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Introduction to Management Accounting

Dr. S.R. Kandalgaonkar


Symbiosis centre for Distance Learning, Pune.

MANAGEMENT ACCOUNTING
Financial Accounting: Which consists of Financial Concepts , Records, Financial Statements and Financial Policies of Business Organizations. Cost Accounting: Which consists of Cost Accounting Concepts, Records, Stages in Cost Accounting Statements, Costing Techniques, Tools and Policies used for Internal management of Business Organizations.

Term Money and Finance


MONEY: Currency Notes and Coins Created by Government only
Universally accepted design, shape and size. Specific denominations, indivisible in nature Supported by the Guarantee Different for each Nation $ , L, DM, Yen, Rs, Real, etc.

TERM:MONEY
Features of Money : Money means medium, facilitator Money is Power: Money can do any thing Money does not have inertia. Money is short in supply Money has alternative usability. Money has life Total money Supply is limited.

TERM : FINANCE
Finance is the Art of Governing Money. Finance is a Science of Money Finance means Theories, Principles, rules and Regulations for the use of Money Financial Management:

Features of Financial Management :


Universal applicable to all Continuous Applicable throughout , day in and day out Mixture of many branches of knowledge Accountancy , Economics , Psychology, Professional Body Financial results, Publications, Policies, etc.

Organizational Structure
Board of Directors
VP Production VP Finance Finance Controller Accounting and Costing Annual reporting Internal Audit Budgeting Statistics Records keeping VP Marketing Treasurer Receivables Management Taxes and Insurance Cost Management Securities Bank related activities Real estate related Dividend Distribution

Fields of Finance
Business Finance Corporation Finance International Finance Public Finance Private / Family Finance Social Work Finance

Finance function and other Functions


Production and materials HR and Legal matters Marketing, Advertizing R and D Development and Expansion

FINANCE IS THE BACKBONE OF MODERN INDUSTRY

Basics of Accounting
Is MONEY =FINANCE
Money means COINS AND NOTES put in circulation by the Central Authority i.e. the Government. Different Types of Currency : $ , DM, L, Rs., Y , RO , Main Features of Money : SHORT IN SUPPLY ALTERNATE USE

BAD MONEY DRIVES AWAY GOOD MONEY OUT OF CIRCULATION !

Stages in Financial Accounting

ACCOUNTS : BOOK KEEPING : ACCOUNTANCY : ADVANCED ACCOUNACY : FINANCIAL MANAGEMENT : MANAGEMENT ACCOUNTING : MIS

Rules in Financial Accounting


BASIC RULES OF ACCOUNTING PERSONAL ACCOUNTS :
DEBIT THE RECEIVER CREDIT THE GIVER

REAL ACCOUNTS
DEBIT WHAT COMES IN CREDIT WHAT GOES OUT

NOMINAL ACCOUNTS
DEBIT ALL EXPENSES AND LOSSES CREDIT ALL INCOMES AND GAINS

BASIC TERMS IN ACCOUNTING


A TRANSACTION CAPITAL DRAWINGS BANK ACCOUNTS ASSETS AND LIABILITIES CASH BOOK , PETTY CASH BOOK INCOME AND EXPENDITURES

FLOW CHART IN ACCOUNTING


JOURNALS : CASH BOOK ; PURCHASE DAY BOOK : SALES DAY BOOK: PURCHASE RETURNS BOOK;SALES RETURN BOOK ; BILLS RECEIVABLES BOOK ; BILLS PAYABLE BOOK, JOURNAL PROPER. BANK RECONCILIATION STATEMENT LEDGER POSTING , CASTING , BALANCING TRIAL BALANCE FINAL ACCOUNTS : MFG , TRADING ACCOUNT, PROFIT AND LOSS ACCOUNT BALANCE SHEET and ADJUSTING ENTRIES

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