ACC 103 - Principles of Accounting III

Course Description

Emphasizes a fundamental understanding of corporate and cost accounting. Topics include: accounting for a corporation, departmental accounting, cost accounting, and budgeting. Laboratory work demonstrates theory presented in class.


Competency Areas



Accounting for a Corporation



Departmental Accounting

D. Lab


Cost Accounting

P. Lab/O.B.I.









ACC 102




Course Guide



After completing this section, the student will:










Characteristics of a corporation

Define major terms associated with corporations.




Corporation capital

Identify the primary subdivisions of corporate capital.





Summarize the differences in the equity sections for sole proprietorships, partnerships, and corporations.




Characteristics of capital stock

Define capital stock, its classes, its characteristics, and all associated terms.




Issuing stock

Recognize the sale of stock at par, at a premium and at a discount, and record journal entries appropriate to each.





Illustrate stock premium and discounts on the balance sheet.




Stock subscriptions

Explain the subscription process.





Record journal entries for stock subscriptions and issuance.




Treasury stock

Define treasury stock.





Record journal entries for treasury stock transactions.




Paid-in capital

Identify and define the primary sources of paid-in capital.




Earnings and income tax

Illustrate the application of income taxes to corporate earnings.




Extraordinary items in the financial statements

List and illustrate the major categories of unusual items relating to net income.




Appropriation of retained earnings

Name the major reasons for appropriating retained earnings.





 Record journal entries for appropriations of retained earnings.





Define cash dividend and stock dividend.





Calculate total dividends and dividends per share for preferred and common stock.





Record journal entries for cash and stock dividends.





Define stock split.




Stockholders' equity on the balance sheet

Prepare the stockholders equity section of the balance sheet.




Statement of cash flow

Define the Direct and Indirect Method.





Assemble data and prepare the Statement of Cash Flow.




Financial statement analysis

Describe the basic analytical procedures used such as percentages, analyses, ratios, and turnovers.





Calculate percentages, ratios, and turnovers as applied to solvency and profitability measures.




Annual reports

Describe the contents of Corporate Annual Reports.









Distinguish between financial accounting and managerial accounting.





Define planning.





Define control.




Responsibility accounting

Define responsibility accounting.





Utilize responsibility accounting's principles for cost, profit, and investment centers.





Define budget.





Define budget performance report.




Departmental accounting

Define and illustrate gross profit by department.





Define and illustrate operating income by department.








General principles

Illustrate similarities between manufacturing and merchandising.





Distinguish between cost of merchandise sold and cost of goods sold. Differentiate between job order and process accounting and give examples of items produced under each system.




Job order cost accounting

Summarize the process of accounting for materials, including appropriate documentation, determination of material cost, and the journal entry to record the flow of materials into production.





Define factory overhead, explain the use of the factory overhead ledger, and list the major sources of charges to this account.





Name and connect the controlling accounts and subsidiary ledgers normally used in job order cost accounting.





Record journal entries for the issuance of materials, factory labor, and factory overhead.





Prepare journal entries for goods completed and transferred to finished goods.





Prepare journal entries for the cost of goods sold.




Distinction between job order and process cost accounting

Cite major areas of similarities between job order and process cost accounting.




Service departments and cost allocation

Define service departments and explain the allocation of service department costs to departmental factory overhead accounts.




Processing costs

List the elements which comprise processing costs.





Explain the calculation of the unit processing cost.




Equivalent units of production

Define and explain the concept of equivalent units.





Demonstrate the computation of equivalent units of production for the month.





Apply the above results to the calculation of the cost of goods finished for an accounting period.





Show the computation of the cost of units in process at the end of the month.





Summarize the data on the cost of production report.




Journal entries

Record journal entries for the allocation of service department costs.





Record journal entries for the flow of factory costs between departments.





Record journal entries for the application of factory overhead and determine the amount and nature of the balances in departmental factory overhead accounts.





Record journal entries for routine business transactions related to manufacturing operations.








Nature and objectives of budgeting

Define budget, and list its major objectives.




Budget period and procedures

Illustrate budget periods.





Describe in general terms the budgeting process.





Make distinctions between the master budget and its components.




Cash budget and budget performance report

Summarize cash budget use and explain its preparation.





Prepare a cash budget.





Illustrate budget performance report use.




Flexible budgets

State the primary reasons for using flexible budgets.





Distinguish between fixed and variable overhead costs.





Prepare a flexible budget for several levels of productive activity.




Standard costs

Explain standard costs.





Illustrate the process of determining standard costs.





Define standard cost variances for a variety of applications.





Prepare journal entries for standard cost application.





Suggested Resources


Suggested Resources include textbooks shown below or most current edition.




Brock, H. R., et al. (1990). Accounting principles and applications. New York: McGraw-Hill.

Fess, P. E., et al. (1996). Accounting principles. Cincinnati: South-Western.

Heintz, J. A., et al. (1990). College accounting. Cincinnati: South-Western.