IILM Graduate School of Management

IILM Graduate School of Management
Accounting for Managers, 502
Brief Module Description :

The objective of this course is to help students develop as an informed user of financial statement
information and its applications in managerial decision-making.
Academic Year: 2019-20
Page 1 of 15
1. Introduction to the Module and Module Objective:
In an economy financial transactions are inherent. Companies and other entities need to
communicate to all stakeholders about the transactions they perform which have financial
implications. This need is precisely addressed by a language called accounting. Accounting is the
process of identifying, recording, and summarizing of economic information and reporting the same
to the end users. The end users are a varied group. It includes prospective and existing investors, tax
administration authorities, and even the Board of Directors of the company concerned. Each group
has their own distinct need and it is the decision making process of the users that dictates the need
for financial information. This course of accounting has general objective of developing students'
understanding of the nature, scope, and limitations of accounting information and its use in decision
making.
Further, this course emphasizes on the development and use of management accounting information
for internal decisions in business management with the aim to equip participants with a systematic and
rigorous knowledge of management accounting practices that can be strategically applied across
various functions of an organization to improve its’ performance. The course also reviews contemporary
developments in cost & management accounting for strategic decision-making.
This is a core paper of accounting in Trimester I, Year 1, and is fundamental to the understanding of
all the finance courses that follow in Trimester 2 and 3. Even if you decide to go into other
specialization such as human resources, marketing or operations, this paper remains equally
important for you because anywhere in an organization you will require knowledge of the subject in
order to understand the implications of your decisions on the financial health of the firm.
This course is specifically recommended for students who will be using accounting information for managing-
manufacturing & service operations; controlling costs & making strategic decisions; as well as those going
into general consulting or entrepreneurship. A variety of case studies in different industries and decision
contexts are used to examine the application of accounting concepts.
Module Learning Outcomes: Upon completion of this course, it is expected that:

 Participants will be able to understand various principles on which financial
statements are prepared.
 Participants will acquire critical thinking skills to analyze financial data, and
demonstrate the ability to communicate such data effectively, as well as the ability
to provide knowledgeable recommendations.
 Participants will be able to understand the role of managerial accounting in decision
making.
 Participants will be able to understand and interpret the various cost information for planning
and control purposes in managerial decision making.
Page 2 of 15
2. Introduction to the tutors
2.1 Area Chair Name : Raju Majumdar

Phone Number: 0120 6670675
Email id: raju.majumdar@iilmgsm.ac.in
Cabin Location: Second floor
Website URL: http://www.iilmgsm.ac.in/faculty/
2.2 Module Leader Name : Dr. Reenu Bansal

Phone Number: 9899915589
Email id: reenu.bansal@iilmgsm.ac.in
Cabin Location: Third Floor
2.3 Tutors
Name: Dr. Reenu Bansal
Email id: reenu.bansal@iilmgsm.ac.in
Name: Dr. Shikha Mittal Shrivastav

Email id: shikha.shrivastav @iilmgsm.ac.in
3. Module Pre-requisite: None
4. Module Overview
Session No. Topics

Session 1 Accounting and Economic Decisions
Session 2 Accounting Cycle
Session 3-5 Understanding Income Statement
Session 6-8 Understanding Balance Sheet
Session 9 Revenue Recognition and Inventory Valuation
Session 10 Accounting for Long Lived Assets
Session 11 Liabilities and Equity
Session 12-13 Cash Flow Statement
Session 14-15 Financial Statement Analysis-Common Size, Comparative Statement Analysis
and Trend Analysis
Session 16-17 Ratio Analysis- Liquidity, Solvency, Profitability and Turnover
Session 18-19 Cost Concepts, Elements of Costs and Cost Behaviour, Cost Sheet
Page 3 of 15
Session 20 Overhead Cost Management Systems
Session 21 Overhead Accounting - Determination of Product/Service Cost
Session 22 Activity Based Cost Management
Session 23 Cost Volume Profit (CVP) Analysis
Session 24-25 Marginal Costing Vs Absorption Costing, & Tactical Decisions
Session 26-27 Managerial Accounting & Control – Budgets & Budgetary Control
5. Module Readings
5.1 Main Text –

Text - “Financial Accounting - A Managerial Perspective” by R Narayanaswamy, Prentice-Hall
of India, Fourth Edition (4e)
Principles and Practice of Cost Accounting by Ashish K. Bhattacharyya, Prentice-Hall of India, Third
Edition
5.2 References –
Accounting: Text and Case, Robert N. Anthony, David F Hawkins, and Kenneth A Merchant
(AHM), 13th Edition, Tata McGraw Hill
 Text-“Accounting for Management: Text and Cases” by S.K. Bhattacharyya and John Dearden,
Vikas Publishing House; Third edition
 Cost Accounting - A Managerial Emphasis by Charles T Horngren, Srikant M. Datar and George
Foster, Pearson Education, Thirteenth Edition.
Introduction to Management Accounting by Charles T. Horngren, Gary L. Sundem, William O.
Stratton, Pearson Education, Thirteenth Edition.
5.3 Journals –
It will be good if you read the Economist on a regular basis. It is very important for you to
read at least one financial newspaper every day.
5.4 Websites –
The web is rich in resources when it comes to financial accounting. The list below is only
indicative and not exhaustive.
 https://www.icai.org
 https://www.icsi.edu/
 https://www.ft.com/,
 http://accounting-simplified.com/,
 https://www.bna.com/financial-accounting/
6. Session Plan
Page 4 of 15
Session 1
Title : Accounting and Economic Decisions

Description of the session : This introductory session will enable participants understand the role
of accounting in economic decision making.
Learning Outcome : At the end of this session you will be able to describe the functions of
financial accounting, identify the business activities that financial accounting measures and the
role played by financial accounting in efficient distribution of society’s resources.
Required Readings : Chapter 1, Financial Accounting: A Managerial Perspective by Prof. R
Narayanaswamy, PHI, 4e.
Desired Readings: Accounting and economic decisions
http://www.oeconomica.uab.ro/upload/lucrari/1020081/17.pdf
Session 2
Title : Accounting Cycle

Description of the session : The accounting cycle comprises the sequence of accounting processes.
It begins with analyzing transactions and ends with carrying forward the balances in balance
sheet accounts to the next accounting period.
Learning Outcome : These sessions will take you through the steps in the accounting cycle and
familiarize you with the same.
Required Readings : Chapter 2&3, Financial Accounting: A Managerial Perspective by Prof. R
Narayanaswamy, PHI, 4e.
Desired Readings : https://www.principlesofaccounting.com/chapter-1/
https://www.principlesofaccounting.com/chapter-2/
Case : “Mehta Automobile”, Accounting for Management: Text and Cases” by S.K.
Bhattacharyya and John Dearden, Vikas Publishing House; Third edition
Exercise : Excel Problem
Session 3-5
Title : Understanding Balance Sheet

Description of the session: This session aim to familiarize students with the various components
of a balance sheet and the accounting concepts that go behind the preparation of this statement.
Learning Outcome : Understanding the concepts that go behind preparing a balance sheet, its
various heads and their interpretation.
Required Readings : Understanding Financial Statements, A Damodaran, p44
http://people.stern.nyu.edu/adamodar/pdfiles/valn2ed/ch3.pdf
Case : “Lone Pine Café (A)”, Accounting: Text and Case, Robert N. Anthony, David F Hawkins,
and Kenneth A Merchant (AHM), 13th Edition, Tata McGraw Hill, page 48
Page 5 of 15
Session 6-8
Title : Understanding Income Statement

Description of the session : The primary purpose of the income statement is to report an
organization’s earnings to investors over a specific period of time. It provides important insights
with regard to the performance of an organization and its management.
Learning Outcome: Here we try to understand how an income statement prepared and what
information does it communicate to various stakeholders.
Required Readings: Understanding Financial Statements, A Damodaran, p44
http://people.stern.nyu.edu/adamodar/pdfiles/valn2ed/ch3.pdf
Desired Readings: Understanding Income statements
http://www.free-management-ebooks.com/dldebk-pdf/fme-income-statements.pdf (p32)
Case : Case : “Lone Pine Café (B)”, Accounting: Text and Case, Robert N. Anthony, David F
Hawkins, and Kenneth A Merchant (AHM), 13th Edition, Tata McGraw Hill, page 74
Session 9
Title : Revenue Recognition and Inventory Valuation

Description of the session : Accrual Concept would be used to calculate and compute the Net
Income. Practical analysis and adjustments would be made for the same. It gives an
understanding of how the adjustment entries impact the Net Income. This session also
emphasizes on the concepts of Raw Material, Work in Progress, Finished Goods, Spares and
Consumables.
Learning Outcome : Understanding of how the adjustment entries impact the Net Income.
Students would get a fair understanding of Inventories as the largest part of current assets of an
Organization.
Required Readings : Chapter 4, 5 & 6 Financial Accounting: A Managerial Perspective,
Narayanaswamy
Case : “Grennell Farm”, Accounting: Text and Case, Robert N. Anthony, David F Hawkins, and
Kenneth A Merchant (AHM), 13th Edition, Tata McGraw Hill, page 132
Session 10
Title : Accounting for Long Lived Assets
Page 6 of 15
Description of the session :
Learning Outcome : Students would understand different Fixed Assets and the ways of valuing
them. They would know the need for fair reporting of fixed assets.
Required Readings: Chapter 7 Financial Accounting: A Managerial Perspective, Narayanaswamy
Desired Readings: https://www.principlesofaccounting.com/chapter-9/
Video : https://www.youtube.com/watch?v=vnWtAchWP1c
Session 11
Title : Liabilities and Equity

Description of the session : The session provides an overview of Current and Long Term
liabilities. You will learn about reporting of contingent liabilities. You would get an
understanding of the different elements in Liabilities.
Learning Outcome : Students would get an understanding of the different elements in Equity &
Liabilities.
Required Readings : Chapter 9 & 10 Financial Accounting: A Managerial Perspective,
Narayanaswamy
Desired Readings : : https://www.principlesofaccounting.com/chapter-12/
Session 12-13
Title : Cash Flow Statement

Description of the session : The cash flow statement is an important financial statement given the
recent incidences of company failure, snowballing debt, rising interest rates and inflation.
Reporting cash flows presents fewer problems because cash receipts and payments are
recognized as and when they occur.
Learning Outcome : These two sessions will help participants learn how to prepare, present and
interpret cash flow statements.
Required Readings : Chapter 12, Financial Accounting: A Managerial Perspective by Prof. R
Narayanaswamy, PHI, 4 e.
Exercise : Numerical Problems
Session 14-15
Page 7 of 15
Title : Financial Statement Analysis-Common Size, Comparative Statement Analysis and Trend
Analysis
Description of the session : Financial analysis is a process of selecting, evaluating, and
interpreting financial data, along with other pertinent information, in order to formulate an
assessment of a company’s present and future financial condition and performance.
Learning Outcome : On completion of these two sessions students are expected to be conversant
with common size analysis
Required Readings : Chapter 11 Financial Accounting: A Managerial Perspective,
Narayanaswamy
Session 16-17
Title : Ratio Analysis- Liquidity, Solvency, Profitability and Turnover

Description of the session : These sessions focuses on how accounting information is analyzed by
various parties of the organization to facilitate the comparions.
Learning Outcome : On completion of these two sessions students are expected to be conversant
with financial ratio analysis
Required Readings : Chapter 11 Financial Accounting: A Managerial Perspective,
Narayanaswamy
Session 18-19
Title : Cost Concepts, Elements of Costs and Cost Behaviour, Cost Sheet
Description of the session : In this session we will cover topics on elements of cost – functional
classification of costs. There are different methods for determining product / service cost suitable for
different types of industry. The selection of a particular method depends on the process of
manufacturing or rendering services.
Learning Outcome : To distinguish between manufacturing company and service sector company
Required Readings : AKB Chapter 3, Cost Elements and Cost Sheet
Desired Readings : Charles T. Horngren, Chapter 2, An Introduction to Cost Terms and Purposes
Session 20
Page 8 of 15
Title : Overhead Cost Management Systems
Description of the session : Overhead is an important component of ‘cost of production’.
However, under variable costing method only variable manufacturing is included in the cost of
production. In this session we will cover topics on distribution of overheads across production &
service departments through primary distribution summary.
Learning Outcome : Identifying production department & service departments and preparing primary
distribution summary
Required Readings: AKB, Chapter 11, Manufacturing Overhead
Desired Readings : CharlesT. Horngren, Chapter 14, Cost Allocation, Customer Profitability
Analysis and Sales Variance Analysis
Session 21
Title : Overhead Accounting - Determination of Product/Service Cost

Description of the session: This topic will give the idea about overhead accounting. In this session
we will discuss the topics on overhead accounting, classification, allocation, absorption and
apportionment of costs.
Learning Outcome: To be able to classify overheads by segregating the costs into variable, semi-
variable and fixed costs.
Required Readings: AKB, Chapter 10, Overheads: Classification, distribution and control
Desired Readings : Charles T. Horngren, Chapter 15, Allocation of Support Department Costs,
Common Costs and Revenues
Session 22
Title : Activity Based Cost Management

Description of the session : In this session you will learn how costs are allocated to products or
services through ABC in contrast to t r a d i t i o n a l overhead allocation method.
Learning Outcome : To understand how overhead costs are allocated through ABC while comparing
traditional overhead cost allocation and Activity Based Costing.
Required Readings :
Desired Readings : Charles T. Horngren, Chapter 5, Activity Based Costing
Cases : “Midwest Office Products”, Accounting: Text and Case, Robert N. Anthony, David F
Hawkins, and Kenneth A Merchant (AHM), 13th Edition, Tata McGraw Hill, page 567.
Session 23
Title : Cost Volume Profit (CVP) Analysis

Description of the session : Break Even Point (BEP), Margin of Safety, Cost planning, Cost
Volume Profit (CVP) Analysis, Profit Volume Ratio & Profit Volume Graph will be discussed in
this session.
Learning Outcome : To determine the breakeven point and output level needed to achieve target
operating income; applying CVP analysis for managerial decision making
Required Readings : AKB, Chapter 17, Cost-Volume-Profit Analysis
Desired Readings : Charles T. Horngren, Chapter 3, Cost-Volume-Profit Analysis
Page 9 of 15
Case : Prestige Telephone Company, Accounting: Text and Case, Robert N. Anthony, David F
Hawkins, and Kenneth A Merchant (AHM), 13th Edition, Tata McGraw Hill, page 483.
Session 24-25
Title : Marginal Costing Vs Absorption Costing, & Tactical Decisions

Description of the session : In this session we will discuss the use of marginal costing technique for
tactical decisions like make or buy; domestic sale versus exploring international market, pricing,
shutdown or continue, etc. We will also discuss the impact of short-term decisions on fixed cost.
Learning Outcome : To distinguish between relevant and irrelevant information in decision situations
Required Readings : AKB, Chapter 18, Marginal Costing and Tactical Decisions
Desired Readings : Charles T. Horngren, Chapter 7, Decision Making & Relevant Information
Session 26-27
Title : Managerial Accounting & Control – Budgets & Budgetary Control

Description of the session : Meaning & need for Budget and Budgetary Control – Preliminaries for
adoption of Budget Control – Budget Manual and Budget Periods, Budgetary Control &
reporting, Limitations of Budgetary Control - Preparation of Cash Budget will be covered in this
session.
Learning Outcome : To understand preparation of various budgets and their importance in managerial
decision making.
Required Readings : AKB, Chapter 19, Budget and Budgetary Control
Desired Readings : Charles T. Horngren, Chapter 6-7, Master Budget and Responsibility Accounting,
Flexible Budgets, Direct Cost Variances and Management Control
7. Assessment Plan
Written/Oral Group/ Individual Assessment
Written Individual 2 Quizzes (2.5 marks * 2 = 5 marks)
Written & Oral Group Report submission & Presentation (10 marks)
Written Individual Closed Book End Term Examination (25 marks)
Details of Assessments:
Page 10 of 15
7.1 Component 1: Quiz: Students will be required to answer two quizzes of 2.5 marks each. The
quizzes will be administered through ERP and sequenced as mentioned in the outline. Please
note, quizzes will not be repeated and a student will lose the marks assigned in case of absence.
7.2 Component 2: Report submission: The students would be required to analyze the annual report
of the company of their choice and provide a comparative analysis vis-à-vis the industry. They
would be required submit the soft copy of their report which will include both qualitative and
quantitative analysis. The marks would be given on the basis of individual involvement in
preparing report. This would be a group assignment comprising of 5 members each.
The project report will:
 Measure the ability to analyze and interpret the financial statements of firms.
 Measure the ability to apply concepts to assess the financial health of companies.
 Measure the liquidity and profitability of firms through ratio analysis.
 Measure the ability to analyze and interpret the Cost Information for Business
Decision Making.
7.3 Component 3: End-term Examination (90 min): The end term examination will cover the entire
course. The end term examination assess your understanding the financial reporting structure of an
organization, your capacity to analyze and interpret the financial statements of a company, and use
the same in decision making.
8. Maps
8.1 Assessment Map
Module Name: A1 A2 A3 A4 A5
Accounting for Managers    
A1- Individual assignment/quiz A2- Group assignment

A3- Open book examinations A4- Closed book examinations
A5- Presentations
8.2 Teaching Map

Module Name: T1 T2 T3 T4 T5 T6
Accounting for Managers    
T1: Lectures T2: Seminars/Tutorials

T3: Projects T4: Case Discussion
T5: Guest Lectures/Industrial Visit T6: Lab Sessions
8.3 Curriculum Map

Module Name: Programme Learning Outcomes
Page 11 of 15
Accounting for Managers L1 L2 L3 L4 L5 L6 L7
Taught    
Assessed   
Covered    
L1 - An understanding of organizations and management techniques to allow investigation into

business and management issues.
L2 - An ability to acquire, analyze and understand data and information for managerial decisions.
L3 - Critical thinking and informed judgment leading to problem solving, decision-making and
negotiating skills.
L4 - Cognitive flexibility which enables adaptability to uncertainty in a rapidly changing business
environment.
L5 - An understanding of disruptive and technological change and the ability to seek innovative and
entrepreneurial solutions.
L6 - Emotional intelligence and people’s skills in communicating, working in teams and with people.
L7 - Being cognizant of the impact of individual and corporate actions on society, recognizing
responsible and inclusive business practices and sensitivity to the social, economic and environmental
responsibilities of business.
9. Module Readings Grid
Case No. Title Topic Discussed No of Shared/

pages Isolated
Brief Cases
1. Mehta Automobiles Accounting 2 Accounting for Management (text

process and cases) by S.K. Bhattacharyya
and John Dearden, Vikas
Publishing house.
2. Lone Pine Café (A) Understanding 2 Accounting: Text and Case, Robert
Balance Sheet N. Anthony, David F Hawkins, and
Kenneth A Merchant (AHM), 13th
Edition, Tata McGraw Hill
3. Lone Pine Café (B) Understanding 2 Accounting: Text and Case, Robert
Income N. Anthony, David F Hawkins, and
Statement Kenneth A Merchant (AHM), 13th
4. Grennell Farm page 132 Revenue 2 Accounting: Text and Case, Robert N.
Recognitio Anthony, David F Hawkins, and
Page 12 of 15
n and Kenneth A Merchant (AHM), 13th
Inventory Edition, Tata McGraw Hill
Valuation
5. Midwest Office Products ABC Management 2 Accounting: Text and Case, Robert N.
Anthony, David F Hawkins, and
6. Prestige Telephone CVP Analysis 4 Accounting: Text and Case, Robert N.
Company Anthony, David F Hawkins, and
Essential
Readings
1 Chapter 1, Financial Accounting & 16 Textbook
Accounting: A Economic
Managerial Perspective Decisions,
by Prof. R
Narayanaswamy, PHI,
4e.
2 Chapter 2 &3, Accounting 5 Textbook

Financial Accounting: cycle
A Managerial
Perspective by Prof. R
Narayanaswamy, PHI,
4e.
3 Understanding Financial 44 http://people.stern.nyu.edu/adamod
Financial Statements, A statements ar/pdfiles/valn2ed/ch3.pdf
Damodaran
4 Chapter 5 & 6, Accounting for 40 Textbook
Financial Accounting: Current assets
A Managerial
Perspective by Prof. R
Narayanaswamy, PHI,
4 e.
5 Chapter 9 Financial Accounting for 40 Textbook
Accounting: A Liabilities
Managerial Perspective
by Prof. R
Narayanaswamy, PHI,
Page 13 of 15
4e
6 Chapter 10, Financial Accounting for 40 Textbook
Accounting: A Shareholders’
Managerial Perspective equity
by Prof. R
Narayanaswamy, PHI,
4 e.
7 Chapter 11, Financial Financial 63 Textbook
Accounting: A Statement
Managerial Perspective Analysis
by Prof. R
Narayanaswamy, PHI,
4 e.
8 Chapter 12, Financial Cash Flow 25 Textbook
Accounting: A Statement
Managerial Perspective
by Prof. R
Narayanaswamy, PHI,
4e.
9 Chapter 3, Principles and Cost Elements Textbook
Practice of Cost and Cost Sheet
Accounting by Ashish K.
Bhattacharyya, Prentice-
Hall of India, Third Edition
10 Chapter 17, Principles and CVP Analysis Textbook
Practice of Cost
11 Chapter 18, Principles and Marginal Textbook
Practice of Cost Costing
12 Chapter 19, Principles and Budgetary Textbook

Practice of Cost Control
Page 14 of 15
Desired
Reading
1 Economic decision- Accounting & 5 http://www.oeconomica.uab.ro/upload/luc
rari/1020081/17.pdf
making and the role of Economic
accounting information Decisions
2 Understanding Income Financial 32 http://www.free-management-
statements Statements ebooks.com/dldebk-pdf/fme-
income-statements.pdf
Tutorials
Tutorial 1 Introduction to Prowess Database (CMIE)

Tutorial 2 Comparative Analysis of Industrial Financial Performance-
Trend Analysis (Using Prowess Database)
Tutorial 3 Comparative Analysis of Industrial Financial Performance-
Ratio Analysis (Using Prowess Database)
Tutorial 4 Case Study on Cash Flow Statement – Chemalite Inc. (B).
Case study will be shared with the students.
Tutorial 5 Case Study on Cost Behaviour – Precision Worldwide, Inc.
Case study is available in the book – “Accounting-Text &
Cases” by AHM published by Tata MCGraw Hill, Page 835
Apart from this articles from the newspaper will be discussed from time to time.
Page 15 of 15

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IILM Graduate School of Management

Accounting for Managers, 502

Brief Module Description :

Academic Year: 2019-20

Module Learning Outcomes: Upon completion of this course, it is expected that:

2.1 Area Chair Name : Raju Majumdar

2.2 Module Leader Name : Dr. Reenu Bansal

Name: Dr. Shikha Mittal Shrivastav

3. Module Pre-requisite: None

Session No. Topics

5.1 Main Text –

Title : Accounting and Economic Decisions

Title : Accounting Cycle

Title : Understanding Balance Sheet

Title : Understanding Income Statement

Title : Revenue Recognition and Inventory Valuation

Title : Accounting for Long Lived Assets

Title : Liabilities and Equity

Title : Cash Flow Statement

Title : Ratio Analysis- Liquidity, Solvency, Profitability and Turnover

Title : Overhead Accounting - Determination of Product/Service Cost

Title : Activity Based Cost Management

Title : Cost Volume Profit (CVP) Analysis

Title : Marginal Costing Vs Absorption Costing, & Tactical Decisions

Title : Managerial Accounting & Control – Budgets & Budgetary Control

Written Individual 2 Quizzes (2.5 marks * 2 = 5 marks)

Written Individual Closed Book End Term Examination (25 marks)

Accounting for Managers    

A1- Individual assignment/quiz A2- Group assignment

8.2 Teaching Map

Accounting for Managers    

T1: Lectures T2: Seminars/Tutorials

8.3 Curriculum Map

L1 - An understanding of organizations and management techniques to allow investigation into

9. Module Readings Grid

Case No. Title Topic Discussed No of Shared/

1. Mehta Automobiles Accounting 2 Accounting for Management (text

2 Chapter 2 &3, Accounting 5 Textbook

12 Chapter 19, Principles and Budgetary Textbook

Tutorial 1 Introduction to Prowess Database (CMIE)

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