Post Post Graduate Graduate Programme in in Management 2014-15 TERM: I TITLE TITLE OF THE COURS COURSE: FINANCIAL ACC ACCOUNTI OUNTIN N G AND REPORTI REPORTING NG CREDITS: 4
Name of the Faculty member Prof. V K Gupta Prof. Akila K. Faculty Block – A -104
Prof. Jayanthi Iyer
VF
Dr. Amit Shrivastava Shrivastava
VF
VF
Prof. N. Sivasankaran
VF
Email:
[email protected]
[email protected]
[email protected]
[email protected] [email protected]
Telephone Number 2439516
COURSE DESCRIPTION Accounting is the language of business. It attempts to measure and report corporate performance. Users of financial statements demand the performance measure in a variety of decisions they make. Managers use accounting in making decisio ns; while investors use it for valuing stocks. The bankers and lender rely on accounting information to decide to whether to lend money to business. The accounting information is also crucial in evaluating the performance of employees at various levels in an organization.
COURSE OBJECTIVES This course is designed with the following objectives: (i) (i ) Help the participants to become intelligent users of accounting information (a) Understand the rules and management’s discretion ( b) Understand what explains the rules and the type of management discretion (c) Understand how events affect firm value (ii) (i i) Make the participants’ comfortable looking through an annual report (iii) Develop the ability in partici pants’ to use financial statements to assess a company’s performance (iv) Participants’ to get a sense of the limitations of financial statement data.
PEDAGOGY/TEACHING METHOD: METHOD: Cases, minicases and annual report discussion.
EVALUATION Quizzes Case Analysis / Home Assignments Mid-term Examination End-term Examination Total
WEIGHTAGE 25% 20% 25% 30% 100%
SCHEDULE OF SESSIONS Module I
Preparation of Financial Statements
Module Objective
To explai n the basic principles underlying the preparation of financial statements and to go through the entire accounting process quickly to establish an overview. Sessions and Objective Session 1: Balance Sheet Objective: To explain how to prepare the balance sheet and the importance of each underlying principle. Reading: AHM: Chapter 2: Basic Accounting Concepts: The Balance Sheet Case: Smoky Valley Café Session 2: Objective:
Reading: Case: Sessions 3 & 4: Objective:
Reading: Case: Session 5: O bjecti ve:
Reading: Case: Sessions 6 & 7: Objective:
Reading: Case:
Income Statement To explain ho w t o p rep ar e t he i nc ome st at eme nt o f a f ir m a nd t he underlying principles in accrual accounting. AHM: Chapter 3: Basic Accounting Concepts: The Income Statement Mansa Building [IIMA / F&A-0089R] Income Statement- Merchandising firms To introduce the system of double-entry bookkeeping and to explain its elements viz. preparation of journal, the ledger and the trial balance. AHM: Chapter 4: Accounting Records and Systems AHM: Case 4 – 4: Waltham Oil and Lube Centre, Inc. Income Statement – Manufacturing firms To ex pla in how the costs ar e ac cr ued in the man uf ac tur ing cont ext and estimating the cost of goods manufactured and cost of goods sold apart from preparation of classified financial statements. AHM: Chapter 6: Cost of Sales and Inventories, pgs. 148-152 Birla3M [IIMA / F&A-0462] Cash Flow Statement To explain how to prepare the cash flow statement including cash flows from operating, investing and financing activities and also to cal culate the cash from operations by indirect method AHM: Chapter 11: Statement of Cash Flows Chemalite, Inc. [B] [9-195-130]
Module
II
Accounting Policies and Managerial Choices
Module Objective
To discuss important accounting policies and standards which are required for measuring the revenues, expenses, assets and liabilities. Sessions and Objective Session 8: Objective:
Reading: Case: Session 9: Objective:
Reading: Case: Session 10: O bjecti ve:
Reading: Case: Session 11: Objective:
Reading:
Case:
Revenue Recognition To explain the revenue recognition methods used when the “critical event” and “measurability” conditions for revenue recognition are not satisfied at the point of sale. AHM: Chapter 5: Revenue and Monetary Assets AHM: Case 5 – 2: Grennell Farm Issues in Revenue Recognition To understand the accounting standard on revenue recognition and when to recognize revenue in different types of sales transactions. Revenue Recognition and Reporting [9-101-050] Boston Automation [9-103-041] Accounting for Inventory To ex pl ai n di ff er en t c lassi fi ca ti on of inven tor y a nd how to mea sure the value of inventory under different methods as well as explaining accounting standard regarding Inventory. (1) AHM: Chapter 6: Cost of Sales and Inventories (2) The Question of LIFO or FIFO: Which is Preferable? [9-104-087] Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? [3217] Accounting for Depreciation To understand how to measure the depreciation expenses for long-lived assets under different methods as well as explaining the relevant accounting standard. (1) AHM: Chapter 7: Long-lived Nonmonetary Assets and Their Amortization (2) Accounting for Property, Plant, and Equipment and Other Assets [9-193046] Depreciation at Delta and Singapore Airlines [9-198-001]
Case:
Accounting for Long Lived Assets To ev al ua te th e t hr ee mo del s o f a cc ou nt in g f or lo ng -l iv ed as se ts (cost, revaluation and fair value models) and to conclude on a major financial reporting decision. (1) AHM: Chapter 7: Long-lived Nonmonetary Assets and Their Amortization (2) Asset Reporting [9-101-014] Land Securities Group [A] [9-105-014]
Session 13: Objective: Reading: Case:
Accounting for Equity To understand the accounting and financial reporting for owners’ equity. AHM: Chapter 9: Sources of Capital: Owners’ Equity Kemp Foods Corporation [9-110-101]
Session 12: O bjecti ve:
Reading:
Session 14: Objective:
Reading: Case: Session 15: Objective:
Reading: Case: Session 16: Objective:
Reading: Case:
Module
Accounting for Liabilities To understand when to recognize the contingent liability and to measure and record it in financial statements. AHM: Chapter 8: Sources of Capital: Debt Accounting for the Intel Pentium Chip Flaw [9-101-072] Accounting for Leases To understand when to capitalize a lease and how to report in the financial statements. (1) Lease Accounting and Analysis [9-100-003] (2) Lease Reporting and Analysis A Note on Comdisco’s Lease Accounting [9-196-122] Accounting for Income Taxes To understand the situations in which deferred tax arise as asset or liability and how to report in the financial statements. Income Tax Reporting and Analysis Taxing situations: Two cases on income taxes and Financial Reporting [9191-071]
III Financial Statement Analysis
Module Objective
To examine the information contained in corporate annual report, assess the performance from different viewpoints and to understand the limitations of the accounting data. Sessions and Objective Sessions 17 & 18: Objective:
Reading: Discussion: Session 19: Objective:
Reading: Case: Session 20: Objective:
Understanding of Annual Report To explain how to understand the corporate financial statements in prescribed format as well as significant account policies apart from directors’ report, auditors’ report and the management discussion. AHM: Chapter 14: Understanding Financial Statements Annual Report of Hindustan Unilever Limited Financial Statement Analysis To explain how analyze the corporate financial statements from the viewpoint of various stakeholders about the performance of the company and its financial condition. AHM: Chapter 13: Financial Statement Analysis Analyzing the Financial Statements of Hindustan Unilever Limited Review To review the topics covered in different sessions of the course and Q&A session on any accounting issue related to meeting the objectives of the course.
Additional Reading & Text Book:
Accounting Text and Cases (AHM)- 13th Edition" Author- Robert N Anthony, David F Hawkins and Kenneth A Merchant- Publisher- Tata McGraw *****
