Prof Alnoor Bhimani MAR 3.21 and Dr Julia Morley MAR 3.22

This course is compulsory on the MSc in Management (1 Year Programme). This course is not available as an outside option.

This course covers introductions to both management accounting and financial accounting.

The first half of AC493 introduces management accounting.  Management accounting helps executives in managing and controlling enterprise activities and in making decisions that drive performance and increase competitiveness. We cover management accounting approaches that support operational, strategic and performance focused decision making. We will discuss accounting concepts and tools associated with cost management and decision-making taking account of technological, digitalisation, marketing and entrepreneurial issues. 

The management accounting part of the course will cover:

• Managerial accounting concepts such as incremental costing, break-even analysis, overhead cost allocations, activity-based accounting, and cost issues in complex enterprises;
• Operational, marketing and corporate strategy issues across industrial, e-business and internet-based business models;
• Accounting practices in different enterprise contexts including functional and multidivisional firms, strategic business units and web-based enterprises.
• The course will provide students with an understanding of:
• How management accounting and cost control practices align with marketing, technological and digitalisation pursuits and strategies.
• How modern cost management techniques can increase enterprise competitiveness.
• How organisations can apply management accounting concepts to achieve a balance between traditional financial objectives and innovative practices.

The second part of this course provides students with an introduction to financial accounting, and highlights aspects of financial reporting that are important to users of financial information. It covers the preparation of key financial statements and the frameworks of accounting regulation and aims to familiarise students with the current debates in practice. After the second half of the course, students should be able to:

• Distinguish between cash accounting and accrual accounting
• Explain traditional accounting concepts and conventions.
• Produce simple balance sheets, income statements and cash flow statements
• Perform elementary financial statement analysis using ratios.
• Understand contemporary issues in accounting.

This course is delivered over 11 weeks in WT with two sessions of 90 minutes per week. Sessions make use of in-seminar exercises, case study analyses and real-world applications to bring the materials to life and to apply conceptual knowledge to problems faced in practice. The use of case studies permit the exploration of accounting issues in broader management perspectives (e.g., large and small firms, manufacturing and service firms, multinational firms, startups). The case method of instruction, however, requires good advance preparation by students, and every student should be ready to contribute to the case discussion when called upon. Students should expect to be ‘cold called’ and not count on being able to hide behind classmates who volunteer to participate.

Students are expected to be prepared for the cases and/or other tasks for each session as indicated on the syllabus. Two of these will be collected and graded as shown below under Assessment.

Reference Textbooks:

Management accounting:

• Bhimani, A., C.T. Horngren, S.M. Datar, and M.V. Rajan. 2023. Management and Cost Accounting (Pearson, 8th edition)
• Bhimani, A. Accounting Disrupted: How digitalization is changing finance (Wiley/AICPA, 2021)
• A. Bhimani, Financial Management for Technology Start-ups (Kogan Page, 2022)

Financial Accounting:

• Atrill, P. and E. J.McLeaney. 2022, Financial accounting for decision makers (Pearson). Available as an e-book via the LSE library.

Exam (80%, duration: 2 hours) in the spring exam period.
Coursework (10%) and coursework (10%) in the WT.