AP ACCOUNTING What will it look like and how do we get there?

OBJECTIVES Attract high academic performing students Provide challenge and rigor Reflective of the accounting profession Create an interest in students to consider or pursue accounting as a major and a career Change the perception of accounting and accounting- related careers among students, teachers, guidance counselors and parents Allow college faculty to work with high school teachers to develop a course that better prepares students for a college accounting curriculum

AP PROCESS: Development and Implementation Each course is developed by a committee composed of college faculty and AP teachers. Members of these Development Committees are appointed by the College Board and serve for overlapping terms of up to four years. An AP course may be equivalent to a full-year college course or a half-year course. AP courses and exams are updated regularly, based on curriculum surveys of colleges and universities and committee members.

AP PROCESS: Development and Implementation College faculty serve on the Development Committee: Develop the course descriptions Develop the examinations College faculty are responsible for standard setting College faculty are involved in the evaluation of student responses.

AP PROCESS: Development and Implementation College AND high school faculty: Create detailed descriptions of course topics, Determine percentage goals of those topics on the exam, Prepare a summary outline and teaching materials for the course, Compile and class test many multiple choice and free response exam questions, and Form teams of dedicated faculty ready to serve on the Development Committee, as exam graders, professional development trainers, etc.

AP PROCESS: Development and Implementation Teacher Preparedness: Many Development Committees recommend that the AP teachers have recent college-level content- specific courses as background preparation and that schools augment the resource materials available to teachers and students. In addition, colleges and the College Board through its Pre-AP program provide professional development for teachers through content-specific strategies to build a rigorous curriculum via one-day workshops, two-day conferences, or five-day summer institutes.

AP PROCESS: Development and Implementation Granting Credit Advanced placement and/or credit is awarded by the college or university – NOT the College Board or the AP Program. Colleges need to know that the AP grades they receive for their incoming students represent a level of achievement equivalent to that of students who take the same course in the colleges’ own classrooms.

PILOT: AP ACCOUNTING Status of efforts to have a course adopted by the College Board Pilot program Academic year, 2007 – 2008 Approximately 6 – 8 high schools in Kansas Administered by Dan Deines, Accounting Professor, KSU Teacher Workshop/Training

PILOT: AP ACCOUNTING Contact Hours Estimated hours Classes take place in either a block format (90 minutes sessions alternating from 3 days per week follow by 2 days per week) or a traditional format (45-50 minute sessions that meet 4 or 5 times per week) The course is a full, one-year course Can be taught over two consecutive semesters

PILOT: AP ACCOUNTING College Credit Students who receive a score of 5, 4, or 3 on the comprehensive exam will receive 3 credits from Kansas State University (Accounting for Business Operations) Students earning a score of 5 or 4 on the exam will receive an “A” grade; students earning a score of 3 will receive a “B” grade. Colleges and universities other than Kansas State University, as well as community colleges, which participate in the program, will define how their institution will treat the course.

PILOT: AP ACCOUNTING Course Materials The text used for the course is “Introduction to Accounting: an Integrated Approach” 4th edition, by Ainsworth and Deines (McGraw Hill) Teachers will also be supplied with instructor resources, such as an instructor’s manual, PowerPoint presentations, test banks, chapter tests and exams

CONTENT Based on the premise that students should first understand business events, and then how the events are captured by an accounting system and then reported to interested users. Follows a “planning, performing and evaluating” approach.

CONTENT Reflective of “real-world” business activities and the integral role accountants play throughout the operating cycle of a business. Traditional courses focus on teaching the entire accounting cycle with the explanation of business events as only a secondary emphasis. New approach presents the accounting cycle within the context of businesses operating, investing, and financing activities, giving students a more realistic perspective of the role accounting plays in business.

CONTENT In addition, this course will integrate the following professional and technical skills throughout the course: Professional Skills: Writing, presentations, teamwork, and research Technical Skills: Excel, PowerPoint, use of internet, EDGAR and other data bases

MODULE 1, INTRODUCTION: BUSINESS OPERATING ACTIVITIES Chapter and TopicDiscussion PointsApproximate Time (Hours) Chapter 1, Accounting and Business (Supplemented by Chapter 17 and Chapter 18.)  Income statement (Chapter 17) and balance sheet (Chapter 18) material.  Also bring in material on career alternatives (AICPA Career Guides, Video, and Start Here Go Places) 4 hours Chapter 2, Business Processes and Accounting Information  Supplement this with personal bank reconciliation from Bank. Bank reconciliations should contain errors that student must find. Also introduce SEC’s Edgar data base. 4 hours Total hours, Module 18 hours Practice AP Test #1 *1 hour * Consider option to have chapter tests only.

MODULE 2, PLANNING: BUSINESS OPERATING ACTIVITIES Chapter and TopicDiscussion PointsApproximate Time (Hours) Chapter 3, Operating Processes: Planning and Control  The focus of the chapter is on understanding the relationship between cost and activities.  Explore use of high low as a way to determine fixed and variable cost.  Will look at possibility of using AICPA material. Chapter 4, Planning: Operating Activities (Supplemented by Chapter 17)  Focus on Breakeven Analysis and product mix.  Bring contribution margin income statement from Chapter 17 but use retail example.  Use excel to solve BEP and to demonstrate sensitivity analysis. Chapter 5, Strategic Planning Regarding Operating Processes  Introduce pricing concepts, such as target pricing as part of breakeven analysis. Chapter 6, Planning, the Balanced Scorecard, and Budgeting  Focus on service and retail entities and not manufacturing.  Build a financial literacy component relating to personal budgeting.  Calculate operating cycle using inventory turnover, accounts receivable turnover, and accounts payable turnover. Total hours, Module 230 hours** Practice AP Test #22 hours ** Hours will be revised during training (June).

MODULE 3, RECORDING AND EVALUATING: OPERATING ACTIVITIES (Part I) Chapter and TopicDiscussion PointsApproximate Time (Hours) Chapter 7, Accounting Information Systems  Focus on learning the accounting cycle and its mechanics (general journal only). Chapter 8, Purchasing/Human Resources/ Payment Process: Recording and Evaluating Expenditure Process Activities  Drop the special journals and subsidiary ledger.  Rather than do journal entries for payroll do a payroll spreadsheet, or introduce a tax return. Total hours, Module 312 – 15 hours Practice AP Test # 3 ****** *** After Chapter 8 do a practice set (KSU practice set) to reinforce the mechanics of the accounting system. This may be the midpoint of the course and students would have the semester break to do the practice set.

MODULE 4, RECORDING AND EVALUATING: OPERATING ACTIVITIES (Part II) Chapter and Topic Discussion PointsApproximate Time (Hours) Chapter 10, Marketing/Sales/Collection/ Customer Support Process: Recording and Evaluating Revenue Process Activities 4 hours Chapter 9, Recording and Evaluating Conversion Process Activities  Focus on recording DM and DL activities and how they become part of the cost of inventory; focus on DM and DL variance analysis.  We may use legos to demonstrate cost flows and the cost accounting system. (We moved Chapter 9 behind Chapter 10 due to level of difficulty.) 6 hours Total hours, Module 410 hours Practice AP Test # 41 hour

MODULE 5, INTRODUCTION: CAPITAL RESOURCE PROCESS ACTIVITIES Chapter and TopicDiscussion PointsApproximate Time (Hours) Chapter 11, Time Value of Money  There will be a good deal of material pertaining to financial literacy in this chapter.  The chapter will rely on financial calculators to solve these types of problems.  Spreadsheets will be used to solve amortization problems and reinforce the how interest is earned over time. 10 hours Total hours, Module 510 hours Practice AP Test # 5 ****2 hours ****This is just a chapter test to make sure students are prepared for the material that follows. It will not have the same weight as the other exams.

MODULE 6, PLANNING: CAPITAL RESOURCE PROCESS ACTIVITIES (Part I) Chapter and TopicDiscussion PointsApproximate Time (Hours) Chapter 12, Planning Investment: Capital Budgeting  This chapter will cover the basics of capital budgeting and only limited coverage of after-tax cash flows. 5 hours Chapter 16, Recording and Evaluating Capital Resource Process Activities: Investing  Use partial year depreciation versus mid year convention. 5 hours Total hours, Module 610 hours Practice AP Test # 61 hour

MODULE 7, PLANNING: CAPITAL RESOURCE PROCESS ACTIVITIES (Part II) and RECORDING AND EVALUATING: CAPITAL RESOURCE PROCESS ACTIVITIES Chapter and TopicDiscussion PointsApproximate Time (Hours) Chapter 13, Planning Equity Financing  Emphasis on types and advantages of the various ownership structures. 5 hours Chapter 14, Planning Debt Financing  Emphasis on the three basic types of notes and how time value of money shapes cash flows and interest cost. Very rigorous chapter. 10 hours Chapter 15, Recording and Evaluating Capital Resource Process Activities: Financing  Rigorous chapter on recording and reporting financing activities. Total hours, Module 725 hours Practice AP Test # 72 hours

MODULE 8, EVALUATING: CAPITAL RESOURCE PROCESS ACTIVITIES Chapter and TopicDiscussion PointsApproximate Time (Hours) Chapter 17+, Reporting Cash Flows, Financial Statement Analysis  This chapter is necessary IF the preparation of the cash flow done as part of the course. If the emphasis is on understanding what the cash flow statement reports then this material would be consolidated into Chapter hours Total hours, Module 810 hours***** Practice AP Test # 81 hour ***** Hours will be discussed/revised during training (June).

SUMMARY OF ESTIMATED TIME ModuleApproximate Time (Hours) Practice AP Test (Hours) Module 1, Introduction: Business Operating Activities8 hours1 hour Module 2, Planning: Business Operating Activities30 hours2 hours Module 3, Recording And Evaluating: Operating Activities (Part I)12 – 15 hours Module 4, Recording And Evaluating: Operating Activities (Part II)10 hours1 hour Module 5, Introduction: Capital Resource Process Activities10 hours2 hours Module 6, Planning: Capital Resource Process Activities (Part I)10 hours1 hour Module 7, Planning: Capital Resource Process Activities (Part II) and Recording And Evaluating: Capital Resource Process Activities 25 hours2 hours Module 8, Evaluating: Capital Resource Process Activities10 hours1 hour Total115 – 118 hours10 hours

Teaching Training/Workshops Dan Deines will hold a training session on selected topics for teachers participating in the pilot. The topics will include: ModuleChaptersTopics Module 2, Planning: Business Operating Activities Chapter 3, Operating Processes: Planning and Control; Chapter 4, Planning: Operating Activities;(Chapter 17) Breakeven analysis, fixed/variable costs, etc. Module 4, Recording And Evaluating: Operating Activities (Part II) Chapter 9, Recording and Evaluating Conversion Process Activities DM, DL, Inventory, Variance analysis Module 5, Introduction: Capital Resource Process Activities Chapter 11, Time Value of MoneyTime value of money Module 6, Planning: Capital Resource Process Activities (Part I) Chapter 16, Recording and Evaluating Capital Resource Process Activities: Investing Exchange of assets Module 7, Planning: Capital Resource Process Activities (Part II) and Recording And Evaluating: Capital Resource Process Activities Chapter 14, Planning Debt FinancingBonds – effective method of amortization Module 8, Evaluating: Capital Resource Process Activities Chapter 17, Reporting Cash FlowsStatement of cash flow

CONTACTS: Dan Deines Kansas State University Glenda Eichman Manhattan High School