Kathmandu University School of Management (KUSOM)

Balkumari, Lalitpur, Phone No 5548891

Course
Code no.
Semester
Credits
Faculty/Facilitator
Email

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Accounting for Managerial Decisions (AMD)

ACC:510
MBA I, 2013
4 Credit Hours
Ghanendra Fago (MBA, M. Phil.),
gfago@hotmail.com; ghanendra@kusom.edu.np

MAIN OBJECTIVES : The main objective of this course is to develop knowledge of accounting and
management accounting techniques for understanding and analyzing financial statements and
using these cost and revenues information in managerial planning, control and decision making of
organization.
ENABLING OBJECTIVE: After completion of all the learning units and the requirements of the courses,
participants will be able to:
- Describe and use basic accounting concept, terminologies, principles and their relationship with
balance sheet
- Prepare and understand financial statements: Income statement, balance sheet and cash flow
statements, and analyze and use of financial statements for decision making purpose
- Understand the management accounting and its changing role in changing business environments
- Understand and use management accounting concepts, tools and techniques for managerial
planning, control and decision making
- Understand use of costs and its classification for managerial planning and decision making
- Enable to understand students about the management accounting practices in developed and
developing countries.
METHODOLOGY: The teaching methodology of Management Accounting will include a combination of
class lectures, group discussions, tutorials i.e. problem solving exercises, reviews of articles, group
assignments, quizzes, and tests. Participants must complete their prior reading and works before
participating in the class.
EVALUATION CRITERIA
The following are the evaluation criteria of this subject:
Attendance , Quiz and Class initiatives
Project work, reviews and presentation
Problems assignment and cases
Mid-term Exam (Two tests)
Final Examination

: 10 Marks
: 15 Marks
: 10 Marks
: 25 Marks
: 40 Marks
100 Marks

Course outline
Units

Descriptions

Unit- 1
LH 2

Basic fundamentals of Financial Accounting

Forms of business organization: Sole proprietorship, partnership, joint
stock company and others, Types of Business: Manufacturing,
merchandising, services and hybrid companies. Business and
Accounting. Accounting information, Book Keeping Vs. Accounting,
Users of Accounting Information: internal and external users, Means
of Accounting information: Income statement, balance sheet,
statement of changes in equity, statement of changes in retained
earnings, statement of cash flow, notes and disclosures Functions of

Prereading
s

Evaluation

N&P &
Power
Points

Assignment:
Annual
Report
Project Work

Prepared by: Mr. Ghanendra Fago (MBA, M Phil.), Visiting Faculty, MBAI, KUSOM,
Kathmandu University

Unit 2
LH 2

Unit 3
LH 6

Unit-4
LH 4

Unit-5
LH 6

Unit-6
LH 6

Unit-1
LH-2

Unit-2
LH 4

accounting- Recognizing and recording transactions, Classifying and

summarizing, Analyzing, Interpretation, communication of information,
Branches of Accounting: financial accounting, management
accounting, Career in accounting: Financial accountant, cost
accountant, management accountant, internal auditor, account system
designer, tax accountant, statutory auditors, tax consultants etc..
Generally Accepted Accounting Principles (GAAPS) and Concepts
Financial Accounting Standard Board (FASB) and SEC (i.e. NEPSE),
N&P,
GAAPS: IFRS, Accounting entity, Going concern, money measurement,
ICAN,
accounting period, revenues principles, cost principle, matching principle,
ICAI,
Dual aspect principle, Stable monetary principle.
IFRS
Completion of Accounting Cycle
Accounting basics: Accounting equation and debit and credit rules, N&P &
Systems of Accounting: cash basis, accrual basis and hybrid basis,
Power
Accounting Process, charts of accounts, vouchers and their types, Points
Accounting Cycle: Journalizing, posting into Ledgers, Drawing up Trial
balance, Journalizing: general journal, Journalizing, compound journal
entries, Ledgers: ledger accounts, posting into ledgers, balancing ledger
accounts, Trial Balance: Objective and preparation of trial balance,
Adjusting Account and prepare Adjusted Trial balance. Preparing
financial Statements, Preparing and posting closing entries, and
Preparing Post closing Trial balance.
Quiz I
Preparation of Financial Statements with or without using work sheet
Understanding the components of Income statement: Sales, cost of N&P &
goods sold, gross profit, profit before tax, profit after tax, and
Power
Understanding components of Balance Sheet: Current assets, Fixed
Points
assets, Investments, Non-monetary Assets, Current Liabilities, Long-term
&
Liabilities (i.e. Bond, debentures, Bank loans) Owners equity (i.e.
Power
Common Stock, Preferred Stock, Retained Earnings etc.) - Preparing
Points
income statement under Single Step and Multi Step Income
Statement and Preparing Balance sheet Using account form and
Report form. Work sheet and use of work sheet in preparation of
financial statements
Cash Flow Statement Analysis
Concept and importance of cash flow analysis, Sources of cash flows;
N&P/
Operating, Investing and Financing Activities, Method of cash flow:, Direct
G&N
and Indirect method, Preparing cash flow statement with or without using
work sheet.
Financial Statement Analysis:
Overview of financial analysis, techniques: Vertical Vs. Horizontal
N&P/
Analysis; Common Size Statements, Ratio Analysis: Ratios Analysis for
G&N
management, common stockholders, short term creditors, long-term
creditors, management, short comings of ratio analysis.
Internal Test I
Introduction to Managerial Accounting
Role and objective of management accounting information in planning, Lecture
controlling, directing, motivating, and performance measurement,
Accounting position in organization structure, Role of management
HSS &
accounting changing environments, career in management accounting
G&N
(CMA, CIMA, ICWA), ethical code of conduct.
Cost Concept, Classification, and Estimation
Cost concepts, cost elements, manufacturing Vs non-manufacturing, HSS:
Product cost Vs. period costs, Direct cost and indirect costs, cost Chapter
classification in financial statements, and Cost behavior: variable, fixed 2 and 3

Prepared by: Mr. Ghanendra Fago (MBA, M Phil.), Visiting Faculty, MBAI, KUSOM,
Kathmandu University

ICAN/ICAI

Individual
assignment
using excel
spread sheet

Individual
assignment
using excel
spread sheet

cash flow
interpretation

Ratio
analysis in
Nepalese
cases

Review
assignment

Use of Excel
for cost
Segregation

Unit 4
LH 2

and semi-variables cost, segregation of semi-variables costs: accounting

analysis, engineering techniques, scatter diagram, high low point method,
least square regression analysis, correlation coefficient and coefficient of
determination, coefficient of variation (CV).
Cost Volume Profit Analysis
Overview of CVP analysis, CVP relationship, use of CVP analysis,
assumptions of CVP: Contribution margin, CVP relationship on Graph,
Contribution Margin ratio, Some application of CVP concepts - Sensitivity
analysis, Concept of Break even analysis: BEP computation: Equation
method and contribution margin method, Target profit is analysis: CVP
equation and contribution margin approach, Margin of safety concept,
margin of safety in volume and ratio CVP consideration in choosing a
cost structure, The concept of sales mix, and BEP with or without
resources constraints -Linear programming model
Quiz II
Activity Based Costing and Management; Overviews of traditional
costing and activity based costing, reasons for using abc system

Unit -5

Relevant Cost for Decision- Making and Pricing Decision

Unit -3
LH 4

LH-8

Unit-6
LH-6
Unit 7
LH-4

Unit 8

Cost concepts for decision making, relevant costs vs. irrelevant costs,
incremental costs and differential costs, departmental cost, separable
costs, avoidable costs, joint costs, allocated cost, out of pocket expenses,
opportunity costs, sunk cost, differential cost, Adding or Dropping product
lines decisions, Accepting or rejecting special offer decision, Make or Buy
part and components, Sell or process further decisions, Pricing
Decision- Internal and external pricing methods, target pricing, pricing for
new products.
Profit Planning: A Tool of Strategic Planning and control
Concept of budget and its features, Components of Master budgets,
Preparing master budgeting merits and demerits, Zero based budgeting,
Participative Budgeting
Standard costing, Flexible Budget and Variance Analysis
Setting standard cost, Ideal Vs practical, Setting material and labour
standard, , Variance analysis, reasons for differences and responsibilities,
Flexible budgeting and overhead variance analysis,
Test II
Decentralization and performance Measurement
Segment Reporting, Transfer pricing, ROI and RI Balance Scorecard

& Chapter
Reviews
Due
HSS &
G&N

HSS & G&N

HSS &
G&N

Ivey Case
and Harvard
Business
Review

G&N,
HSS

Cases
and
Assignments

HSS &
G&N

Excel
assignment

HSS and
G&N

Harvard
Business
Review

Project work/Cases /Articles for Review and

Presentation

Dummy Business Transaction and Preparation of financial statements using Excel spread sheet
Annual Report Project Work
Introduction to Responsibility Accounting Systems
Introduction to Activity Based Costing and Management- Harvard Business Review
Cases on Activity Based Costing and Management- Richard Business School
Balance Scorecard- Harvard Business Review
Standard Costing and Variance Analysis

Text Books

Porter A., Gary and Norton, Curtis L. (2011 7th edition ). Introduction to Financial Accounting. Southern
Cengage Learning (International Edition)
Prepared by: Mr. Ghanendra Fago (MBA, M Phil.), Visiting Faculty, MBAI, KUSOM,
Kathmandu University

Horngren et. al.(2008). Introduction to management accounting. New Delhi: Pearson Education.
Garrison et.al (2011). Managerial Accounting; New York: Tata MaGraw Hill

Prepared by: Mr. Ghanendra Fago (MBA, M Phil.), Visiting Faculty, MBAI, KUSOM,
Kathmandu University