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3. Accounting for managers

The objective of the course is to acquaint the students with the uses and services of accounting, defined as the language of business, for managers and executives of the firm. It is commonly known that accounting has two main areas: one whose main concern is to record the financial transactions and report the financial statements concerning the performance and financial position for the period, while the second is devoted to presenting and analysing the ways and methods with which the accountant may assist, advise, and help executives and managers make decisions and solve different problems facing the business firm.

With the course divided into two modules, the first module, designated as financial accounting, will be concerned with the preparation and presentation of the firm’s financial statement to measure its performance and cash flow during the financial period in addition to the financial position in the form of balance sheet. Emphasis will be on analysing the financial transactions in terms of their impact on the financial position through recoding them according to generally accepted accounting principles and the requirements of International Accounting Standards. Transactions of sales, collection, evaluation of receivables, purchasing and inventory transactions and end of period valuation, long-term assets and their depreciation, repairs and maintenance and capitalized additions, short-term and long-term liabilities, and equity issuance, purchases and resales and dividends will be reviewed and considered in detail. In addition, understanding and analysing financial statements using financial ratios to evaluate the performance and financial position of the firm will be presented.

The focus of the second module is on management accounting. The users of financial accounting information in the first module include managers, investors, lenders, employees, suppliers, customers, government and the public. In management accounting, the main purpose is to provide management with financial and non-financial information to use in taking decisions, both operational and strategic. It is the financial consequences of these decisions that are reported in financial accounting in the first module. Thus, financial accounting and management accounting are inter-related.

Thus, the objective of this course in the second module will be to introduce accounting essentially as a tool for internal management decision-making, planning and control. The behaviour and estimation of costs and cost-volume- profit relationship will be analyzed at a basic level from managerial perspective in relation to activity changes, as well as activity-based costing. The use of accounting information for different short-term management decisions will be analyzed and explored in the context of recent developments.