Core Concepts of Accounting – Numbers and People Training

Financial Accounting – Basic Principles Transaction Analysis Income Recognition Accounting for Current Assets

In Week 1 we discuss the scope of accounting and its two major areas – financial and managerial accounting In the first part of the Course – Weeks 1 through 3 – we talk about financial accounting (FA) First, the key financial statements – the Balance Sheet (BS), the Income Statement (IS), and the Statement of Cash Flows (SCF) – are introduced, and the accounting equation is analyzed

Then we move on to the basic accounting principles, standards, and approaches – from double-entry bookkeeping to GAAP Equipped with the general understanding of the financial accounting approach, we apply accounting procedures to transaction analysis Then we study revenue and expense recognition, and focus on accounts receivable and bad debts Finally, you will learn how financial accounting deals with inventories
Then we discuss how financial investments in securities – stocks and bonds – are treated in accounting dependent upon goals and time horizon of holding and/or issuing of these securities You will see how financial concepts (present values) are used in accounting for bond premium/discount amortization Finally, an overview of the accounting approach to taxes is provided. On an example, you will study the core idea of deferred taxes
Then we briefly discuss the analysis and use of financial statements as a powerful tool in the overall assessment of performance, financial stability, and future development of a company or investment project Finally, wrapping up the first part of the Course, we draw conclusions about the role of financial accounting in financial valuation in the world of uncertainty
Then the core idea of managerial accounting – cost – is introduced and discussed You will learn why it is so important to identify the total cost of any product, project, or division We will study cost behavior, fixed and variable costs, and break-even point
The last part of Week 3 discusses cost tracing and allocation as a major task of any in-depth cost analysis We study an example and come up with the tracing and allocation roadmap
We start with the analysis of ABC on an example of a small retail firm Then we move on to the more detailed example of the use of ABC in manufacturing Both examples will help us gain insight in the role of ABC in identifying ways to improve performance
Finally, we analyze the idea of relevant costs and its application to managerial actions –make-or-buy decisions, product mix under capacity constraints, customer profit analysis Of special attention will be the role of relevant and opportunity costs in valuation
We will also discuss responsibility accounting in some more detail to follow relationships between decision makers, processes, and results – or, as we call it, numbers and people We will comment on some major trends in approaching budgeting in the fast changing, uncertain, and complex world
Finally, we summarize the contribution of accounting to the valuation of investment projects As a result, you will be able to successfully apply the obtained knowledge and skills well beyond accounting, but in any financial and managerial area

Operational Assets Depreciation Short-Term Investments Long-Term Liabilities Shareholders’ Equity Some Tax Issues

Week 2 is devoted to long-term assets and liabilities We start with operational assets and see the role of depreciation and amortization in financial accounting and compare it to the way depreciation is used in valuation of investment projects

The Statement of Cash Flows Analysis and Use of Financial Statements Financial Accounting and Project Valuation

In Week 3 of the Course we discuss the idea and format of the Statement of Cash Flows and use examples to delve deeper in its role and importance Special attention is paid to the use of financial accounting inputs – cash flows, net income, and investments – in valuation

Managerial Accounting – Core Ideas Cost Behavior Direct and Indirect Costs Indirect Cost Allocation

Weeks 4 through 6 of the Course are devoted to the issues of managerial accounting First, we introduce the key ideas of managerial accounting, and compare it to the financial accounting We focus on the much closer link of managerial accounting to people

Activity-Based Costing (ABC) Relevant Costs

In Week 5 we will study the more advanced approaches to costing – activity-based costing (ABC) and relevant costs – that provide for the more accurate costing of products, projects, and divisions, and allow to reveal actual relationship between numbers and people

Budgets and Responsibility Accounting Accounting and Valuation – Final Conclusions

Week 6, the final week of the Course, is devoted to the discussion of budgets and responsibility accounting as powerful tools of improving efficiency and quality of managerial decision making A comprehensive example of preparing the operational budget will help reveal the interdependence of different areas of management in the budgeting process