Financial Management-I

Semester- I /AFM/ LNP/(Jun-Oct, 2014)Course Handout Accounting For Managers (AFM) Semester-I (June -October, 2014)

Course OverviewThis course is designed to help you develop aframeworkfor understanding financial statements and managerial reports by learning the basic accounting principles, concepts and standards. At the end of this course, students will be capable of preparing and understanding financial statements and use financial and management accounting information for taking business decisions.

Course Objectives To help you become intelligent users of accounting information. To make you learn the language and techniques. Go beyond bookkeeping and computation. To acquire the essential skills to deal with the decisions involving cost control and profit planning. To use management and cost accounting information in planning, controlling, and decisions making.

What You Will Learn From This Course Why financial statements are important. Types of financial statements and how they are related? Terminologies, accounting methods and various uses of financial statements. Importance of managerial reports and techniques to analyze them.

Reading Material:1. Accounting Text and Cases by Robert Anthony, David Hawkins and Kenneth Merchant (AHM), 13/e2. Framework for Preparation and Presentation of Financial Statements Issued by ICAI (http://www.mca.gov.in/XBRL/pdf/framework_fin_statements.pdf)3. Accounting Standards Issued by ICAI (http://www.icai.org/post.html?post_id=8660)

Supplementary Reading Material:1. Accounting for Decision Making by Belverd Needles, Marian Powers and Susan Crosson, Cengage Learning2. Introduction to Financial Accounting by Charles Horngren, Gart Sundem, John Elliott and Donna Philbrick (9th Edition), Pearson3. Introduction to Management Accounting by Horngren, Sundem, Stratton, Burgstahler and Schatzberg (14th Edition), Pearson4. Financial Accounting for Business Managers by Ashish K Bhattacharyya (3rd Edition), PHI LearningEvaluation:The evaluation for the course will be based on Class Participation, Written Tests and End Term Exam.

ActivitySessionMarks

1Class Participation

Round I1-1110%

Round II13-2210%

Round III24-3310%

2 Tests

Test I11th 5%

Test II21st 10%

Test III29th15%

3End term Examination40%

TOTAL100%

Instructor: L N Pappu e-mail: lnpappu@hotmail.comOffice: F-206Consultation Hours:Monday Sec N: 9:30 to 10:45 AM Sec A: 1:45 to 3.00 PM Mob:98494 68134

Guidelines: No background of accounting, finance or economics is necessary however, Please do not skip the classes unless you absolutely have to do so. It is a difficult course to Self Teach Please ensure that you read all the recommended materials and come to the class well prepared.

Delivery ScheduleSessionDetailed SyllabusChapters in AHMCases to be DiscussedSource

1Introductory Session

2 Need for Accounting Information Financial Accounting Framework Financial Statements OverviewChapter 1Framework (issued by ICAI) Case 1-2 Kim Fuller AHM

3-4Basic Accounting Concepts: Balance Sheet Overview Assets, Liabilities and Owners Equity Basic Concepts Money Measurement Concept Entity Concept Going Concern Concept Cost Concept The Dual Aspect ConceptChapter 2Framework (issued by ICAI) Case 2-2 Music Mart Inc Case 2-1 Maynard Company (A).AHM

AHM

5-7Basic Accounting Concepts: Income Statement Basic Concepts The Accounting Period Concept Conservatism Realization Concept Matching Concept Consistency Concept Materiality Concept Recognition of Expenses Criteria for Expense Recognition Expenses and Expenditure Gains and Losses The Income Statement Revenues, Cost of Sales, Gross Margin, Expenses, Net Income Concept Relationship between Balance Sheet and Income Statement Accrual versus Cash Based AccountingChapter 3Framework (issued by ICAI) Case 3-3 Dispensers of California, Inc. Case 3-4 Pinetree Motel

AHM

AHM

8Comprehensive Case Surendar PalINTERNAL

9-10Revenue Recognition Concept Gross versus Net Timing of Revenue Recognition Delivery / Sales Method Collection Method Production Method Percentage of Completion Method Installment Method Amount of Revenue Recognition Cash Discounts Revenue Adjustment versus Expense Warranty CostsChapter 5AS 9 (issued by ICAI) Case 5-3 Joan Holtz (A)

AHM

11 Test-I

12-13Inventory valuation in Merchandising / Manufacturing / Service Companies Full Cost of Inventory Product versus Period Cost Periodic versus Perpetual Inventory method Methods of Inventory Costing Specific Identification Method First in First Out Last in First Out Average Cost Method Valuation Principle (Lower of Cost or Net Realizable value)Chapter 6AS 2 (issued by ICAI) Case 6-2 Lewis Corporation Case 6-4 Joan Holtz (B) AHM

AHM

14-16 Long-Lived Assets Asset versus Expense Self Constructed Depreciation Disposal Depleting Assets Depletion and Appreciation Intangible Assets Goodwill Patents and Copyrights Research and Development CostChapter 7AS 6, 7, 10, 16, 26 (issued by ICAI) Case 7-3 Stafford Press Case 7-4: Silic: Choosing Cost or Fair Value

AHMAHM

17-19 Purpose of Cash Flow Statement Utility, Liquidity versus Profitability Contents of Cash Flow Statement Cash flow from Operating Activities Cash flow from Investing Activities Cash flow from Financing Activities Direct method versus Indirect method Non Cash transactions (Depreciation, Amortization, provisions, etc)Chapter 11AS 3 (issued by ICAI) Asian Paints Case 11-2 Amerbran CompanyINTERNALAHM

20Understanding Annual Report Notes, Schedules, Auditors Report, Directors Report, M D & A, Off Balance Sheet ItemsChapter 14AS 1 (issued by ICAI) Infosys Annual Report

21Test II

22-24 Relation of Cost to Volume Variable and Fixed Costs Unit Costs Break Even Analysis & Applications Break Even Point Target Profit Operating Leverage ContributionChapter 16 Case 16-1 Hospital Supply, Inc.

Case 16-3 Bill FrenchAHM

AHM

25-28 Full Cost Concept & Uses Measurement of Direct Costs Allocation of Indirect Costs Activity Based Costing Cross-SubsidiesChapter 17Chapter 18

Pepe Denim Case 18-1 Huron Automotive Company Case 18-4 Safety Monitoring Devices

INTERNAL

AHM

AHM

29Test III

30-33 Decisions Involving Alternative Choices Dropping a product line Shut down / Subcontract Acceptance of Special Order

Chapter 26 Case 26-1 Import Distributors Inc. Case 26-2 Forner Carpet Company Case 26-4 Baldwin Bicycle Company

AHM

AHM

AHM

End term Case based Examination (40%)

Happy Learning

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