Вы находитесь на странице: 1из 14

Management

Accounting

By- Prof. S.Y. Shewale


Synopsis
qDefinition of Accounting -
qObjectives & Function –
qParties /Users interested in Accounting
qBranches of Accounting
qMeaning & Definition of Management
Accounting
qScope of Management of Accounting.
qDistinction Between Management Accounting
And Financial Accounting .

Defination of accounting
 Accounting is defined as "the art of recording,
classifying and summarizing in terms of money
transactions and events of financial character and
interpreting the results thereof." In simplest
words, we can say:
(1) Accounting is an art

(2) of recording classifying and summarizing

(3) in terms of money

(4) transactions and events of financial nature and

(5) interpreting the results thereof

q
 Objectives of Accounting
 The objectives of accounting are two-fold:
(1) To record permanently, all business transactions, and

(2) To show the effect of each transaction and also the

combined effect of all such transactions for a given


period so as to find out the profit the business has
earned or loss incurred, and also to know the correct
financial position on a particular date.

The necessity and importance of accounting can be


understood by answering the following questions:
(1) How much we have earned this year ?

(2) How much was earned during the last year ?

(3) Is our business improving?

(4) How much cash do we have?

(5) How much money we owe?

(6) How much others owe to us ?


Functions of Financial
Accounting
Recording - The primary function of
accounting is to keep a systematic record of
financial transaction – journalisation , posting
and preparation of final statements. The
purpose of this function is to report regularly to
the interested parties by means of financial
statements.
Classification - This aspect of accounting is
concerned with systematic analysis of the
recorded data in such manner that transaction
of similar class and nature are classified under
appropriate heads of account.
 To get full information.

 To know the appropriate account


 Summarizing – It is concern with presenting the


classified data in such manner , which serves the
purpose of the management and external end user of
accounting statement.
It aids to preparation of Trial Balance.

It reveals the financial performance of enterprise.

 Communicating the Results (Interpretation)


 Accounting is the language of business. Various
transactions are communicated through
accounting. There are many parties - owners,
creditors, government, employees etc, who are
interested in knowing the results of the firm. The
fourth function of accounting is to communicate
the results to interested parties. The accounting
shows a real and true position of the firm of the
Parties /Users interested in
Accouting
 Accounting is the language employed to
communicate financial information of a concern
to such parties.
Creditor
Management
Employees
Government
Tax Authorities
Customers
Public at Large
Branches of Accounting
qFinancial Accounting- It is the original form of
accounting. It is mainly confined to the
preparation of financial statements for the
use of outsiders like creditors, banks and
financial institutions etc. The chief purpose of
financial accounting is to calculate profit or
loss made by the business during the year
and exhibit financial position of the business
as on a particular date.
qCost Accounting - Function of cost accounting
is to ascertain the cost of the product and to
help the management  in the control of cost.

Cont…
qManagement Accounting - It is accounting for
management. i.e., accounting which provides
necessary information to the management for
discharging its functions. It is the
reproduction of financial accounts in such a
way as will enable the management to take
decisions and to control various business
activities.
qSocial Responsibility Accounting - It is the
process of identifying, measuring and
communicating the social effects of business
decision to permit informed judgment &
decision by the users of information's. It is
accounting for social responsibility aspect of a
business.
Management Accounting &
Financial Accounting
Management Accounting Financial Accounting
Managerial accounting is used Financial accounting is used
primarily by those within a primarily by those outside of a
company or organization. company or organization.
Reports can be generated for any Financial reports are usually
period of time such as daily, created for a set period of time,
weekly or monthly. such as a fiscal year or period.
Management Accounting deals While financial accountants follow
primarily with confidential Generally Accepted Accounting Princ
financial reports for the exclusive (GAAP) set by professional
use of top management within an bodies in each country, managerial
organization. accountants make use of
procedures and processes that are
Time period- Managerial not regulated
while FinancialbyAccounting
a standard-setting
Accounting provides top bodies
provides reports based on
management with reports that are historical information.
Management Accounting Financial Accounting
Time span -There is no time span financial accounting statements
for producing managerial are generally required to be
accounting statements produced for the period of 12
Freedom - In management financial accounting annual
previous months.
accounting systems there is no statements must be audited by an
requirement for an independent independent CPA firm.
Type of Data
external – In this the data Financial accounting makes
review
which is statistical , descriptive, use of the data which Is historic
subjective and relates to the ,quantitativemonitory, and
legally
future. - There is no legal but publicly-traded firms (limited
absoluteness.
requirement for an organization companies or whose shares are
to use management accounting bought and sold on an open
market) must, by law, prepare
financial account statements.
Accuracy - In management In financial Accounting there is
accounting approximation are importance to figures worked out
often useful as against figures accurately.
Accounting Concept &
Convection
Concept –
 1.Entity Concept –
2. Realisation Principle –

3. Going Concern Concept -

4. Periodic Matching - a. Revenue Realisation

Principle
 b. Matching Cost Principle.
5. Disclosure concept –

6. Measurement Concept –

7.Accrual Concept –

8. Continuity concept –

9. Conservation concept –


Convection –

1.Consistency
2. Full Disclosure

3. Conservation

4. Materiality.
 Thank you for your
attention

Вам также может понравиться