Introductory description

The module aims to provide a comprehensive introduction to financial reporting and
management accounting.

Module web page

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

1. Measuring and reporting financial position: overview of the main financial statements;
   classification of assets and liabilities; accounting conventions and concepts; basic construction
   and meaning of the statement of financial position.
2. Measuring and reporting financial performance: the relationship between the income
   statement and the statement of financial position; recognising revenue and expenses; layout of income statement; depreciation; cost of sales; basic construction and understanding of an income statement (profit and loss account).
3. Measuring and reporting cash flows: the importance of cash flow; differences between cash and profit; construction and analysis of basic cash flow statements.
4. Analysing and interpreting financial statements: using various ratios to enable a firm’s
   performance to be analysed and compared to its peers or its own performance over time;
   limitations of ratio analysis.
5. Cost-volume-profit analysis: classification of costs; break-even analysis; using relevant costs to inform short-term decision-making.
6. Full costing in single and multi-product businesses; total absorption costing; introduction to activity-based costing.
7. Budgeting: the relationship between budgeting and strategy; how budgets link to each other; preparation of budgets; introduction to variance analysis; using budgets as control devices – behavioural considerations.

Learning outcomes

By the end of the module, students should be able to:

• Explain the nature and purpose of the three main financial statements and explain accounting conventions used in their construction
• Demonstrate an understanding of, and be able to identify, major categories of ratios used for analysis purposes
• Explain the relationship between budgets/financial information, strategic objectives and strategic plans
• Interpret and analyse ratios in order to analyse financial position and financial performance of firm
• Interpret / analyse the results of investment appraisal calculations; explain which caveats management should note in using the numbers presented

Indicative reading list

Atrill, P. and McLaney, E. (2017) Accounting and Finance for non-Specialists (10th edition), Financial Times/Prentice Hall.
Jones, M. (2013) Accounting. John Wiley & Sons.
Dyson, J. R. (2011) Accounting for non-Accounting students. Financial Times/Prentice Hall.
Gowthorpe, C. (2011) Business accounting and finance. Cengage Learning EMEA.
Weetman, P. (2016) Financial accounting: an introduction. Pearson.

Subject specific skills

Construct simple versions of the three main financial statements from relevant information provided; calculate important ratios using financial statement information; demonstrate understanding of the limitations of ratios analysis

Calculate the returns expected from investment projects using various techniques; prepare simple reports which detail the results of investment appraisal calculations, make recommendations about which projects should be adopted; explain the shortfalls of each investment appraisal method

Transferable skills

Written communication skills