Post Graduate Programme in Management

AY 2016-17 TERM: I
TITLE OF THE COURSE: FINANCIAL ACCOUNTING AND CONTROL
CREDITS: 4

Name of the Faculty Faculty Block/ Email Telephone Number

Room No.
Prof. Mehul Raithatha A- Conference mehulr@iimidr.ac.in +91-731-2439588
Prof. Pradip Banerjee J-202 pbanerjee@iimidr.ac.in +91-731-2439683
Prof. Saumya R. Dash B- Conference sranjan@iimidr.ac.in +91-731-2439667
Prof. V. K. Gupta A-104 vkgupta@iimidr.ac.in +91-731-2439516

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:

(i) Help the participants to become intelligent users of accounting information

(a) Understand the rules and managements discretion
(b) Understand what explains the rules and the type of management discretion
(c) Understand how events affect firm value
(ii) Make the participants comfortable looking through an annual report
(iii) Develop the ability in participants to use financial statements to assess a
companys performance
(iv) Participants to get a sense of the limitations of financial statement data.

PEDAGOGY/TEACHING METHOD:
Cases, mini-cases and annual report discussion.

Text Book:
Accounting Text and Cases (AHM)- 13th Edition" Author- Robert N Anthony, David F Hawkins and
Kenneth A Merchant- Publisher- Tata McGraw
 EVALUATION COMPONENT WEIGHTAGE
Quizzes 25%
Case Analysis / Home Assignments 20%
Mid-term Examination 25%
End-term Examination 30%
Total 100%

SCHEDULE OF SESSIONS

Module I: Preparation 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 Objective :

Session 1: Overview of Financial Accounting and Control

Objective: Generating an overview of Financial Accounting and Control
Reading: Hawkins D (1995), Financial Reporting Fundamentals Inc.HBS No. 9-195-
160). Boston, MA: Harvard Business School Publishing

Session 2: 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 3: 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: Seshan S (2001) Mansa Building IIMA No. F&A-0089R. Indian Institute of
Management Case Repository.

Sessions 4 & 5: 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 Systems
Case: Desai P (2002) Irrigation Equipments Limited IIMA No. F&A-202. Indian
Institute of Management Case Repository.

Session 6: Income Statement Service firms

Objective: To explain how the costs are accrued in the service firms and
preparation of classified financial statements.
Reading: Healy P (2001) Reporting Income for Dot-coms HBS No. 9-101-013. Boston,
MA: Harvard Business School Publishing.
Case: Seshan S (2003) Symphony Theatre IIMA No. F&A0126R, Indian Institute of
Management Case Repository
Module II: Accounting Policies and Managerial Choices

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

Sessions and Objective :

Session 7: 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 8: 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.
Reading: (1) AHM: Chapter 6: Cost of Sales and Inventories
(2) Bruns W J, Bruns S M (2005) The Question of LIFO or FIFO: Which is
Preferable? HBS No. 9-104-087. Boston, MA: Harvard Business School
Publishing.
Case: Bruns W J, Bruns S M & Marmeling S (2008). Merrimack Tractors and
Mowers, Inc.: LIFO or FIFO? HBS No. 3217. Boston, MA: Harvard Business
School Publishing

Session 9: 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.
Reading: (1) AHM: Chapter 7: Long-lived Nonmonetary Assets and Their Amortization
(2) Bruns W J (2004). Accounting for Property, Plant, and Equipment and
Other Assets [9-193-046]
Case: Bruns W J (2004). Depreciation at Delta and Singapore Airlines (A) HBS No.
9-198-001. Boston, MA: Harvard Business School Publishing

Session 10: Accounting for Long Lived Assets

Objective: To evaluate the three models of accounting for long-lived assets (cost,
revaluation and fair value models) and to conclude on a major financial
reporting decision.
Reading: (1) AHM: Chapter 7: Long-lived Nonmonetary Assets and Their Amortization
(2) Healy P & Choudhary P (2001). Asset Reporting HBS No. 9-101-014.
Boston, MA: Harvard Business School Publishing.
Case: Riedl E (2008). Land Securities Group [A] Inc. HBS No.9-105-014. Boston,
MA: Harvard Business School Publishing.
Session 11: Accounting for Equity and Liability
Objective: To understand the accounting and financial reporting for owners equity.
Reading: AHM: Chapter 9: Sources of Capital: Owners Equity
Case: Hawkins D, & Madera F (2005) Kemp Foods Corporation Inc. HBS No. 9-110-
101. Boston, MA: Harvard Business School Publishing

Session 12: Accounting for Leases

Objective: To understand when to capitalize a lease and how to report in the financial
statements.
Reading: (1) Hawkins D (2001). Lease Accounting and Analysis. Inc. HBS No. 9-100-
003. Boston, MA: Harvard Business School Publishing.

(2) Lease Reporting and Analysis

Case: Palepu K (1996). A Note on Comdiscos Lease Accounting Inc. HBS No. 9-
196-122. Boston, MA: Harvard Business School Publishing.

Session 13: 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: Harmeling S S (1993). Taxing situations: Two cases on income taxes and
Financial Reporting. Inc. HBS No. 9-191-071. Boston, MA: Harvard Business
School Publishing.

Module III: Understanding and Analysis of Financial Statements

Module Objective: To examine the information contained in corporate annual & quarterly
reports, assess the performance from different stakeholders viewpoints and to understand the
limitations of the accounting data.

Sessions and Objective :

Sessions 14 & 15: Cash Flow Statement

Objective: To explain how to prepare the cash flow statement including cash flows
from operating, investing and financing activities and also to calculate the
cash from operations by indirect method
Reading: AHM: Chapter 11: Statement of Cash Flows
Case: Davila A (1995), Chemalite, Inc. Inc.HBS No. [B] 9-195-130. Boston, MA:
Harvard Business School Publishing

Sessions 16 & 17: 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 Financial Statements
Discussion: Latest Annual Report of Hindustan Unilever Limited
Session 18 & 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: Emerging Issues in Accounting

Objective: Overview of contemporary accounting issues

Reading: Human Resource Accounting: A historical Perspective and Future

Implication. [Management Decision 40/10 (2002) pp.947-954]

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