discussions.
Continue reading

Great Teaching Ideas from AIR: The Present Value Circle: An Ideal Tool for Teaching Present Values

Because the concept of present value is new and potentially confusing to the student, the instructor must determine the content of the introductory lecture carefully. As part of the lecture, the instructor should define the terms, delineate the concept, and explain how the known values can be used to solve for the unknown value.

Continue reading