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Accounting for Management An Introduction

What is accounting
Accounting is often called the language of business. It is a means of communication. The purpose of Accounting is to communicate the Business results. Business results are given in analytical form.

American Institute of Certified Public Accountants defines Accounting Accounting is an art of recording, classifying and summarizing, in a significant manner and in terms of money, transactions and events which are, in fact at least, of a financial character, and interpreting the results thereof

Accounting and Book- keeping

Accounting includes Book-keeping also Book-keeping Recording business transactions in the books Accounting Compilation of accounts. We know the state of affairs of the business

Accounting involves
Systematic classification of Business Transactions. Recording of events and transactions. Summarizing of recorded events Trial Balance and Balance Sheet. Interpreting the financial transactions.

The purpose and objective of Accountancy

To keep systematic record To ascertain the results of operations. To ascertain the financial position of the business. To facilitate rational decision making To Satisfy requirement of law.

Usefulness of Accounting

Provides information useful for economic decisions. To provide information to user.Shareholders and Investors, Creditors, Employees, Government, Management and Consumers. To provide information useful to investors and creditors. To predict earning power of the Company. To utilize enterprise resources effectively.

Stewardship Accounting Financial Accounting Cost Accounting Management Accounting detailed information for decision making Social Responsibility of Accounting new phase. Social effects of business decision Human Resource Accounting Inflation Accounting.

Emerging Role of Accounting

Accounting Concepts At the Recording Stage

Business Entity Concept Profit is liability Loss is asset Money Measurement Concept Health of Proprietor, No inflation/deflation included. Objective Evidence Concept. Historical Record Concept Cost Concept Assets at cost, Present Value, Dual Aspect Concept Assets =Capital +Liability

Accounting Concepts At the Reporting Stage

Going Concern Concept Deprecation, Deferred Revenue Expenditure, Fixed Assets at Cost, Valuation of Current Assets, Reserves & Provisions Accounting Period Concept Matching Concept.- Deferred Revenue Expenditure, Adjustments Realization Concept no future income is considered Conservatism Concept Doubtful debts, All loses must be taken into account. Ignore anticipated profits.Full Disclosure Contingent Liabilities, Market value of investments Materiality Concept

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