Introduction to Accounting: An Integrated Approach (AICPA) 8th Edition
The primary reason to integrate financial and managerial accountinQg is that it mirrors the way businesses operate. In addition, having as many as 85 percent nonaccounting majors in a first accounting course is not unusual. These students need to understand that accounting is an information system that serves a wide variety of stakeholders, both internal and external to the organization. Rather than separating financial accounting from managerial accounting, we emphasize the business processes, and how to plan and evaluate the related activities from both a financial (external reporting) and a managerial (internal reporting) perspective.
Understanding the Integrated Approach
The eighth edition of Introduction to Accounting: An Integrated Approach revolves around the premise that students are better able to understand the accounting process and information system if they understand the nature and functions of business before teaching them the mechanics of the bookkeeping process. For example, traditional introductory accounting courses teach students how to make accounting entries that record accounting transactions (debit truck and credit cash). The emphasis is on the mechanics of making the entry without understanding factors that led the company to buy the truck. What capital budgeting process said the truck would be a good decision? What options did the company consider to finance the purchase price of the truck. To operationalize this premise the book is organized around three major themes:
- The overriding theme of the text is that accounting is an information system that serves many stakeholders, some internal and some external to the organization. Traditionally, Introduction to Accounting has been taught as two separate and distinct segments: financial accounting and managerial accounting. Consequently, many of our nonaccounting students never gain an understanding of accounting as a process of providing information about business to both internal and external stakeholders. An understanding of why and how accounting information is used by internal and external stakeholders is vital, regardless of a student’s major.
- The second theme is business processes. We introduce the four major business processes in the second chapter and use these processes to divide content between the first and second halves of the text (courses). The four business processes are (1) business organization and strategy, (2) operating, (3) capital resources, and (4) performance measurement and management. We describe how the business organization and strategy process provide a long-term direction for the company and how the performance measurement and management process provide the evaluation of the company. Then we divide content into operating processes (first half) and capital resources processes (second half). This mirrors the operating, investing, and financing activities on the statement of cash flows.We chose to cover operating processes first for two reasons: First, these activities are more intuitive to students—they have been customers and employees, now we must get them to think like businesspeople. Second, investing and financing activities require the time-value-of-money, a somewhat complex topic. Our classroom experience shows that investing and financing activities are more easily understood after learning about operating activities.
- The final theme is the balanced scorecard. The balanced scorecard is a holistic approach to planning and evaluating that translates a company’s strategy (from the business organization and strategy process) into measurable objectives (for the operating and capital resources processes) organized into four perspectives: (1) financial, (2) internal, (3) customer, and (4) learning and growth. That is, the balanced scorecard approach plans and evaluates business success using financial and other measures of success. The balanced scorecard approach provides a number of measures of success that, in turn, managers use to evaluate performance and plan for the future. This is important because these other measures impact the financial performance of the company in future periods. Thus, the balanced scorecard approach is a forward-looking planning and evaluating tool, in that we begin by planning the activities in the operating and capital resources processes, then we record and evaluate the results to provide feedback to the next planning phase. Therefore, in each half of the text, we examine planning activities followed by recording and evaluating activities.
By concentrating on these three themes, students learn why and how activities are planned and evaluated by different stakeholders. Students with a greater understanding of business will have a better understanding the accounting information system and its role in business and the capital markets. This will certainly help them in whatever careers they may choose.
What Are the Main Objectives of This Unique Approach?
Introduction to Accounting: An Integrated Approach is designed to benefit everyone, regardless of major. We consciously integrated life skills into the content along with business skills. In designing the text, we incorporated three objectives:
- To focus on accounting as an information system used in each business process to provide information to holistically plan and evaluate activities. As outlined earlier we believe that students must understand that accounting is the information infrastructure of business, that it serves a wide variety of stakeholders, and that it is used for both planning and evaluating business activities. We believe that content organized around business processes provides students with linkages often missing when financial accounting is separated from managerial accounting. Finally, we believe that understanding planning, recording, and evaluating activities enhances the ability to use financial information.
- To stimulate interest in the field of accounting. Classroom experience has shown that Introduction to Accounting: An Integrated Approach serves as a way to increase interest in the discipline of accounting. As students gain an understanding and appreciation of the broader role of accounting in the business world, they are more likely to express interest in accounting as a major field of study. In addition, we have seen the dropout rates in our introductory accounting courses decline from almost 50 percent to less than 20 percent.
- To promote active and cooperative learning. Various pedagogical devices in this book stimulate active and cooperative learning for the students. Most obvious are the Enhance Your Understanding questions posed throughout the text. These questions serve as checkpoints for students as well as stimulate their critical thinking. Additionally, the Cases, Critical Thinking, and Ethical Challenge materials provide opportunities for teamwork. The Instructor’s Resource Manual provides additional cooperative learning experiences for students. We have found that active and cooperative learning promotes retention of the material and deeper learning.
Based on extensive feedback from instructors using the first seven editions as well as our combined 60-plus years of teaching experience, the Eighth Edition focuses on improving the text’s readability and real-world examples.
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|September 24, 2019|
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