ACC
Principles of Accounting
A fifteen-chapter introductory accounting course covering the full accounting cycle, accounting systems, merchandising operations, inventories, internal control, receivables, fixed assets, liabilities and payroll, partnerships and corporations, long-term debt, and financial statement analysis. Each chapter may be viewed or downloaded for personal study, classroom preparation, and professional reference.
- Instructor
- Dr. Abenet Yohannes, Ph.D.
- Institution
- Kuraz Consulting
- Course code
- ACC
- Chapters
- 15 · PDF
The course builds accounting competence from first principles: the nature and purpose of accounting, the accounting equation, analyzing and recording transactions, adjusting entries, closing the books and preparing financial statements, accounting systems and special journals, merchandising operations, inventory costing methods, internal control under Sarbanes-Oxley, receivables and uncollectible accounts, fixed and intangible assets, current liabilities and the Ethiopian payroll system, accounting for partnerships and limited liability companies, corporate stock and dividends, bonds and long-term notes, and financial statement analysis.
Course overview, outcomes and enrolmentCourse materials
Chapters
Each chapter opens as a PDF in a new tab and can be downloaded for personal study and classroom learning.
- Chapter 1
Introduction to Accounting and Business
Introduces the nature and purpose of accounting, users of accounting information, forms of business organization, generally accepted accounting principles, the accounting equation, and the effect of business transactions on the elements of financial statements.
Learning objectives
- Describe the nature of a business and the role of accounting within it.
- Identify internal and external users of accounting information.
- State the accounting equation and define its elements.
- Analyze how transactions affect assets, liabilities, and owner's equity.
- Prepare a simple income statement, statement of owner's equity, and balance sheet.
Prerequisites
- No prior accounting knowledge required.
After this chapter: You will be able to explain what accounting is for and show how everyday transactions change the accounting equation.
Open or download Chapter 1 (PDF) - Chapter 2
Analyzing Transactions
Covers the double-entry system: accounts and the chart of accounts, rules of debit and credit, journalizing transactions, posting to the ledger, preparing the trial balance, and finding and correcting errors.
Learning objectives
- Describe the chart of accounts and the characteristics of an account.
- Apply the rules of debit and credit to assets, liabilities, equity, revenue, and expenses.
- Journalize transactions and post them to ledger accounts.
- Prepare an unadjusted trial balance and interpret it.
- Identify and correct common recording errors.
Prerequisites
- Chapter 1 accounting equation and elements of financial statements.
After this chapter: You will be able to record a period's transactions in the journal and ledger and produce a balanced trial balance.
Open or download Chapter 2 (PDF) - Chapter 3
The Adjusting Process
Explains accrual versus cash basis accounting, the matching concept, and the preparation of adjusting entries for prepaid expenses, unearned revenue, accrued revenue, accrued expenses, and depreciation, followed by the adjusted trial balance.
Learning objectives
- Distinguish the accrual basis from the cash basis of accounting.
- Explain the revenue recognition and matching concepts.
- Prepare adjusting entries for deferrals and accruals.
- Record depreciation using the contra-asset accumulated depreciation account.
- Prepare an adjusted trial balance.
Prerequisites
- Chapter 2 journalizing, posting, and the trial balance.
After this chapter: You will be able to adjust the accounts at period end so revenues and expenses fall in the correct period.
Open or download Chapter 3 (PDF) - Chapter 4
Completing the Accounting Cycle
Completes the cycle: the end-of-period spreadsheet (worksheet), preparation of the financial statements, closing entries, the post-closing trial balance, the classified balance sheet, and the fiscal year and accounting cycle in review.
Learning objectives
- Prepare an end-of-period spreadsheet from the adjusted accounts.
- Prepare the income statement, statement of owner's equity, and classified balance sheet.
- Journalize and post closing entries for temporary accounts.
- Prepare a post-closing trial balance.
- Describe the complete accounting cycle in sequence.
Prerequisites
- Chapter 3 adjusting entries and the adjusted trial balance.
After this chapter: You will be able to close the books for a period and present a complete, correctly classified set of financial statements.
Open or download Chapter 4 (PDF) - Chapter 5
Accounting Systems
Examines accounting system design and implementation, manual systems using subsidiary ledgers and special journals, computerized accounting systems, and e-commerce considerations for recording and controlling transactions.
Learning objectives
- Describe the principles and phases of accounting system design.
- Use subsidiary ledgers and control accounts.
- Record transactions in the revenue, cash receipts, purchases, and cash payments journals.
- Compare manual and computerized accounting systems.
- Explain how e-commerce affects accounting systems.
Prerequisites
- Chapter 4 completion of the accounting cycle.
After this chapter: You will be able to choose and operate an accounting system suited to the size and transaction volume of a business.
Open or download Chapter 5 (PDF) - Chapter 6
Accounting for Merchandising Businesses
Covers merchandising operations: the operating cycle, purchase and sales transactions, discounts and returns, freight terms, sales taxes, the perpetual and periodic inventory systems, the multiple-step income statement, and the merchandiser's accounting cycle.
Learning objectives
- Distinguish merchandising from service business activities.
- Record purchases, purchase discounts, returns, and freight costs.
- Record sales, sales discounts, returns, and cost of merchandise sold.
- Compare perpetual and periodic inventory systems.
- Prepare a multiple-step and single-step income statement.
Prerequisites
- Chapter 5 accounting systems and special journals.
After this chapter: You will be able to account for a full merchandising cycle and report gross profit and operating income correctly.
Open or download Chapter 6 (PDF) - Chapter 7
Inventories
Addresses control of inventory, inventory cost flow assumptions (FIFO, LIFO, and weighted average) under both perpetual and periodic systems, valuation at lower of cost or market, inventory errors, and inventory reporting and analysis.
Learning objectives
- Describe internal controls over inventory.
- Apply FIFO, LIFO, and weighted-average costing under perpetual and periodic systems.
- Compare the financial statement effects of each cost flow assumption.
- Value inventory at the lower of cost or market and at net realizable value.
- Explain the effect of inventory errors on the financial statements.
Prerequisites
- Chapter 6 merchandising transactions and cost of merchandise sold.
After this chapter: You will be able to cost and value inventory defensibly and explain how the method chosen affects reported profit.
Open or download Chapter 7 (PDF) - Chapter 8
Sarbanes-Oxley, Internal Control, and Cash
Introduces the Sarbanes-Oxley Act, the objectives and elements of internal control, controls over cash receipts and payments, the bank account as a control device, bank reconciliation, petty cash, and the presentation of cash in the financial statements.
Learning objectives
- Explain the purpose and requirements of the Sarbanes-Oxley Act.
- Describe the objectives, elements, and limitations of internal control.
- Apply controls over cash receipts and cash payments.
- Prepare a bank reconciliation and the related journal entries.
- Operate a petty cash fund and report cash and cash equivalents.
Prerequisites
- Chapter 7 inventory control concepts.
After this chapter: You will be able to design basic internal controls over cash and reconcile the bank account with confidence.
Open or download Chapter 8 (PDF) - Chapter 9
Receivables
Covers classification of receivables, internal control over receivables, accounting for uncollectible accounts under the direct write-off and allowance methods, estimating doubtful accounts, notes receivable and interest, and reporting and analysing receivables.
Learning objectives
- Classify accounts, notes, and other receivables.
- Apply the direct write-off and allowance methods for uncollectible accounts.
- Estimate doubtful accounts using the percentage-of-sales and ageing methods.
- Account for notes receivable, interest, and dishonoured notes.
- Report receivables and compute accounts receivable turnover.
Prerequisites
- Chapter 8 internal control concepts.
After this chapter: You will be able to record and report receivables and provide realistically for amounts that will not be collected.
Open or download Chapter 9 (PDF) - Chapter 10
Fixed Assets and Intangible Assets
Explains the nature and cost of fixed assets, depreciation methods (straight-line, units-of-output, and declining balance), revisions of depreciation estimates, capital and revenue expenditures, disposal of fixed assets, natural resources, intangible assets and amortization, and their financial reporting.
Learning objectives
- Determine the cost of a fixed asset and distinguish capital from revenue expenditure.
- Compute depreciation using straight-line, units-of-output, and declining-balance methods.
- Revise depreciation estimates and account for the change prospectively.
- Record discarding, sale, and exchange of fixed assets.
- Account for depletion of natural resources and amortization of intangible assets.
Prerequisites
- Chapter 3 depreciation adjusting entries and Chapter 9 asset reporting.
After this chapter: You will be able to capitalize, depreciate, and dispose of long-lived assets and report them correctly in the balance sheet.
Open or download Chapter 10 (PDF) - Chapter 11
Current Liabilities and the Ethiopian Payroll System
Covers accounts payable, short-term notes payable, and other current liabilities, together with payroll accounting under the Ethiopian system: gross earnings, employment income tax, pension contributions, other deductions, net pay, payroll registers, and the related employer liabilities.
Learning objectives
- Identify and measure current liabilities, including notes payable and accrued items.
- Compute gross earnings, taxable income, and statutory deductions under Ethiopian payroll rules.
- Calculate employee and employer pension contributions.
- Prepare a payroll register and record payroll and payroll-tax journal entries.
- Account for contingent liabilities and warranty obligations.
Prerequisites
- Chapter 3 accrued expenses and Chapter 4 classified balance sheet.
After this chapter: You will be able to prepare a compliant Ethiopian payroll and record current liabilities accurately.
Open or download Chapter 11 (PDF) - Chapter 12
Accounting for Partnerships and Limited Liability Companies
Explains the characteristics of proprietorships, partnerships, and limited liability companies; forming a partnership; dividing income and losses; partner admission and withdrawal; and partnership liquidation and statements of partnership equity.
Learning objectives
- Compare the features of proprietorships, partnerships, and LLCs.
- Record the formation of a partnership and partner investments.
- Divide net income and loss under various profit-sharing agreements.
- Account for the admission and withdrawal of a partner.
- Record the liquidation of a partnership and prepare a statement of partnership equity.
Prerequisites
- Chapter 4 financial statements and equity reporting.
After this chapter: You will be able to maintain partnership accounts through formation, income division, changes in membership, and liquidation.
Open or download Chapter 12 (PDF) - Chapter 13
Corporations: Organization, Stock Transactions, and Dividends
Covers the nature of a corporation, paid-in capital and classes of stock, issuing stock at par and above par, treasury stock transactions, cash and stock dividends, stock splits, reporting stockholders' equity, and related equity ratios.
Learning objectives
- Describe the characteristics and formation of a corporation.
- Account for the issuance of common and preferred stock.
- Record treasury stock purchases and reissues.
- Account for cash dividends, stock dividends, and stock splits.
- Prepare and interpret the stockholders' equity section of the balance sheet.
Prerequisites
- Chapter 12 equity accounting for unincorporated entities.
After this chapter: You will be able to record corporate equity transactions and present stockholders' equity correctly.
Open or download Chapter 13 (PDF) - Chapter 14
Long-Term Liabilities: Bonds and Notes
Explains financing alternatives and the effect of leverage, the characteristics and pricing of bonds, issuance at par, discount, and premium, amortization by the straight-line and effective-interest methods, bond redemption, installment notes, and the reporting of long-term liabilities.
Learning objectives
- Compare financing through debt and equity and explain the effect on earnings per share.
- Compute the present value and issue price of a bond.
- Record bond issuance at par, at a discount, and at a premium.
- Amortize discounts and premiums using straight-line and effective-interest methods.
- Account for bond redemption and installment notes payable.
Prerequisites
- Chapter 11 liabilities and basic present-value concepts.
After this chapter: You will be able to account for long-term borrowing from issuance through amortization to redemption.
Open or download Chapter 14 (PDF) - Chapter 15
Financial Statement Analysis
Introduces horizontal and vertical analysis, common-size statements, and ratio analysis of liquidity, solvency, and profitability, together with the content of corporate annual reports and the limitations of ratio-based conclusions.
Learning objectives
- Perform horizontal and vertical analysis and prepare common-size statements.
- Compute and interpret liquidity and solvency ratios.
- Compute and interpret profitability and market-based ratios.
- Relate ratio results to operating decisions and financing structure.
- Recognise the limitations of financial statement analysis.
Prerequisites
- Chapters 4, 13, and 14 — a complete set of financial statements.
After this chapter: You will be able to analyse a set of financial statements and draw defensible conclusions about performance and financial position.
Open or download Chapter 15 (PDF)
These teaching materials were prepared by Dr. Abenet Yohannes, Ph.D., for educational purposes. Students may download and use them for personal study and classroom learning.
Materials may be updated periodically; students should use the latest version available on this page. Questions about the course can be sent to abenetyohannes@gmail.com.
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