Managerial Accounting and Control MAM-560 2(1-1-2)

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Managerial Accounting and Control MAM-560 2(1-1-2)

Syllabus for Mid Term:
I GAAP 
1 Double Entry System-Adv.[11] and Dis-Adv.[4]
II Branches of Accounting 
III Accounting Information System 
IV Book keeping 
V Journal Entry-its Advantages,
1 Compound Journal Entry
2 Subsidiary Journal Entry
i Cash Book-Single, Double and Three column Cash Book
a Contra Entry []
b Bill Receivable []
c Bills Payable []
ii Petty Cash Book
VI Terminologies and Definitions: -[Assignment]
1 Capital 
2 Assets and its types
3 Revenue 
4 Expenditure 
5 Stocks 
6 Debentures
7 Bad Debts
8 Depreciations
9 Purchase 
10 Purchase Return
11 Sales 
12 Sales return
13 Sale tax
14 Goods 
VII Ledger []
VIII Trail Balance []

Meaning Of Management Accounting:

Management accounting deals in accounting information which is useful to a manager
-Robert N. Antony

Scope:
Main duty of MA is to provide necessary quantitative and qualitative information for the management for
planning and control.

Objective / Purpose:
1. Decision making-Modernisation, Expansion, Diversification of Production.
2. Controlling performance-Cost, Budgetary.
3. Organising and Controlling-Various dept. are financed based on the information of the accounting dept. and thus helps in
co-ordination of depts.

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4. Reporting to Management-Performance of various dept. is also evaluated by this dept. and it will inform the same to
management.

Functions:
1. Modification of DATA
2. Financial analysis and interpretation
3. Planning and Forecasting
4. Communication
5. Qualitative information
6. Strategic decision making

Advantages:
1. Increase the efficiency in the activities of the business
2. Effective system of Budgeting and planning.
3. It makes efficient utilisation of available resources by, increasing return on capital invested.
4. Ensures effective control by comparing actual with the standards.

Limitations:
1. Lack of objectivity
2. Persistent efforts required for the decisions to be implemented in the firm
3. High Cost for installation and operation.
4. Managerial Accounting is in its Evolutionary stage.
5. Provides only DATA, but not the decisions.

Accounting Information System:

Processing :
Input : Output : Users :
Accounting
Business Financial Investers
Princiiples
Transaction Statements Lenders and
and
And Event and Report managers
Procedures

Book keeping:
“It is the art of keeping the business transactions in a systematic manner”
-A.H. Rosenkampff
Advantages:
a) It helps in knowing what are all the business expenses and gains of a business.
b) Helps to know exact financial position of the business.
c) Keeps the permanent record of the business transaction.
d) It helps in easily location of errors and frauds that have taken place and the steps to prevent them in
the future.
e) It assist business managers in assessment of Income and sales tax.
f) Helps managers in proper planning of the business.
g) Helps in evaluation of our business with that of the other similar competitive business.

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Branches of Accounting:
1. Financial Accounting
2. Cost Accounting
3. Managerial Accounting

Basic Terms in Accounting:

1) Entity: Entity is a thing that has definite existence. Eg for Business Entity- Super Bazar
2) Transaction:- An event which has some specific value b/w 2/more entities.
i. Eg: Purchase of good, Payment to a creditor, Receipt of money.
ii. Certain terms used in Business Transaction are:
a Cash Transaction
b Credit Transaction
c Barter Transaction
3) Assets:- Assets are some economic resources of an enterprise which has some monitory value.
i. Fixed Assets: Fixed assets persists for a longer duration of time.
Eg: Land, Machinery, Furniture.
ii. Current Assets: Assets hold on a short term basic is known as Current Assets
Eg: Bills Receivable (Notes Receivable), Debtors (Accounts receivable), Stock (Invento-
ry),….
4) Liabilities: These are the debts that an enterprise has to pay in some future point of time.
i. Long-Term Liabilities: - Loans taken normally for more than 1 year.
Eg: Debentures (Bond)
ii. Short-Term Liabilities: - Loans taken normally for a period which has to be paid back
within 1 year.
Eg: Creditors, Bills Payable, Loan overdraft.
5) Capital:- Amount invested by the owners of a company.
6) Sales:-Sales are total revenues from goods or services sold or provided to customers. Sales may
be cash sales or credit sales.
7) Sales return:
8) Sale tax:
9) Revenues(Income, commission, interest, dividends, royalties, rent received):- These are the amounts
of the business earned by selling its products or providing services to customers, called sales revenue
10) Expenses: Cost incurred by the business in the process of earning revenue.
11) Expenditure: Spending money or incurring a liability for some benefit, service or property received is
called expenditure.
12) Profit: Excess of revenue over expenses during a financial year of accounting.
13) Gain: Profit that are generated by an enterprise from an event or transaction which are inci-
dental in nature.
Eg: Appreciation in the value of an asset, Winning a court case,
14) Loss: Excess of expenses over revenue in a accounting year.
Eg: Theft of goods.
15) Discount: is deduction in the price of the goods sold.
i. Trade Discount: [ ManufWhole Seller / Whole Seller Retailers.] Certain % of List
price is deducted at the time of selling.
ii. Cash Discount: This is offered by the credit giver to the credit taker, when the credit
taker pays back the amount on a stipulated period of time or earlier.
16) Voucher: The documentary evidence in support of a transaction is known as voucher.
Eg: Cash payment for goods purchasedCash memo[Bill],
Credit purchaseInvoice
PaymentsReciepts
17) Goods: It refers to a product that the business is dealing with i.e buying and selling.
Eg: Furniture:
For A Furniture dealer-it’s a Good-But for others it is asset.
Stationary:
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For a Stationary shop keeper, it’s a Good-But for others it’s an Expense (Not Purchase*)
18) Drawing: Withdrawal of money and/or goods by the owner from the business for personal use.
19) Purchase: Purchases are total amount of goods procured by a business on credit and on cash, for
use or sale.
i. Cash Purchase
ii. Credit Purchase
20) Stock: Stock (inventory) is a measure of something on hand-goods, spares and other
items in a business. It is called Stock in hand. In a trading concern, the stock
on hand is the amount of goods which are lying unsold as at the end of an
accounting period is called closing stock (ending inventory). In a manufacturing
company, closing stock comprises raw materials, semi-finished goods and
finished goods on hand on the closing date. Similarly, opening stock (beginning
inventory) is the amount of stock at the beginning of the accounting period.
21) Debtor: Are persons who owe an enterprise for buying goods and services on Credit.
Note: Sundry Detor- On Closing date , it is shown on assets side.
22) Creditor: Creditors are persons and/or other entities who have to be paid by an enterprise an amount for
providing the enterprise goods and services on credit.
23) Debentures:
24) Bad Debts:
25) Depreciations:

Accounting Principles:

Separate Entity-Owner and

Business will have saparate assets

Going Concern-Long term

business, Will not shut down.

Money Mesurment-Only Monitary

transactions entry

Cost-Only Purchasing cost entry,

A/c Concepts- Assumptions No Depreciation calculation
and Conditions
A/C Principle=GAAP

Dule-Aspect-Dr. & Cr. 4 Every

transactions

Accounting Period-Financial Period

ver Profit/Loss 4 d firm

Periodic Matching of Cost and

Revenue- [Income=Revenue-
Expenditure]

Conservatism- Real profits r enterd

Full Disclosure- Full & Fair

disclouser
A/c Conventions- Custums
and traditions
Consistency- Should Remain
Unchanged from 1 period 2
another

Materiality- Importance to
Material, Ignore Insignificant

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Journal[Book Of Original Entry]: Journal Record all daily transactions in the order of they occur.

Ledger:- Ledger is the principle accounting book of the accounting system. It has different accounts and transactions
relating to that accounts are recorded.