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The course offers an introduction and a unified approach to the theory and practice of Accounting, Accounting standards, Financial Statements and Financial Statement Analysis. Information contained in corporate financial documents, like annual reports, is used by many stakeholders as a basis to make decisions: investors to invest in shares of the company, money lenders to lend money to the company, suppliers to set payment terms for their customer and many more.
The focus of this course is on Financial accounting information, but it is placed in the broader context of societal information needs. Accounting is considered as the language of business, whereby enormous amounts of data are collected, registered, classified, consolidated and analysed to obtain useful information that supports decision making by investors, money lenders, financial experts and other stakeholders. The connecting thread in understanding the systematical recording of transactions in an accounting system is the principle of double bookkeeping. The accounting system supplies the raw data and transactions which are grouped in a balance sheet, income statement, cash flow statement, and statement of changes in equity. Together these statements make up the financial statements. To extract useful information that enables end users to make sound judgments about the financial position of a company, financial statement analysis is applied. Ratios linking different statement accounts with each other are calculated and benchmarked to compare individual firms with industry benchmarks. Actual fraud cases are covered to put the topics in a real-life perspective.
Learning objectives
At the end of the course the student is able to:
- have a unifying view of how business transactions are reflected in financial statements;
- have knowledge of the relevant rules to compose financial statements;
- be able to prepare financial statements based on IFRS;
- be able to discern the advantages and disadvantages of financial statement analysis;
- understand the different needs of end users for corporate information;
- be able to explain how accounting information affects the decision making of stakeholders.
Academic skills
This course focuses on the following academic skills:
- Analytical skills
- Problem solving (identifying the problem, devising a path towards the solution, following this path, verifying the outcome) for specific questions.
- Being able to identify, interpret and critically evaluate the main line of reasoning, for specific questions.
- Academic research
- Being able to execute the instructed research design.
- Being able to search and select (additional) sources for the research.
- Being able to draw clear and correct conclusions.
- Social responsibility
- Being able to perform in a team for a well-designed task or project.
Format
Weekly lectures, workshops and tutorials.
Assessment method
- Written exam (75% of the final grade). The exam will be scheduled in the examination week of period 2 and consists for 50% of Multiple Choice questions and for 50% of computational and open problems.
- Participating in a group research project to analyse financial accounting information of listed companies. This research project has a weight of 25% in the course grade.
Effort requirements
Meeting the effort requirement consists of:
- Attending and active participation in at least 6 out of 8 weekly tutorials.
Course repeaters
Students who signed up for the course in the previous year, but failed the course, participate in the course repeaters programme. Repeaters are not entitled to attend the regular tutorials.
With respect to the teaching format, this implies that course repeaters:
- can join the lectures and workshops;
- Have a special "Question & Answer"-session before the final test;
- Join the regular final test (100%)
Courses that build on Financial Accounting and External Accountability
- Corporate Finance and Behaviour (ECB2FIN)
- Management Accounting and Corporate Decision Making (ECB2FIV)
- Advanced Accounting (ECB3AA)
- Essentials of Business and Economics (EC2EB1/2/3/4)
- Financial Statement Analysis (USEMFSA)
This course is mandatory for noneconomic students who do the minor Enterpreneurship.
Language of instruction
English
Information
For information and questions about enrolment and group distribution you have to address your question to the study desk of U.S.E. For questions about course content you can address your question to the coordinator.
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