Indian Institute of Management, Bangalore

FINANCIAL ACCOUNTING
Course Outline for PGP

PGP Batch: 2021-23 Term: I Credits: 3

Instructors: Debojyoti Das

Narahari Hansoge
Padmini Srinivasan
Srinivasan Rangan

I. Course Objectives:
Through an introduction into the concepts, techniques, and issues of financial accounting
and reporting, this course aims to enable students to:

1. Appreciate the information needs of the different categories of users of a company’s

financial reports,

2. Understand the significance of accounting principles and the systems and processes
involved in preparing and presenting financial reports, and

3. Analyze and interpret financial reports.

At the end of the course, students are not expected to become trained accountants, but they
should develop into informed users of financial statements. They should:
 Be able to analyze business transactions systematically,
 Have a comprehensive understanding of the information available in financial
reports, and
 Be able to analyze the financial statements of a company.

II. Course Delivery:

 Pedagogy: A mix of lectures, case discussions, and analysis of real financial

statements. At least one annual report of an Indian company will be reviewed
comprehensively by all the instructors.

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  Reading Material:

o R. Narayanaswamy, Financial Accounting: A Managerial Perspective, Sixth

Edition, Prentice-Hall of India, New Delhi.

o Annual Report of Dr. Reddy Laboratories Limited.

 Online Classes: Because of the Covid-19 pandemic, all classes and exams will be
held in online mode. We will provide a separate addendum to this document to
address questions that are unique to learning in online mode.

III. Session Plan:

The course will be covered in three modules:

i. The Basic Accounting Model which details the mechanics of accounting,

ii. Measuring and Reporting Assets, Liabilities and Shareholders’ Equity which
describes the information conveyed by the various components of accounting, and

iii. Analyzing and Interpreting Financial Statements.

Module details:
The following is the tentative schedule of topics. A few topics may be dropped at the
discretion of the instructor.

Module I: The Basics of Financial Statements (Number of Sessions: 5)

This module provides an overview of financial reporting and accounting systems and
discusses the role of accounting in providing information for decisions. It explains the basic
transaction processing model and the accounting principles and concepts relevant to the
preparation of financial statements from transactions and documents. It covers:

 Chapter 1: Business Accounting and Basic

 Chapter 2: Financial Statements
 Chapter 3: Transaction Processing
 Chapter 4: Measuring Income

Module II: Measuring and Reporting Assets, Liabilities and Shareholders’ Equity
(Number of Sessions: 9)

This module discusses the generally accepted accounting principles that are used in the
preparation and presentation of financial statements. It explains the accounting standards

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 applicable to major items that appear in financial statements and provides an overview of the
relevant legal requirements relating to disclosure. It covers:

 Chapter 5: Inventories
 Chapter 6: Long-lived Assets
 Chapter 7: Financial Assets
 Chapter 8: Operating Investments
 Chapter 9: Operating Liabilities
 Chapter 10: Financial Liabilities
 Chapter 11: Equity

Module III: Analyzing and Interpreting Financial Statements (Number of sessions: 6)

This module deals with the analysis and interpretation of financial statements using tools
like financial ratios, trends, and common-size statements. It also details out the components
of the statement of cash flows and the inter-relationship among these components. It also
identifies difficulties in comparing financial statements across firms. It covers:

 Chapter 12: Balance Sheet and Statement of Profit and Loss

 Chapter 13: Statement of Cash Flows
 Chapter 15: Earnings Analysis and Qualitative Information

IV. Course Evaluation:

1. Test 1 10%

2. Mid-term Examination 20%

3. End-term Examination 30%

4. Project on Financial Statement Analysis 25%

5. Group Assignments/Case Presentations 15%

*The first four components are common to all sections. The fifth component will vary by
instructor. Your instructor will inform you about the exact requirements for the fifth
component.

The duration of exams will be communicated in due course.

We strongly suggest that you take exams on the scheduled dates. In the event of your having
to miss the scheduled exam because of unforeseen circumstances, we will schedule a
makeup toward the end of the term.

V. Attendance Policy:

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PGP Office Attendance Rules will apply.

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