Handout - FIN ZC415

BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE, PILANI
WORK INTEGRATED LEARNING PROGRAMMES

Digital Learning
Part A: Course Design
Course Title Financial and Management Accounting
Course No(s) MBA ZC415/FIN ZC415
Content Author Dr. Puran Singh
Learning Outcomes
No At the end of the course, the student will be able to;
L01 Interpret, identify, classify elements of the financial accounting transactions and summarise it
L02 Construct classified Balance Sheet, Profit & Loss Account and Cash Flow Statements
L03 Measure, analyze, and evaluate the financial statements and business performance of a firm
L04 Understand behavior of cost and relationship between cost-volume-profits (CVP)
L05 Evaluate capital investments and recommend based on capital-budgeting decision criteria
Course Objectives
No
C01 Demystify the components and elements of the financial statements.
C02 Learn to prepare financial statements from information and interpret transactions.
C03 Explain the tools and techniques of financial statement analysis.
C04 Examine the cost behavior and use of CVP for managerial decision making.
C05 Use capital budgeting techniques to analyse and make capital budgeting decisions.
Text Book
T1 Financial Accounting – A Managerial Perspective, R. Narayanaswamy, PHI, 5th edition, 2014.

T2 Accounting Text & Cases, Robert Anthony, David Hawkins, Kenneth Merchant, 13th edition,
2013 (For select cases & Management Accounting)
*If you are not able to find a copy of Text Book, feel free to get any one of the three reference books
mentioned below.
Reference Book(s)
R1 P. C. Tulsian, Financial Accounting, Tata McGraw Hill, latest edition

R2 Financial Accounting: A Managerial Emphasis, Ashok Banerjee, Excel Books; 3rd Revised
edition, 2009
Study Modules and Learning Outcomes:
Module Module Title Objectives Learning outcome (You should be able
No to answer these questions after the
module)
1 Introduction to To understand importance of Is accounting mere a historic record of
Accounting financial and management transactions or can it create value for
accounting in business as a source business?
of value creation
2 Generally To understand underlying principles What is the philosophy behind record
Accepted of financial accounting keeping? Are there any guiding principles
Accounting for transaction recording?
Principles
(GAAP)
3 Journal To learn the mannerism of recording How do they record every small business
business transactions in first book of transaction? Are there any rules? Is there
entry called ‘Journal’ a scientific method for recording
transactions?
4 Ledger To learn to classify transactions The transactions can differ in type and
recorded in Journal using ‘ledger nature. How do they account for that?
posting’ process
5 Trial balance To learn to prepare ‘trial balance It must be difficult to go through

statement’ (using records from thousands of transaction records. Can one
ledger) to get a summarize state of just have a summary of transactions like a
business transactions bird’s eye view?
6 Final Accounts To learn the process of preparation What is the result of all transactions that
of ‘Profit and Loss Account’ and took place during a year - profit or loss?
‘Balance Sheet’ using summary of How much does the business own and
accounts provided by trial balance how much does it owe?
7 Financial To learn to examine financial health How efficiently is business being run? Is
statement Analysis of business by converting data the financial position of business healthy
exhibited in ‘Income Statement’ and or critical? Is it headed for insolvency?
‘Balance Sheet’ into useful What areas need immediate attention?
information
8 Cash flows To learn the process of preparation Gee..Are you saying profit earned does
statement of ‘Cash Flow Statement’ using data not equal cash earned? How are these two
supplied by ‘Income Statement’ and different? Does that mean there
‘Balance Sheet’ transactions that do not involve cash?
9 Cost-volume- To learn to determine optimal scale What is the minimum scale of business
profit analysis of business operations for different that needs to be achieved before it starts
profit levels conditional to cost making profit? What scale needs to be
structure of a firm achieved to earn a target profit level?
10 Capital Budgeting To learn the techniques of Which investment projects should the
investment decision making business invest in given the limited
resources?
Content Structure
1. Introduction to Accounting
1.1. Why study accounting?
1.1.1. How valuable is the knowledge of financial accounting?
1.1.2. Types of business and information requirement
1.1.3. Financial accounting as an information system for stakeholders in business
1.2. What is accounting?
1.2.1. Definition of Accounting and accounting cycle
1.2.2. Introduction to Annual Accounting Statements
1.2.3. In class exercise
2. Generally Accepted Accounting Principles (GAAP)
2.1. Balance Sheet Principles
2.1.1. Money Measurement Concept
2.1.2. Business Entity Concept
2.1.3. Going Concern Concept
2.1.4. Cost Concept
2.1.5. Dual Aspect Concept
2.2. Income Statement concepts
2.2.1. Accounting Period Concept
2.2.2. Conservatism Concept
2.2.3. Realization Concept
2.2.4. Matching Concept
2.2.5. Consistency Concept
2.2.6. Materiality Concept
2.3. Accounting Equation
3. Journal
3.1. What is journal?
3.1.1. Meaning and format of Journal
3.1.2. Nature of business transactions
3.2. Types of accounts – Personal, Real and Nominal

3.3. Rules of debit and credit
3.3.1. What is debit and credit
3.3.2. Rules of debit and credit for types of accounts
3.3.3. Double entry system
3.3.4. Practice questions – recording transactions in Journal
4. Ledger Posting
4.1. Meaning and format of account – T accounts
4.2. How to post journal entries into ledger?
4.2.1. Posting Journal entries into Ledgers
4.2.2. Balancing of accounts and rules
5. Trial Balance
5.1. Format of trial balance
5.2. Transferring ledger balances to trial balance
5.3. Errors in preparation of trial balance
6. Final Accounts
6.1. Preparation of final accounts
6.1.1. Components of final accounts
6.1.2. Format and preparation of Income Statement & Balance Sheet
6.2. Adjustments for Transactions after closing of accounts
6.2.1. Outstanding and Prepaid Expenses
6.2.2. Closing stock
6.2.3. Fixed asset purchase/sale, Depreciation and profit/loss
6.2.4. Bad debts
7. Ratio Analysis
7.1. Introduction to Ratio Analysis
7.1.1. Introduction to financial ratio analysis
7.1.2. Meaning and classification of ratios
7.2. Liquidity ratios
7.2.1. About liquidity ratios
7.2.2. Current ratio
7.2.3. Liquid ratio
7.2.4. Absolute liquid ratio
7.2.5. Calculating liquidity ratios
7.3. Solvency ratios
7.3.1. About solvency ratios
7.3.2. Debt-equity ratio
7.3.3. Proprietary ratio
7.3.4. Gearing ratio
7.3.5. Interest coverage ratio
7.3.6. Calculating solvency ratios
7.4. Profitability ratios
7.4.1. Gross profit ratio, Operating ratio, operating profit ratio, net profit ratio, Calculation
of above ratios
7.4.2. ROI, ROCE, EPS, DPR, DYR, PER
7.4.3. Calculation of above ratios
7.5. Turnover ratios
7.5.1. Introduction to turnover ratios
7.5.2. STR
7.5.3. DTR and ACP
7.5.4. CTR and APP
7.5.5. Working capital turnover ratio
7.5.6. Fixed asset turnover ratio
7.5.7. Calculation of these ratios
8. Cash flow statement
8.1. Introduction to Cash flow statement
8.1.1. Need for cash flow statement
8.1.2. Types of cash flows
8.1.3. Defining cash for cash flow statement
8.1.4. Format of Cash flow statement
8.2. Calculation of cash from operating activities
8.2.1. Why accounting profit is not cash profit
8.2.2. How to calculate operating cash profit from accounting profit
8.2.3. Format - Calculation of cash from operating activities
8.2.4. Example problem -calculating cash flows from opearting activities
8.2.5. Treatment of exceptional item - Provision for tax
8.3. Calculation of cash from investing activities
8.3.1. Format - Calculation of cash from investing activities & Example problem
8.3.2. Treatment of exceptional item - purchase/sale of fixed asset
8.4. Calculation of cash from financing activities
8.4.1. Format - Calculation of cash from financing activities & Example
8.4.2. Treatment of exceptional item - dividend provision
8.5. Practice problems
8.5.1. Preparing CFS without additional information
8.5.2. Preparing CFS with additional information
9. Cost volume profit analysis

9.1. Introduction to Cost Volume Profit Analysis
9.1.1. Need for CVP analysis
9.1.2. Algebra of CVP analysis
9.1.3. Graphical representation
9.1.4. Practice questions
10. Capital Budgeting

10.1. Introduction to time value of money
10.2. Cash flow patterns
10.3. Present value calculation for different cash flow patterns
10.3.1. Practice questions
10.4. Investment decision rules
10.4.1. NPV rule
10.4.2. IRR rule
10.4.3. Pay-back period rule
10.4.4. Rate of return rule
10.4.5. Profitability indeed rule
10.5. Practice questions
Experiential Learning Components (ELC):
This course will feature experiential learning components in the form of projects / assignments.
ELC is designed to enable the participants to learnby doing. This will also form part of the
Evaluation Components for the course.
Part B: Contact Session Plan

Academic Term First Semester 2018-2019
Course Title Financial and Management Accounting
Course No MBA ZC 415/ FIN ZC415
Content Developer Dr. Puran Singh
Glossary of Terms:
1. Contact Hour (CH) stands for one hour long live session with students conducted either in a physical
classroom or enabled through technology. In this model of instruction, instructor led sessions will be
for 22 CH.
a. Pre CH = Self Learning done prior to a given contact hour
b. During CH = Content to be discussed during the contact hour by the course instructor
c. Post CH = Self Learning done post the contact hour
2. RL stands for Recorded Lecture or Recorded Lesson. It is presented to the student through an online
portal. A given RL unfolds as a sequences of video segments interleaved with exercises
3. CS stands for case study
4. QZ – Quiz component will be aggregated into 10% of the total evaluation component.
5. HW stands for Home Work and could be a selection of problems or CS from the text.
Contact Hour 1
Time Type Sequence Content Reference
Pre CH RL 1.1.1
1.1.2
1.1.3
During CH CH1 Introduction to the course
Post CH SS1 Chapter 1 Course Text book
Post CH HW1
Post CH QZ1
Note: HW/QZ to be assigned at the end of contact hour
Contact Hour 2
Pre CH RL 1.2.1
1.2.2
During CH CH2 1.2.3
Post CH SS2 Chapter 8 Course Text book
Post CH HW2
Post CH QZ2
Contact Hour 3
Pre CH RL 2.1.1 Taxila Course Page > Lecture3

2.1.2
2.1.3
2.2.1
2.2.2
2.2.3
2.2.4
2.2.5
2.2.6
During CH CH3 2.3
Post CH SS3 Chapter 1 Course Text Book
Post CH HW3
Post CH QZ3
Contact Hour 4

3.1.2
3.2
3.3.1
3.3.2
During CH CH4 3.3.3
Post CH HW4
Post CH QZ4
Contact Hour 5
Pre CH RL None None
During CH CH5 3.3.4
Post CH HW5
Post CH QZ5
Contact Hour 6
Pre CH RL None None
During CH CH6 4.1

4.2.1
Post CH HW6
Post CH QZ6
Contact Hour 7
Pre CH None None None
During CH CH7 4.2.2
Post CH HW7
Post CH QZ7
Contact Hour 8
Pre CH RL 5.1 Taxila Course Page > Lecture 8
During CH CH8 5.2

5.3

Post CH HW8
Post CH QZ8
Contact Hour 9
Pre CH RL None None
During CH CH9 6.1.1

6.1.2
Post CH HW9
Post CH QZ9
Contact Hour 10
Pre CH RL None None
During CH CH10 6.2.1

6.2.2
6.2.3
6.2.4
Post CH HW10
Post CH QZ10
Contact Hour 11
Review session before mid term
Contact Hour 12

7.1.2
7.2.1
7.2.2
7.2.3
7.2.4
7.3.1
7.3.2
7.3.3
7.3.4
7.3.5
7.3.6
Post CH HW12
Post CH QZ12
Contact Hour 13

7.4.2
7.5.1
7.5.2
7.5.3
7.5.4
7.5.5
7.5.6

7.5.7
Post CH HW13
Post CH QZ13
Contact Hour 14

8.1.2
8.1.3
8.1.4
During CH CH 8.2.1
8.2.2
8.2.3
8.2.4
8.2.5
Post CH HW14
Post CH QZ14
Contact Hour 15
Pre CH None None

8.3.2
8.4.1
8.4.2
Post CH HW15
Post CH QZ13
Contact Hour 16
Pre CH RL None
Post CH HW16
Post CH QZ16
Contact Hour 17
Pre CH RL None
Post CH HW17
Post CH QZ17
Contact Hour 18

9.1.3
Post CH SS18 Instructor Notes To be provided after the contact hour
Post CH HW18
Post CH QZ18
Contact Hour 19
Pre CH RL None
During CH CH 9.1.4
Post CH SS19 Instructor Notes To be provided after contact hour
Post CH HW19
Post CH QZ19
Contact Hour 20
Pre CH RL None
During CH20 10.1

CH 10.2
10.3
Post CH HW20
Post CH QZ20
Contact Hour 21
Pre CH RL None
During CH21 10.4.1

CH 10.4.2
10.4.3
10.4.4
10.4.5
10.5
Post CH HW21
Post CH QZ21
Contact Hour 22
Review Session before end term
Evaluation Scheme:
Legend: EC = Evaluation Component; AN = After Noon Session; FN = Fore Noon Session
No Name Type Duration Weight Day, Date, Session, Time
EC-1 Quizzes Online - 10% September 10 – 20, 2018
EL-1 Experiential 15% To be announced
Learning
EC-2 Mid-Semester Test Closed 2 hours 30% 30/09/2018 (FN) 10 AM – 12 Noon
Book
EC-3 Comprehensive Open 3 hours 45% 25/11/2018 (FN) 9 AM – 12 Noon
Exam Book
Syllabus for Mid-Semester Test (Closed Book): Session Nos 1 to 11.

Syllabus for Comprehensive Exam (Open Book): All topics (Session Nos. 1 to 22)
Important links and information:
Elearn portal: https://elearn.bits-pilani.ac.in

Students are expected to visit the Elearn portal on a regular basis and stay up to date with the latest
announcements and deadlines.
Contact sessions: Students should attend the online lectures as per the schedule provided on the Elearn
portal.
Evaluation Guidelines:
1. EC-1 consists of Quizzes. Students will attempt them through the course pages on the Elearn portal.
Announcements will be made on the portal, in a timely manner.
2. EL-1 is the experiential leaning component for which a project will be assigned to you. You will
have submission towards the end of the course. Dates will be announced on the portal.
3. For Closed Book tests: No books or reference material of any kind will be permitted.
4. For Open Book exams: Use of books and any printed / written reference material (filed or bound) is
permitted. However, loose sheets of paper will not be allowed. Use of calculators is permitted in all
exams. Laptops/Mobiles of any kind are not allowed. Exchange of any material is not allowed.
5. If a student is unable to appear for the Regular Test/Exam due to genuine exigencies, the student
should follow the procedure to apply for the Make-Up Test/Exam which will be made available on
the Elearn portal. The Make-Up Test/Exam will be conducted only at selected exam centres on the
dates to be announced later.
It shall be the responsibility of the individual student to be regular in maintaining the self study schedule as
given in the course handout, attend the online lectures, and take all the prescribed evaluation components
such as Assignment/Quiz, Mid-Semester Test and Comprehensive Exam according to the evaluation scheme
provided in the handout.

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BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE, PILANI

WORK INTEGRATED LEARNING PROGRAMMES

L04 Understand behavior of cost and relationship between cost-volume-profits (CVP)

C01 Demystify the components and elements of the financial statements.

C03 Explain the tools and techniques of financial statement analysis.

T1 Financial Accounting – A Managerial Perspective, R. Narayanaswamy, PHI, 5th edition, 2014.

R1 P. C. Tulsian, Financial Accounting, Tata McGraw Hill, latest edition

5 Trial balance To learn to prepare ‘trial balance It must be difficult to go through

3.2. Types of accounts – Personal, Real and Nominal

9. Cost volume profit analysis

10. Capital Budgeting

Experiential Learning Components (ELC):

Part B: Contact Session Plan

During CH CH1 Introduction to the course

Post CH SS1 Chapter 1 Course Text book

During CH CH2 1.2.3

Post CH SS2 Chapter 8 Course Text book

Pre CH RL 2.1.1 Taxila Course Page > Lecture3

During CH CH3 2.3

Post CH SS3 Chapter 1 Course Text Book

Pre CH RL 3.1.1 Taxila Course Page > Lecture4

During CH CH4 3.3.3

Post CH SS4 Chapter 2 Course Text Book

Pre CH RL None None

During CH CH5 3.3.4

Post CH SS5 Chapter 2 Course Text Book

Pre CH RL None None

During CH CH6 4.1

Post CH SS6 Chapter 3 Course Text Book

Pre CH None None None

During CH CH7 4.2.2

Post CH SS7 Chapter 3 Course Text Book

Pre CH RL 5.1 Taxila Course Page > Lecture 8

During CH CH8 5.2

Post CH SS8 Chapter 5 Course Text Book

Pre CH RL None None

During CH CH9 6.1.1

Post CH SS9 Chapter 5 Course Text Book

Pre CH RL None None

During CH CH10 6.2.1

Post CH SS10 Chapter 5 Course Text Book

Pre CH RL 7.1.1 Taxila Course Page > Lecture12

Post CH SS12 Chapter 12 Course Text Book

Pre CH RL 7.4.1 Taxila Course Page > Lecture13

During CH CH13 7.4.3

Post CH SS13 Chapter 12 Course Text Book

Pre CH RL 8.1.1 Taxila Course Page > Lecture14

Post CH SS14 Chapter 11 Course Text Book

During CH CH15 8.3.1

Post CH SS15 Chapter 11 Course Text Book

During CH CH16 8.5.1

Post CH SS16 Chapter 11 Course Text Book

During CH CH17 8.5.2

Post CH SS17 Chapter 11 Course Text Book

Pre CH RL 9.1.1 Taxila Course Page > Lecture18

During CH CH18 9.1.2

Post CH SS18 Instructor Notes To be provided after the contact hour

Post CH SS19 Instructor Notes To be provided after contact hour

During CH20 10.1

Post CH SS20 Instructor Notes To be provided after contact hour

During CH21 10.4.1

Post CH SS21 Instructor Notes To be provided after contact hour

Syllabus for Mid-Semester Test (Closed Book): Session Nos 1 to 11.