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Financial Accounting
PGP Core Course Term 1 2015 Sections A and D Three credits
Course Outline
I LEARNING OBJECTIVES
1. Appreciate the information needs of different categories of users of company financial
reports.
2. Understand the significance of accounting principles and the systems and processes
involved in preparing and presenting financial reports.
3. Analyze and interpret financial reports.
At the end of the course, students should:i. be able to analyze business transactions in a systematic manner.
ii. have a comprehensive understanding of the information available in financial reports.
iii. be able to prepare a financial analysis of a company.
II COURSE CONTENTS
Session
1
June 22
2
June 23
Topic
Part I THE BASIC ACCOUNTING MODEL
Accounting, Markets, and Governance
Understanding Business Organizations
What is Accounting
Accounting Information and Economic Decisions
Users of Accounting Information
Financial and Management Accounting
Assumptions Underlying Accounting Measurement
Generally Accepted Accounting Principles and the Accounting Environment
Forms of Business Organization
Accounting, Capital Market and Corporate Governance
The Accounting Equation
Financial Statements
Fields of Accounting Activity
Ethical Issues in Accounting
Read: Chapter 1 of RNS
Assignment: RNS Problems 1A.1, 1B.1, 1B.4; CP BDC 1.1 MoneyCare
Company; IFR 1.1 Jet Airways Limited
Processing Transactions
Accounts
Classification of Commonly Used Accounts
The Double Entry System: Basis of Modern Accounting
Recording Transactions
The Trial Balance
XBRL
1
Measuring Income
Income Measurement
The Adjustment Process: Accrual Accounting
Preparing Financial Statements from the Adjusted Trial Balance
Overview of the Accounting Cycle
Completing the Accounting Cycle
The Work Sheet: The Accountants Invaluable Tool
Using the Work Sheet
Closing Entries
Post-closing Trial Balance
Reversing Entries
Pro Forma Financial Measures
Read: Chapter 3 of RNS
Assignment: RNS Problems 3A.1, 3B.1, 3B.3, 3B.6; 3B.7; Cases CP BDC 3.1
Findomega.com, CP IFR 3.1 Computer Associates, Inc.
4
June 30
5-6
July 6
July 7
7
July 13
Inventories
Inventory Valuation and Income Measurement
Determining the Physical Inventory
Pricing the Inventory
Estimating Inventory Value
Perpetual Inventory System
Accounting for Manufacturing Costs
Financial Analysis of Inventories
Read: Chapter 6 of RNS
Assignment: RNS Problems 6A.4, 6B.1, 6B.2, 6B.3, 6B.5; Cases CP BDC 6.1
Giridhar Clothing Company, CP IFR 6.1 Nobles Crus
8-9
July 14
July 20
Fixed Assets
Fixed Assets in Perspective
Determining Cost of Acquisition
Accounting for Depreciation
Depreciation Methods
Capital Expenditures and Revenue Expenditures
Depreciation in Income Tax Returns
Disposal of Depreciable Assets
Revaluation of Fixed Assets
Accounting for Natural Resources
Accounting for Intangible Assets
Impairment of Assets
Read: Chapter 7 of RNS
Assignment: RNS Problems 7A.2, 7A.5, 7A.6, 7B.1, 7B.2, 7B.4, 7B.5, 7B.6,
7B7, 7B.8, 7B.9; Case CP BDC 7.1 Bengal Aluminium Company IFR 7.1 Jet
Airways (India) Limited
10-11
July 21
Aug. 3
Investments
Investments in Perspective
Equity and Debt Instruments
Impairment of Financial Assets
Subsidiaries
Consolidated Financial Statements and Business Combination
Joint Ventures
Associates
Investment Property
Read: Chapter 8
Assignment: RNS Problems 8A.1, 8A.5, 8B.1, 8B.3, 8B.4; Case CP BDC 8.1
Flexi Bank IFR 8.2 Unicredit
12-13
Aug. 4
Aug. 10
Liabilities
Liabilities in Perspective
Current Liabilities
Contingent Liabilities
3
Long-term Liabilities
Debentures Payable
Other Long-term Liabilities: Mortgages, Leases, Pensions and Other Postretirement Benefits
Deferred Tax Liability
Off-Balance Sheet Financing
Read: Chapter 9 of RNS
Assignment: RNS Problems 9A.1, 9A.4, 9B.2, 9B.3, 9B.4; Cases CP IFR 9.1
Essar Oil Limited, IFR 9.2 Kingfisher Airlines, IFR 9.3 Lehman Brothers IFR
9.4 Barclays PLC
14
Aug. 11
15-18
Aug. 17
Aug. 18
Aug. 24
Aug. 25
19
Aug. 31
Shareholders Equity
The Corporate Organization
Share Capital
Dividends
Accounting for Share Capital
Preference Share Capital
Reserves
Buy-back of Shares and Treasury Stock
Bonus Shares
Stock-based Compensation
Earnings per Share
Read: Chapter 10 of RNS
Assignment: RNS Problems 10A.1, 10A.4, 10B.1, 10B.4, 10B.5; Case CP IFR
10.1 Housing Development Finance Corporation Limited
PART III ANALYZING AND INTERPRETING FINANCIAL
STATEMENTS
Analyzing Financial Statements: Statement of Profit and Loss and Balance
Sheet
Objectives of Financial Statement Analysis
Sources of Information
Earnings Quality
Techniques of Financial Statement Analysis
Using Financial Ratios
Corporate Disclosure Policy
Efficient Market Hypothesis and Financial Statement Analysis
Read: Chapter 11 of RNS
Assignment: RNS Problems 11A.1, 11A.5, 11B.3, 11B.5; Cases CP IFR 11.1
Reliance Communications, IFR 11.2 Kingfisher Airlines
Analyzing Financial Statements: Cash Flow Statement
Cash Flow Statement in Perspective
Purpose, Uses and Structure of the Cash Flow Statement
Preparing a Cash Flow Statement
Reporting Cash Flows
4
Topic: It may be a study of financial reporting and analysis issue (see Financial
Analysis at the end of each chapter in the book for illustrative topics) or analysis of
the financial statements of two companies from the same industry for a minimum of
five years.
Objective: To test the students ability to critically analyze and interpret accounting
information and present their findings.
Team: A team of five students will complete a project. The team will select the topic.
Report and presentation: The teams will submit a report containing the results of their
study and present a summary of their study in class.
Evaluation criteria:
Innovation in developing the topic;
Efficiency in execution;
Comprehensiveness of data sources;
Clarity in communication; and
Overall quality
Proposal due date: July 3, 2015 5 p.m.
Project presentation in class: August 31, 2015 (tentative)
Project report due date: September 2, 2015 5 p.m.
All submissions will be via moodle.
*
*
Method: The exam will involve analysis of a company annual report. No multiplechoice questions.
Duration: Three hours.
Tests and exams are closed-book. Only pens, pencils, erasers and calculators are allowed.
Answer-sheets will be marked within one week from the date of the test or examination.
Students will have the opportunity of inspecting their respective answer scripts and the
instructor's model answers at the instructor's office. Students must not remove, copy or
photocopy the answer scripts and the instructor's model answers.
Complaints regarding errors in totalling marks will be accepted, if given in writing
immediately after inspecting the answer script. The instructor will examine the complaint and
revise the marks, if appropriate. There should be no email or other kind of follow-up.
Complaints regarding other matters will not be considered. The instructor is not able to
discuss (in person, over the phone or by e-mail) marking or grading matters.
On the basis of the students total marks in the course, there will be an overall grade and a
grade point. The various components of evaluation will not be graded separately.
V ATTENDANCE
Students attendance is not mandatory and it will not be a consideration in marking or
grading.
VI INSTRUCTOR
R. Narayanaswamy
Office
Student meeting time