Principles of accounting AC1025

This course provides a broad understanding of the theory and practice of financial accounting, management accounting and financial management, both for non-specialist students and as a foundation for further study in the area.

You examine the basic principles and underlying concepts and the ways in which accounting statements and financial information can be used to improve the quality of decision-making.

Prerequisites / Exemptions

Prerequisite: A course that you must have ordinarily attempted all elements of before you are permitted to register for another particular course.

Anyone professionally qualified in accountancy who wishes to study for a degree may apply for exemption from this course.

Topics covered

Financial accounting

• Accounting harmonisation and International Financial Reporting Standards.
• Accounting concepts and conventions: their nature, purposes and limitations.
• How to prepare and interpret financial statements: ‘Statement of Financial Position’, income statement and statement of cash flows.
• Analysis and interpretation of financial statements.

Management accounting and financial management

• Cost behaviour, marginal and total absorption costing for inventory.
• Cost-volume-profit analysis.
• Introduction to budgetary planning and control, including standard costs, targets, and variance analysis.
• Making capital investment decisions.

Learning outcomes

If you complete the course successfully, you should be able to:

• distinguish between different uses of accounting information and relate these uses to the needs of different groups of users
• explain the limitations of such statements and their analysis
• categorise cost behaviour, and prepare and contrast inventory valuations under different costing methods
• describe the budgeting process and discuss the use of budgets in planning and control
• explain, discuss and apply relevant techniques to aid internal users in decision-making.

Assessment

Unseen written exam (3 hrs 15, including reading time).

Essential reading

• Leiwy, D. and Perks, R. Accounting: Understanding and Practice. McGraw-Hill.

Course information sheets

Download the course information sheets from the LSE website.