HARAMBEE UNIVERSITY

FACULTY OF BUSINESS AND ECONOMICS

MBA

Course Outline

MBA 682: ACCOUNTING AND FINANCE FOR MANAGERS

Credit Hours: 2 Contact Hours: 2 Pre requisite: None

Course Description
Accounting for Managers emphasizes the interpretation rather than the construction of
accounting information and encourages a critical, rather than unthinking acceptance of the
underlying assumptions behind accounting. It links theory with practical examples and case
studies drawn from real life business situations across a range of industries.

Course objectives
Upon completion of the course students will be able to;
 Explain the purpose of accounting for managers
 Describe the nature of financial decisions
 Extracting financial information from the accounting system.
 Make decisions using financial reports
 Plan and control of firm’s business activities using financial information
 Explain what strategic management accounting is and apply its concepts in business
firms
 Calculate financial ratios
 Apply ratio analysis
 Conduct financial statement analysis
 Evaluate financial performances of firms

Course Contents

Chapter I: CONTEXT OF ACCOUNTING.

1.1. Introduction to Accounting:
1.1.1. Accounting, accountability and the account.
1.1.2. A short history of accounting.
1.2. The role of management accounting.
1.3. Recent developments in management accounting.
1.4. Accounting and its Relationship to Shareholder Value and Corporate Governance.
1.5. Capital and product markets.
 1.6. Value based management.
1.7. Shareholder value, strategy and accounting.
1.8. Company regulation and corporate governance
1.9. Recording Financial Transactions and the Principles of Accounting.
1.10. Business events, transactions and the accounting system.
1.11. The double entry: recording transactions.
1.12. Extracting financial information from the accounting system.
1.13. Basic principles of accounting.
1.14. Cost terms and concepts: the limitations of financial accounting
1.15. Management Control, Management Accounting and its Rational
Economic Assumptions.
1.16. Management control systems.
1.17. Management planning and control systems and management
accounting
1.18. Non-financial performance measurement

Chapter II: THE USE OF FINANCIAL REPORTS FOR DECISION MAKING.

2.1. Constructing Financial Reports:
2.1.1. International Financial Reporting Standards (IFRSs) True and
fair view.
2.1.2. Framework for the Preparation and Presentation of Financial
Statements.
2.1.3. Reporting profitability: the Income Statement.
2.1.4. Reporting financial position: the Balance Sheet. Accruals
accounting. Depreciation.
2.1.5. Reporting cash flow: the Cash Flow Statement.
2.2. Interpreting Financial Reports and Alternative Perspectives: Annual Reports.
Operating and Financial Review. Ratio analysis. Profitability. Liquidity.
Gearing. Activity/efficiency. Working capital. Managing receivables.
Managing inventory. Managing payables. Shareholder return. Interpreting
financial information using ratios
2.3. Accounting for Inventory: Introduction to Inventory. Methods of costing
inventory in manufacturing. Job costing illustration. Process costing
illustration. Long term contract costing. Management accounting statements.

Chapter III: USING ACCOUNTING INFORMATION FOR DECISION MAKING,

PLANNING AND CONTROL.
3.1. Accounting and Information Systems.
3.1.1. Introduction to accounting and information systems.
3.1.2. Methods of data collection.
3.2.3. Types of information system.
 3.3.4. Business processes.
3.3.5. Internal controls for information systems
3.2. Marketing Decisions.
3.2.1. Marketing strategy.
3.2.2. Cost behaviour.
3.2.3. Cost volume profit analysis.
3.2.4. Alternative approaches to pricing.
3.2.5. Cost plus pricing.
3.2.6. Target rate of return pricing.
3.2.7. Optimum selling price.
3.2.8. Special pricing decisions.
3.2.9. Transfer pricing.
3.2.10. Segmental profitability.
3.3. Accounting Decisions.
3.3.1. Cost classification.
3.3.2. Calculating product/service costs.
3.3.3. Shifts in management accounting thinking.
3.3.4. Alternative methods of overhead allocation.
3.3.5. Activity based costing.
3.3.5. Contingency theory.
3.3.7. International comparisons.
3.3.8. Behavioral implications of management accounting.
3.4. Strategic Investment Decisions.
3.4.1. Strategy.
3.4.2. Investment appraisal
3.4.3. Accounting rate of return.
3.4.4. Payback.
3.4.5. Discounted cash flow.
3.4.6. Comparison of techniques.
3.5. Budgeting and Budgetary Control.
3.5.1. What is budgeting?
3.5.2. The budgeting process.
3.5.3. What is budgetary control?
3.5.4. Flexible budgeting.
3.5.5. Variance analysis.
3.5.5.1. Cost variances.
3.5.5.2. Materials variance.
3.5.5.3. Labour variance.
3.5.5.4. Overhead variances.
3.5.5.5. Reconciling the variances.
3.5.6. Criticism of variance analysis.
 3.5.7. Cost control.
3.6. Strategic Management Accounting.
3.6.1. What is strategic management accounting?
3.6.2. Accounting techniques to support strategic management accounting.
MODE OF TEACHING LEARNING PROCESES
A combination of the following major methods of delivery will be used for the course including:
 Article review
 Collaborative Learning
 Group and independent presentations
 Assignments and presentations (independently and in group)
 Individual & or group Assignment /projects / term papers,
 Class presentation and discussion by students.
 Case analysis

ASSESSMENT SCHEME
1 Presentations (group and individual ) 20%
2 Reports/article reviews 10%
3 Group assignment 20
4 Final examination 40%
5 Class participation 5%
Total 100%

Text books
 Paul M. Collier , Accounting for Managers : Interpreting Accounting Information for
Decision Making, 2009, John Wiley and sons
References

 John Glynn, Bill Wilkinson, Michael P. Murphy, Anne Abraham , Accounting for
Managers , 2008 , Thomson learning
 Eric Noreen, Peter Brewer, Ray Garrison, Managerial Accounting for Managers, 1st
Edition, MCGRAW HILL, 2008
 Van Home, “ Fundamentals of Financial Management” 9 th Edition , Mc Graw Hill inc,
USA
 Keown M.P.S. “Financial Management principles and applications “10th Edition Prentice
Hall.