Credits 3

Pre-requisites - None

Core/Elective - Technical Elective

To introduce students to the main concepts in financial and management accounting to students so that they can interpret financial reports and effectively work as engineering managers.

At the end of this course, students should be able to:

1. Interpret profit and loss accounts and balance sheets of a company and calculate key performance ratios.

2. Explain the key terms in financial accounting and describe the methods of accounting for adjustments such as depreciation, accruals, and bad debts.

3. Calculate the net present value of investment options and make recommendations on suitable investments.

4. Explain the different types of costs involved in management accounting and calculate the relevant costs attributable to a cost centre.

5. Use absorption and marginal costing to estimate the manufacturing cost of a product.

6. Prepare sales and production budgets and calculate variances with the actual performance.

1. Introduction to Financial Accounting: Purpose of financial accounting, Key terms in financial accounting, Trading profit and loss accounts, Trial balance Adjustments for stock, depreciation, taxation, accruals etc. Balance sheet Manufacturing accounts Company accounts

2. Financial Statements and Financial Reporting: Cash flow statement, Annual reports, Ratio analysis (profitability ratios, liquidity and gearing ratios), Limitations of ratio analysis

3. Valuation of Future Cash Flows: Time value of money (future value and compounding) Present value and discounting

4. Capital Investment Decisions: Investment analysis, Financial sources, Risk and return, Break-even analysis

5. Introduction to Management Accounting: Types of costs and cost centres Fixed/Variable/Marginal costs Full/Absorption/Marginal Costing, Budgeting, Actual versus planned variance