AE101306 Financial accounting and analysis

Minimum university college entrance requirements.

Part I:
Give basic knowledge about financial accounting and the logic behind the double-entry recording system, including accrual accounting and the allocation problem. It will be focused on the connection between the transactions and their effects on the income statement and the balance sheet and the students shall be able to prepare the statement of income, retained income and the balance sheet.

Part II:
Focus on the conceptual framework, and the students shall learn to treat the main issues concerning measurement of assets, liabilities and equity, prepare the cash flow statement and coduct financial stement analysis. The course also gives an introduction to enterprise valuation.

Part I:

• The basic structure of financial accounting including the charts of accounts(account plans).
• Treatment of documentation and registration of business transactions.
• VAT, income taxes and social security taxes.
• The transaction principle, the concepts of accruals, matching and other basic assumptions and principles underlying financial accounting.
• Depreciations
• Other examples of matching/timing problems regarding revenues and expences.
• Accounting principles for valuing assets (fixed and current assets).
• Presentation/specification of the income statement and the balance sheet according to Norwegian law.

Part II:

• Requirements of the financial accounting system.
• The financial statements as a source of information.
• Further discussion of the concepts, principles and accounting standard guidelines.
• Legislation and NGAAP regarding valuation of assets, liabilities, revenues and expences.
• The cash flow statement.
• The connection between financial accounting and corporate taxes (Permanent differences, temporary differences and the deferred tax model).
• Financial statement analysis and the evaluation of financial ratios as tool of anlysing profitability, liquidity and capital stucture.
• Reports concerning environmental issues.
• International accounting.

Lectures, group- and individual exercises. Case studies with use of ICT tools. The learning management system Classfronter will be used to some extent in the exchange of information.

The students shall work with a case where ICT tools are to be used. The case and case-solution (in one copy) must be brougth to the final exam and shall be handed in together with the examination papers.

A 2-hour written test based on part I in the list of topics. This test counts for 30 % of the total grade and takes place in February. Case and case-solution (in one copy) must be brought to to the final exam of 3 hours which accounts for 70 % of the total grade. At this exam the topics in part II will be tested together with the problems raised in the case. The case-solution must be handed in together with the examination papers.
Both elements of the total grade must be passed. The same case and case-solution is to be used at the resit exam.