Kiondo Bag Boutique: A Serial Case for Introductory Financial Accounting

Abstract

Kiondo Bag Boutique is a hypothetical serial case involving a start-up retail business. The case evolves from an ambitious business idea to a successful business. Through the evolving business, the importance of accounting information is highlighted. Different iterations are used to illustrate the role of accounting in serving and managing multiple stakeholder interests and information needs and mitigating external and internal threats. These iterations are also used to enhance the students' understanding of multiple financial accounting concepts and principles. Case narrative and requirements are presented in six parts. These parts can be used in isolation as well as in the form of a continuous assignment. The first five parts of the case are designed to cover transaction analysis and accounting principles and concepts related to revenue, merchandise operations, inventories, receivables and cash. The last part reinforces accounting concepts, principles, and mechanisms through preparation of a multitude of adjusting entries and financial statements.

Key Words:

• Introductory financial accounting
• serial case approach
• instructional resource
• active learning

Acknowledgements

The author would like to thank students who provided motivation to write the paper. The author would also like thank the two anonymous reviewers, the associate editor and the editor for their constructive comments on earlier versions of this paper.

Notes

1 In some countries this credit term may be expressed as 2/10, n/30.

2 A debt is classified as bad debt (uncollectible debt or impaired accounts receivable) when there is no further hope of the customer paying the amount owed. On the other hand, if the customer is known to be in financial difficulty and unlikely to pay the amount due, the debt is described as doubtful debt.

3 Kyle is suggesting to use the ‘allowance method’ to account for doubtful debts. The estimated amount of doubtful debts is often referred to as allowance for bad debt (allowance for doubtful debt). The term ‘provision for bad debt’ is often, incorrectly, used.

4 The FOB (Free On Board) abbreviation is an import/export term relating to the point at which responsibility and ownership for goods passes from seller (exporter) to buyer (importer). Under FOB destination, ownership is transferred when goods reach the buyer. Under FOB shipping point, ownership is transferred when goods are shipped by the seller. These credit terms are important in deciding revenue recognition.