22747 Accounting for Managerial Decisions

Subject level: Postgraduate

Handbook description

This subject aims to provide an introduction to accounting for students who are taking only one subject in accounting. The subject is divided into two parts. Part 1 covers financial accounting and covers the primary financial statements; purpose, content, form and the use of these statements to extract information about business operations via financial statement analysis. Part 2 deals with topics from management accounting, and covers the area of cost constructs, product costing techniques and the processes used to generate information for management planning and control to support decision activity.

Subject objectives/outcomes

The objective of the subject is based on the premise that managers need to use accounting information in the process of managing their organisations as one of the major information inputs for decision analysis at all levels of management. Thus familiarity and an understanding of accounting reports and the accounting processes used to generate these reports are highly desirable.

On completion of this subject students should be able to:

1. Use accounting language effectively to describe the many aspects of business operations and understand the impact of business technology used to generate information that enable the monitoring of issues, problems and opportunities facing the business as measured and reported by the accounting information system.
2. Understand the purpose, content and format of financial statements and to the methods used by accountants to prepare these reports which are governed by regulatory requirements and the relevant accounting standards governing the information content of these reports.
3. Use accounting knowledge to quantify complex and unfamiliar workplace situations to support the decision process within organisations.
4. Use accounting information for business analysis to gain knowledge about the many different aspects of business operations from both a historical perspective using Financial Accounting information and future direction using Management Accounting information for decisions relating to the planning and control of business activity.
5. Understand how accounting information can affect management behaviour in the workplace.

Contribution to graduate profile

The importance of accounting numbers in organizational management and in the communication of organization performance to the external world has long been established. Hence for students taking a course in business administration it is deemed desirable that they become familiar with the information content of accounting reports and the accounting processes used to generate these reports in accordance with generally accepted accounting standards.

Further the information support provided by accounting systems supporting all levels of management activity is of major importance for business success. The information requirements necessary to control existing business operations as well as mapping the future direction of the business is greatly facilitated by the quantitative models that have been developed by accountants for management support in all facets of decision activity.

Teaching and learning strategies

The presentation is a combination of lecture and seminar. The sessions have three components:

1. Lecture: the ideas and concepts found in the topic assigned will be discussed and illustrated.
2. Problem demonstration: selected problem/case from the text will be demonstrated by the instructor to reinforce concepts and enhance learning.
3. Seminar: discussion of problems and cases as assigned in the syllabus. Instructors in discussing the problems/cases will do so with the assumption that students have prepared answers and will consider ethical and governance issues where appropriate.

Students are provided with additional supplementary questions and worked answers to selected problems and cases to facilitate independent self study in order to consolidate their knowledge as well as to enable self monitoring of their knowledge and progress in the subject.

Content

The subject is divided into two parts:

Part 1: Financial Accounting is devoted to the processes and procedures required for the preparation and interpretation of financial statements and the subsequent analysis of business operations using financial statement analytical techniques.

Part 2: Management Accounting covers cost constructs, product costing procedures and the use of accounting information for planning and controlling business operations as well as providing the necessary quantitative data for decision analysis.

The topics covered in each of the parts are as follows:

Part 1: Financial Accounting

• Introduction, The Accounting Framework and Some Accounting Concepts
• Financial Statements
• Statement of Financial Position (The Balance Sheets
• Statement of Financial Performance (The Income Statement)
• Statement of Cash Flows
• Introduction to Financial Ratios and Financial Statement Analysis

Part 2: Management Accounting

• Cost Concepts and Cost Behaviour
• Cost Accounting and Management Accounting including
• Activity Accounting – Another Way to Measure Costs
• Short-Run Alternative Choice Decisions
• Long-Run Decisions: Capital Budgeting
• Resource Planning and Allocation using Budgeting techniques

Assessment

Indicative references

Schelluch P S Topple C Jubb L E Rittenberg and B J Schwieger [2004] Assurance and Auditing: Concepts for a Changing Environment, Thomson Melbourne

Pearson, Sydney [2004], Auditing Handbook 2004 (This is volume 2 of The Accounting and Auditing Handbook, an annual publication)

Lehman M W [2003] Computer-Assisted Auditing with Microsoft Great Plains Dynamics, Thomson South-Western (A case study for the audit team assignment. Other case studies may be set as appropriate.)

Charter, [2003], Business Software Guide, Charter Supplement

Committee of Sponsoring Organisations of the Treadway Commission (COSO) [1992] New York

Gemmy S. A and Hall G [1998] Internet Guide for Accounting, South-Western College Publishing

The Institute of Chartered Accountants of Scotland, Controlling Computers in Business, Vols 1 to 5 [1996]

Dayton, D., [1997], Information Technology Audit Handbook, Prentice Hall

Gelinas U J, S G Sutton and A E Oram [1999] Accounting Information Systems, South Western 4th edition

Manson, S., S. McCartney and M Sherer, [1997], Audit Automation: The use of Information Technology in the Planning Controlling and Recording of Audit Work, The Institute of Chartered Accountants of Scotland.

Pfleeger. C., [1997] Security in Computing, 2nd edition Prentice Hall