Management Accounting Meaning and Scope of Accounting

Unit Objectives Need for Accounting Definitions of Accounting Book-keeping Role of an Accountant Management Accounting Basics Check your Progress

Need for Accounting Accounting is the Language of Business It Communicates the Result of Business operations to various parties Record of Transactions help in proper utilization of resources Ascertain the Position of the Business Provide inputs for Management of the Business

Definitions Of Accounting The American Institute of Certified Public Accountants ( AICPA ) defined accounting as “ Accounting is the Art of Recording, Classifying and summarizing in significant manner and in terms of money, transactions & events which are in part , of a financial character and interpreting the results thereof ”

Definitions of Accounting The American Accounting Association (AAA) defined accounting as “ The Process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of the information”

Interpretation Thus from the definition of Accounting we can interpret that Accounting is a process of Recording => Journal Entry Classifying => Ledger Posting Summarizing => Trial Balance, Income and Expenditure , Balance Sheet.

Book-Keeping & Accounting Bookkeeping is concerned with recording the financial aspect of a transaction Bookkeeper maintain records of a Business e.g. : Maintaining Accounts of a Firm. Now a days bookkeeping is highly influenced by the use of Computers and other devices. Accounting is mainly concerned with designing the systems of recording , classification and summarizing. Accountants mainly supervise the work of the Bookkeepers. Accountant must be having more knowledge than of a bookkeeper.

Role of an Accountant Maintain Books of Accounts Auditing of Accounts Statutory Audit Internal audit Handle Taxation Financial Services Management Information Systems Corporate Planning Feasibility Studies

Management Accounting Basics ACCOUNTING Financial Accounting Management Accounting Cost Accounting

Financial Accounting Financial accounting is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. The fundamental need for financial accounting is to reduce principal-agent problem by measuring and monitoring agents' performance and reporting the results to interested users.

Purposes of Financial Accounting Producing general purpose financial statements Provision of information used by management of a business entity for decision making Planning and performance evaluation For meeting regulatory requirements

Management Accounting Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.

Aims of Management Accounting Formulating strategies Planning and constructing business activities Helps in making decision Optimal use of resources Supporting financial reports preparation Safeguarding Asset

Cost Accounting Cost accounting is that part of management accounting which establishes budget and actual cost of operations, processes, departments or product and the analysis of variances, profitability or social use of funds. Managers use cost accounting to support decision making to reduce a company's costs and improve its profitability.

Check Your Progress The prime function of Accounting is to Record Economic Data Provide the Information basis for Action Classifying and Recording Business Transaction Attain Non –economic Goals

Sorry. That was a Wrong Answer The Correct answer is c. Classifying and Recording Business Transaction Continue

Check Your Progress Bookkeeping is mainly concerned with Recording of Financial Data relating to the Business Operations Designing the Systems of Recording, Classifying and Summarizing the Data Interpreting the Data for end users None of the Above

Sorry. That was a Wrong Answer The Correct answer is a. Recording of Financial Data relating to the Business Operations Continue

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