Financial accounting includes preparation and analysis of financial statements. The objective of the course is to develop a basis for understanding and interpreting accounting information. Most students will be exposed to such information as users of financial information, preparers of accounts, or auditors. The course covers basic accounting principles, valuation rules, and required presentation and disclosure according to Norwegian Accounting Law and International Accounting Standards. Financial statement analysis implies using accounting information to understand the entity's financial condition. The focus is on evaluation of risk and profitability. The most common measurement problems in financial reporting are explained in detail. In addition, the course will introduce accounting for complex transactions of business combinations and preparation of consolidated financial statements. Alternatives to transaction based historical cost accounting will also be presented with focus on fair value accounting. The teaching emphasise the ethical challenge in financial reporting; to give open, objective, reliable and relevant information to external users the enterprise is dependent on. Several historical examples of reporting manipulation are given; examples where important information is excluded, is dim or biased and beyond commonly accepted ethical values and professional standards. The attempts to secure accounting quality through law regulation and the auditing function will also be examined.
Course overview:
1. Basic understanding of accounts
- The sub-reports that make up the financial accounts: income statement, cash flow statement, balance sheet and *the necessary connections between them.
- The accounts’ *stated goals, users and conflicts
- Norwegian and international accounting regulations (IFRS regulations)
- Transactions, accounting and bookkeeping rules
- Accounting theory, models and principles
- Limited liability companies, tax, equity transactions and group structures
2. Basic analyses of accounts
- Accounting corrections for analysis purposes
- Assessment of profitability: internal rate of return, profitability and required return
- Risk assessment
3. In-depth study of accounts-based measurement and presentation
- Trade debtors and losses
- Stocks and calculation of profit/loss in the wholesale and retail trade and share trading
- Stocks of goods and production costs in normal production enterprises
- Contract manufacturing
- Fixed assets and depreciation/write-downs
- Investment properties
- Fixed interest and currency loans
4. In-depth study of acquisition transactions
- Acquisitions in connection with group formation
- Mergers between companies