Accounting and Finance

Course goals

Learning objectives
At the end of the course, the student is able to:

• Demonstrate an introductory level of understanding of finance and accounting
• Assess and complete problems on the time value of money
• Understand financial statements and assess the financial position of a real-world company based off these financial statements
• Understand the basics of valuation of bonds and equity and is able to value these instruments themselves
• Work with double entry accounting on an introductory level
• Complete problems on discounted cash flow (DCF) analysis
• Work with formulas to calculate the value of perpetuities and annuities

Content

This course covers the basics of corporate finance, principles of accounting and financial statements, emphasising their role and application to variety of situations but mainly to corporate finance and corporate decision making. It starts by presenting key concepts like time value of money, the value of a bond and a stock, financial risk, CAPM and accounting. The course provides exercises and tutorials to practice these newly introduced topics. It also stresses the importance of Excel to make the course more hands-on.

From time value of money to capital asset pricing model, the course prepares students with the required fundamentals to build on later in their bachelor. The course also familiarizes students with the terms and concepts of accounting, explaining bookkeeping and providing a solid foundation to financial statement analysis.

Topics:

• Time value of money
• Future value and Present value
• Perpetuities and Annuities
• Valuation of Bonds and equities
• Financial Statements
• Accounting entries and the ledger accounts
• operating cycle and income statement
• Accrual accounting and cash accounting
• Investment decision rules
• From financial statements to cash flows
• Introduction to risk and return
• Capital asset pricing model

Academic skills
This course focuses on the following analytical skills:

• Problem solving (identifying the problem, devising a path towards the solution, follow this path, verify the outcome).
• Identify, interpret and critically evaluate main lines of reasoning.
• Evaluate evidence in text and presentations.
• Application of MS Excel for accounting and finance assignments.

Format
There will be plenary lectures, tutorials and online quizzes.
The main focus of the lectures is on knowledge transfer and creating an understanding of the subject.
The tutorials will feature assignments and typical exam questions. Assignments will both be made at home and worked out together so that students are well prepared for the weekly quizzes and the final exam. The main focus of the tutorials is to get students to work, to work through exercises together, and to have more time for your questions.

Assessment method
The final course grade will be a weighted average of quizzes made in Remindo (5%), a midterm (35%) and a final exam (60%).
 
Quizzes
The weekly quizzes will be online assignments on Remindo. This is an online testing environment.
All questions in the weekly exercises will be unique. Each student will get a random draw out of a pool of questions about the same topic and all calculus questions will be algorithmic. The time frame in which the weekly quiz can be answered will be limited.

Effort requirements
Meeting the effort requirement consists of attendance of at least 5 out of 6 tutorials for which homework is required and active participation in the tutorials. For these tutorials homework needs to be handed in through Brightspace.

Real World Perspective
The course introduces students to the concept of time value of money, valuing financial assets and understanding financial statements. The course serves as a foundation in the world of corporate finance and accounting. Lastly, the course introduces the concept of risk and return and the capital asset pricing model.

Information
For questions about course content, you can address your question to the coordinator.
LAS and PPE students can enrol via Osiris. The course is not open for other students.

In case online access is required for this course and you are not in the position to buy the access code, you are advised to contact the course coordinator for an alternative solution. This will likely involve writing a substantial paper on a subject related to finance and accounting. Please note that access codes are not reusable meaning that codes from second hand books do not work, as well as access codes from books with a different ISBN. Separate or spare codes are usually not available. Note that the book that is used in this course (together with Connect code) will be used in the second-year finance course as well.