School of Management

UNIVERSITI SAINS MALAYSIA

MASTER OF BUSINESS ADMINISTRATION

Semester 1, Academic Session 2001/2002

Course Outline

AGW 610- FINANCE AND ACCOUNTING FOR MANAGEMENT

Course Synopsis

Accounting is the principal information system within organizations that identifies, measures, aggregates and communicates economic information to facilitate decisions. In today's globally competitive information age, accounting has assumed greater managerial significance and many organizations have committed substantial resources to revamp their accounting systems. Numerous innovations in accounting practices have occurred in response to the changing competitive, technological and organizational environment. This course aims to provide an understanding of the accounting concepts used in the interpretation of accounting reports and financial statements which are prepared to assist effective management of a business entity. Managers should recognise their information requirements on which relevant decisions are based. This will include the financial decisions that the managers have to make such as decisions about financing activities and capital investment.

Accordingly, this course has been designed to include both financial and management accounting information pertinent to a managers’ decision making.

The financial accounting section focuses on external as well as on key internal users such as top management. It will include the measurement of accounting information, the environment in which it operates, financial reporting and time value of money.

The managerial accounting section deals with information generated for managers and other employees to promote efficient and effective use of resources. Topics include cost allocation, role of budgets, capital investment decisions and performance measurement and evaluation.

Course objectives:

~~Sections objectives~~

Section’s objectives

At the end of the financial accounting section, students should be able to:

Ø Perform a reasonably sophisticated financial statements analysis

Ø Evaluate critically the contents of a Statement of Cash Flows

Ø Understand the information disclosed in published annual reports

Ø Understand what is meant by time value of money.

At the end of the managerial accounting section, students should be able to:

Ø Understand the categorization and the reasons for cost allocation

Ø Use cost data in making short- and long-term decisions

Ø Understand the relationship of cost management to corporate strategy

Ø Understand the role of budgets in decision making

Ø Understand how performances can be evaluated

Ø Understand how to make capital investment decisions

Overall:

On successful completion of the course, students should be able to:

Discriminate amongst the concepts used in understanding accounting reports required by management in an organisation
Criticise, understand, analyse and interpret the content of financial statements
Evaluate management accounting information to assist in planning, control and decision making within the business entity
Analyse investment alternatives and evaluate projects

Course facilitator:

Associate Professor Hasnah Haron

Room: 217

Tel: 04-6533888 ext. 3363,04-6532332(DL)

Email:hhasnah@usm.my

Course evaluation:

1) Projects/ Assignments (group assignment)	20%
2) Class Assignments (group presentation)	20 %
3) Quiz	10 %
4) Final examination	50%
	100%

Description of the course evaluation:

Both the projects/ assignments and case presentations will be done in groups. Students are required to form groups of 5 or 6. Group members’ names and emails need to be submitted in Week 2. Each group should appoint a group leader. Marks will be equally given to each group member, unless requested by the group members to be done otherwise. The names of group members should be placed on the front page of the report with the group leader’s name highlighted.

1) Projects/ Assignments (20%):- to be submitted in week 12

a) Report on cases (10%):

i. Case KENDALL SQUARE (a case in financial accounting)

ii. Case DESTIN BRASS PRODUCTS (a case in managerial accounting)

b) Financial analysis (10%):

i. Comment on the presentation in accordance to MASB 1

ii. Comment on the mandatory and voluntary disclosure of the company

iii. Analyse the financial position of a given company.

iv. As an investor, would you invest in the company?

2) Class Assignments(20%):- to be submitted on or before the date of presentation

There are 21 class assignments that need presentation from the groups. Each group will be presenting at least twice. The answers to the assignments are to be given on or before the date that the assignment will be discussed. Please see course outline for the assignments.

3) QUIZ (10%)

It will be given in week 8 covering topics from meetings 1 to 7. It will be a one-hour examination, comprising of multiple-choice questions.

4) Final Examination (50%)

It will be a three hour examination, comprising of 5-6 subjective questions.

Course Grades:

The total mark obtained from both coursework and examination for each course will be graded as follows:

Grade	Grade Values
PASS
A	4.00
A-	3.67
B+	3.33
B	3.00
B-	2.67
C+	2.33
FAIL
C	2.00
C-	1.67
D+	1.33
D	1.00
D-	0.67
F	0.00

Students need to get a C+ in order to pass the course.

Course outline:

Meeting	Topic	Readings	Assignments
FINANCIAL ACCOUNTING
1	The Accounting Information System Accounting and Organization - accounting process - definitions of accounting Information in Organisations - information for decision makers - accounting equation Accounting Measurement - accrual vs cash basis Processing Accounting Information - double entry book keeping - internal control - historical development of accounting - development of accounting standards	F1- F4 Handouts ¹- Accounting Environment in Malaysia
2	The Accounting Information System (continue) Reporting Accounting Information - use of financial statements Financial Statements: Profits & Loss Account, Statement of Shareholder’s Equity, Balance Sheet	F5 MASB 1 Handouts ²- Wonderful Accounts Handouts³- Diversity in Accounting Principles	Problem 1-12 ^1.Case 2-1 ^2.Case 3-1 Problem 4-15
3	The Accounting Information System (continue) Cash Flow Statement - indirect vs direct method	F6 MASB 5	Exercise 5-21 ^3.Case 5-2
4	Analysis and Interpretation of Financial Accounting Information The Time Value of Money - present and future value - unequal payments Financing Activities - types of obligations	F7 & F8	Problem 6-20 ^4.Case 6-1
MANAGERIAL ACCOUNTING
5	Product Costing and Decision Making Accounting and Management Decisions - role of managerial accounting in planning and control Cost Categorization, Cost Flow, and Management Decisions - product cost vs period costs - target costing decisions, make or buy decions	M1 & M2	^5.Case 7-2 ^6.Case 7-1 ^7.Case 8-3
6	Product Costing and Decision Making (continue) Unit Costs for Decision Making - role of unit costs, process and job-order costing	M3	Problem 1-2 ^8.Problem 1-5 ^9.Problem 2-12 ^10.Problem 2-13
7	Product Costing and Decision Making (continue) Cost Measurement for Management - cost volume profit analysis - pricing decisions - absorption vs variable costing	M4	^11.Case 3-1 ^12.Case 3-3
8	Product Costing and Decision Making (continue) Cost Allocation and Business Strategy - activity based costing	M5	^13.Case 4-1 QUIZ
9	Control Measurement, and Evaluation The Role of Budgets in Decision Making - master budget and flexible budget	M6	^14.Case 5-1
10	Control Measurement, and Evaluation (continue) Evaluating Performance Within and Organisation - variance analysis - quality cost concepts	M7	^15.Case 6-1
11	Control Measurement, and Evaluation (continue) Controlling Decisions in Decentralised Organisation - performance evaluation using ROI - balance score card - transfer pricing	M8	^16.Case 7-1 ^17.Case 7-2
12	Control Measurement, and Evaluation (continue) Management Accounting in a Competitive Business Environment - total quality management - just in time manufacturing	M9	^18.Problem 8-9 ^19.Problem 8-11 PROJECTS/ASSIGNMENTS DUE
13	Control Measurement, and Evaluation (continue) Decisions about Capital Investments	M10	^20.Case 9-2
14	Revision		^21.Case 10-2

Meeting

Topic

Readings

Assignments

FINANCIAL ACCOUNTING

The Accounting Information System

Accounting and Organization

- accounting process

- definitions of accounting

Information in Organisations

- information for decision makers

- accounting equation

Accounting Measurement

- accrual vs cash basis

Processing Accounting Information

- double entry book keeping

- internal control

- historical development of accounting

- development of accounting standards

F1- F4

Handouts ¹- Accounting Environment in Malaysia

The Accounting Information System (continue)

Reporting Accounting Information

- use of financial statements

Financial Statements: Profits & Loss Account, Statement of Shareholder’s Equity, Balance Sheet

MASB 1

Handouts ²- Wonderful Accounts

Handouts³- Diversity in Accounting Principles

Problem 1-12

^1.Case 2-1

^2.Case 3-1

Problem 4-15

The Accounting Information System (continue)

Cash Flow Statement

- indirect vs direct method

MASB 5

Exercise 5-21

^3.Case 5-2

Analysis and Interpretation of Financial Accounting Information

The Time Value of Money

- present and future value

- unequal payments

Financing Activities

- types of obligations

F7 & F8

Problem 6-20

^4.Case 6-1

MANAGERIAL ACCOUNTING

Product Costing and Decision Making

Accounting and Management Decisions

- role of managerial accounting in planning and control

Cost Categorization, Cost Flow, and Management Decisions

- product cost vs period costs

- target costing decisions, make or buy decions

M1 & M2

^5.Case 7-2

^6.Case 7-1

^7.Case 8-3

Product Costing and Decision Making (continue)

Unit Costs for Decision Making

- role of unit costs, process and job-order costing

Problem 1-2

^8.Problem 1-5

^9.Problem 2-12

^10.Problem 2-13

Product Costing and Decision Making (continue)

Cost Measurement for Management

- cost volume profit analysis

- pricing decisions

- absorption vs variable costing

^11.Case 3-1

^12.Case 3-3

Product Costing and Decision Making (continue)

Cost Allocation and Business Strategy

- activity based costing

^13.Case 4-1

QUIZ

Control Measurement, and Evaluation

The Role of Budgets in Decision Making

- master budget and flexible budget

^14.Case 5-1

Control Measurement, and Evaluation (continue)

Evaluating Performance Within and Organisation

- variance analysis

- quality cost concepts

^15.Case 6-1

Control Measurement, and Evaluation (continue)

Controlling Decisions in Decentralised Organisation

- performance evaluation using ROI

- balance score card

- transfer pricing

^16.Case 7-1

^17.Case 7-2

Control Measurement, and Evaluation (continue)

Management Accounting in a Competitive Business Environment

- total quality management

- just in time manufacturing

^18.Problem 8-9

^19.Problem 8-11

PROJECTS/ASSIGNMENTS DUE

Control Measurement, and Evaluation (continue)

Decisions about Capital Investments

M10

^20.Case 9-2

Revision

^21.Case 10-2

Note:

The above are main topics for discussion. Students are required to undertake supplementary readings in order to strengthen their understanding of the above topics.

Reference Materials:

Main Text:

Ingram, R.W., Albright, T.L., Baldwin B.A and Hill,.J.W. 2001, Accounting: Information for Decisions, 2^nded., South-western College Publishing: Cincinnati, U.S.

Accounting Standards:

MASB 1: Presentation of Financial Statements, Malaysian Accounting Standards Board, 1999.

MASB 5: Cash Flow Statements

Journals:

1. The Chartered Institute of Management Accountants (CIMA) Journal. Management Accounting, London.

2. Akauntan Nasional. Journal of Malaysian Institute of Accountants (MIA).

3. The Malaysian Accountants- Journal of the Malaysian Institute of Accountants(MICPA).

Other Texts:

1. Albrecht, W.S., Stice, J.D., Stice, E.K., Skousen, K.F. and Swain, M.R. 2002. Accounting: Concepts and Applications, 8^thed., South Western: Cincinnati, Ohio, U.S.

2. Needles, B.E. , Powers, M. and Crosson, S.V. 2002. Principles of Accounting, Houghton Mifflin Company, U.S.

3. Warren, C.S., Reeve, J.M. and Fess, P.E. 2002. Financial & Managerial Accounting, 20^thed., South-Western: Mason, Ohio, U.S.