An Alternative Approach for Teaching the Interest Method Amortization of Bond Premiums and Discounts

Discounts and premiums occur when the issuance price of a bond is more (premium) or less (discount) than its principal or face value. This result is due to a difference between the market or effective rate of interest and the coupon or face interest rate of the bond on the issuance date. If the market rate exceeds the coupon rate, the bond is issued at a discount, and if the market rate is less than the coupon rate, the bond is issued at a premium.

This paper presents an alternative approach for teaching the interest method amortization of bond premiums and discounts.

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The Apartment Hunt: A Short Case to Bridge the Gap between Students Lack of Business Experience and Learning to Define Information Requirements in Accounting Information Systems or Managerial Accounting Courses

Undergraduate students with little work experience have difficulty beginning to learn managerial accounting and information systems concepts. These students have little frame of reference to determine specific information needs for managerial decisions. One way to attempt to bridge this gap between conceptual information requirements and real world business processes is to design assignments that take advantage of experiences common to many students, for example, searching for an apartment or a place to live. Students’ prior experiences should aid learning about the conceptual task of defining information needs. With this in mind, we ask students to define the information requirements for deciding on an apartment. This is an introductory exercise that can be used in either an accounting information systems (AIS) course focused on defining information requirements or in a managerial accounting course focused on information requirements for decision making.

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What Is the Future of Accounting Education?

A reporter interviewed me on the changes I see forthcoming in accounting education. I thought these questions and my answers make a good summary for this issue of Trends.
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Accounting Instructors’ Report, Summer 2009: Table of Contents

What Is the Future of Accounting Education?
Belverd E. Needles, Jr., Ph.D., CPA

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Teaching After-Tax Cost-Volume-Profit Analysis

Cost-volume-profit (CVP) analysis is generally defined as a planning tool by which managers can evaluate the effect of a change(s) in price, volume, variable cost, or fixed costs on profit. Additionally, CVP analysis is the basis for understanding contribution margin pricing, related short-run decisions, target costing, and transfer pricing. As one of managerial accounting’s most basic analytical tools, CVP analysis is covered in all introductory managerial accounting texts.
Traditionally, equations are used to teach CVP analysis and to solve CVP problems. Because the equations method requires a before-tax set of equations and an after-tax set of equations, CVP analysis is frequently classified as before-tax and after-tax. While the before-tax equations are relatively straightforward, the after-tax equations are relatively complex and difficult for introductory managerial accounting students to understand and use. As a result, introductory managerial accounting textbooks either omit after-tax income CVP analysis or treat it separately, usually in an appendix, such that it can be easily omitted. Yet, income after taxes is the measure of wealth created by operations which managers cannot ignore and should not be omitted from introductory managerial accounting when a better method of teaching the topic is available.
This paper discusses an alternative method that is used in introductory managerial accounting classes to teach CVP analysis and to solve CVP problems – the contribution margin income statement. As the paper demonstrates, including income after-taxes using the contribution margin income statement for CVP analysis is straightforward, logical and is accomplished without additional effort or confusion. The equations are unnecessary and do not add value. They are eliminated.
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Accounting Education: Perpetuating the Obsolete

When handheld calculators capable of performing logarithmic and trigonometric functions became widely available in the 1970s, few could foresee the far-reaching effects this development would have on the way the world performs its calculations. The explosive growth of the calculator market forced the largest producer of slide rules to abandon the product line in 1975 (Redin, 2000). Despite the demise of the slide rule, educators in math, science and engineering fought the trend. Many educators did not quit teaching the slide rule until it became impossible for students to gain access to the outdated relics in the late Read More…

The Use of Personal Response System in Accounting Courses

A Personal Response System uses hand-held wireless transmitters, receivers, and computer software to obtain immediate feedback from students. The technique is similar to “asking the audience” on the game show Who Wants to be a Millionaire? This easy-to-use tool enhances interaction among students and the instructor and appears to increase learning. The classroom environment becomes more competitive as students strive to select correct answers to questions asked by the instructor. Any time during a lecture, the instructor can project a question on the screen or simply orally ask a question of the class and students provide answers. The instructor obtains immediate feedback that assesses the students’ understanding of the concept. Immediate feedback provides satisfaction to the students that they have mastered the concepts and identifies students’ misconceptions that a skillful instructor can correct through additional explanations and retest the students’ master through reformulation of additional questions.
The use of PRS appears to be a valuable tool for increasing interactivity within accounting courses. Not only is the technology easy to use but also available at low costs to universities. As instructors continue to develop courses that include the use of PRS, various research opportunities exist to determine whether PRS enhances learning
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The Penultimate Cash Flow Problem

This article contains a cash flow statement problem which, while innocuous at first glance, should challenge even the most experienced statement preparer. The point of the exercise is that one attribute students need to acquire in the accounting curriculum is the ability to solve daunting technical problems. Tasks such as the penultimate cash flow problem require the solver to have insight into the articulation of financial statements as well as extensive knowledge of accounting algorithms. The article serves as a challenge to the reader to create the “ultimate” cash flow problem. The “penultimate” cash flow statement presented in this article, and the ultimate cash flow problem yet to be created, are intended for use in intermediate accounting. Let the contest begin!
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Student’s Attitude of Accounting as a Profession: Can the Video “Takin’ Care of Business” Make a Difference?

Does the AICPA’s video “Takin’ Care of Business” market the accounting profession as dynamic and exciting, thereby countering negative stereotypes students often hold? Do other tools such as articles about accounting careers in the New Accountant magazine have similar effects on students? Should accounting educators devote valuable class time to showing the video or assigning readings?
This study uses a reliable attitude scale to determine whether college students’ positive perceptions of the profession increase after viewing the video and after reading an article with similar content from New Accountant magazine.

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Who Are Our Students?

Whenever I am with teachers of beginning accounting I hear complaints about the new generation of students. “They won’t read the chapters. They won’t do the homework. They won’t come to class. And on and on.” One professor told me, “I’m so glad I’m going to retire next year so I don’t have to deal with these students anymore.” These comments were so common that a year or so ago I decided to examine the issue of “Who are our students?’ This Trends piece reports on what I found; why this generation is as good, only different, from past generations; and how I think we can engage these students.

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