Fundamental Financial Accounting Concepts

Prepared by Phil Olds, Virginia Commonwealth University

Students are often overwhelmed by the amount of information presented in the introductory financial accounting course. By focusing on fundamental concepts in a logical sequence, students are able to fully comprehend the material rather than memorize seemingly unrelated terms and topics. The goal of Fundamental Financial Accounting Concepts is to enable students to understand how any given business event affects the financial statements. The “financial statements model” is a highly praised feature because it allows students to visualize the simultaneous impact of business events on all of the key financial statements (the income statement, the balance sheet, and the statement of cash flows).

Edmonds: Fundamental Financial Accounting Conceptsis a unique entrant in the college market that fits a growing audience of non-accounting majors, yet provides a solid foundation in accounting principles for future accounting students. The Edmonds approach, which focuses on core concepts within a decision-making context, better prepares future managers for the corporate world in which they will be users of financial information. It is a conceptually based book that stresses meaningful learning over rote memorization.More specifically, the text focuses on the relationships between business events and financial statements. The primary objective is for students to develop and explain how a particular business event can affect the income statement, balance sheet, and the cash flow statement. Did the event cause assets to increase, decrease, or stay the same?Similarly, what was its effect on liabilities, equity, revenue, expense, gains, losses, net income, and dividends? Furthermore, how did the event affect cash flow? These are the big picture relationships that both accounting majors and general business students need to understand to function effectively in the business world. The text contains numerous innovative features that are designed to facilitate the students' comprehension of the events affecting financial statements.