Syllabus as per MBA program in Osmania university Hyderabad.

UNIT 1
Accounting cycle- concepts and their conventions and their
implications in the data generation. Definition of transaction and
accounts-Classification of accounts, Accounting equations static and
dynamic and their use -Process of accounting books of original
entry, ledger, trial balance-Preparation and presentation of final
statements.
UNIT II
MEASURING BUSINESS INCOME-Distinction between capital
and revenue Matching revenue and expenditure -The role of
accounting policies like depreciation and inventory valuation on
reported income.

UNIT III
UNDERSTANDING TERMINAL ACCOUNTS-Income
statement -Balance sheet.Provisions of companies act 1956,
relating to the preparation and presentation of final accounts of
companies. Guidelines for disclosure Taxation and tax planning
corporate tax rates and tax structure-The effect of income tax on
business decisions.-Tax avoidance and evasion -Tax planning
-Tax shelters-Carry forward and set off losses.

UNIT IV
FINANCIAL ANALYSIS-The scope and purpose of financial
analysis-Financial statements analysis-Horizontal analysis
-Vertical analysis -Ratio analysis liquidity Activity-Structural
-Coverage and profitability ratios . Common size and index
analysis Predictive power of ratio analysis- Inflation and
financial analysis -Problems in financial statement analysisBalanced score card.
UNIT V
FUNDS FLOW ANALYSIS- Concepts of funds -Ascertaining
funds from operations Sources of funds -Uses of fundsPreparation and analysis of funds flow statement.Cash flow
statements-Preparation and analysis of pro-forma financial
statements Percentage of sales approach-Statistical forecasting
techniques .


INTRODUCTION

What is a business?
Business is identifying customer needs to cater to the customer needs
by employing available resources with an objective to maximize
shareholders wealth.
RAW
MATERI
ALS

CASH

WORK
IN
PROGRE
SS

RECEIVABL
ES

FINISH
ED
GOODS

SALES

What is Financial accounting?

It is a mechanism which is to consolidate business transactions, by
recording, classifying and generating information which assists
organisation to achieve its objectives.
Why is Financial accounting necessary?

Since human memory is limited, accounting is required to keep

track of business transactions.

To avoid confusion and ambiguity, in keeping track of business

transactions.

Accountingconcepts
Businessentityconcept: In Accounting, business is treated as a
separate entity from its owners. Accounts prepared give
information about the business, but not about the owners.
E.g.: a bicycle dealer may purchase cycles for personal use. The
cycles purchases for trading purposes will become a part of
business transactions and a cycle purchased for personal use will
not be a part of business transaction.

Goingconcernconcept: It is presumes that the firm will

continues to exist indefinitely.
Thecostconcept: business involves exchange of goods and
services. The money paid for the exchange becomes the cost of the
goods. The price, which is actually paid, is recorded in the
accounting books.

Dualconcept: It is based on the principle that for every debit

transaction, there is a corresponding credit transaction.
e.g. suppose a building is purchased for Rs 20000, business gets
a building and will part with cash for similar amount.
Moneymeasurementconcept: According to this concept, only
those transactions are recorded which can be expressed in
monetary terms.

4 Accounting period concept: As per going concern concept, the

assets are realizable only at the time of liquidation, and creditors will
be paid off at that time.
5 For practical purposes, financial position of the concern is assessed
at regular intervals.
5
Matching of cost and revenue concept: A correct statement of
profit required a distinction
between present, past and future
expenditure and distinction between
capital and revenue
expenditure.
When income of a particular
accounting period is taken into
consideration, then all expenses of that period whether paid or not
are also considered.

 Accountingconventions

Conventionofdisclosure:
Conventionofconsistency:
Conventionofconservation:
Conventionofmateriality:

THERULESOFACCOUNTING
Transactions are broadly classified into
Expenses/
losses
Assets

Incomes/
profits
Liabilities

The language of financial accounting is debits and credits. In

English language, debit has only a negative meaning credit has only
a positive meaning. In accounting language, debit has both negative
and positive meanings, credit also has both positive and negative
meanings.

Typesofaccounts

Rules

Rules

Personal

Debit the receiver

Credit the giver

Real

Debit what comes in

Credit what goes

out

Nominal

Debit all losses and

expenses

Credit all gains and

incomes

Illustration-1:
1. Mr. Ganesan commenced business with a capital of Rs.
50000.
2. Bought goods for cash of Rs. 30000.
3. Sold goods for cash of Rs. 25000
4. Deposited in a bank Rs. 20000
5. Bought goods from Janakiraman worth Rs. 15000