Corporate Financial Accounting
July 2014

Instructor: Professor “Radha” B. Radhakrishna
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Knowledge of accounting is a core requirement of any career in business – whether you choose to specialize in finance, marketing, strategy or human resources. The accounting system provides much of the data needed to make business decisions. The aim of this course is to help you build a strong base of this essential building block at the outset of your business education.

This course is designed to provide a comprehensive, graduate level introduction to accounting. It is designed to provide globally oriented managerial users of accounting with the foundations of accounting concepts and mechanics; and to help develop a perspective for the intelligent use of accounting information. You will get an introduction to the accounting system used by firms to measure and report their economic performance and financial position to external constituents such as stock holders, debt holders and potential investors. By the end of the course you should be able to read and interpret financial accounting reports (balance sheet, income statement, cash flows, and owners’ equity) and draw conclusions about a firm's performance.


The course is organized into two interrelated modules. First, we will learn how the accounting is done - how information is recorded, organized and collated to produce into reports. We will learn to create the reports. This includes an examination of the main financial statements, the nature of accrual measurement, revenue recognition, assets, liabilities and equity. The first half of the course is the foundation.   Then, we will learn to systematically analyze the financial reports and try to understand the relevance of the information in evaluating company performance. In the process, we
will attempt to develop the information perspective that is central to this course.

Course Materials

I will teach the course entirely from my notes that I have developed over the last 20 years that I have been teaching this course. You will get a course pack that we will use in class. I will also be using some case studies which will be given to you. Cases are intended for class discussion and you should come prepared to discuss the case and answer the questions in the case. The recommended book for this course is Financial Accounting for MBAs, by Easton, Wild, Halsey & McAnally

(EWHM), 5th Edition, Cambridge Business Publishing, 2013. Since I will be largely teaching from my notes, purchase of the book is optional. If you are looking for a useful reference book for future
use you should buy it. Since this is a course about learning to read and interpret financial reports, I will also refer you to various company financial reports that you can access from the web. Some of the companies that we will study include – General Mills, Colgate, Nestle, Macy’s, Walmart, Target and Infosys. You should download their annual report and have them ready for class discussions. Colgate, General Mills, Macy’s, Target and Walmart use US Accounting Standards. Nestle and Infosys use International Accounting Standards.


A tentative assignment schedule is attached. I will assume that you have skimmed the assigned material for the day and attempted the assigned problems, prior to the classroom session. Since this is an intensive 2 week course, you will need to keep up with all the class problem and homework. I have therefore built in problem solving sessions into the class schedule throughout the course.
Review sessions will be held occasionally and the time for the sessions will be posted. Review session are mandatory and you are required to attend all scheduled review sessions. There are no
posted office hours. Students who wish to meet me in my office should set up appointments with me.


Sharing of course materials with anyone who is not currently enrolled in the course is not allowed (both giving and receiving). It would be considered a violation of the honor code (and potentially of the copyrights), and I take it very seriously.

Grading

Grades will be assessed based on total points earned on the following:

  Midterm Quiz

 30

 Final Exam

 40

 Case (Research Assignment) [Due at the end of the course]

 30

 Total

 100


The midterm will be held on the completion of the first module of the course. This is the
foundation module, and you will be tested to make sure that you have learnt the basics of accounting
and gained the knowledge needed to tackle the second module. The final exam will include material

from the entire course.

For your case assignment, you will analyze the financial statements of a company of your choice (pre-approved by me). You will work in groups of four or five. I will give you a set of questions/scenarios after each class and you will conduct research into the company of your choice and do a peer group analysis. At the end of the term you will summarize what you have learned and present it in a report. I will give you a set of questions/scenarios that I will expect you to cover in your report. The assignment will be due on the last day of the course, but you will be meeting me from time to time to discuss your progress on the project.


Some Remarks

  • I will assume that each student begins the term with no knowledge of accounting (even if you have). I will try to balance everyone’s needs. Please be warned that this course is a lot of work. It may be overwhelming at the beginning. But, it is absolutely essential that you keep up with the 
  • This course begins with the basic attributes of the accounting system. The course is constructed around the lecture notes. It is necessary to read the notes handed out, work the self-study and assigned homework problems, and participate in class to do well in the course. This is a course that builds up and each module builds on what was learnt before. If you fail to keep up and stay in sync, you will find it difficult to catch up. However, with regular preparation, you will be fine.

 Schedule / Assignments - I may change this schedule as we progress

  Date

       Readings

 July 15 (Morning) 

(Session 1)

Introduction to Accounting and Financial Statements.

 July 15 (Afternoon)

(Session 2)

 Introduction to the accounting process (completion), recording 

transactions, journal, ledger, trial balance.

 July 15 (Late Afternoon) 

(RS1 - 1 hour)

Review session; Problem solving.

July 16 (Afternoon)
(Session 4)

Building the financial statements – Closing process.
Understanding the nature of each financial statement, the flow
of information through the ledger.

July 16 (Afternoon)
(Session 4)

Building the financial statements – Closing process.
Understanding the nature of each financial statement, the flow
of information through the ledger.

July 17 (Late Afternoon)
(RS3 – 1 Hour)

Review session; problem solving.

July 18 (Morning)
(Session 7)

Introduction to Financial Statement Analysis

July 18 (Afternoon)

Study time – Midterm preparation.

July 21 (Morning)
(Session 8 – 3 Hours)

Midterm Exam (3 hours)

July 21 (Afternoon)
(Session 9)

Working Capital Analysis – Accounting for Accounts
Receivable.

July 22 (Morning)
(Session 10)

Accounting for Inventory, Accounts Payable and other current
assets/liabilities. Case: John Smith.

July 22 (Afternoon)
(Session 11)

Introduction to Long Term Assets – Accounting for PP&E,
Intangibles.

July 23 (Morning)
( Session 12)

Introduction to Debt Analysis – Accounting for debt.

July 23 (Afternoon)
( Session 13)

Off Balance-Sheet Debt.

July 23 (Late Afternoon)
(RS4 – 1 Hour)

Review Session; Problem solving

July 24 (Morning)
( Session 14)

Equity, Earnings per share, Taxes

July 24 (Afternoon)
( Session 15)

Equity, Earnings per share, Taxes

July 24 (Late Afternoon)
( RS5 – 1 hour)

Review Session

July 25
(Session 16 – 4 hours)

 Final Exam (4 hours) 

Case Assignment Due

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: Each session is two hours unless noted. RS stands for Review Session – each review session is one hour. Office hours are by request. Additional review sessions may be set up, if needed.