BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division
SECOND SEMESTER 2023-24
COURSE HANDOUT
Date: 10.01.2024
In addition to part I (General Handout for all courses appended to the Time table) this portion gives further
specific details regarding the course.
Course No. : ECON F212
Course Title : FUNDAMENTALS OF FINANCE & ACCOUNTING
Instructor-in-charge : Krishna M
Instructors : Aprajita Pandey
[Link] description:
Accounting is the language of business. Through this language, the business (i.e. the Company) not only maintain the
records of transactions it undertakes during the course of its existence, but also communicates with the outside world
by publishing various financial reports that summarize transactions undertaken by the company. Therefore, it is
important to note here that this course entails two important and interrelated aspects, i.e.
a. Recording transactions, and
b. Preparing financial statements such as balance sheet, income statement, etc.
Since, b. follows a., it is important to learn the recording of transactions first to learn preparing financial statements.
The course will introduce you to the following key concepts: introduction, standards and basic rules of accounting,
double-entry accounting system, identifying and recoding transactions, preparing trial balance, dealing with
incomplete transactions, preparing the balance sheet, types of ownership, credibility and role of auditing, measuring
income, adjustments to the accounts, preparing the statement of cash flows, recording sales revenue, reporting
inventories and cost of goods sold, recording capital assets, liabilities and interest, stockholders' equity and valuation
of financial assets.
This course is specifically designed to meet the educational needs of second year Economics students and students
pursing Finance minor program. To complete the program requirement, the students from Economics and Finance
background require a basic understanding on accounting principles and financial statement analysis. This course serves
that purpose, and it is prerequisite to other advanced courses that students from (MSc) Economics and Finance (minor)
undertake in the subsequent semesters. Hence, being elementary in nature this course has got its relevance and
importance. Besides, a few students also take this course as an elective to pursue their academic interests in the field
of finance.
[Link] and Objective:
The scope of this course largely encapsulates an introduction to the reporting system used by businesses to record and
convey financial information to investors, analysts, and regulators.
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BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division
This reporting system is referred to as financial accounting. The key learning objectives that this course accomplishes
enables participants in learning:
a. how companies identify and record transactions that have a financial impact and are critical to day-to-day
functioning of the company.
b. how using a systematic procedure, the recorded transactions are summarized into meaningful and
standardized reports (financial statements) such as the balance sheet, statement of income etc.
c. the key components that form part of these financial statements.
d. how these financial statements are analyzed and what information do they convey about the financial well-
being and prospects about the company.
3. Text Book: The below given text-book (prefer 11th Edition) is highly recommended for this course.
TB1: Horngren, Sundem, Elliott and Philbrick, “Introduction to Financial Accounting”, Pearson Education
India Ltd., 11th edition, 2018.
4. Ref. Books:
R1: Libby, Robert., Libby, Short, “Financial Accounting”, Tata McGraw-Hill., 6th edition, 2011 R2: R
Narayanaswamy, Financial Accounting: A managerial perspectives,6th edition, PHI 2017
5 Course Plan:
Module Lecture/tutorial session References Learning
No. objectives
1. Basics of L1.1 Introduction, significance of financial Class Notes Understanding
financial accounting, scope and prospects, evaluation scheme of the relevance
Accounting the course of accounting
L1.2 Understanding business, Why we invest, Class in business
financial statement users, analyzing financial Notes; Ch. transactions
statements, double-entry accounting system, debits 1,R1 and its
and credits, Accounting rules and procedures recording
L1.3 Assumptions in financial reporting, GAAP, Class process
Indian accounting system, IFRS, Ind AS, and Indian Notes; Ch.
GAAP, Accounting methods, types of accounts, 1,R1
analyzing transactions, accounting process
2: L2.1 Accounting system: traditional versus modern, Ch.3, TB1 Identifying the
Accounting Analyzing, and journalizing transactions, posting steps
: The transactions to ledger, accounting rules involved in
Language L2.2: Preparing the trail balance, effects of errors; Ch.3, TB1& the recording
of Business accounting system, Some basic accounting concepts class notes
and of business
L2.3: Revenue and expense transactions, Ch.3, TB1; transactions
recording
depreciation, and prepaid transactions, Ch. 1R2
transactions and
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BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division
L2.4: accumulated depreciation, adjusted vs Ch.3, TB1 preparation of
unadjusted trail balance
L2.5: Financial statements from trial balance Ch.3, TB1 trail
L2.6: Closing the accounts, capital vs. revenue, types Ch.3, TB1 balance
of errors, ethics
T2.1 CASE STUDY and Critical thinking problems
3: L3.1: Basics of income measurement, operating cycle, Ch.2, TB1 Preparing and
Measuring concepts related to income, recognition of revenue, the analyzing the
Income to income statement income
Assess L3.2: Understanding income statement, cash Ch.2, TB1 statement
Performanc dividends and retained earnings
e L3.3: Four popular financial ratios with real-world Ch.2, TB1
cases.
T3.1 Critical thinking problems and real-world cases Class notes
4. L4.1 Adjustments to the accounts. four types of Ch.4, TB1 Understand
Adjustment s adjustments different types
to of
the accounting
accounts and adjustments
Financial L4.2: four types of adjustments, classified balance Ch.4, TB1
Statements sheet
L4.3 Income statement and profitability evaluation Ch.4, TB1
ratios
T4.1 Critical thinking problems using financial Ch.4, TB1
statements
5. L5.1 Overview the cash flow statement, preparing the Ch.5, TB1 Preparation of
Statement of clash flow statement, types of cash flow activities, cash flow
cash inflows and outflows of cash flows statements using
flows direct and
indirect
methods and its
importance
L5.2 Cash flow statement and balance sheet, examples
of cash flow statements
L5.3 Methods of preparing cash flow statements, Ch.5, TB1
accounting rules, the importance of cash flow
statements
T5.1 Critical thinking problems and real-world cases
6: L6.1: recognition of sales revenue, measuring sales Ch.6, TB1 Recording the
Accounting revenue, cash sales and account receivables sales
for Sales using contra
account and
internal
controls
L6.2: Measuring of uncollectible accounts Assessing Ch.6, TB1
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BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division
the level of account receivable, Internal control
T6.1 Critical thinking problems and real world cases
7: L7.1: Profit and cost of goods sold, types of inventory Ch.7, TB1 Estimating the
Inventories systems, cost of merchandise acquired, Inventory cost of goods
and Cost of valuation methods sold and
Goods Sold inventory
valuation
L7.2: Inventory valuation methods: LIFO and FIFO, Ch.7, TB1
effects of inventory errors, importance of gross profits,
internal control of inventories
T7.1 Critical thinking problems
8. Long- L8.1: Overview of long-lived assets, expenditure Ch.8, TB1 Estimating and
lived Assets versus expenses, acquisition of accounting
and tangible assets, depreciation of building tangible and
Depreciation and equipment intangible assets
L8.2: Changes in estimated useful life, contrasting Ch.8, TB1
income tax and shareholding reporting
L8.3 Methods of depreciation, Depreciation and cash Ch.8, TB1
flow, gains and losses on sales of tangible assets,
impairment, goodwill
T8.1 Critical thinking problems
9. L9.1 Accounting for current liabilities, other Ch.9, TB1 Understand the
Liabilities liabilities, long-term liabilities recording of
and Interest current
and
L9.2 Bond accounting, accounting for lease, other Ch.9, TB1
long-term liabilities
L9.3 Debt ratios and interest covering ratios, pensions Ch.9, TB1 non-current
and deferred taxes liabilities
T9.1 Critical thinking problems
10 L10.1 Types of share capital, cash dividend, preferred Ch.10, TB1 Understanding
Stockholde stock types of shares
r’s Equity and
how to
account
owners' capital
L10.2 additional stock issuance, stock splits and stock Ch.10, TB1
dividends, repurchase of stocks
L10.3 Other issuance of common stocks, retained Ch.10, TB1
earnings restricts, other components of stock holders'
equity
11: L11.1 Sources of information about companies Ch.12, TB1 Evaluate the
Financial Auditor's report, objectives of financial statement performance
Statement analysis, evaluating trends and financial
Analysis position of
companies
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BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division
L11.2 Financial ratios, operating performance and Ch.12, TB1
financial decisions, real world cases
L11.3 Prominence of earning per share, Disclosure of Ch.12, TB1
nonrecurring items, international issues, valuation
issues, relating cash flow and net income
6 Evaluation Scheme:
Component Duration Weightage Date& Time Remarks
(marks)
Mid-Semester Test 90 Min. 30% (90) As per timetable Closed book
Comprehensive Exam 3 hrs. 40% (120) As per timetable Partly open book
QUIZ (Best 2 of 3) 30 Min. 30% (90) To be announced Closed book
7 Learning outcome
Students who complete this course would be able to
a. Understand the accounting methods for recording the business transactions.
b. Evaluate various financial concepts and preparation of financial statements-balance sheet,
income statement, and cash flow statement.
c. Identify the financial position and performance of the companies.
d. Make better economic decisions while undertaking investments in financial assets.
Closed Book Test: No reference material of any kind will be permitted inside the exam hall.
Open Book Exam: Only prescribed reference (i.e., textbook/reference books) and hand- written lecture
notes are allowed inside the exam hall. The use of calculator is permitted in all exams, including quizzes.
Exchange of any material is not allowed inside the examination hall.
Make-up policy:
The application for make-up of the mid-semester and the comprehensive exam will not be entertained without
genuine reasons. Application must be submitted to instructor-in-charge along with documents supporting the
reason for seeking make-up beforehand. All such documents must be verified by the respective authorities such
as hostel warden and medical superintendent.
Chamber Consultation Hour: To be announced by respective instructors.
Notices: Notices concerning the course will be circulated via Nalanda and/or will be put on Economics and
Finance Notice Board (6165, NAB).
Instructor in-charge
ECON F212
