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Level 6 Diploma in Business Management

Accounting Foundations and Expenditure Classification

BM604 · Financial Decision Making — Week 3 of 16

CourseBM604
Week3 of 16
SemesterII
TutorOnline in the course chat

This week’s topics

Accounting Foundations and Expenditure Classification

  1. Accrual accounting versus cash flow approach
  2. Liquidity implications for working capital decisions
  3. Distinguishing capital expenditure from revenue expenditure
  4. Asset recognition and depreciation impacts
  5. Cash Flow from Operating Activities vs Net Income
  6. Depreciation Introduction - ACCA Financial Accounting (FA) lectures
  7. Relevant cash flows for DCF Working capital (examples 2 and 3) - ACCA Financial Management (FM)

What you will be able to do

  • 2.1 Compare the accrual and cash flow approaches to accounting and financial reporting and the implications of each for business decision making.
  • 2.4 Differentiate between financial decisions relating to capital expenditure and those relating to revenue expenditure.

Activity

Start with this week’s 3 videos, then: Seminar, guided reading and a short written task: compare the accrual and cash flow approaches to accounting and financial reporting and the implications of each for business decision making.

Study materials

Videos

  • Cash Flow from Operating Activities vs Net Income · YouTube · Edspira · 6 min · for registered students
  • Depreciation Introduction - ACCA Financial Accounting (FA) lectures · YouTube · OpenTuition · 23 min · for registered students
  • Relevant cash flows for DCF Working capital (examples 2 and 3) - ACCA Financial Management (FM) · YouTube · OpenTuition · 16 min · for registered students
  • Session 8: From Earnings to Cash Flows · YouTube · Aswath Damodaran · 80 min · for registered students
  • Session 9: Digging Deeper into Cash Flows · YouTube · Aswath Damodaran · 83 min · for registered students
  • Session 4: The Statement of Cash Flows · YouTube · Aswath Damodaran · 13 min · for registered students
  • Session 4A: The Statement of Cash Flows (Examples) · YouTube · Aswath Damodaran · 16 min · for registered students

Further resources

  • Principles of Finance 2e, ch. 4.1: Cash versus accrual accounting · PDF · OpenStax, textbook chapter; pp. 100–101 · for registered students
  • Principles of Accounting Vol. 1, ch. 11.2: Capital versus revenue expenditure · PDF · OpenStax, textbook chapter; pp. 642–644 · for registered students
  • Introduction to Financial Accounting, Lyryx 2023-A, ch. 8: Long-lived Assets · PDF · Other, textbook chapter; pp. 307–350 · for registered students
Materials marked “for registered students” open in the student portal, which is set up as soon as you receive final acceptance.
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Course plan
  • Week 1: Strategic Business Decision Making and Financial Drivers
  • Week 2: Business Risk Assessment in Financial Decisions
  • Week 3: Accounting Foundations and Expenditure Classification
  • Week 4: Structure and Interpretation of Final Accounts
  • Week 5: Financial Performance Metrics and Long-Term Sustainability
  • Week 6: Sources and Selection of Business Finance
  • Week 7: Capital Expenditure Appraisal Techniques
  • Midterm: Midterm evaluation
  • Week 9: Off-Balance Sheet Financing and Risk Management
  • Week 10: Ownership Structures, Governance and Agency Dynamics
  • Week 11: Ethics, Governance Controls and Financial Accountability
  • Week 12: Applying Financial Decision Making in practice: case studies
  • Week 13: Assignment workshop: research, planning and referencing
  • Week 14: Assignment workshop: drafting, feedback and improvement
  • Week 15: Review and coursework completion
  • Final: Final assessment and submission
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