Fundamentals of Financial Accounting 7th Edition

Book Preface

Data-Driven Pedagogy: A Proven Teaching and Learning Methodology

Faculty agree that for students studying financial accounting, the accounting cycle is the most critical topic to learn and master. The approach to this topic in the Phillips text is based on the belief that students struggle with the accounting cycle when transac-tion analysis is covered in one chapter. If students are exposed to the accounting equation, journal entries, and T-accounts for both balance sheet and income statement accounts in a single chapter, they can feel overwhelmed and are unable to grasp material in the next chapter, which typically covers adjustments and financial statement preparation.
The authors’ peer-reviewed research on various approaches to teaching the accounting cycle informed the step-by-step model used in the text—a model proven to lead to better results in short-term assessment as well as in long-term understanding and application of the material. In a study published in Issues in Accounting Education, author Fred Phillips and his research partner Lindsay Heiser studied the effects of teaching the accounting cycle by initially restricting the scope of transactions to only those affecting balance sheet accounts, while waiting to introduce transactions involving both balance sheet and income statement accounts until later.

The results showed that students who learned the accounting cycle via the scaffolded approach were better able to prepare journal entries on similar types of transactions both immediately and one week later. Importantly, these same students later performed just as well on complex transactions affecting balance sheet and income statement accounts despite having had less practice with them. The scaffolded accounting cycle approach that proved so effective in this study is the same that is used in Fundamentals of Financial Accounting, helping students to “work smarter,” and better preparing them for success in financial accounting and beyond.

The graphic below shows how, unlike other texts, Phillips spreads transaction analysis coverage over two chapters so that stu-dents have the time to master the material. In Chapter 2, students are exposed to the accounting equation and transaction analysis for transactions that affect only balance sheet accounts. This provides students with the opportunity to learn the basic structure and tools used in accounting in a simpler setting. In Chapter 3, students are exposed to more complex transactions that affect both balance sheet and income statement accounts. As a result of this progressive approach to transaction analysis, students learn more, as documented in peer-reviewed research.* This innovative organization also prepares students to better understand adjustments, financial statement preparation, and
more advanced topics. Traditional Accounting Cycle Approach Phillips Accounting Cycle Approach

In addition, the accounting cycle approach used here tells a natural business story—one that would be familiar to any modern entrepreneur. From planning and establishing the business to opening and eval-uating the business, the first few chapters clearly break out each key stage in starting a company. The accounting cycle coverage steadily unfolds as stu-dents move along this company’s journey, allow-ing them to keep pace and absorb how accounting events unfold in the real world of business.

Modern Businesses Engage Students

Entrepreneurial Approach: Inspiring  Students

The authors of Fundamentals of Financial Accounting understand the challenges instructors face and the need for a financial accounting text that is relevant, easy to read, and current.
Fundamentals of Financial Accounting responds by using carefully chosen focus companies that students recognize and engage with in their everyday lives. From tech start-ups to some of the world’s most familiar trademark brands, each chapter opens with an engaging scenario or story using a familiar company. The same focus company, such as Walmart, Cedar Fair, American Eagle, National Beverage, Under Armour, or General Mills, is used throughout the entire chapter so that students can see how the concepts and calculations apply to a real-world company they are already familiar with.
Today’s students have grown up hearing about start-up culture, and many are entrepreneurially minded having seen the rise of Apple, Facebook, and the “gig economy.” The authors showcase accounting’s relevance by using Noodlecake Studios, a digital start-up, as the company profiled in Chapters 1–4. With this example, students see how a new small business uses accounting, from planning to evaluation of financial performance.