AC493      Half Unit
Financial and Management Accounting for Managerial Decision Making

This information is for the 2023/24 session.

Teacher responsible

Prof Alnoor Bhimani MAR 3.21 and Dr Julia Morley MAR 3.22

Availability

This course is compulsory on the MSc in Management (1 Year Programme). This course is not available as an outside option.

Course content

This course covers introductions to both management accounting and financial accounting.

The first half of AC493 focuses on management accounting, which is a key function in organisations that involves developing and using financial and non-financial information to support decision making, not only in a technical sense, but bearing in mind that the way in which management accounting systems are designed and implemented often determines whether employees will be motivated to act in ways that are congruent with the objectives of the organisation. The discipline of management accounting is often partitioned into (1) cost and management accounting systems and (2) management control systems, and both components are covered in the second part of the course.

The focus in this part of the course is on cost and other accounting and non-accounting information systems that aid managerial decision making. This includes the study of management accounting systems in widespread use today as well as an analysis of the problems associated with these systems in today’s business environment (such as their tendency to provide distorted product cost information), as well as approaches to mitigate these problems (e.g., activity-based costing; use of non-financial information). Through the secondfirst half of the course, students should be able to:

1. Analyse key concepts which form the discipline of management accounting:

- Product costing and pricing;

- Activity based costing/management (ABC/ABM);

- Profitability and variance analysis;

- Performance measurement and evaluation;

- ROI, EVA, and other performance metrics.

2. Possess the skills necessary to use management accounting information to make business decisions.

3. Illustrate how management accounting information can be used to formulate and implement strategy in a variety of organisational settings.

4. Understand how the design and use of management accounting systems affect human behaviour in organisations.

The second part of this course provides students with an introduction to financial accounting, and highlights aspects of financial reporting that are important to users of financial information. It covers the preparation of key financial statements and the frameworks of accounting regulation.

It aims to familiarise students with the principles and some of the techniques of financial accounting and financial reporting as well as some aspects of current regulatory debates on the subject. After the second half of the course, students should be able to:

• Distinguish between cash accounting and accrual accounting, and explain traditional accounting concepts and conventions.

• Draw up simple balance sheets, and income statements as well as to develop an understanding of cash flow statements and group accounts, and understand how they are affected by different accounting treatments.

• Use these financial statements to perform financial analysis.

• Discuss the issue of “creative accounting”, asset valuation and other contemporary issues in accounting.

• Discuss market influences of accounting information and theories of accounting choice.

Teaching

33 hours of lectures in the WT.

This course consists of 11 principal weeks with topics delivered in sessions of 1½ hours twice a week. Each session is conducted in groups of about 65 students. Most sessions make use of class exercises, case study analyses and real-world applications to bring the materials to life and to apply conceptual knowledge to problems faced in practice. The case study analyses and discussions permit the exploration of accounting issues in broader management perspectives (e.g., large and small firms, manufacturing and service firms, multinational firms, startups). The case method of instruction, however, requires good advance preparation by students, and every student should be ready to contribute to the case discussion when called upon. Students should expect to be ‘cold called’ and not count on being able to hide behind classmates who volunteer to participate.

Formative coursework

Students are expected to be prepared for the cases and/or other tasks for each session as indicated on the syllabus. Two of these will be collected and graded as shown below under Assessment.

Indicative reading

Reference Textbooks:

Bhimani, A., C.T. Horngren, S.M. Datar, and M.V. Rajan. 2019. Management and Cost Accounting (Pearson, 7th edition).

Weetman, P. 2010, Financial Accounting: An Introduction (Financial Times/Prentice Hall, 5th edition).

Bhimani, A. 2013, Strategic Finance (Strategy Press).

Merchant, K.A., and W.A. Van der Stede. 2017, Management Control Systems: Performance Measurement, Evaluation, and Incentives (Financial Times/Prentice Hall, 4th edition).



 

Assessment

Exam (80%, duration: 2 hours) in the spring exam period.
Coursework (10%) in the WT Week 5.
Coursework (10%) in the WT Week 10.

Student performance results

(2019/20 - 2021/22 combined)

Classification % of students
Distinction 68.6
Merit 21.1
Pass 8.5
Fail 1.8

Key facts

Department: Accounting

Total students 2022/23: 89

Average class size 2022/23: Unavailable

Controlled access 2022/23: No

Value: Half Unit

Guidelines for interpreting course guide information

Course selection videos

Some departments have produced short videos to introduce their courses. Please refer to the course selection videos index page for further information.

Personal development skills

  • Self-management
  • Problem solving
  • Communication
  • Application of numeracy skills
  • Commercial awareness