Syllabus of Financial Accounting II ,Pokhara University
This course aims to equip students with the knowledge and skills in accounting, reporting and analyzing different items of assets, liabilities and owners’ equities. Specifically, it aims to acquaint students with the processing and reporting of major components of financial statements along with their analysis.
This course discusses the accounting system and disclosure of major components of financial statements. Basically, it deals with recording, valuating and presenting inventory; recording, reporting and analyzing current liabilities; long term liabilities; property, plant and equipment; shareholders’ equities; and analysis of financial statements.
By the end of this course, students will be able to:
- record, account, valuate and present the inventories and the cost of goods sold;
- record, report and analyze account receivables and bills receivables;
- record, report and analyze current and non-current assets and liabilities;
- record, report and analyze property, plant and equipment;
- record, report and analyze owners’ equity and dividends;
- analyze financial statements using different tools.
Unit I: Inventories and Cost of Goods Sold 7 hours
The nature of inventory; cost of goods sold model; perpetual and periodic inventory accounting system, inventory valuation and income measurement; inventory costing methods: FIFO, Weighted average & Specific identification; choice of a method; methods of inventory estimation; effect of inventory valuation method on the cost of goods sold; disclosure in the financial statements; Ratios relating to inventory management.
Unit II: Receivables 7 hours
Accounts receivables: accounts receivable & notes receivables; recognizing accounts receivables, valuation of accounts receivables, methods of accounting for doubtful and uncollectible debt, balance sheet presentation.
Notes receivables: interest bearing notes, non-interest bearing notes, presentation of the notes receivable and related aspects in the financial statements; Ratios relating to account receivables.
Unit III: Property, Plant and Equipment 7 hours
Nature of operating assets (property, plant and equipment); acquisition costs of operating assets; concepts of capital and revenue expenditure; the capitalization process; depreciation: concepts, methods and accounting (straight line method, diminishing balance method, double declining balance method and units of production method), comparison of depreciation methods, disposal of assets and accounting for gains and loses; disclosure in the financial statements; Ratios relating to property, plant and equipment.
Unit IV: Current Liabilities 3 hours
Accounts payable; notes payable, tax payable, current portion of long term liabilities, contingent liabilities and other current liabilities; accounting procedures and balance sheet presentation; Ratios relating to current liabilities.
Unit V: Non-current Liabilities 7 hours
Bonds payable: issuance of bonds, characteristics of bonds, factors affecting bond price, premium or discount on issuance of bonds, amortization of bond premium or discount, redemption of bonds at and before maturity, disclosure in financial statements. Leases: operating and financial lease; Balance sheet presentation; Ratios relating to non-current liabilities.
Stockholders’ Equity and Dividends 7 hours
Components of the stockholders’ equity section of the balance sheet; types of stocks: common and preferred, types of preferred stocks, issuance of stock, stock issued for cash and non-cash consideration and on a subscription basis, retirement of preferred stocks; accounting for treasury stock: purchase and sale, presentation in the financial statements; dividends: meaning and types of dividend-cash dividend, cash dividend for ordinary stock and preferred stock; stock dividend and stock split, disclosure in financial statements; Ratios relating to stockholders’ equity and dividend.
Unit VII: Financial
Statement Analysis 7 hours
Recap of financial statements, techniques of financial statements analysis, comparative analysis: vertical and horizontal; ratio analysis: liquidity, solvency, profitability and assets management ratios; use of ratios by investors (existing & prospective) and lenders for their decision. Basic Text Porter, G. A., & Norton, C. L. Financial Accounting: The Impact on Decision Makers. USA: The Dryden Press. References
- Hermanson, H. R. and Edwards, D. J. Financial Accounting: A Business Perspective. USA: Von Hoffmann Press.
- Kimmel, P. D., Weygandt, J. J., &Kieso, D. E. Financial Accounting. New Delhi: Wiley India Pvt. Ltd.
- Narayanswamy, R. Financial Accounting: A Managerial Perspective. New Delhi: Prentice Hall of India.
- Koirala, M. P., Acharya, C., Sharma, L. P. B., Sharma, N., &Gautam, C. M. Financial Accounting. Kathmandu: Buddha Academic Enterprises.
- Nepal Accounting Standards (NASs)
- International Accounting Standards (IASs) / International Financial Reporting Standards (IFRSs)