Professional Documents
Culture Documents
Decisions
MBA Trimester - I
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Evaluations & Grading
Test Activities No. Weight
Quizzes & Class tests 2 10%
Assignments 2 10%
Class participation & Topic Presentation - 15%
Attendance - 5%
Mid Term Exam 1 15%
Project work & presentation ( Group ) 1 20%
End-term Exam 1 25%
TOTAL 100%
Grading
Marks and corresponding grading rule for evaluation shall be as follows:
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Course Outline & Session Plan
Session Topics to be dealt Activities
Part I: Financial Reporting and Analysis
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Session Topics to be dealt Activities
Part II: Managerial Accounting
Overview of Managerial accounting:
Difference between management and financial
accounting, Role of management accounting
information in planning, controlling, directing, Projects shall be discussed and
motivating, and performance measurement, assigned.
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Accounting position in organization structure,
Faculty Presentation and discussions
Controller-ship and treasurer-ship function of CFO,
Role of management accounting changing
environments, career in management accounting
(CMA, CIMA, ICWA), ethical code of conduct.
Cost Behavior and Cost Volume Profit Analysis; Faculty Presentation, discussions
Cost elements, cost classification, Cost behavior: and some exercises
16, 17, Methods of segregating semi-variables costs.
18 & 19 Development of cost function and estimation of cost.
CVP Analysis and CVP analysis with or without
resources constraints. Operating leverage. Exercises
using excel spread sheet
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Session Topics to be dealt Activities
Costing of products and services : Brief outline of costing systemsJob, Topic Presentation by students,
Process, Batch, Joint-product; Costing under Job Costing system with discussions and feedback from
distinction of standard, normal and actual costing; Different basis of the faculty G4
22 & 23 overhead allocation and end-of year adjustment of under or over
allocation; Activity-based method of overhead allocation distinguishing
from departmental-based.
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Session Topics to be dealt Activities
Profit Planning: A Tool of Strategic Planning and control Topic Presentation by students,
Concept of budget and its objectives, requisites for discussions and feedback from
28, 29 successful budgeting, participative budgeting, budget the faculty G5
& 30 committee, and zero based budgeting. Preparation of
Faculty Presentation, discussions
Master budgets, exercises in budgeting. Responsibility
and some exercises
accounting
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PART I Financial Reporting and Analysis
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What Is Business?
to provide with
members goods
Activities of an and
economic services
system
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Forms of Organization
Corporation
entity organized under
laws of a particular state
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Nonbusiness Entities
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Business Activities
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The Nature of Business Activity
Financing Investing Operating
Activities Activities Activities
Examples:
sale of
borrowing purchase of assets
products/services
sale of stock costs incurred
to operate business
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What is Accounting?
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What Is Accounting?
Identifying
to
Measuring Economic various
Information users
Communicating
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Myth #1: Accounting = Bookkeeping
Not true!!!!!!
An IT Auditor: Blend of accounting and technology - in high demand. Ensure that a company's
cyber security is reliable.
Government Accountant. Work for federal, state, or local government in various roles. (Auditor
General)
Trade Government
Associations Agencies
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Decisions Made with
Financial Information
Add new
Invest??
product line??
Borrow $$?? Build new plant??
Extend credit $$?? Loan $$??
Start new business?? Sell stocks or bonds??
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Why do we need to Understand Accounting?
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The Accounting Equation
Assets = Liabilities + Owners Equity
(or Stockholders Equity)
Assets
= Liabilities
+
Owners Equity
(or Stockholders Equity)
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Top of the World
Balance Sheet
June 30, 2012
A A = L + SE
Current assets:
Cash $ 200
Accounts receivable 600
Land 4,000
Lodge, lifts and equipment 2,500
Total assets $7,300
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Top of the World
Balance Sheet A = L + SE
June 30, 2012
Liabilities and Stockholders Equity
Liabilities: = L
Accounts payable $ 700
Salaries and wages payable 400
Notes payable 3,000
Total liabilities $4,100
Stockholders equity: + SE
Capital stock $2,000
Retained earnings 1,200
Total stockholders equity $3,200
Revenues $$
Less: Expenses ($$)
Net income $$
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Top of the World
Income Statement
For the Year Ended June 30, 2012
Revenues Expenses = Net Income
Revenues:
Lift tickets $5,800
Equipment rentals Revenues 2,200
Total revenues $8,000
Expenses:
Salaries and wages $2,000
Depreciation 100
Water, gas, and electricity 1,500
Insurance 1,100
Interest Expenses 300
Income taxes 1,000
Total expenses 6,000
Net income $2,000
Net Income
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Statement of Retained Earnings
(for a period of time)
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Top of the World
Statement of Retained Earnings
For the Year Ended June 30, 2012
Retained earnings, beginning of the year $ 0
Add: Net income for the year 2,000
Deduct: Dividends for the year (800)
Retained earnings, end of the year $ 1,200
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Top of the World
Statement of Cash Flows
For the Year ended June 30, 2012
Cash flows from operating activities:
Cash collected from customers $ 7,400
Cash payments for:
Salaries and wages $ 1,000
Water, gas, and electricity 1,500
Insurance 400
Interest 300
Income taxes 1,000
Total cash payments 4,800
Net cash provided by operating activities $ 2,600
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Top of the World
Statement of Cash Flows
For the Year ended June 30, 2012
Cash flows from investing activities:
Purchase of land $(4,000)
Purchase of lodge, lift and equipment (2,600)
Net cash flows from investing activities $(6,600)
Cash flows from financing activities:
Proceeds from issuance of long term note $ 3,000
Proceeds from issuance of capital stock 2,000
Dividends declared and paid (800)
Net cash flows from financing activities 4,200
Net increase in cash $ 200
Cash at beginning of year 0
Cash at the end of the year $ 200
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Relationship among Financial Statements
Top of the World Example
Income Statement for Year ended June 30, 2012
Revenues $ 8,000
Less: Expenses ( 6,000)
Net income $ 2,000
Balance Sheets
June 30, 2012 July 1, 2011
Total assets $7,300 $ 0
Liabilities 4,100 0
Capital stock 2,000 0
Retained earnings 1,200 0
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equity $7,300 $ 0 33
The Conceptual Framework:
Foundation for Financial Statements
Aids accountants in their role as
interpreters and communicators of
relevant information
Acts as a foundation for the specific
principles and standards needed by
the profession
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Financial Statement Assumptions
Economic
Entity Cost
Concept Principle
Time
Period
Assumption
Going Monetary
Concern Unit
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Economic Entity Concept
Each entity has its own books,
records, and financial statements
that are separate from owners
No intermingling of personal and
business assets and liabilities or
income and expenses
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Cost Principle
Record assets at cost paid to
acquire them
Continue to value assets at
historical cost until sold
More objective than market value
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Going Concern
Assume business will
continue indefinitely into the
future
Justifies use of historical cost
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Monetary Unit
How we measure amounts in the
financial statements (e.g., U.S. dollar,
Japanese yen, Mexican peso, etc.)
Assumes economic measure is
relatively stable; no adjustment for
inflation made in financial statements
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Accrual Concept :
According to the accrual concept revenue is recognized when it is earned and expenses are
recognized when it is incurred and obligation for payment arise, whether cash is received and paid
or not. i.e. Salary payable, electric bill payable, interest due but not paid are recognized into the
respective expenses head and liability is created. Credit sales is record as the income of the year
even though the cash is not realized.
Consistency Concept:
Accounting methods and principals are followed consistently from one accounting period to
another accounting period. Ay change in the accounting principal or methods should be clearly
indicated as notes to accounts in the financial statement. If it is not followed, the financial
statement can not be comparable for one period to another.
Conservatism Concept:
All possible losses should provide and record in the financial statements but anticipated gain should
not record. While choosing the assets valuation method, accountant should choose the method
which leads to the lesser value.
i.e. provision for bad debt, loan loss provision, Inventory is recorded at market value or cost
whichever is less
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Ethics in Accounting
1. Identify the ethical dilemma
2. Analyze key elements
3. Determine the alternatives
4. Resolve by selecting ethical alternative
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The Changing Face of the
Accounting Profession
A financial reporting crisis caused by:
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Sarbanes-Oxley Act
Provisions of the act:
Established the Public Company Accounting
Oversight Board
Required external auditors to report directly to
the companys audit committee
Prohibits external auditors from providing
other services compromising independence
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Comparison of Financial and Managerial Accounting
Financial Accounting Managerial Accounting
1. Users External persons who Managers who plan for
make financial decisions and control an organization
Internal Users
External Users
Financial accounting provides external users Managerial accounting provides information needs
with financial statements (shareholders, for internal decision makers (officers, managers, etc.).
lenders, etc.).
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Auditing
Financial statements are prepared by
and are the responsibility of the
companys management
External auditors performs tests and
procedures to render an opinion as to
the financial statements are fairly
presented
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THE AUDIT OF FINANCIAL STATEMENTS
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Where Accountants Work
Private business
Non business entities
Public accounting
Auditing services
Tax services
Management consulting services
Education
Others : Govt placement, Fund Manager.
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Career in accounting:
Financial Accountant
Cost Accountant
Management Accountant
Internal Auditor
Account System Designer
Tax Accountant
Statutory Auditors
Accounts and Tax consultants etc.
Accounting Expert
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Opportunities in Accounting
Managerial Taxation
Financial
General accounting Preparation
Preparation Cost accounting Planning
Analysis Budgeting Regulatory
Auditing Internal auditing Investigations
Regulatory Consulting Consulting
Consulting Controller Enforcement
Planning Treasurer Legal services
Criminal Strategy Estate plans
investigation
Lenders Govt investigators
Consultants Market researchers
Analysts Systems designers
Accounting- Traders Merger services Consultant
Directors Business valuation
related Underwriters Forensic accountant
Planners Litigation support
Appraisers Entrepreneurs
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Accounting concepts
NFRS : 13 / NAS 27
www.standards.org.np
IAS : 41 / IFRS 15
www.isab.org
www.ifrs.com
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Generally Accepted
Accounting Principles
The various methods, rules, practices
and other procedures that have
evolved over time that regulates the
preparation of financial statements
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Accounting as a Social Science
Accounting is a service activity
Accounting is a social science, not a
physical science
Accounting principles develop in response
to changing business conditions
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International
Accounting Standards
International Accounting Standards
Board was created in 2001
There may be significant differences
between U.S. and international
standards
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WHO DETERMINES THE RULES OF THE GAME?
Financial Accounting Standards Board (FASB) :The group in the private
sector with authority to set accounting standards.
American Institute of Certified Public Accountants (AICPA) :The
professional organization of certified public accountants (CPAs).
International Accounting Standards Board (IASB) : The organization
formed to develop worldwide accounting standards.
Institute of Chartered Accountant of Nepal ( ICAN) : Accounting
Regulatory Authority of Nepal
Association of Certified Chartered Accountants (ACCA) : Accounting
Regulatory Authority of U.K.
International Federation of Accountants ( IFAC) : The organization
formed to develop worldwide accounting professionals .
Accounting Standards : IAS / IFRs/ NAS / AS
Generally Accepted Accounting Principle (GAAP)
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Any Questions???
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