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Principles of Managerial Accounting

Principles of Managerial Accounting. ACCT -104. Syllabus. Fundamental of Managerial Accounting – Meaning, Definition and objectives of Managerial Accounting. Distinction between Financial and Managerial Accounting. Distinction between Managerial and Cost Accounting.

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Principles of Managerial Accounting

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  1. Principles of Managerial Accounting ACCT -104

  2. Syllabus Fundamental of Managerial Accounting – Meaning, Definition and objectives of Managerial Accounting. Distinction between Financial and Managerial Accounting. Distinction between Managerial and Cost Accounting. Analysis and Interpretation of Financial Statements-I – Analysis of Financial Statements, Form of Income Statement & Balance Sheet and persons interested in Financial Statements; Comparative Financial Statements, Common Size Statement. Ratio Analysis- Meaning of ratio, importance of ratio analysis, classification of ratios and calculation of various ratios, Du Pont Analysis. Cost Volume Profit Analysis-I Cost Drivers, Variable & Fixed Cost Behaviour, Difficulties in classifying Costs. Cost Volume Profit Analysis-II Cost Volume Profit Analysis, Break Even Point, Margin of Safety.

  3. Assessment

  4. What is Managerial Accounting? • It is the process of identifying, measuring, accumulating, analyzing, preparing, interpreting, and communicating information that managers use to fulfill organizational objectives. • The branch of accounting that produces information for managers within an organization is termed as Managerial Accounting. • The term Managerial accounting refers to accounting for the management, i.e., accounting which provides necessary information to the management for discharging its functions. The functions of the management are planning, organizing, directing and controlling. • Thus, Managerial accounting provides information to management so that planning, organizing, directing and controlling g of business operation can be done in an orderly manner.

  5. Definition of Managerial Accounting The Institute of Chartered Accountants of England and Wales: “Managerial Accounting is any form of accounting which enables a business to be conducted more efficiently can be regarded as Managerial Accounting.” According to Robert Anthony: Managerial Accounting is concerned with accounting information which is useful for management. The Anglo-American Council : “Managerial Accounting is the presentation of accounting information in such away as to assist management in the creation of policy and in the day –to –day operations of an undertaking.”

  6. Characteristics of Managerial Accounting • Selective Nature • It does not Provide Decision • It is concern with Future • Managerial Accounting Studies causes & effects • Not bounded by the sets of rules of financial accounting • Concerned with the Problem of Choice • Nature of various elements of costs • It modifies, analyses and interprets data.

  7. Objectives of Managerial Accounting • To help in Planning • To help in Organizing • To help in Controlling • To help in communicating • To help in decision making • To help in coordination • To help in solving business problems • To help in motivating employees • To help in interpreting financial information Managerial accounting is thus helpful to the management in every field of activity. This is the reason why management accountant is considered not only a service arm to management but also a part of management.  

  8. Tools and Techniques of Managerial Accounting • Financial Planning • Analysis of Financial Statements • Historical Cost Accounting • Standard Costing • Marginal Costing • Fund Flow Statements • Budgetary Control • Decision Making Accounting • Statistical Techniques

  9. Limitation of Managerial Accounting • Based on Traditional Accounting • Knowledge of other related subjects • Continuity and Participation • It does not provides decision • It is not an alternative of management • Evolutionary stage • Human Opinion • Broad based scope • Costly installation • Lack of Coordination in operation

  10. User of Information Financial Information Management Information • Investors • Creditors • Bankers • Government authorities • Managers • Owner • Employees etc Purpose: Help investors, creditors, and others make investment, credit, and other decisions Purpose: Help managers plan and control business operations

  11. Distinction between Financial Accounting and Managerial Accounting Financial Accounting: It is systematic knowledge and the art of recording business transaction in the books of business. It is a basic accounting which helps the persons to know financial position of business concern. Managerial Accounting: It is the process of identifying, measuring, accumulating, analyzing, preparing, interpreting, and communicating information that managers use to fulfill organizational objectives

  12. Differences between Financial Accounting and Managerial Accounting Cont…..

  13. Differences between Financial Accounting and Managerial Accounting

  14. Distinction between Cost Accounting andManagerial Accounting Cost Accounting: Cost Accounting is the process of a accounting for costs which begins with recording of income and expenditure or the bases on which they are calculated and ends with the preparation of statistical data. Managerial Accounting: It is the process of identifying, measuring, accumulating, analyzing, preparing, interpreting, and communicating information that managers use to fulfill organizational objectives

  15. Difference Between Cost Accounting and Financial Accounting

  16. Unit - 1 Descriptive Type Questions • Define Managerial Accounting? • State the objectives of Managerial Accounting. • Write difference between Cost Accounting and Managerial Accounting. • Write difference between Financial Accounting and Managerial Accounting. • Explain Characteristics scope of Managerial Accounting. • State four tools and techniques of Managerial Accounting.

  17. Home Assignment • What is Managerial Accounting ? State its objectives of Managerial Accounting. • Hint: • Introduction • Meaning of Managerial Accounting • Definitions of Managerial Accounting • Objectives of Managerial Accounting • Conclusion. 2. Difference between “Managerial Accounting” and “Financial Accounting”. • Hint: • Introduction • Definitions of Managerial Accounting • Definitions of Financial Accounting • Differences of Managerial And Financial Accounting. • Conclusion.

  18. HOME ASSIGNMENT – I Principles of Managerial Accounting (ACCT 104) Name : ………………………………………….. University Number: ………………………………… Group : IST Submitted to : Auz: Anass hamadelneel College of Business Administration Salman bin abdulaziz University, Alkharj Kingdom of Saudi Arabia

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