Semester- I /AFM/ PM /(Jun-Oct, 2015)

Course Handout
Accounting For Managers (AFM)
Semester-I (June -October, 2015)
Course Overview
This course is designed to help you develop a framework for understanding financial statements and managerial reports by learning the
basic accounting principles, concepts and standards. At the end of this course, you will be capable of preparing and understanding financial
statements and you can 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 accounting language and its techniques.
Go beyond book-keeping and computation.
What is not our objective
To train you become an accountant or book-keeper.

Learning Outcome of the Course:

You will know what financial statements are and why the statements are important?
You will know how these financial statements are related?
You will be familiar with accounting terminologies, methods and various uses of financial statements.
You will appreciate the importance of accounting reports and you will be able to analyze these reports using various techniques.

Sessions

Topics

Teaching Objectives

Learning Outcomes

Introductory Session

Understanding and
appreciating why
accounting is important?

Need for Accounting Information

To introduce the
course and highlight its
significance and role in
a business career.
To differentiate
accounting Vs. nonaccounting
information

Financial Statements Overview

1 | Page

Becoming familiar with

the type of information
that affects books of
accounting.

Cases
to
be Sources
Discussed
/Readings
Introduction
to
Framework given
by ICAI.
Case 1-2: Kim
Fuller

AHM
(Chptr-1)

Semester- I /AFM/ PM /(Jun-Oct, 2015)

3-4

5-7

8
3 | Page

To know about the

important of financial
statements and the
purpose thereof.
To discuss the
elements of Balance
Sheet.

Basic Accounting Concepts: Balance

Sheet
Overview
Assets, Liabilities and Owners
To discuss the various
Equity
concepts that Balance
Basic Concepts
Sheet is based on.
Money Measurement Concept, Entity
Concept, Going Concern Concept,
Cost Concept, The Dual Aspect
Concept
Basic Accounting Concepts: Income
To discuss the
Statement
elements of Income
Basic Concepts
Statement.
The Accounting Period Concept,
To discuss the various
Conservatism Concept, Realization
concepts
and principles
Concept, Matching Concept
that Income Statement
Consistency Concept, Materiality
is based on.
Concept
Recognition of Expenses
To highlight the
Criteria for Expense Recognition,
differences
between
Expenses and Expenditure,
expenses and
The Income Statement
expenditures;
Revenues, Cost of Sales, Gross Margin,
Expenses, Gains, Net Income, Retained revenues, profits, and
gains;
Earnings.
Relationship between Balance
Sheet and Income Statement
Accrual versus Cash Based
Accounting
Comprehensive Case
To discuss a practical
accounting problem by

Becoming familiar with

important accounting
statements and their need
for a firm.
Extended understanding
about Balance Sheet

Understanding the role

of various concepts in
identifying assets,
liabilities and equity
related transactions, and
knowledge of their
appropriate recording.
Understanding the
application of the
principles and concepts
associated with income
statement.

Case 2-2: Music

Mart Inc
Case 2-1:
Maynard
Company (A)
.

Case 3-3:
Dispensers of
California, Inc.

AHM
(Chptr-2)

AHM
(Chptr-3)

Case 3-4:
Pinetree Motel

Ability to discern the

accounting line items
rightly in appropriate
heads.
Enables to prepare
Income statement of a
firm.

Ability to handle a real

time problem of

Case: Surendar
Pal

INTERNAL

Semester- I /AFM/ PM /(Jun-Oct, 2015)

9-10

11
12-13

14-16

17-19

5 | Page

applying the learning

so far.
Revenue Recognition
To Discuss the criteria
Concept Gross versus Net
for revenue recognition
under accrual
Timing of Revenue Recognition
accounting
so
Delivery / Sales Method, Collection
as to know when, and
Method, Production Method,
how much revenue
Percentage of Completion Method,
should be recognized.
Installment Method
Amount of Revenue
To discuss various
Recognition
methods
associated
Cash Discounts, Revenue Adjustment
with revenue
versus Expense, Warranty Costs.
recognition.
Test-I
Inventory valuation in Merchandising /
To discuss principle
Manufacturing / Service Companies
and various methods of
Full Cost of Inventory
inventory valuation
Product versus Period Cost
Periodic versus Perpetual
Methods of Inventory Costing
Specific Identification Method
FIFO, LIFO, Average Cost
Method
Valuation Principle
Long-Lived Assets
To describe the nature
of long-term assets and
Asset versus Expense
its various kinds.
Self Constructed Assets
Depreciation and Disposal
To discuss their
Depletion and Appreciation
recording
principle in
Intangible Assets
the books of accounts.
Goodwill, Patents and Copyrights
Research and Development Cost

To discuss the
difference between
Cash Flow Statement
cash flow and earnings

preparing final accounts.

Understanding of how
accounting transactions
influence operating
decisions and

Case 5-3: Joan

Holtz (A)

AHM
(Chptr-5)
AS-9

Knowledge of improper
ways that can be used to
inflate the operating
performances.

Familiarity with the

methods to value
inventory and
understanding the
reporting consequences
under each method.

Learning how the Long

term assets differ from
other assets in terms of
its use in the business
and valuation in the
books.

Learning and
appreciating about cash
flow statement being a

Case 6-2: Lewis

Corporation
Case 6-4: Joan
Holtz (B)

Case 7-1- Stern

corporation (B)

AHM
(Chptr-6)
AS-2

AHM
(Chptr-7)

Case 7-3: Stafford

Press
AS-10, 26

Case:Asian
Paints

INTERNAL

AHM

Semester- I /AFM/ PM /(Jun-Oct, 2015)

Utility, Liquidity versus
and importance of
cash-flow statement
Profitability
(CFS)
Contents
of Cash Flow
Statement
To discuss the broader
Cash flow from Operating
activities affecting the
Activities
cash flows to the firm
Cash flow from Investing
Activities
To discuss the
Cash flow from Financing
preparation
of CFS
Activities
under different
Direct method versus Indirect
methods.
method
Non Cash transactions
20
Understanding Annual Report
To discuss the annual
reporting by
Notes, Schedules, Auditors
companies and detailed
Report, Directors Report, M D
content of the report
& A, Off Balance Sheet Items
21
Test II
22-24
Relation of Cost to Volume
To discuss the costvolume relationship
Variable and Fixed Costs, Unit Costs
and computation of
Break Even Analysis &
BEP.
Applications
Break Even Point, Target Profit,
To discuss concept of
Operating Leverage, Contribution
operating leverage and
how it affects profits.
25-28

7 | Page

Full Cost Concept & Uses

Measurement of Direct Costs
Allocation of Indirect Costs
Activity Based Costing
Cross-Subsidies

To discuss the
preparation of cost
sheet and various
classifications of cost.
To discuss the ways of
cost allocation across
cost objects.

derivative of Income
Statement and Balance
Sheet.

11-2: Amerbran
Company

(Chptr-11)
AS-3

Learning how and why a

company can be cash
rich yet unprofitable, and
vice-versa.
Enables to prepare cashflow statement for a
company.
Familiarity with the
annual reports of
companies, its purpose
and content

Infosys Annual
Report

Enables to understand
how cost structure plays
a vital role in
magnifying profits or
losses of a firm and
changes the level of
BEP.

Case 16-1:
Hospital Supply,
Inc.

Enables to identify the

relevant costs associated
with a cost object for
strategic decisionmaking.
Makes to learn how to
prepare the cost sheet.

AHM
(Chptr-14)

AHM
(Chptr-16)

Case 16-3: Bill

French

Case: Pepe
Denim
Case 18-1: Huron
Automotive
Company
Case 18-2
California

INTERNAL

AHM
(Chptr-18)

Semester- I /AFM/ PM /(Jun-Oct, 2015)

To explain ABC
method of costing
29
30-33

Test III
Decisions Involving Alternative
Choices
Dropping a product line
Shut down / Subcontract
Acceptance of Special Order

To discuss the
considerable factors
associated with
strategic decisions of
the firm such as 'make
or buy' a product,
using case analysis
approach.

Enables to understand
the merits of ABC
Costing over other
methods.
Enables to identify the
important criteria while
evaluating alternatives
for decision making.

Creamery Inc.

Case 26-1:Import
Distributors Inc.
Case 26-2:
Forner Carpet
Company

AHM
(Chptr-26)

Instructor Details:
Name: Dr Pranati Mohapatra
Designation: Asst. Professor, Finance.
Academic Qualifications: M.com, MBA, PhD, FDPM (IIMA)
E-mail: pranatim@ibsindia.org
Consultation - Tuesday
Office: F-104, 1st Floor
Reading Material:
1. Accounting Text and Cases by Robert Anthony, David Hawkins and Kenneth Merchant (AHM), 13/e
2. 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 (AS) 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 Learning
2. Introduction to Financial Accounting by Charles Horngren, Gart Sundem, John Elliott and Donna Philbrick (9th Edition), Pearson
3. Introduction to Management Accounting by Horngren, Sundem, Stratton, Burgstahler and Schatzberg (14th Edition), Pearson
4. Financial Accounting for Business Managers by Ashish K Bhattacharyya (3rd Edition), PHI Learning
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Semester- I /AFM/ PM /(Jun-Oct, 2015)

Evaluation:
The evaluation for the course will be based on Class Participation (30%), Tests (30%) and End Term Exam (40%).
Student Discipline and Class Participation

Reach the class in time/before time. You will not be given attendance, if you arrive after the class starts.
Ensure that you read all the recommended materials and come to the class well prepared.
It is the responsibility of each student to maintain discipline in the class and add value to class room learning.
In the class discussion each student is expected to participate actively and contribute to individual and group learning.
Evaluation is based on active and intelligent participation.
If you will be found talking, chatting in mobile you will not be allowed to sit in the class.
Do not use any gadget in the class unless you are instructed to do so. Mobile phones should be switched off for the entire duration of the class.
You should not skip the classes unless it is an emergency. This is not the course that you can self teach.
No background of accounting, finance or economics is necessary for this course.
If you have any doubts, or you need any guidance regarding the subject you can consult the faculty.

Wish you all the best.

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