Post Graduate Programme in Management At Mumbai

2013-14TERM: I

TITLE OF THE COURSE: MANAGERIAL ACCOUNTIN G AND CONTROL ICREDITS: 4

Name of the Faculty member

Prof. Akila Kalyanaraman

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 decisions; 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:

Help the participants to become intelligent users of accounting information

Understand the rules and managements discretion

Understand what explains the rules and the type of management discretion

Understand how events affect firm value Make the participants comfortable looking through an annual report

Develop the ability in participants to use financial statements to assess a companys performance

Participants to get a sense of the limitations of financial statement data

PEDAGOGY/TEACHING ME THOD

Cases, minicases and annual report discussion.

EVALUATIONWeightage

Quizzes

25%Case Analysis / Home Assignments20%Mid-term Examination

25%End-term Examination

30%Total

100%

SCHEDULE OF SESSIONS

Module IPREPARATION OF FINANCIAL STATEMENTS

Module Objective

To explain the basic principles underlying the preparation of financial statements and to go through the entire accounting process quickly to establish an overview.

Sessions and ObjectiveSession 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 Caf

Session 2:Income Statement

Objective: To explain how to prepare the income statement of a firm and the underlying principles in accrual accounting.

Reading:AHM: Chapter 3: Basic Accounting Concepts: The Income Statement Case:Mansa Building [IIMA / F&A-0089R]

Sessions 3 and 4:Income Statement- Merchandising firms

Objective:To introduce the system of double-entry bookkeeping and to explain its elements viz. preparation of journal, the ledger and the trial balance.

Reading:AHM: Chapter 4: Accounting Records and SystemsCase:AHM: Case 4 4: Waltham Oil and Lube Centre, Inc.

Session 5:Income Statement Manufacturing firm

Objective:To explain how the costs are accrued in the manufacturing context and estimating the cost of goods manufactured and cost of goods sold apart from preparation of classified financial statements.

Reading:AHM: Chapter 6: Cost of Sales and Inventories, pgs. 148-152 Case:Birla3M [IIMA / F&A-0462]

Sessions 6 and 7:Cash Flow Statement

Objective:To explain how to prepare the cash flow statement including cash flows from operating, investing and financin g activities and also to calculate the cash from operations by indirect method

Reading:AHM: Chapter 11: Statement of Cash Flows

Case:Chemalite, Inc. [B] [9-195-130]

ModuleIIACCOUNTING POLICIES AND MANAGERIAL CHOICES

Module Objecti ve

To discuss important accounting policies and standards which are required for measuring the revenues, expenses, assets and liabilities.

Sessions and Objective

Session 8: Revenue Recognition

Objective: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.

Reading:AHM: Chapter 5: Revenue and Monetary Assets

Case:AHM: Case 5 2: Grennell Farm

Session 9: Issues in Revenue Recognition

Objective: To understand the accounting standard on revenue recognition and when to recognize revenue in different types of sales transactions.

Reading:Revenue Recognition and Reporting [9 -101-050]

Case:Boston Automation [9-103 -041]

Session 10: Accounting for Inventory

Objective:To explain different classification of inventory and how to measure the value of inventory under different methods as well as explaining accounting standard regarding Inventory.

Readings:

AHM: Chapter 6: Cost of Sales and Inventories

The Question of LIFO or FIFO: Which is Preferable? [9 -104-087]

Case:Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? [3217]

Session 11: Accounting for Depreciation

Objective: To understand how to measure the depreciation expenses for long-lived assets under different methods as well as explaining the relevant accounting standard.

Readings:

AHM: Chapter 7: Long -lived Nonmonetary Assets and Their Amortization

Accounting for Property, Plant, and Equipment and Other Assets [9 -193 -046]

Case:Depreciation at Delta and Singapore Airlines [9-198-001]

Session 12: Accounting for Long Lived Assets

Objective:To evaluate the three models of accounting for long -lived assets (cost, reva luation and fair value models) and to conclude on a major financial reporting decision.

Readings:

AHM: Chapter 7: Long -lived Nonmonetary Assets and Their Amortization

Asset Reporting [9-101 -014]

Case:Land Securities Group [A] [9 -105 -014]

Session 13: Accounting for Equity

Objective:To understand the accounting and financial reporting for owners equity. Reading: AHM: Chapter 9: Sources of Capital: Owners EquityCase:Kemp Foods Corporation [9-110-101]

Session 14: Accounting for Liabilities

Objective: To understand when to recognize the contingent liability and to measure and record it in financial statements.

Reading:AHM: Chapter 8: Sources of Capital: Debt

Case: Accounting for the Intel Pentium Chip Flaw [9-101-072]

Session 15: Accounting for Leases

Objective:To understand when to capitalize a lease and how to report in the financial statements.

Readings:Lease Accounting and Analysis [9-100-003]

Lease Reporting and Analysis

Case:A Note on Comdiscos Lease Accounting [9-196-122]

Session 16: Accounting for Income Taxes

Objective: To understand the situations in which deferred tax arise as asset or liability and how to report in the financial statements.

Reading:Income Tax Reporting and Analysis

Case:Taxing situations: Two cases on income taxes and Financial Reporting [9 -191-071]

ModuleIII: 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 and 18:Understanding of Annual Report

Objective: 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.

Reading:AHM: Chapter 14: Understanding of Annual Report

Discussion:Annual Report of Hindustan Unilever Limited

Session 19: Financial Statement Analysis

Objective: To explain how analyze the corporate financial statements from the viewpoint of various stakeholders about the performance of the company and its financial condition.

Reading:AHM: Chapter 13: Financial Statement Analysis

Case:Analyzing the Financial Statements of Hindustan Unilever Limited

Session 20: Review

Objective: 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.

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