Unit 7: Students strengthen evidence-based reading, analytical reasoning, and structured writing skills through synthesis and reflection of course content.

By the end of this unit, students will know:

• How the full accounting cycle operates within a merchandising corporation
• How inventory valuation methods impact cost of goods sold and net income
• How uncollectible accounts are estimated and adjusted
• How depreciation methods affect long-term asset reporting
• How adjusting entries impact financial statements
• How financial ratios measure profitability, liquidity, and efficiency
• How financial red flags signal potential risk
• How professional judgment influences reported financial outcomes
• How accountants communicate findings to decision-makers

Students will:

• Record merchandising transactions using a simulation, textbook reinforcement problem, or Excel-based model
• Apply inventory valuation methods
• Estimate and adjust for uncollectible accounts
• Record depreciation using appropriate methods
• Prepare adjusting entries
• Generate simplified financial statements (manually or using software)
• Calculate key financial ratios
• Conduct trend and efficiency analysis
• Identify embedded financial red flags
• Evaluate earnings quality
• Develop recommendations for internal controls
• Prepare an executive summary
• Present findings in a professional board-style presentation

Students will complete a comprehensive simulation project that includes:

1. Accurate transaction recording

2. Completion of adjusting entries

3. Preparation of financial statements

4. Calculation and interpretation of financial ratios

5. Identification of financial strengths and weaknesses

6. Detection of potential risk indicators or red flags

7. Development of a professional executive summary

8. Formal presentation defending financial conclusions