Introduction of management ac

MANAGEMENT ACCOUNTING

Dr. SHWETA GUPTA. Shweta Gupta

UNIT -1

INTRODUCTION Meaning Nature and Scope Financial Accounting, Cost Accounting,

Management Accounting. Role of Management Accounting Advantage and Limitation of

Management Accounting.

MEANING

Management Accounting is a branch of Accounting that assist to managers to take best decision in interest of organization .

MEANING Management accounting is a discipline

For

Financial and operating

information

summarizing

interpreting

communicating

Gathering

CONT…..

To assist management in its task of maximizing profit or minimizing losses.

NATURE Nature is some special type of characteristics that help to recognize the particular concept.

it may be positive or negative. when we represent it in a group it form

the definition of concept and if we segregate a definition, it describe nature of a particular concept.

NATURE OF MANAGEMENT A/C Useful in decision making Financial and cost accounting

information Internal use Purely optional Concerned with future Flexibility in presentation of information

SCOPE

coverage or concern area

SCOPE OF MANAGEMENT A/C Financial accounting

A Proper and well designed financial accounting system

planningforecastin

g

CONT… 2 Cost accounting

Cost Accounting is an inherent part of Management

Accounting

Cost control

Standard costing

Budgetary control

Profit planning and decision making

Marginal costing

CVP Analysis

Differential cost analysis

CONT…. Budgeting and forecasting

Management

Accounting

forecastingBudgeting

CONT… Tax Planning-Assist inA

Generate an idea about tax liability

Planning to minimize the tax

liabilities

Save more fund for the business

CONT. Reporting-for effective and timely

decision report should

promptly

Intelligently

accurately

STATISTICAL TOOLS Assist to makes a presentable report-

Graphs

Tables

Charts

INTERNAL CONTROL AND INTERNAL AUDIT

Internal control Internal AuditServe a reliable

information

OFFICE SERVICES

Office services

Control office services

Systematic procedure

Best coordination

Efficient Data base

FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING

Basis

Management Accounting

Financial Accounting

External and Internal User

Management

Shareholders, Investors, creditors,

Govt. Authorities

CONT….

Accounting Method

Optional as per requirement but not double Entry system

Double Entry system

CONT…..

Statutory Requirement

Its utility set its

requirement

Taxation law and company law set its requirement

CONT…..

Analysis of Cost and Profit

Management Accounting able

to show Individual information

Financial Accounting show the profit and loss of the business as

whole

CONT….

Past and Future data

It may be use past data for

future projections

It represent past or

historical data

CONT….

Periodic and continuous reporting

Yearly ,monthly, weekly even daily

as per requirement

Yearly basis

CONT….

Accounting

Standard

Not required Required

CONT….

Types of statement prepared

Special purpose report required

Trading A/c , Profit and Loss

A/c and Balance sheet

CONT….

Publication and audit

Publication and auditing is not necessary

Publication and auditing is

necessary

CONT…

Monetary and Nonmonetary Management

Information in terms of units, quantity,

machine hours and labour hours

Information in terms of money

COST AND MANAGEMENT ACCOUNTING

Basis

Managemen

t Accounting

Cost Accountin

g

CONT…..

Scope

Cost and financial

Accounting

Cost accounting

CONT….

Basis

Emphasis

on Planning , Controlling and decision making

on cost ascertainment

and cost control

CONT….

Techniques employed

all techniques of cost accounting as well as ratio

analysis, fund flow statement and also other

stream that can help in managerial decision

standard costing and variance analysis ,

marginal costing and profit

analysis ,Budgetary analysis

CONT….

Evolution

Due to Insufficiency of Cost Accounting

Due to the limitation of

financial Accounting

CONT….

Statutory requirement

purely voluntary compulsory in

selected industries

CONT….

Database

Data drive from financial and cost accounting both

Data derive from financial

accounting

CONT….

Status in organization

management accounting is more important than cost

accounting

cost accounting is less important

than management accounting

CONT…

Installation

management accounting can not be install without cost accounting

it can be install without

management accounting

ROLE OF MANAGEMENT A/CPlanningControllingCoordinatingOrganizingMotivatingCommunicating

ADVANTAGE OF MANAGEMENT ACCOUNTING

Decisions based on authentic information Decisions very close to accuracy An internal control system develop prevention of wastage of material, manpower

and money Increase efficiency Maximize profitability Control of business cash flow High moral of employees proficient to figure distinguish goodwill in

industry

LIMITATION OF MANAGEMENT ACCOUNTING Authenticity of basic record Require comprehensive knowledge Management Accounting is only a tool Element of Intuition Heavy Installation cost

REFERENCES Monga J.R. ,Malhotra,Management

Accounting, A.K.,Scholar Tech Press, First edition.

Maheshwari Dr. S.N.,Principles of Management Accounting, sultan chand and sons, seventeenth Revised edition.

Arora M N,A Textbook of cost and Management Accounting, Vikas publishing House Pvt Ltd.9th revised edition.