Msc in Management

______HEC Paris______

MSc in Management

2017-2018

Financial accounting

(36 hours)

Course syllabus

Last update: August 24, 2017

Course leader: DrHervéStolowy, HEC Paris, Department of Accounting and Management Control

Course instructors: DrWoo-Jin Changand Dr Han Wu, HEC Paris, Department of Accounting and Management Control

This document may not be used, reproduced or distributed without the authorization of HEC Paris

1 - GENERAL OVERVIEW

The course is an introduction to Financial Accounting & Reporting designed for business students with the assumption that the knowledge of a unique accounting system (the US, the UK or the French one) is not sufficient. The main purpose of this course is to deal with the measurement of value created (and value creation from the point of view of outside decision-makers) and the use of financial accounting information.

The approach is based on the following ideas:

-We adopt a user perspective, rather than a producer one, because most MBA students will become users of financial statements, internal (managers, executives) or external (investors, analysts…), rather than preparers of financial statements. Thus the same financial information a company uses to assess its performance internally is used by investors and analysts to determine how to assess a company in the marketplace.

-When faced with a complex problem, we begin examining the problem by a general overview of the possible solutions and what impact they will have on a company’s financial decisions. This requires an a-national or non-national approachit is more useful to take time explaining the various possible solutions than studying the way a particular country handles the issue. In the first part of the course, all the developments are not based on a specific country but on a generic country. In the second part of the course, we mainly refer to International Financial Reporting Standards (IFRS), though occasionally we will mention the US approach to the problem. Since over 100 countries have adopted IFRS, students should be able to understand financial statements produced in many countries.

-The comparative part of the course is based on a topic-based (issue) approach, rather than a country approach.

1.1 Course objectives

The objectives of this course are:

-To understand the process of accumulating, identifying, measuring and recording economic information

-Appreciate the use of accounting information for external decision-making

-Understand the underlying similarities and differences of generally accepted accounting principles in the world

-To understand the importance of financial statement analysis for fund managers, financial analysts, strategy advisors and the stakeholders of the company

-To master the different “tools” used to perform a financial statement analysis.

1.2 Course content

-Definition of financial accounting, users of financial accounting, introduction to the accounting process

-The financial statements (Balance sheet, balance sheet equation, income statement, notes to financial statements, principle of double entry, examples of transactions, profit appropriation, notion of depreciation, consumption and inventory)

-Accounting principles and preparation of financial statements (accounting principles, end-of-period entries: adjusting entries, change in value of fixed assets, change in value of current assets, other entries and adjustments)

-Financial statement analysis (financial statements format, statement of cash flows, common-size income statement, financial structure, ratios).

1.3 Course material

The course is based on the following textbook: “Financial Accounting and Reporting: A Global Perspective” (co-authored by Prof. HervéStolowy with Prof. Yuan Ding), Cengage Learning, Andover, UK, 5thedition 2017. This book is specifically tailored for the approach used in this course.

Some resources will be made available online from the course’s Website, run by the instructors, accessible from the following address:

• Login:
• Password:

The reading of some parts of the book is compulsory (see Course content, below).

1.4 Teaching methods

-Compulsory reading of a recommended textbook

-Problems and cases studies

-Business game.

1.5 Format

24 sessions of 1.5 h during the first semester (September/December) - 2 sessions by week.

1.6 Evaluation and grading of the participants

Elements in grading

Your final grading will contain different items weighted as follows:

Business game / 10 points
Midterm test / 30 points / 1.5 hour
Final test / 60 points / 3 hours
Total / 100 points

Grading scale

Grading is based on ECTS (European Credit Transfer System):

A / Excellent
B / Very Good
C / Good
D / Satisfactory
E / Pass
FX / Insufficient
F / Very insufficient or absent

The grading rules set by the HEC administration are as follows:

A / Between 10 to 20 %
A + B / Between 20 to 40 %
A + B + C / Between 40 to 70 %
A + B + C + D + E / Between 70 to 100 %
FX + F / Maximum of 30 %

2 - COURSE CONTENT

S / Learning objectives / Required readings / Cases and exercises to prepare / Cases and exercises for review
1 / -Definition of financial accounting
-Users of financial accounting
-Introduction to the accounting process / Chapter 1
pp. 2-21 / Costas / -
2-3 / Introduction to the financial statements
-Balance sheet
-Accounting equation (balance sheet equation)
-Income statement
-Notes to financial statements
-Principle of double entry
-Examples of transactions / Chapter 2
pp. 37-60 / A 1.3 Xenakis
Verdi
A 2.4 Corelli (1) / R 1.1 MCQ
4-5 / Introduction to the financial statements
-Profit appropriation
-Notion of depreciation
-Consumption and inventory / Chapter 2
pp. 60-79 / A 2.1 MCQ
A 2.2 Vivaldi 3
A 2.5 Corelli (2) / R 2.1 Vivaldi 1
R 2.2 Vivaldi 2
R 2.3 Albinoni
6 / Financial statements: interrelations
Production process of accounting information
-The link between the balance sheet, income statement and statement of cash flows
-Double entry bookkeeping and the recording of transactions
-Accounting process
-Chart of accounts / Chapter 3
p. 89-104 / A 3.3Schubert (1)
A 3.6 Sibelius / R 3.1 Beethoven (1)
R 3.3 Grieg (1)
R 3.4 Grieg (2)
7-9 / Preparation of the financial statements
The link between the balance sheet, income statement and statement of cash flows: practice / A 3.5 Bach (Business game) / -
10-12 / Accounting principles and preparation of financial statements
Accounting principles.
End-of-period entries: adjusting entries, change in value of fixed assets, change in value of current assets, other entries and adjustments (errors, inventory) / Chapter 4
pp. 122-144 / A 4.1 MCQ
A 4.4 Lalo / R 4.1 Adam
13 / Regulation of Accounting and Financial Reporting
-Financial reporting standards
-The content of annual report
-Presentation of financial statements / Chapter5
pp. 163-207
14 / RevenueRecognition
-Revenue recognition criteria
-Reporting accounting changes / Chapter6
pp. 208-247 / A 6.2 Schultz
15 / Earnings management and accounting fraud / Chapter 17
pp. 575-578 / Satyam case
16 / Financial statement quality: the role of auditors / Presentation by an auditor
17 / Income statement analysis
-Common-size income statements
-Common-size income statements by nature: value added statement and statement of intermediate balances / Chapter 14
pp. 494-506 / A 14.1 MCQ
A 14.2 Smetana (1)
A 14.3 Procter & Gamble (1)
A 14.4 Iliad-Free (1) / R 14.1 Dvorak (1)
R 14.2 Chugoku (1)
18-19 / Balance sheet analysis
-Common-size balance sheets
-Common-size balance sheet: the link between working capital, working capital needs and net cash / Chapter 15
pp. 518-533 / A 15.1 MCQ
A 15.2 Smetana (2)
A 15.6 Iliad-Free (2) / R 15.1 Dvorak (2)
R 15.2 Chugoku (2)
20-22 / Statement of cash flows
-Objectives and usefulness of a statement of cash flows
-Preparation of the statement of cash flows (IAS 7/FAS 95 model) / Chapter 16
pp. 543-563
Chapter 17
pp. 568-573 / A 16.1 MCQ
A 16.2 Smetana (3)
A 17.1 MCQ
A 17.2 Smetana (4)
A 17.5 Procter & Gamble (2)
AA 17.1 Iliad-Free (3) / R 14.1 Dvorak (3)
R 17.1 Wesfarmers
23-24 / Ratio analysis
-Key ratios
-Disclosure
-Governance / Chapter 18
pp. 594-617 / Case will be given in class

Schedule of sessions

Numéro : / N01
Professeur : / WU Han
Date des séances / Horaire / Durée
Lundi 04/09/2017 / 13h00 - 14h30 / 1.30
Mercredi 06/09/2017 / 13h00 - 14h30 / 1.30
Lundi 11/09/2017 / 13h00 - 14h30 / 1.30
Mercredi 13/09/2017 / 13h00 - 14h30 / 1.30
Lundi 18/09/2017 / 13h00 - 14h30 / 1.30
Mercredi 20/09/2017 / 13h00 - 14h30 / 1.30
Lundi 25/09/2017 / 13h00 - 14h30 / 1.30
Mercredi 27/09/2017 / 13h00 - 14h30 / 1.30
Lundi 02/10/2017 / 13h00 - 14h30 / 1.30
Mercredi 04/10/2017 / 13h00 - 14h30 / 1.30
Lundi 09/10/2017 / 13h00 - 14h30 / 1.30
Mercredi 11/10/2017 / 13h00 - 14h30 / 1.30
Mercredi 25/10/2017 / 13h00 - 14h30 / 1.30
Lundi 30/10/2017 / 13h00 - 14h30 / 1.30
Lundi 06/11/2017 / 13h00 - 14h30 / 1.30
Mercredi 08/11/2017 / 13h00 - 14h30 / 1.30
Lundi 13/11/2017 / 13h00 - 14h30 / 1.30
Mercredi 15/11/2017 / 13h00 - 14h30 / 1.30
Lundi 20/11/2017 / 13h00 - 14h30 / 1.30
Mercredi 22/11/2017 / 13h00 - 14h30 / 1.30
Lundi 27/11/2017 / 13h00 - 14h30 / 1.30
Mercredi 29/11/2017 / 13h00 - 14h30 / 1.30
Lundi 04/12/2017 / 13h00 - 14h30 / 1.30
Mercredi 06/12/2017 / 13h00 - 14h30 / 1.30
Numéro : / N02
Professeur : / CHANG Woo-Jin
Date des séances / Horaire / Durée
Lundi 04/09/2017 / 13h00 - 14h30 / 1.30
Mercredi 06/09/2017 / 13h00 - 14h30 / 1.30
Lundi 11/09/2017 / 13h00 - 14h30 / 1.30
Mercredi 13/09/2017 / 13h00 - 14h30 / 1.30
Lundi 18/09/2017 / 13h00 - 14h30 / 1.30
Mercredi 20/09/2017 / 13h00 - 14h30 / 1.30
Lundi 25/09/2017 / 13h00 - 14h30 / 1.30
Mercredi 27/09/2017 / 13h00 - 14h30 / 1.30
Lundi 02/10/2017 / 13h00 - 14h30 / 1.30
Mercredi 04/10/2017 / 13h00 - 14h30 / 1.30
Lundi 09/10/2017 / 13h00 - 14h30 / 1.30
Mercredi 11/10/2017 / 13h00 - 14h30 / 1.30
Mercredi 25/10/2017 / 13h00 - 14h30 / 1.30
Lundi 30/10/2017 / 13h00 - 14h30 / 1.30
Lundi 06/11/2017 / 13h00 - 14h30 / 1.30
Mercredi 08/11/2017 / 13h00 - 14h30 / 1.30
Lundi 13/11/2017 / 13h00 - 14h30 / 1.30
Mercredi 15/11/2017 / 13h00 - 14h30 / 1.30
Lundi 20/11/2017 / 13h00 - 14h30 / 1.30
Mercredi 22/11/2017 / 13h00 - 14h30 / 1.30
Lundi 27/11/2017 / 13h00 - 14h30 / 1.30
Mercredi 29/11/2017 / 13h00 - 14h30 / 1.30
Lundi 04/12/2017 / 13h00 - 14h30 / 1.30
Mercredi 06/12/2017 / 13h00 - 14h30 / 1.30
Numéro : / N03
Professeur : / CHANG Woo-Jin
Date des séances / Horaire / Durée
Mardi 05/09/2017 / 08h00 - 09h30 / 1.30
Jeudi 07/09/2017 / 08h00 - 09h30 / 1.30
Mardi 12/09/2017 / 08h00 - 09h30 / 1.30
Jeudi 14/09/2017 / 08h00 - 09h30 / 1.30
Mardi 19/09/2017 / 08h00 - 09h30 / 1.30
Jeudi 21/09/2017 / 08h00 - 09h30 / 1.30
Mardi 26/09/2017 / 08h00 - 09h30 / 1.30
Jeudi 28/09/2017 / 08h00 - 09h30 / 1.30
Jeudi 05/10/2017 / 08h00 - 09h30 / 1.30
Mardi 10/10/2017 / 08h00 - 09h30 / 1.30
Lundi 16/10/2017 / 08h00 - 09h30 / 1.30
Mardi 17/10/2017 / 08h00 - 09h30 / 1.30
Jeudi 26/10/2017 / 08h00 - 09h30 / 1.30
Mardi 31/10/2017 / 08h00 - 09h30 / 1.30
Mardi 07/11/2017 / 08h00 - 09h30 / 1.30
Jeudi 09/11/2017 / 08h00 - 09h30 / 1.30
Mardi 14/11/2017 / 08h00 - 09h30 / 1.30
Jeudi 16/11/2017 / 08h00 - 09h30 / 1.30
Mardi 21/11/2017 / 08h00 - 09h30 / 1.30
Jeudi 23/11/2017 / 08h00 - 09h30 / 1.30
Mardi 28/11/2017 / 08h00 - 09h30 / 1.30
Jeudi 30/11/2017 / 08h00 - 09h30 / 1.30
Mardi 05/12/2017 / 08h00 - 09h30 / 1.30
Jeudi 07/12/2017 / 08h00 - 09h30 / 1.30
Numéro : / N04
Professeur : / WU Han
Date des séances / Horaire / Durée
Lundi 04/09/2017 / 14h40 - 16h10 / 1.30
Mercredi 06/09/2017 / 14h40 - 16h10 / 1.30
Lundi 11/09/2017 / 14h40 - 16h10 / 1.30
Mercredi 13/09/2017 / 14h40 - 16h10 / 1.30
Lundi 18/09/2017 / 14h40 - 16h10 / 1.30
Mercredi 20/09/2017 / 14h40 - 16h10 / 1.30
Lundi 25/09/2017 / 14h40 - 16h10 / 1.30
Mercredi 27/09/2017 / 14h40 - 16h10 / 1.30
Lundi 02/10/2017 / 14h40 - 16h10 / 1.30
Mercredi 04/10/2017 / 14h40 - 16h10 / 1.30
Lundi 09/10/2017 / 14h40 - 16h10 / 1.30
Mercredi 11/10/2017 / 14h40 - 16h10 / 1.30
Mercredi 25/10/2017 / 14h40 - 16h10 / 1.30
Lundi 30/10/2017 / 14h40 - 16h10 / 1.30
Lundi 06/11/2017 / 14h40 - 16h10 / 1.30
Mercredi 08/11/2017 / 14h40 - 16h10 / 1.30
Lundi 13/11/2017 / 14h40 - 16h10 / 1.30
Mercredi 15/11/2017 / 14h40 - 16h10 / 1.30
Lundi 20/11/2017 / 14h40 - 16h10 / 1.30
Mercredi 22/11/2017 / 14h40 - 16h10 / 1.30
Lundi 27/11/2017 / 14h40 - 16h10 / 1.30
Mercredi 29/11/2017 / 14h40 - 16h10 / 1.30
Lundi 04/12/2017 / 14h40 - 16h10 / 1.30
Mercredi 06/12/2017 / 14h40 - 16h10 / 1.30
Numéro : / N05
Professeur : / CHANG Woo-Jin
Date des séances / Horaire / Durée
Mardi 05/09/2017 / 09h40 - 11h10 / 1.30
Jeudi 07/09/2017 / 09h40 - 11h10 / 1.30
Mardi 12/09/2017 / 09h40 - 11h10 / 1.30
Jeudi 14/09/2017 / 09h40 - 11h10 / 1.30
Mardi 19/09/2017 / 09h40 - 11h10 / 1.30
Jeudi 21/09/2017 / 09h40 - 11h10 / 1.30
Mardi 26/09/2017 / 09h40 - 11h10 / 1.30
Jeudi 28/09/2017 / 09h40 - 11h10 / 1.30
Jeudi 05/10/2017 / 09h40 - 11h10 / 1.30
Mardi 10/10/2017 / 09h40 - 11h10 / 1.30
Lundi 16/10/2017 / 09h40 - 11h10 / 1.30
Mardi 17/10/2017 / 09h40 - 11h10 / 1.30
Jeudi 26/10/2017 / 09h40 - 11h10 / 1.30
Mardi 31/10/2017 / 09h40 - 11h10 / 1.30
Mardi 07/11/2017 / 09h40 - 11h10 / 1.30
Jeudi 09/11/2017 / 09h40 - 11h10 / 1.30
Mardi 14/11/2017 / 09h40 - 11h10 / 1.30
Jeudi 16/11/2017 / 09h40 - 11h10 / 1.30
Mardi 21/11/2017 / 09h40 - 11h10 / 1.30
Jeudi 23/11/2017 / 09h40 - 11h10 / 1.30
Mardi 28/11/2017 / 09h40 - 11h10 / 1.30
Jeudi 30/11/2017 / 09h40 - 11h10 / 1.30
Mardi 05/12/2017 / 09h40 - 11h10 / 1.30
Jeudi 07/12/2017 / 09h40 - 11h10 / 1.30

Course description - p. 1