Module 1 Financial Accounting - Dr. Varadraj Bapat Dr. Varadraj - - PowerPoint PPT Presentation

Financial Accounting - Dr. Varadraj Bapat

Financial Accounting and Analysis

Module 1

Financial Accounting - Dr. Varadraj Bapat

• Dr. Varadraj Bapat

 M.Com.  Cost Accountant 1992  Chartered Accountant 1995  Ph.D. 2005, IIT B, Powai, Mumbai

Contact Information: varadraj@som.iitb.ac.in 9892413119/ FB/ Twitter

Financial Accounting - Dr. Varadraj Bapat

• Dr. Varadraj Bapat

 Teaching Interests  Financial Accounting, Cost Accounting,

Indian Financial and Business Models

 Research Interests  Financial Disclosure, Financial Inclusion,

Bankruptcy Prediction, Portfolio Management, Corporate Governance, Environmental Accounting

Financial Accounting - Dr. Varadraj Bapat

 Research Output (papers in last 3 yrs)  Bankruptcy Prediction (3), Accounting

Standards (2), Financial Inclusion (2), Portfolio Management (2) and Corporate Governance (1) = Total Listed in ABDC Journals (10)

Financial Accounting - Dr. Varadraj Bapat

• Dr. Varadraj Bapat

 Other Interests  Education, ABVP, Integral Humanism  Yoga, BrahmaVidya

Financial Accounting - Dr. Varadraj Bapat

• Dr. Varadraj Bapat

Yogasth https://www.facebook.com/yogastha.iitb Think India https://www.facebook.com/thinkindiaofficial

Think India’s Social Internship Opportunity Anubhooti

Financial Accounting - Dr. Varadraj Bapat

About this course

 The course will cover Financial

Accounting

 Cost Accounting and Financial

Management is dealt in a different course

Financial Accounting - Dr. Varadraj Bapat

About this course

 Assignments, Internal + TET  Class participation  Groups (of 5)  Assignments – Annual Report,

One company in group

Financial Accounting - Dr. Varadraj Bapat

About this course

 Text Book: Financial Accounting:

A Managerial Perspective Author/Editor: Bapat and Raithatha Publisher: TMH ISBN No: 1-25- 900488

Financial Accounting - Dr. Varadraj Bapat

About this course

 Video Course  https://www.youtube.com/watch?v=eU

Mwwp5zDW0

 http://nptel.ac.in/courses/110101003/2

Financial Accounting - Dr. Varadraj Bapat

Session Contents

 Need to Know About Accounting  What is Accounting?  Financial Accounting, Cost Accounting

and Management Accounting

Financial Accounting - Dr. Varadraj Bapat

Session Contents

 Financial Accounting and Financial

Management

 Finance and complexity of organisation  Financial Statements - Balance Sheet,

Income Statement

 Annual Report

Financial Accounting - Dr. Varadraj Bapat

“Why do I need to learn about finance … I am very good in my

• wn area of specialization”

How would you react to the above statement?

Financial Accounting - Dr. Varadraj Bapat

The job content

Functional Expertise Management & Finance Expertise As you mo ve up ..

Financial Accounting - Dr. Varadraj Bapat

Accounting

 Language of Business  Performance

is reported and evaluated in financial terms

 Knowledge

is useful for personal investment and tax planning as well

Financial Accounting - Dr. Varadraj Bapat

 It is not necessary to become

accountant

 But its very useful if every one

understands the accounting and financial concepts and terminology properly

Accounting

Financial Accounting - Dr. Varadraj Bapat

Need to Learn Accounting

 Reporting to stakeholders  Data for planning, organisation,

control of business

 Leads to increase in efficiency of

business / Profit maximization

 Personal Investment/ Taxation

Financial Accounting - Dr. Varadraj Bapat

Streams of Accounting

 Financial

Accounting, Cost Accounting and Management Accounting

 the similarities and difference

in these three streams

• f

accounting

Financial Accounting - Dr. Varadraj Bapat

Financial Accounting

 Recording of Financial

Transactions

 Reporting of Financial Results  Preparation of Financial

Statements

 Targeted to External Users

Financial Accounting - Dr. Varadraj Bapat

Cost Accounting

 Recording of Costs  Analysis of Costs  Preparation of Cost

Statements

 Targeted to Internal Users

Financial Accounting - Dr. Varadraj Bapat

Management Accounting

 Recording of Financial & other

data

 Analysis of Financial and other

information

 Preparation of Statements for

Managerial Decisions

Financial Accounting - Dr. Varadraj Bapat

Management Accounting

 Targeted to Internal Users -

All levels of Management

 This

is a broader concept encompasses Financial and Cost Accounting

Financial Accounting - Dr. Varadraj Bapat

Meaning of Management Accounting

 Any

form

• f

accounting which enables a business to be conducted more efficiently can be regarded as Management Accounting. (Institute

• f

Chartered Accountants of India- ICAI)

 Management Accounting is the

Financial Accounting - Dr. Varadraj Bapat

application

• f

professional knowledge and skill in the preparation

• f

accounting information in such a way as to assist management in the formation

• f policies and in the planning and

control of operations of undertaking. (International Capital Market Association, London- ICMA)

Financial Accounting - Dr. Varadraj Bapat

Financial Management

 Managerial

Accounting and Financial Management: Relationship

 Financial Management deals with

raising and utilization of funds

 Raising

• f

funds may include Cost of Capital, Capital Structure

Financial Accounting - Dr. Varadraj Bapat

Financial Management

decisions, Capital Markets, IPOs and so on

 Financial Management deals with

raising and utilization of funds

 Utilization of funds

may include Capital Budgeting, Portfolio Management, Working Capital Management and so on

Financial Accounting - Dr. Varadraj Bapat

Managerial V/s Financial Accounting

Accounting System (accumulates all accounting data)

Managerial Accounting Information for decision making, and control

• f an organization’s
• perations.

Internal Users External Users

Financial Accounting Published financial statements and other financial reports.

Financial Accounting - Dr. Varadraj Bapat

Complexity of Organisation

 Finance

and complexity

• f
• rganisation

 As the organizations grow, they

become complex

 Ownership and Management are

separated

Financial Accounting - Dr. Varadraj Bapat

Financial Statements

 What are they?  Which are important Financial

Statements?

 What purposes do they serve?