Learning Financial Accounting

[ecoskian]

Dear QuantNet members,

I'm preparing to attend MIT's M.Fin program next year and my knowledge of financial accounting is superficial at best. While the math and programming give me no reason to worry, I'd very much like to prepare early and acquire solid bases in financial accounting so that I can undertake my future endeavor with greater confidence.

Could anyone who has attended the program let me know what's the book in use for teaching the subject?

Suggestions from other members are welcome as well, keeping in mind that I'm after something at the introductory level, yet rigorous in nature.

Thanks in advance,

Best,

E.C.O.

 

[Ken Abbott]

Financial accounting is one of the few disciplines in finance that you can effectively teach yourself. Get a textbook, get the accompanying workbook, and do all of the exercises.

 

[doraton]

do we really need to know financial accounting in depth to work as a quant?

 

[Ken Abbott]

If you don't understand the basics you'll be at a competitive disadvantage. Many MS programs require it and you need to know it, unless you're content to spend your career sitting in a windowless room, cranking out C++.

 

[Barny]

If you don't understand the basics you'll be at a competitive disadvantage. Many MS programs require it and you need to know it, unless you're content to spend your career sitting in a windowless room, cranking out C++.

Ken - which bits of financial accounting are important to know? Accounting is a huge subject in and of itself - you could spend a lifetime learning the nuances of financial accounting.

 

[Ken Abbott]

Ken - which bits of financial accounting are important to know? Accounting is a huge subject in and of itself - you could spend a lifetime learning the nuances of financial accounting.

To name a few items:
Basic Intro: B/S, P&L, Cash Flow (Understanding the Income and Expense Summary is key)
Financial Statement Analysis (ratios, etc - taught by ABA)
Depreciation & Amortization
Bad Debts Expense

You could even take some basic courses at your local community college (I did).

 

[Barny]

To name a few items:
Basic Intro: B/S, P&L, Cash Flow (Understanding the Income and Expense Summary is key)
Financial Statement Analysis (ratios, etc - taught by ABA)
Depreciation & Amortization
Bad Debts Expense

You could even take some basic courses at your local community college (I did).

Ahh ok. That's kind of re-assuring - I worked as a trainee accountant for a year and that stuff is bread & butter by the time I finished. I didn't realise that accounting knowledge was even remotely important for quant roles.

 

[ecoskian]

Hey everyone, thanks for the replies but I'd like t point out that I'm still in need for a textbook recommendation..!

 

[purplyboy]

There's a lot of financial accounting in CFA level 1 and 2. I think if you read the CFA materials you'd be in good shape. I think you could use the Schweser CFA Preparation guide for accounting section like a cliff note for financial accounting.

A long time ago, the CFA program used this accounting book for CFA 1.
http://www.amazon.com/The-Analysis-Use-Financial-Statements/dp/0471375942/