Financial Accountancy

MANAGEMENT ACCOUNTING

1.       Nature and scope of management Accounting

a.       Introduction

b.      Definition of Management Accounting

ü  According to J.Batty

ü  Robert Anthony

ü  I.G.ROSE

ü  Management Accounting Team of Anglo-American Council on productivity

ü  The Institute of Chartered Accounts of India.

c.       Objective of Management Accounting

ü  Formulating  strategy

ü  Planning and controlling activity

ü  Decision taking

ü  Resources

d.      Scope of management Accounting

ü  Construct and reconstruct

ü  Vital data

ü   

e.      Characteristic Features of Management Accounting

f.        Functions of Management Accounting

ü  Planning and Forecasting

ü  Modification of data

ü  Financial Analysis and interpretation

ü  Facilitates  managerial control

ü  Communication

ü  Use of Qualitative Information

ü  Coordinating

ü  Helpful in  taking Strategic Decision

ü  Supplying information to various Level of management

ü  Objectives of management Accounting and Functions of Management Accountants

      Objectives of Management Accounting

·         Providing  information

·         Participating in the Management Process

      Management Accountant’s Responsibilities

·         Planning

·         Evaluation

·         Controlling

·         Assuring

·         Accountability

·         External reporting

      Principal Activities

·         Reporting

·         Interpretation

·         Resource Management

·         Information system Development

·         Technological Implementation

·         Verification

·         Administration

      Process

·         Identification

·         Measurement

·         Accumulation

·         Analysis

·         Preparation and Interpretation

·         Communication  

g.       Methods and Techniques

h.      Financial Accounting  Vs Management Accounting

ü  Provide Data

ü  Law

ü  GAAP

ü  Data

ü  Emphasizes

ü  BISINESS AS A WHOLE

ü  Primarily stands

i.         Cost Accounting and Management Accounting Differences

ü  Primary objective

ü  Time Factory

ü  Information Coverage

ü  Governing Principles

ü  Statutory Verification

ü  Utility of Reports

ü  Inter Dependence

j.        Management Accountant- Position and Status

ü  Controller

ü  Assistant Controller

      Planning and Control

      Special Decisions

      General Accounting System ‘

      Data Processing

ü  Manger

      Budget and Standard cost

      Cost Reports

      Financial Reporting

      Internal Auditing

      Performance and various analysis

      Feasibility Study Reports

      Taxes

      Financial Records

k.        Limitations of management Accounting

ü  Dependence on Historical data

ü  Lack of Desired Skill

ü  Scope for Subjectivity

ü  Management Indifference

ü  Costly Affair

ü  Imperfect Tools

ü  No substitute for management

l.         Evaluation of Management Accounting

ü  Highlight on Current Evolutionary Stage

ü  The Future Management Accountant

      Orientation Value chain Accounting

      Focus Continuous improvement and process re engineering

      Customer Services

      Performance Value chain matrices cost quality time services

      Measurement external/ Internal Financial /Non financial Ex-ante expost

m.    Summary.

n.      Key Words.

2.       Financial Accounting

a.       Introduction

b.      Meaning of Accounting

c.       Distance between Book keeping and accounting

ü  10 points

d.      Objective of Accounting

ü   5 Points

e.      Advantages of accounting

ü  Replacing Memory

ü  Assessing the performance of the business

ü  Assessing the financial status of the business

ü  Documentary Evidence

ü  Assisting in realization of debts

ü  Facilities the sale of business

ü  Preventing and detecting frauds

ü  Helpful to management

f.        Limitations of accounting

ü  Incomplete information 

ü  Inexactness

ü  Showing valueless assets

ü  Manipulation

ü  Ignorance about the present value of business

g.       Basics of accounting

ü  Cash basics of accounting

ü  Accrual Basic of accounting

ü  Hybrid or Mixed Basic of accounting

ü  Step 1 -  Identification of transaction

ü  Step 2 -  Preparation of Business Documents

ü  Step 3 -  Recording of Transaction of Journal

ü  Step 4  - Positing to Ledger

ü  Step 5  -  Preparation Unadjusted trial Balance

ü  Step 6 -  Passing of Adjusting Entries

ü  Step 7 -  Preparation of Adjusted Trial Balance

ü  Profit and Loss Account

ü  Balance Sheet 

ü  Users of accounting information

      Owners

      Managers

      Coeditors

      Employees

      Investors

      Customers

      Government

h.      General accepted Accounting principles (GAAP)

ü  Relevance

ü  Objectivity

ü  Feasibility

i.         Conventions and Concepts

ü  Materiality Concept

ü  Money Measurement Concepts

ü  Cost Concepts

ü  Rime Period concepts

ü  Conservatism concept

ü  Consistency concept

ü  Business entity Concept

ü  Duality or accounting equivalence concept

ü  Accounting Period Concept

ü  Realization Concept

ü  Matching concept

j.        Accounting Standard

ü  Indian Accounting Standard

ü  Importance of accounting standard

ü  Companies Amendment Act 1999

ü  Accounting Standard Issued by ASB of the Institute of charted Accountants of India

k.       The Accounting Equation

ü  Assets = Liabilities + capital

ü  Capital = Assets – Liabilities

ü  Liabilities = Asset - capital

l.         Rules of Credit and Debit

ü  Debit what comes in

ü  Credit what goes in

ü  Debit the receiver

ü  Credit the giver

ü  Debit the all expenses, losses and assets

ü  Credit all incomes, profits and liabilities

m.    Types of Accounting

ü  Personal Accounts

ü  Real Accounts

ü  Nominal Accounts

ü  Modern Calcification of accounts

      Assets account

      Liabilities Accounts

      Capital Accounts

      Revenue Account

      Expense Account

      Withdrawal Account 

n.      Journal and Ledger

ü  The journal and Nature

ü  Ruling of a Journal

      The date

      Particular

      Ledger folio(L.F)

      Amount(debit)

      Amount(credit)

ü  Simple and compound Journal entries

ü  Sub division of Journal

o.      The Ledger

ü  Subdivision Ledger

ü  Statement from of Ledger Account

p.      Trial Balance

ü  Characteristics of a trial Balance

ü  Objectives of Drawing up a trial Balance

ü  Defects of a trial Balance

ü  Methods of preparation

q.      Emerging Roles of Accounting

ü  Stewardship Accounting

ü  Financial Accounting

ü  Cost Accounting

ü  Management Accounting

ü  Social Accounting

ü  Human Resource Accounting

ü  Inflation Accounting or Accounting for price level charges

r.        Summary

s.       Key words.  

3.       Final Accounting

a.       Introduction

b.      Trading Accounts

ü  Items appearing in the debit side of Trading Account

ü  Items appearing on the credits side of trading Accounting

ü  Balancing of Trading Accounting

c.       Profit and loss Account

d.      Balance Sheet

e.      Suggested steps for preparation of final accounts

f.        Summary

g.       Review Questions

4.       Financial Statement Analysis

5.       Ratio Analysis

6.       Funds Flow Statements

7.       Cash Flow Statement

8.       Capital budgeting

9.       Budgeting and Budgetary control

10.   Cost Account

11.   Process Accounting

12.   Marginal costing and break even analysis

13.   Application of marginal costing and Differential costing

14.   Standard Costing

15.   Reporting to management.