Financial Accounting

Aims

1. Demonstrate an understanding of the theoretical framework of accounting and the principles underlying accounting statements.
2. Demonstrate an understanding of the applications of accounting systems using information technology.
3. Prepare and present limited company financial statements.
4. Evaluate the performance and financial position of organisations from their financial statements.

Programme content and learning objectives:

After completing the programme the student should be able to:

1. The Theoretical Framework
   Scope and objectives of accounting.
   The users of accounting information and their needs.
   Traditional accounting conventions.
   The distinction between capital and revenue expenditure.
   Use of Information Technology in Accounting.
2. The Financial Statements of Limited Companies
   External publication of companies’ financial statements.
   An understanding of the different elements that make up the externally reported financial statements.
   An appreciation of the rules contained in Generally Accepted Accounting Practice.
3. Interpretation of Financial Statements
   Application of financial ratios in order to help interpret financial statements.
   Investors ratios.
   Limitations of ratio analysis.
   Accounting ratios and inflation: the impact of changing prices on financial statements and methods of adjusting historic cost accounts to reflect the impact of inflation.
4. Capital Structure and Gearing
   Types of shares and loans.
   Issue and redemption of shares and debentures.
   The relationship between equity and debt-gearing.
5. Consolidated Accounts
   Principles of consolidation.
   Inter-company items and their elimination.
   Comparison of the acquisition method with the merger method.
6. Sources of Finance
   The various sources of finance available to businesses.
   Differentiation between short-term, medium-term and long-term sources of finance.
   An appreciation of the differing financing needs of organisations.