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JAIPURIA INSTITUTE OF MANAGEMENT, JAIPUR

PGDM; TRIMESTER I; ACADEMIC YEAR 2015-17


Course Code: FIN 101

Course Title: Accounting for Decision Making

Course Overview:
Accountancy is the process of communicating financial information about a business entity
to various stakeholders. The communication is generally in the form of financial statements
that show in monetary terms, the economic resources under the control of management. The
American Institute of Certified Public Accountants (AICPA) defines accountancy as "the art of
recording, classifying, and summarizing in a significant manner and in terms of money,
transactions and events which are, in part at least, of financial character, and interpreting the
results thereof."
Early accounting, popularly known as Stewardship Accounting, served mainly to assist the
memory of the businessperson and the audience for the account was the proprietor or
record keeper alone. The development of joint stock companies created wider audiences
for accounts. This was because the companys investors without first hand knowledge of its
operations relied on accounts to get the requisite information. Today, accounting is called "the
language of business" because it is the vehicle for reporting financial information about a
business entity to many different groups of people. Accounting that focuses on reporting to
people inside the business entity is called management accounting and is used to provide
information to employees, managers, owners and auditors. Management accounting is concerned
primarily with providing a basis for management or operating decisions.
Accounting that provides information to people outside the business entity is called financial
accounting and provides information to present and potential shareholders, creditors such as
banks or vendors, financial analysts, economists, and government agencies. Because these
users have different needs, the presentation of financial accounts is very structured and
subject to many more rules than management accounting. The body of rules that governs
financial accounting in a given jurisdiction is called Generally Accepted Accounting Principles,
or GAAP.
In this course students are not only exposed to domestic accounting practice and regulation
but are also exposed to International Financial Reporting Standards (IFRS). The major
objective of this course is to develop an understanding of the concepts, principles and
conventions upon which financial accounting is based, and more importantly to provide an
analytical basis upon which financial statements can be interpreted intelligently.
Consideration will be given to accounting techniques and the formulation of financial
reports; however, the course will focus on understanding accounting concepts, their rationale
and the implications for users of the financial accounting information. The course also

emphasizes on how general purpose financial statements communicate information about the
business corporations performance and position to users external to management. Also, the
course case studies will help the student to learn that accounting is not a cut-and-dried subject
with all of its answers clearly indicated by the application of rules.
The first module of the course describes and discusses how the accountant processes and
presents the information. It includes exposure to recording transactions, adjusting balances and
preparing financial statements for various firms according to the established rules and
procedures. The second module of the course examines major elements of the statements
such as cash, receivables, inventory, longlived assets, depreciation, and other liabilities.
Analysis and interpretation of the financial statements using ratios as the tool is dealt in detail in
module 3 while, the last module deals with estimating and analyzing cash flows of business
entities.
Learning Outcomes:
After undergoing this course, the students will be able to:
1. Understand financial statements from the perspective of preparer as well as the users.
(LO1)
2. Comprehend and estimate the individual items of financial statements. (LO2)
3. Analyze & interpret financial Statements for decision-making. (LO3)
List of Topics/ Modules
Topic/ Module

Contents/ Concepts

Module:1 Financial Statements and the


Underlying Concepts

Overview of accounting environment, accounting


equation, concepts & format of financial statements.

Module-2: Measuring and Reporting


Assets, Liabilities and Equity

Estimation and reporting methods for Balance Sheet


items like cash, current assets, fixed assets, inventory,
investments, liabilities and shareholders equity.

Module-3: Financial Statement Analysis


Using Ratios

Objectives, source of information, standards of


comparison, and techniques and tools of financial
statement analysis.

Module-4: Estimating and Analyzing Cash Cash flow statement: purpose, objectives and structure,
Flows
determination of cash flows from various business
activities and their interpretations.

Component

Group
Assignment

Description
Each group would scan the annual report of a company which will be
allocated to them in the 3rd session of the course. Students in their
study group are individually required to analyze the assigned section
of the report and discuss the same with the other group members.
Presentations followed by a viva-voice will be taken for the same
between 20-24 sessions. The structure of viva-voice would be such
that students will be asked questions from the sections assigned to the
other members of the study group and not from the section assigned to
them. One report per group would be submitted in 22nd session.

There will be three quizzes conducted unannounced. The quiz would


Quiz
consist of MCQ (s). There will be .25 negative marking for each one
wrong answer. Best two out of three will be considered for evaluation.
Class participation would aim to test the students ability to apply the
Class
various concepts taught in the course. The evaluation would be done
Participation
on the basis of students level of participation and his/her quality of
response to the posed accounting/financial problem/situation in the
class.
Mid-term
The mid-term question paper would be designed in such a manner that
Examination
it will assess the conceptual understanding and application ability of
the students.
End-term
The end-term question paper would consist of conceptual questions,
Examination
application based questions and a case study to assess the application
and analytical ability of the students.
Evaluation Criteria

Weig
ht

0.20

0.10

0.10

0.20
0.40

Recommended/ Reference Text Books and Resources


Text Book
Narayanaswamy R, Financial Accounting - A Managerial Perspective, PHI Learning,
New Delhi (5th edition), 2014.
References
1. Anthony R. A, Hawkins D.F and Merchant K.A, Accounting: Text and Cases,
Tata McGraw Hill Publishing Company Limited, New Delhi (12th Edition), 2011.
2. Banerjee, A, Financial accounting a managerial emphasis, Excel Books (3rd Edition),
2010.
3. Williams H and Bettner, Financial and Managerial Accounting, Tata McGraw Hill,
New Delhi (13th Edition), 2005.

Session Plan:
Session

Topic

Requirements:
Cases

Readings/ Learning Outcomes

Module:1 Financial Statements and the Underlying concepts


1

Meaning and uses of


accounting, accounting
assumptions, accounting
equation.

Discussions
Ch. 1 pg. 14-25, pg.36-41

Understanding of
accounting Environment.
(LO1)

2.

Double entry system,


recording transactions.

Discussion and Text Book


Exercises
Ch.2 pg. 65-70, pg. 80-86

Knowledge of accounting
treatment of business
transactions. (LO1)

Accounting equation

Discussion and Text Book


Exercises
Ch.2 pg. 65-70, pg. 80-86

Knowledge of accounting
treatment of business
transactions. (LO1)

Income measurement,
converting cash to accrual,
adjustment entries.

Debate: Cash or Accrual?


Ch.3 pg. 105-120

Understanding income
related concepts and cash &
accrual basis of accounting.
(LO1)

Estimating revenue from


Discussion and Text Book
sales, COGS and operating
Exercises
expenses for a merchandising Ch.4 pg. 164-176
company.

Statement of Profit and loss

Cash flow statement

Estimating income statement


items for a merchandising
company. (LO2)

P&L statements of real time


companies (one manufacturing
+ one services)
Ch.4 pg. 180-184

Understanding of P&L
statement concepts and
format. (LO1)

Cash flow statements of real


time companies (one
manufacturing + one services)
Ch.12 pg. 532-538

Understanding cash
Statements. (LO1)

Module-2: Measuring and Reporting Assets, Liabilities and Equity

flow

Cash and cash equivalents,


receivables, financial analysis
of receivables. Investments in
perspectives, financial
instruments and financial
assets and their impairment.

Balance Sheets of Real time


companies
Ch.5 pg.217-232, pg.237
Ch.8 pg.338-349

Understanding and analyzing


receivables cash and
investments. (LO3)

Inventory costs and costing


techniques, inventory
valuation. accounting
standard relating to inventory
& financial analysis of
inventory

Balance Sheets of Real time


companies
Discussion and Text Book
Exercises
Ch.6 pg. 255 272

Knowledge of current assets


and inventory accounting.
(LO2)

10

Fixed assets in perspective,


property, plant & equipment
and related accounting
standard, cost of acquisition
and depreciation methods,
capital and revenue
expenditure, disposal of
depreciable assets.

Balance Sheets of Real time


companies

Understanding of fixed assets


and depreciation. (LO1)

11

Accounting standard for


depreciation, Revaluation of
property, plant and
equipment, intangible assets,
impairment of assets,
Financial analysis of fixed
assets.

Balance Sheets of Real time


companies
Discussions
Ch. 7 pg. 312-323

12

Liabilities in perspective,
classification of liabilities:
current liabilities, non-current
liabilities, contingent
liabilities and deferred tax.

Balance Sheets of Real time


Understanding of Liabilities
companies
of a company. (LO1)
Discussions
Ch.9 pg. 382-397, pg. 403 414

Discussion and Text Book


Exercises
Ch.4 pg. 287- 307

Accounting for revaluation


and asset impairment and
analyzing fixed assets.
(LO2)

13

Shareholders equity, share


capital, preference share
capital, reserves and surplus,
accounting for: share capital;
buy back of share, bonus
share, and dividends.

Balance Sheets of Real time


companies
Discussion
Ch.10 pg. 438 449

Accounting for changes in


shareholders equity. (LO2)

Module-3: Financial Statement Analysis using Ratios


14

15

Financial statement analysis:


objectives, source of
information, standards of
comparison, earnings quality,
Techniques of financial
Profitability analysis,
liquidity Analysis/DuPont
Analysis

Discussions
Ch.11 Pp. 478-493

Overview of financial
statement analysis and its
techniques. (LO3)

Financial statements of real time Analysis of profitability and


companies
liquidity. (LO3)
Discussion and Text Book
Exercises
Ch.11 pg. 488-493

16

Solvency analysis and capital Financial statements of a realmarket ratios.


time companies
Discussion and Text Book
Exercises
Ch.11 pg. 503-509

Analyzing solvency and


capital market standing of a
company. (LO3)

17

Analyzing information
Guest Talk
beyond financial statements.

Analyzing information
beyond financial statements
for the purpose of decision
making. (LO3)

Module-4: Estimating and Analyzing Cash Flows


18

Determining net cash flow


from Operating activities.

Discussion and Text Book


Exercise
Ch.12, pg. 538-543

Calculating cash generated


from operating activities of a
business. (LO2)

19

Determining net cash flow


from financing & investing
activity.

Discussion and Text Book


Exercise
Ch. 12, pg. 543-547

20

Interpreting the cash flow


Discussion and Text Book
statement and concept of free Exercise
cash flows.
Ch. 12, pg. 550-552

Calculating cash generated


from financing and investing
activities of a business.
(LO2)
Analyzing cash flow
statements for decision
making. (LO3)

21

Review and integration of


Study Group Presentations &
Financial Statement concepts Discussions
& analysis (Income statement
and Balance sheet)

Comprehend, Analyze &


Interpret the income statement
and balance sheet. (LO2 &
LO3)

22

Review and integration of


Study Group Presentations &
Financial Statement concepts &Discussions
analysis (Cash flow statement)

Comprehend, Analyze &


Interpret cash flow statements.
(LO2 & LO3)

23

Review and integration of


Financial Analysis concepts
and interpretation skills
(Profitability & Liquidity)

Study Group Presentations &


Discussions

Comprehend, Analyze &


Interpret financial Statements
for decision-making. (LO2 &
LO3)

24

Review and integration of


Study Group Presentations &
Financial Analysis concepts
Discussions
and interpretation skills
(Solvency and Capital Market
Ratios)

Comprehend, Analyze &


Interpret financial Statements
for decision-making. (LO2 &
LO3)

Contact Details:
Name of the Instructor:

Dr. Bhupendra Hada/ Dr. Babita Parmar

Office Location:

Room No. 108

Telephone:

9929344229 / 9602274367

Email:

bhupendra.hada@jaipuria.ac.in/ babita.parmar@jaipuria.ac.in

Teaching Venue:

Room No. 104/105


09:00 AM 05:00 PM

Office Hours: