IBS Hyderabad

Academic Year: 2020-21 (June 2020 – October 2020)

Course Handout

Program: MBA
Course Code: SLAC501
Course Name: Accounting for Managers Semester: I
Faculty Name: Dr.Pavana Jyothi Room No: F007
Mobile No: 9951752725 Email ID: [email protected]
Consultation hours: Monday 8.30 AM

Course Description:
The course focuses on the detailed understanding of accounting concepts and principles along with their relevance in the
changing global business environment. It relates these concepts to the preparation of various financial statements, like
Income Statement, Balance Sheet and the Cash Flow Statement. It also involves the calculation of Unit Cost and the
preparation of cost sheet and quotations. It covers the break-even analysis and decision making alternatives for the short
term, emphasizing on the evaluation and selection of a feasible alternative for the business.

Course Objectives:
At the end of the course, the student will be able to:
• Develop conceptual knowledge required for preparation of books of accounts.
• Create books of accounts on the basis of principles and regulations of accounting.
• Analyze and interpret financial statements for prudent business decisions.

Learning Outcomes:
At the end of the course, the student will be able to:
• Understand book keeping system, concepts of Accounting, Accounting standards and cost concepts.
• Prepare Financial and Cost statements required for reporting and analysis purpose.
• Gain familiarity with terminologies, accounting methods and various uses of financial statements.
• Identify the importance of managerial reports and techniques to analyze them for decision making.

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. Indian Accounting Standards (IND ASs) – Issued by ICAI
https://www.icai.org/post.html?post_id=7543

Supplementary Reading Material:

1. Accounting for Management – Text & Cases by SK Bhattacharyya and John Dearden (3rd Edition), Vikas Publishing
House
2. Introduction to Management Accounting by Horngren, Sundem, Stratton, Burgstahler and Schatzberg (14th Edition),
Pearson

Sessi
Cases to be Sources /
on Topic / Area Covered Teaching Objectives Learning Outcomes
Discussed Readings
No.
To introduce the
course and highlight Understanding and Introduction to
1 Introductory session its significance and appreciating why Framework given
role in a business accounting is important? by ICAI
career.
 Need for Accounting To differentiate Becoming familiar with
Problems solving
Information accounting Vs. non- type of information that AHM
2-3 on Transaction
Financial Statements accounting affects books of (Chptr-1)
analysis
Overview information accounting. Becoming
 Changing Landscape of To know about the familiar with important
Accounting – IFRS important financial accounting statements
Schedule III Companies statements and the and their need for a firm.
Act purpose thereof.
Basic Accounting
Concepts: Income
Statement
Basic Concepts: The
Accounting Period
Concept, Conservatism
Concept, Realization To discuss the
Understanding the
Concept, Matching elements of Income
application of the
Concept Consistency Statement.
principles and concepts
Concept, Materiality To discuss the various
associated with income
Concept concepts and
statement.
Recognition of Expenses principles that Income
Ability to discern the AHM
4 Criteria for Expense Statement is based on. Schedule 3
accounting line items (Chptr-3)
Recognition, Expenses To highlight the
rightly in appropriate
and Expenditure, differences between
heads.
The Income Statement expenses and
Enables to prepare
Revenues, Cost of Sales, expenditures;
Income statement of a
Gross Margin, Expenses, revenues, profits, and
firm.
Gains, Net Income, gains;
Retained Earnings.
Relationship between
Balance Sheet and Income
Statement
Accrual versus Cash
Based Accounting
Basic Accounting
Extended understanding
Concepts: Balance Sheet
about Balance Sheet
Overview; Assets, To discuss the
Understanding the role
Liabilities and Owner’s elements of Balance
of various concepts in
Equity; Basic Concepts Sheet. AHM
5 identifying assets, Schedule 3
Money Measurement To discuss the various (Chptr-2)
liabilities and equity
Concept, Entity Concept, concepts that Balance
related transactions, and
Going Concern Concept, Sheet is based on.
knowledge of their
Cost Concept, The Dual
appropriate recording.
Aspect Concept
Record keeping
fundamentals,
permanent and
temporary accounts,
AHM
ledger, chart of Familiarity with record
6-8 Accounting records Numericals (Chptr-4)
accounts, Accounting keeping
process, transaction
analysis ,accounting
systems ,computer
based accounting.
To provide additional Extended practice of the
practice of the application of principles AHM
Comprehensive Problem
9 - 10 concepts relating to and concepts of Income Schedule 3 (Chptr-4)
Solving
the Income Statement Statement and Balance
and the Balance Sheet Sheet
11 Class Test - 1 (Objective) Sessions 1 to 10 Chapters 1, 2, 3, 4
 Revenue Recognition
Concept – Gross versus
To Discuss the criteria
Net, Timing of Revenue
for revenue AHM
Recognition, Delivery / Understanding of how
recognition under (Chptr-5)
Sales Method, Collection accounting transactions
accrual accounting so Indian
Method, Production influence operating
as to know when and Case 5-3: Joan Accounti
Method, Percentage of decisions and
12-13 how much revenue Holtz (A)
Completion Method, Knowledge of improper ng
should be recognized. Problems solving
Installment Method ways that can be used to Standard
To discuss various
Amount of Revenue inflate the operating (Ind AS)
methods associated
Recognition, Cash performances. 18
with revenue
Discounts, Revenue
recognition.
Adjustment versus
Expense, Warranty Costs.
Inventory valuation in
Merchandising /
Manufacturing / Service
Companies AHM
Full Cost of Inventory, Familiarity with the (Chptr-6)
To discuss principle Indian
Product versus Period methods to value
and various methods Accounti
14 - Cost, Periodic versus inventory and
of inventory valuation Problems solving
15 Perpetual understanding the ng
Methods of Inventory reporting consequences Standard
Costing, Specific under each method. (Ind AS)
Identification Method, 18
FIFO, LIFO, Average Cost
Method
Valuation Principle
Long-Lived Assets
Asset versus Expense AHM
Self-Constructed Assets To describe the nature (Chptr-7)
Learning how the Long
Depreciation and Disposal of long-term assets Indian
term assets differ from
Depletion and and its various kinds. Accounti
16 - other assets in terms of
Appreciation Problems solving
18 its use in the business ng
Intangible Assets: To discuss their
and valuation in the Standard
Goodwill, Patents and recording principle in
books. (Ind AS)
Copyrights the books of accounts.
Research and 16
Development Cost
Purpose of Cash Flow
To discuss the Learning and
Statement
difference between appreciating about cash
Utility, Liquidity versus AHM
cash flow and earnings flow statement being a
Profitability, Contents of (Chptr-11)
and importance of derivative of Income
Cash Flow Statement Indian
cash-flow statement Statement and Balance
Cash flow from Operating Problems from Accounti
(CFS) Sheet. Learning how
19 – Activities AS-3
To discuss the broader and why a company can ng
21 Cash flow from Investing
activities affecting the be cash rich yet Standard
Activities
cash flows to the firm unprofitable and vice- (Ind AS)
Cash flow from Financing
To discuss the versa. Enables to 7
Activities
preparation of CFS prepare cash-flow
Direct method versus
under different statement for a
Indirect method
methods. company.
Non Cash transactions
22 Class Test 2 (Written Test) Sessions 12 to 22 Chapters 5, 6, 7, 11
 Understanding Annual To discuss the annual Familiarity with the Annual report of
23 AHM
Report, Notes, Schedules, reporting by annual reports of TATA Steel Ltd.
 Auditors Report, Directors companies and companies, its purpose (Chptr-
Report, M D & A, Off detailed content of the and content 14)
Balance Sheet Items report
Behavior of Cost: Cost To discuss the cost
concepts and classification concepts, the various Enables to understand
of costs; Relation of Cost types of costs how cost structure plays
AHM
to Volume; Variable and To discuss the cost- a vital role in
(Chptr-16)
24 - Fixed Costs, Unit Costs volume relationship magnifying profits or
(Chptr-17)
27 Break Even Analysis & and computation of losses of a firm and
Applications; Break Even BEP. changes the level of
Point, Target Profit, To discuss concept of BEP.
Operating Leverage, operating leverage and
Contribution how it affects profits.
Enables to identify the
Full Cost – Concept & To discuss preparation
relevant costs associated Theoretical
Uses of cost sheet and
with a cost object for concepts with
Measurement of Direct various classifications AHM
28-29 strategic decision- examples
Costs of cost, To discuss the (Chptr-17)
making. Makes to learn
Allocation of Indirect ways of cost allocation
how to prepare a cost
Costs across cost objects.
sheet.
30 Class Test - 3 (Objective)
Decisions Involving To discuss the
Alternative Choices: considerable factors Enables to identify the Hospital Supply,
AHM
31 - Make or Buy; Dropping a associated with important criteria while Inc
(Chptr-26)
33 product line; Shut down / strategic decisions of evaluating alternatives
Subcontract; Acceptance the firm such as 'make for decision making.
of Special Order or buy' a product, etc.

Expectations from Students:

a. Students must report to the respective sessions well before the announced time. Latecomers will not be permitted
to join the class after the scheduled time. If late, the attendance for that session will be marked as absent.
b. Read the Case Study / material well prior to the class discussion. He/she is also expected to read the chapter
indicated in the course plan as the faculty directs.
c. In the class discussion student is expected to participate actively and contribute to individual and group learning.
Evaluation is based on active participation.
d. Evaluation is a continuous process at IBS. Every student needs to be aware of the timelines given in the section
below. Absence from these evaluations will mean non-awarding of marks in that particular component.
e. Each faculty has been given a scheduled consultation hour. Utilize this time to meet the faculty and clarify doubts
if any, seek explanations and get mentored if needed.

Evaluation Timelines:
Keeping in line with continuous evaluation at IBS the following evaluation schedule has been drawn. Students are expected
to go through the dates / sessions mentioned and prepare accordingly.
Component Component Expected slot / Marks Weightage
Number due date declaration by
Class Test 1 1 11th session 14th session 10
rd th
Class Test 2 2 23 session 26 session 20
st rd
Class Test 3 3 31 session 33 session 10
Project Assignment 4 28th session 33rd session 10
rd rd
Class Participation 5 33 session 33 session 10
End exam At the end of the semester Examination 40
Department
Total 100
 Electronic and Web resources: Swayam Videos, NPTEL Videos, Syndicated Databases

Links to NPTEL videos:

1. https://www.digimat.in/nptel/courses/video/110101003/L01.html (Introduction to Management Accounting)

2. https://www.digimat.in/nptel/courses/video/110101003/L02.html (Double Entry System, Forms of Organization)
3. https://www.digimat.in/nptel/courses/video/110101003/L03.html (Financial Statements)
4. https://www.digimat.in/nptel/courses/video/110101003/L04.html (Balance Sheet)
5. https://www.digimat.in/nptel/courses/video/110101003/L05.html (Profit and Loss Account)
6. https://www.digimat.in/nptel/courses/video/110101003/L07.html (Accounting Concepts, Standards, IFRS)
7. https://www.digimat.in/nptel/courses/video/110101003/L08.html (Depreciation, Inventory, Goodwill)
8. https://www.digimat.in/nptel/courses/video/110101003/L09.html (Inventory Valuation & Cash Flow)
9. https://www.digimat.in/nptel/courses/video/110101003/L10.html (Cash Flow Statement Cases1)
10. https://www.digimat.in/nptel/courses/video/110101003/L11.html (Cash Flow Statement Cases2)
11. https://www.digimat.in/nptel/courses/video/110101003/L12.html (Cash Flow Statement Cases Part II)
12. https://www.digimat.in/nptel/courses/video/110101003/L20.html (Types of Costs)
13. https://www.digimat.in/nptel/courses/video/110101003/L21.html (Accounting for Costs)
14. https://www.digimat.in/nptel/courses/video/110101003/L27.html (CVP Analysis)
15. https://www.digimat.in/nptel/courses/video/110101003/L35.html (CVP and BEP Analysis)
16. https://www.digimat.in/nptel/courses/video/110101003/L36.html (CVP Analysis - Cost Indifference point &
leverage)