APPLIES TO ACADEMIC YEAR 2016/2017 Norwegian version

BØK 3532 Financial Accounting and Financial Statement Analysis

Responsible for the course
John Christian Langli

Department
Department of Accounting - Auditing and Business Analytics

Term
According to study plan

ECTS Credits
7,5

Language of instruction
Norwegian

Introduction
All limited companies and many other enterprises must annually prepare financial statements, which give all interested parties an insight into how the economic situation has developed. In this course students learn how financial statements are prepared and how they can be used.

Financial statements must be organized in a specific manner. The legislation for this area is extensive and regulates the entire production process: from bookkeeping of the enterprise’s transactions to the type of information that has to be disclosed in the publicly available annual report.

The first part of the course covers techniques and methods used for an enterprise to record all its transactions in the course of a year. It’s not sufficient to consecutively book the transactions that take place. The financial statements must be set up at the end of the fiscal year, which means that the enterprises must value their assets and debts and calculate how much that has been lost or gained. The second part of the course covers this process and addresses what the financial statements shall include of information and the rules that govern valuation of assets and liabilities and recognition of revenues and expenses.

Financial statements are publicly available and vital information on every Norwegian company can be accessed by just pressing a key, since the main figures are freely available on the Internet. The third part of the course covers how financial statements can be used.

Learning outcome
Acquired knowledge
After having completed the course the students shall be able to:

• Record ordinary transactions and incorporate frequent closing provisions (including calculation of the annual tax cost and allocation of net income) in accordance with the principle of double-entry book-keeping, and draw up the final income statement and balance sheet.
• Describe the main accounting rules for measurement of assets and liabilities.

• Value assets and debts and apply the accruals principle on revenues and costs in accordance with the main rules of the accounting act. The rules and principles may be applicable to the asset and debt items and the income and cost elements that are customary in small and medium-sized enterprises.
• Draw up a cash flow statement and consolidated accounts when conditions are simple and easily understood.
• Analyse and comment on a company’s financial development over time and relative to other companies.

• After having completed the course the students shall be able to read a financial statement with sound scepticism and be able to reflect on the possibilities that the producers of the accounts have to provide good or poor information to users of the accounts.

• What are accounts and accounting?
• Transactions and the balance sheet equation
• Transactions and the accounting system (the principle of double-entry bookkeeping)
• Closing of accounts: from the list of ledger balances to the income statement and the balance sheet
• Fundamental accounting principles
• Measurement of assets and debts
• The cash flow statement
• The connection between accounts and taxation
• The accounts as a source of information
• Time series analyses and cross section analyses of profitability, cash flow, solidity and financing.