Executive Post Graduate Diploma in Management

Subject Outline

Subject Name Management Accounting and Analysis

Subject Code MGT402

Subject Credits 3

InstructorProf. Zohra Bi:

Email:

Office Hours By Appointment only

Summary/Overview

This subject aims to create a good understanding of the financial statements and the other components of the Annual Report. It focuses mainly on various tools for analysis and interpretation like ratio analysis, and cash flow analysis. In addition it also introduces to the students, the tools for decision making such as cost-volume profit analysis and the applications of marginal costing. It provides an overview of the control techniques such as budgetary control, standard costing and variance analysis.

Since, cost control and cost reduction have assumed greater significance in view of the recent recession elsewhere in the world and the consequent slowdown in our own country, understanding cost concepts, costing methods and techniques, dissemination of costing information have become integral part of reporting. Hence, the subject also covers the various elements of cost, the methods of costing, with reference to different industries and also the costing techniques such as activity based costing.

Aims The subject has been designed to enable the student to acquire the skills necessary to use, interpret and analyze accounting data. The ultimate objective is to enable the

student to become a better manager.

The student should:

Understand how to furnish information about the firm's economic resources, claims against those resources, owners’ equity, and changes in resources and claims

Understand how cost control achieve the targeted cost objectives through the realization of predetermined cost targets to reduce costs

Understand the significance of cost control. Understand the various tools and techniques of costing.

Understand the functions of each responsibility center within an organization and what are the inter-linkages between those centers

Be able to identify financial strengths and weaknesses of a business through appropriate analysis

Core Learning OutcomesLearning Outcomes

On completion of this unit you should be able to:

Assessment CriteriaTo achieve the learning outcome you must demonstrate the ability to:

1. Understand and significance and importance of Accounting. What are the elements that go into preparation of financial statements. What are the salient features and differences between Financial and Management accounting. Get an insight into international accounting standards.

2. Understand the components of all three forms of financial statements, viz. Income Statement, Balance Sheet and Cash Flow Statement. Be able to read financial statement of a company and make sense out of it.

3. Be able to compute various ratios and compare them across companies or within a company across horizontally or vertically with the aid of tools such as Excel.

4. Understand various types of costing. What is the importance of diligent costing in achieving better pricing and hence better profitability? Analytical & conceptual understanding of CVP & BEP.

5. The proof of understanding is in one’s ability to apply the knowledge. Students should be able to take up any company of their choice, analyze critically based on their learning.

The students will be evaluated based on the conceptual understanding of the learning objectives and Learn how to read and understand financial statements and to observe the effects of routine business transactions on them. In the examination how accounting can be viewed as an information system

Students will be evaluated on their understanding and interpretation of financial statements.

The students will be evaluated through liquidity, capital structure, profitability, turnover and market ratio calculation of different Ratios. Interpretation of the same.

Students will be evaluated on the costing method used, cost sheet, different type of cost, tender and quotations, cost centers, cost units.

Case presentation, original interpretation of their observations from publicly available financial statements.

Approach to Learning1. Lectures2. Student presentation and class room

exercises3. Group discussion4. Case Analysis

Assessment Strategy Participants will be assessed on both conceptual understanding and business

application of Management Accounting subject by way of:

Participation in the class discussions Case study discussions & solving

examples in the class Submission of assignments Written Exam

No Assessment Method*

Description of Assessment Method

Weight%

Learning Outcomes Assessed

Submission day/week

(assignments) or length (exam)

1 2 3 41 PF Class Participation 10% X X Weekly2 CS Case Study 20% X X Two case studies

per term3 DTA Assignments 20% X Two assignments

per term4 EX Exam 50% X Term end Exam

*The following codes for assessment methods apply:-LR literature review PC practicalCB computer-based PF performanceCS case study PL placementDI dissertation or project PO portfolioEX exam PR presentationGR group report RE individual report

DTA during term test OR oralOT other

Outline Teaching Schedule

Session Session Topics

1, 2, & 3 INTRODUCTION TO ACCOUNTINGMeaning, Basic Concepts, Principles of Accounting, Accounting Equation, Double entry system of accounting, Accounting Mechanism Journal, Ledger, Trial balance, Capital & Revenue items and Depreciation. Financial Accounting vs. Management Accounting. ( Theory and Problems)

4ACCOUNTING STANDARDS: Accounting Standards, Introduction to Ind – AS, International accounting standards such as GAAP & IFRS. ( Theory)

5 & 6 COMPANIES FINAL ACCOUNTS : Introduction, Meaning, types and characteristics of companies, Profit and loss statement and balance sheet in detail as per the revised schedule VI of Companies Act of 2013 ( Only theory), Off Balance sheet items, Treatment of events occurring after Balance sheet.

7 & 8 ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTSRatio Analysis – Meaning of ratio, classification of ratios, Liquidity ratios, capital structure or solvency ratios, turnover or activity ratios, Profitability ratios, Advantages and Limitations of ratio analysis and its computations (Case study and Practical)

9 CASH FLOW STATEMENTS: Meaning of Cash Flow statements, Meaning of cash flow, Classification of cash flows (AS-3), Significance of cash flow statement in reporting Treatment of items, preparation of Cash Flow statements, objectives and uses of cash flow statements and its computations. (Case study and Practical)

10 INTRODUCTION TO COST CONCEPTS AND COST ACCOUNTING: Concept of cost, cost centre, cost unit, methods and Technique of costing, Classification o costs, Elements of costs, Cost control and Cost reduction. (Theory).Marginal Costing: Meaning of marginal cost, marginal costing, CVP analysis and Break even analysis, Contribution and P/V ratio, Margin of safety, Key factors.

Recommended Resources

Essential Readings

1. Managerial Acct - 2nd Edition - Sawyers/ Jackson/ Jenkins/ Arora - Cengage.

Reference Materials

1. Cost and Management Accounting by Colin Drury., Cengage Learning2. Introduction to Management Accounting by Charles Horngreen et al., Prentice Hall.3. Financial Accounting by B.S.Raman4. Management Accounting Text, Problems and Cases by Khan and Jain (Latest Edition) Tata

McGraw-Hill Publications5. Advanced Financial Management by Dr. S. N. Maheshwari Published by Sultan Chand and Sons,

2007 edition.6. Cost and Management Accounting, by M. N. Arora, 9th Edition, Vikas Publishing House7. ICAI e-Journal8. CIMA Financial Management Magazine

Form completed by:

Name: Zohra Bi

Date:

E-PGDM/Term1/Jan/2016/MAACO/Rev/06