Accounting Theory
Overview
- Accounting under ideal conditions: present value model, reserve recognition accounting, historical cost accounting.
- Decision usefulness approach to financial reporting: single person decision theory, rational, risk averse investor, portfolio diversification, optimal investment decisions, portfolio risk.
- Efficient securities markets and their implications for financial reporting: informativeness of price, capital asset pricing model, information asymmetry.
- Information perspective on decision usefulness: market response, earnings response coefficients, unusual, non-recurring and extraordinary items.
- Measurement perspective on decision usefulness: theories relating to the efficiency of securities markets.
- Measurement perspective applications: traditional reporting, fair-value-oriented standards, financial instruments, accounting for intangibles, reporting on risk.
- Economic consequences: employee stock options, government assistance, successful-efforts accounting, positive accounting theory (PAT).
- Analysis of conflict: game theory (non-cooperative and cooperative), agency theory.
- Executive compensation: theory, incentives, compensation plans, role of risk, politics.
- Earnings management: motivations, patterns, “good” and “bad” side of earnings management.
- Standard setting – economic issues: private incentives for information production, sources of market failure, regulation of economic activity and decentralization regulation.
- Standard setting – political issues: public interest and interest group theories; standard setting in Canada and the U.S., International Accounting Standards Boards (IASB), conflict and compromise, criteria for standard setting.
Lectures, seminars and case analysis. All methods of instruction apply to in class, hybrid and/or online modes of learning.
Evaluation will be carried out in accordance with the Douglas College Evaluation Policy.
| Assignments/projects/tests AND case analysis | 30% |
| Midterm examination | 35% |
| Final examination | 35% |
| Total | 100% |
Students must write both the midterm examinations and the final examinations to pass the course.
Students may conduct research as part of their coursework in this class. Instructors for the course are responsible for ensuring that student research projects comply with College policies on ethical conduct for research involving humans, which can require obtaining Informed Consent from participants and getting the approval of the Douglas College Research Ethics Board prior to conducting the research.
At the end of the course, the successful student should be able to:
- describe various theories that underlie financial accounting and reporting;
- explain the impact of accounting policies on financial accounting and reporting;
- explain the impact of financial accounting and reporting on securities markets;
- explain game and agency theories and their implications for accounting;
- explain the criteria, and the economic and political issues involved in the standard setting process;
- demonstrate awareness of ethical and professional standards and responsibilities of financial management professionals.
Textbooks and Materials to be Purchased by Students
Required: William R. Scott. Financial Accounting Theory, latest Canadian edition. Prentice-Hall, Toronto, or other textbooks as approved by department.
Optional (at discretion of instructor): Schroeder, Clark and Cathey, Financial Accounting Theory and Analysis: text readings and cases, latest edition. John Wiley & Sons Inc.
Instructor compiled materials (if applicable)
Only Faculty of Commerce and Business approved calculators may be used in examinations.
Requisites
Course Guidelines
Course Guidelines for previous years are viewable by selecting the version desired. If you took this course and do not see a listing for the starting semester / year of the course, consider the previous version as the applicable version.
Course Transfers
These are for current course guidelines only. For a full list of archived courses please see https://www.bctransferguide.ca
| Institution | Transfer details for ACCT 4850 |
|---|---|
| Acsenda School of Management (ASM) | ASM ACCT 435 (3) |
| Athabasca University (AU) | AU ACCT 4XX (3) |
| Capilano University (CAPU) | CAPU BFIN 3XX (3) |
| College of the Rockies (COTR) | COTR ACCT 4XX (3) |
| Kwantlen Polytechnic University (KPU) | KPU ACCT 4199 (3) |
| Langara College (LANG) | LANG FMGT 4221 (3) |
| Simon Fraser University (SFU) | No credit |
| Trinity Western University (TWU) | TWU BUSI 3XX (3) |
| University Canada West (UCW) | UCW ACCT 3XX (3) |
| University of British Columbia - Vancouver (UBCV) | No credit |
| University of Northern BC (UNBC) | UNBC COMM 4XX (3) |
| University of the Fraser Valley (UFV) | UFV BUS 443 (3) |
| University of Victoria (UVIC) | UVIC COM 4XX (1.5) |
| Vancouver Island University (VIU) | VIU ACCT 421 (3) |