Contextualizing the Intermediate Financial Accounting Courses in the Global Financial Crisis

This paper represents an attempt to incorporate concepts and issues stemming from the global financial crisis (GFC) into the typical Intermediate Accounting, two-course sequence as taught in North American colleges and universities. The teaching approach which the authors advocate embeds the GFC throughout these courses. The main expected outcome from this project is a greater appreciation on the part of the accounting and finance majors that other business disciplines ‘matter.’ Put differently, those disciplines, including economics, banking, and management, interface with accounting and finance. Therefore, to understand accounting, students must be conversant with the other disciplines. The principal interrelating concepts we cover in this approach are as follows: capital maintenance, liquidity, solvency, financial leverage, efficient market hypothesis, transparency in disclosure, derivatives, fair valuation, moral hazard, and ethics.

Editor's Note : The continuing repercussions of the GFC were felt on the day when the final version of this paper was submitted (8 August 2011) due to Standard & Poor's downgrading the credit rating of the USA for the first time ever (from AAA to AA+) and this, coupled with problems relating to financial stability across the Eurozone, triggered huge falls on stock markets throughout the world.