Basics

May 12, 2019 | Author: Sagar Bansal | Category: Management Accounting, Accounting, Corporations, Business, Financial Economics
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MANAGERIAL ACCOUNTING

SOMNATH DAS

BASICS OF MANAGERIAL ACCOUNTING

 Purpose of the course - familiarize you with: 1. 2. 3. .

Managerial accounting concepts. Managerial accounting practices. practice s. Use of managerial accounting information for decision making. Pitfalls.

!ccounting !ccounting is a "ranch of study concerned concerned with the the generati generation on # identif identificatio icationn $ measuremen measurementt % and  pro&ision  pro&ision #'ommun #'ommunication ication%% of informatio information. n. Managerial accounting is in particular accounting for the internal management of organizations. A. Financial Financial versus Managerial Accouning

(inancial !ccounting

Management !ccounting

!pproach

,ules

) unifying concept: assets*e+uities ) no unde underl rlyying ing unit unityy-approaches ) .!.!.P.

many many

) no general principles

) mandatory

) mostly optional

Measurement ) almost eclusi&ely /

) many non-financial elements

) emphasis on precision0 o"ecti&ity

) su"ecti&e estimates

Past(uture

) "ased on past

) many future estimates and fo forecasts

!ggregation

) o&erall summary of "usiness

) &ery segmented

) general purpose information

) specific purpose reports

(re+uency

) lessmandatory fr fre+uency

) more fre+uent and optional

imilarity

) "a "asic ddaata so source sa same

4nd result

) ends with financial statements 2

)

integral part of other "usiness aspects

3

B. Cos Accouning Ter!inolog"

1. 5ature of 'ost 'ost - ! sacrifice of resources: Cost is a measurement  in monetary terms of the amount of resources used for some purpose. 4pense - 6he cost charged against re&enue in a particular accounting period. 2. Purposes of athering 'ost 7nformation

making:

Managerial !ccounting

making

'ost !ccounting (inancial Product !ccounting 'osting

,outine

decision control

5onroutine

decision

'ost of oods old 7n&entory 8aluation

B. T#ree As$ecs %Basic coss& o' Managerial Accouning(

1. 9ecision Making #9ifferential 'osts% 7nterface with decision models from operations research0 economics and finance0 competiti&e analysis of  costs and prices0 cost of capital calculations and in&estment decisions. 4ample : 9ominos Pizza almost "ankrupt ; pizza making losses 2. Product 'osting #(ull 'osts% !ssociating a / &alue for the resources sacrificed in o"taining a product or ser&ice. - used for financial reporting - &aluation of in&entory0 '
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