Fundamentals of Accounting and Finance

Introduction

Accounting serves as a fundamental information system that underpins governance and facilitates decision-making for a wide array of stakeholders. This course provides a rigorous introduction to the principles of financial recording and reporting, with a focus on accounting mechanics and basic finance concepts. Students will develop the capacity to analyze organizational performance through the lens of rigorous financial data.

By the conclusion of the course, students will be prepared to engage in professional discourse, capable of using AI tools to support their analysis while critically verifying results to ensure accuracy and ethical integrity.

Course content

The course is organized into three distinct but interrelated modules. Each module integrates technical accounting skills with critical reflection on the tools used.

Subtopic 1: Financial Accounting and Reporting: This module establishes the grammar of accounting, focusing on external reporting.

• The regulatory framework and the main financial statements: Statement of Financial Position, Income Statement, and Statement of Cash Flows.
• The accounting equation: Analyzing the relationships between assets, liabilities, and equity.
• Transaction analysis.
• Accounting policies and professional judgement: Depreciation methods, accrual accounting concepts, and the imperative for transparency and accountability.
• Data integrity and ethics: Recognizing that financial reports are only as good as the data entered, exploring potential errors in automated systems.

Subtopic 2: Management Accounting and Cost Analysis: This module shifts focus to internal decision-making, emphasizing how cost information and predictive tools support operational efficiency and strategic goals.

• Cost theory and behavior: Differentiating between variable, fixed, direct, and indirect costs to understand cost drivers.
• Cost allocation systems: Defining cost centers and cost objects, and implementing methods such as Activity-Based Costing (ABC) for more accurate resource tracking.
• Cost-Volume-Profit (CVP) analysis: Calculating break-even points and safety margins to assess risk and operational resilience.
• Relevance in decision-making: Analyzing short-term scenarios (special orders, outsourcing) through the lens of strategic integration of sustainability.

Subtopic 3: Introduction to Finance and Investment Appraisal: This module introduces the principles of capital allocation, focusing on the valuation of future cash flows and the risks associated with long-term forecasting.

• The Time Value of Money: Understanding interest, compounding, and discounting as foundations of finance.
• Investment appraisal techniques: Application of Net Present Value (NPV) and Internal Rate of Return (IRR).
• Performance measurement: Utilizing Residual Income to align divisional performance with the required cost of capital.