Accounting for Decision Making
Introduces the contents of financial statements and their interpretation and analysis. Introductory management accounting topics are also included. Emphasis is placed on covering the decision making tools from a user's perspective, without the need to refer to debits and credits.
Introduction to accounting
- The role of accounting
- Users of accounting information
- Regulatory environment
Introduction to financial statements
- Defining assets, liabilities, equity, income, expenses and net income
- Classifying accounts as assets, liabilities, equity, revenues or expenses
- The accounting equation
- Characteristics of financial statements
- Introduction to the balance sheet
- Introduction to the income statement
Transaction analysis
- The principle of duality
- Recording transactions to start up a business
- Recording revenue and expense transactions
- Recording transactions that affect inventory
- Multiple transaction analysis
Balance sheet
- Transactions affecting the balance sheet
- Format, presentation and limitations of the balance sheet
Income statement
- Cash vs accrual accounting
- Transactions affecting the income statement
- Determining gross profit and net income
- Format and presentation of the income statement
Cash flow statement
- Purpose and format of the cash flow statement
- Operating, investing and financing cash flows
- Direct method of preparing the cash flow statement
- Indirect method of preparing the cash flow statement
Financial statement analysis
- Common sized statements
- Horizontal and vertical analysis
- Calculating ratios