Financial Accounting

BED2 Financial Accounting

Autumn 2020

  • Topics

    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

  • Learning outcome

    Learning outcomes

    After completing the course, students are expected to have achieved the following learning outcomes

    Knowledge

    - understands the content of financial accounts in key industries

    - has knowledge of the national and international regulation of accounts and its purpose

    - has a basic understanding of business and insight into financial transactions 

    - understands the necessary connections in periodic profit/loss and capital reporting

    - acknowledges the difficult aspects of periodic financial reporting where uncertainty is present

    - knows how economic activities are organised and is familiar with group structures

    Skills

    - masters the basic models for financial reporting where uncertainty is present

    - is capable of using simple techniques for profitability and risk assessments of companies based on their financial statements

    - is capable of helping companies to solve key measurement problems in connection with the implementation of Norwegian and international accounting regulations

    - is capable of preparing cash flow statements for companies based on information about their profit/loss and balance sheet

    - is capable of preparing consolidated accounts on the basis of company accounts

     

    General competence

    - is capable of presenting accounting information in writing

    - is capable of exchanging professional opinions and discussing the information value of an accounting report for different users

    - is capable of communicating financial information honestly and in compliance with legal and accounting standards

  • Teaching

    30 hours of plenary lectures, 5 rounds of group assignments, 2 compulsory assignments. All plenary lectures and group assignments will be made available online. See more information in Canvas at the start of the semester.

  • Required prerequisites

    No special requirements

  • Credit reduction due to overlap

    The course is equivalent to BED020

  • Requirements for course approval

    The course has two assignment assignments that must be approved in order for the candidate to receive course approval.

    If you have taken the course before autumn 2017, there is no requirement for course approval upon repetition.

  • Assessment

    Written 3 hour school exam.

  • Grading Scale

    Grading scale A-F

  • Computer tools

    No special tools are required

  • Literature

    Oddbjørn Sættem: Bedriftens finansregnskap. Det analytiske brukerperspektivet. Last edition. Los Forlag.  The new third edition of the syllabus will be released during the summer and will be used in the autumn of 2020

Overview

ECTS Credits
7.5
Teaching language
Norwegian
Semester

Autumn. Offered autumn 2020.

A written school exam is held each semester (cf. Regulations on full-time studies at the Norwegian School of Economics, NHH, §3-1).

Course responsible

Kjell Ove Røsok and Oddbjørn Sættem, Department of Accounting, Auditing and Law.